Toll Brothers Reports 1st Qtr 2009 Results

HORSHAM, Pa., March 4, 2009 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today reported a FY 2009 first quarter net loss of $88.9 million, or $0.55 per share diluted, which included pre-tax write-downs totaling $156.6 million. This compared to FY 2008's first quarter net loss of $96.0 million, or $0.61 per share diluted, which included pre-tax write-downs totaling $245.5 million.

Excluding write-downs, FY 2009's first quarter earnings were $9.6 million ($9.55 million of which resulted from the net reversal of a prior tax provision), or $0.06 per share diluted, compared to $57.3 million, or $0.35 per share diluted for FY 2008's first quarter.

In FY 2009's first quarter, revenues were $409.0 million, backlog was $1.04 billion and net (after cancellations) signed contracts were $127.8 million. These totals represented declines of 51%, 56%, and 66%, respectively, in dollars, and 45%, 51% and 59%, respectively, in units, compared to FY 2008's first-quarter results.

The Company ended FY 2009's first quarter with $1.53 billion in cash, compared to $956.6 million at FY 2008's first-quarter-end. The Company's cash position was down slightly from $1.63 billion at FY 2008's fourth-quarter-end, principally due to the payment in 2009's first quarter of previously accrued taxes and the retirement of purchase money mortgages and other debt. In addition, the Company had $1.32 billion available under its bank credit facility, which matures in March 2011.

The Company ended 2009's first quarter with a net-debt-to-capital ratio(1) of 14.5%, its lowest level ever at first-quarter-end, compared to 26.8% at 2008's first-quarter-end. Stockholders' Equity at FY 2009's first-quarter-end of $3.16 billion was down 2% compared to $3.24 billion at FYE 2008 and 7% compared to $3.41 billion at FY 2008's first-quarter-end.

Robert I. Toll, chairman and chief executive officer, stated: "Faced with a plunging stock market, weak consumer confidence, growing job losses, challenging credit markets and a hobbled economy, we continue to focus on maintaining a strong balance sheet and significant liquidity. With this capital, we hope to take advantage of opportunities we believe will arise from the current downturn. We are beginning to see some properties come to market at reasonable prices. We have not bought any yet, but we are getting closer.

"Ironically, now is a very good time to buy a home. With the decline in home prices and historically low mortgage rates, home price affordability is at an all-time high, according to the National Association of Realtors. As a result, in many markets, inventory is starting to be absorbed by bargain hunters.

"We believe there are buyers on the fence. Our recent 3.99% mortgage promotion had a dramatic effect on our website activity; visitors to our mortgage company website, www.tbimortgage.com, grew from 84 a day to 1,617 a day. However, we believe weak buyer confidence still impedes the market. We have not yet seen a pick-up in activity at our communities other than ordinary seasonal increases for this time of year.

"Many experts continue to believe we must first stem home price declines before we can resolve the nation's economic and financial crisis. The recent stimulus bill shows that Washington is paying greater attention to our industry; however, we think more is needed. We advocate a buyer tax credit of $15,000 to be made available to all buyers of homes, not just first-time buyers: We must motivate the entire food chain of home buyers to stop the decline of home prices. Creating a sense of urgency is necessary to motivate buyers to act now; therefore the credit should only be available for a limited period of time.

"If home prices are stabilized, financial institutions, which today cannot value the mortgage-backed securities on their balance sheets, will once again be able to trade these securities; this, in turn, will help stabilize the financial system.

"Housing starts are at their lowest level since measurement began fifty years ago and the resulting job losses have been brutally damaging to the U.S. economy. The new home industry, combined with the related service, building products and home furnishings industries, are together, perhaps, the largest employer in the United States. If Congress and the Administration can effectively call the bottom and thereby put a floor under home prices, we believe the housing market will recover sooner, jobs will be created, bank balance sheets will improve, and millions of people will be able to return to the workforce."

Joel H. Rassman, chief financial officer, stated: "Given the numerous uncertainties related to sales paces, sales prices, mortgage markets, cancellations, market direction and the potential for and size of future impairments, it is particularly difficult in the current climate to provide guidance for the rest of FY 2009. As a result, we will not provide earnings guidance at this time. However, subject to the caveats above and those contained in our Statement on Forward-Looking Information included in this release and in our other public filings, we offer the following limited guidance.

"Based on FY 2009's first-quarter-end backlog of $1.04 billion and the pace of activity at our communities, we currently estimate that we will deliver between 2,000 and 3,000 homes in FY 2009 at an average delivered price of between $600,000 and $625,000 per home. We believe that, as a result of continuing incentives and slower sales paces per community, our cost of sales as a percentage of revenues, before taking into account write-downs, will be higher in FY 2009 than in FY 2008. Based on FY 2009's lower projected revenues, we expect our SG&A expenses, exclusive of interest, to be lower in absolute dollar terms in FY 2009 than in FY 2008; however, we expect it will be higher as a percentage of revenues in FY 2009 than in FY 2008."

Toll Brothers' financial highlights for the first quarter ended January 31, 2009 (unaudited):

*  FY 2009's first-quarter net loss was $88.9 million, or $0.55
     per share diluted, compared to FY 2008's first-quarter net
     loss of $96.0 million, or $0.61 per share diluted. FY 2009's
     first-quarter net loss included pre-tax write-downs of $156.6
     million, or $0.60 per share diluted. $143.3 million of the
     write-downs was attributable to operating communities and
     owned land, $6.0 million was attributable to unconsolidated
     entities in which the Company has an investment, and $7.3
     million was attributable to optioned land. In FY 2008,
     first-quarter pre-tax write-downs totaled $245.5 million,
     ($153.3 million, or $0.93 per share diluted, after tax).

*  Excluding write-downs, FY 2009's first quarter earnings
     were $9.6 million, ($9.55 million of which resulted from
     the net reversal of a prior tax provision), or $0.06 per
     share diluted, compared to $57.3 million, or $0.35 per share
     diluted for FY 2008's first quarter.

*  The Company's Stockholders' Equity at FY 2009's
     first-quarter-end was $3.16 billion, compared to $3.24
     billion at FYE 2008.

*  FY 2009's first-quarter total revenues of $409.0 million
     (665 units) decreased 51% from FY 2008's first-quarter total
     revenues of $842.3 million (1,208 units).

*  In FY 2009's first quarter, unconsolidated entities in
     which the Company had an interest delivered $10.3 million
     of homes, compared to $11.3 million in the first quarter of
     FY 2008. The Company recorded its share of the results from
     these entities' operations in "Loss from Unconsolidated
     Entities" on the Company's Statement of Operations.

*  The Company signed 423 gross contracts totaling approximately
     $242.8 million in FY 2009's first quarter, a decline of 53%
     and 58%, respectively, in units and dollars, compared to the
     904 gross contracts totaling $573.1 million signed in FY
     2008's first quarter.

*  In FY 2009, first-quarter cancellations totaled 157. This
     compared to 233, 195, 308, 257, 417, 347, 384, 436, 585
     and 317 in FY 2008's fourth, third, second and first
     quarters, FY 2007's fourth, third, second and first quarters
     and FY 2006's fourth and third quarters, respectively. FY
     2006's third quarter was the first period in which
     cancellations reached elevated levels during the current
     housing downturn.

*  FY 2009's first-quarter cancellation rate (current-quarter
     cancellations divided by current-quarter signed contracts)
     was 37.1%, versus 30.2%, 19.4%, 24.9%, 28.4%, 38.9%, 23.8%,
     18.9%, 29.8%, respectively, in the preceding fourth, third,
     second and first quarters of 2008, fourth, third, second
     and first quarters of 2007, and 36.7% and 18.0%, respectively,
     in FY 2006's fourth and third quarters.

*  As a percentage of beginning-quarter backlog, FY 2009's
     first-quarter cancellation rate was 7.7%, compared to 9.0%,
     6.4%, 9.2% and 6.5% in FY 2008's fourth, third, second and
     first quarters, respectively, 8.3%, 6.0%, 6.5% and 6.7% in
     the fourth, third, second and first quarters of FY 2007,
     respectively, and 7.3% and 3.6% in the fourth and third
     quarters of FY 2006, respectively.

*  The average price per unit of gross contracts signed,
     cancellations and net contracts signed in FY 2009's
     first-quarter were $574,000, $733,000 and $481,000,
     respectively, compared to $583,000, $785,000 and $495,000,
     respectively, in FY 2008's fourth quarter and $634,000,
     $770,000 and $580,000, respectively, in FY 2008's first quarter.

*  The Company's FY 2009 first-quarter net contracts of 266
     units, or approximately $127.8 million, declined by 59%
     and 66%, respectively, compared to FY 2008's first-quarter
     net contracts of 647 units, or $375.1 million.

*  In FY 2009, first-quarter-end backlog of approximately $1.04
     billion (1,647 units) decreased 56% from FY 2008's first-
     quarter-end backlog of $2.40 billion (3,341 units). In
     addition, at January 31, 2009, unconsolidated entities in
     which the Company had an interest had a backlog of
     approximately $10.8 million.

*  The Company ended its FY 2009 first quarter with more than
     $1.5 billion in cash plus more than $1.3 billion available
     under its bank credit facility, which matures in March 2011.

*  The Company ended FY 2009's first quarter with approximately
     38,000 lots owned and optioned, compared to approximately
     55,000 one year earlier and approximately 91,200 at its peak
     at FY 2006's second-quarter-end. Approximately 32,300 of
     these lots were owned, of which approximately 13,300 lots,
     including those in backlog, were substantially improved.

*  The Company ended FY 2009's first quarter with 258 selling
     communities, compared to 273 at FYE 2008. The Company now
     expects to end FY 2009 with approximately 240 selling
     communities, down approximately 26% from its peak of 325
     communities at FY 2007's second-quarter-end.

*  The Company's SG&A expenses for FY 2009's first-quarter
     totaled $85.8 million, a decline of 29% compared to $121.3
     million in FY 2008's first quarter.

*  Subject to the caveats outlined in this release and in the
     Statement on Forward Looking Information contained herein
     and in its other public filings,  the Company offered the
     guidance that follows:

*  The Company currently estimates it will deliver between
     2,000 and 3,000 homes in FY 2009. It estimates that the
     average delivered price for the full year will be between
     $600,000 and $625,000 per home.

*  The Company expects that the average delivered price per
     home for FY 2009's second quarter will be higher than the
     midpoint of the full-year range detailed above and that
     the average prices per home will decrease sequentially in FY
     2009's third and fourth quarters.

*  Primarily due to continuing incentives and slower sales per
     community, the Company projects that its cost of sales as a
     percentage of revenues, before taking into account write-downs,
     will be higher in fiscal 2009 than it was in fiscal 2008.

*  Additionally, the Company believes, based upon fiscal 2009's
     lower projected revenues, that its FY 2009 SG&A, excluding
     interest, will be lower in absolute dollars than FY 2008's
     SG&A, but will be higher as a percentage of revenues in FY
     2009 than in FY 2008.

*  The Company also expects that it will have increasing interest
     expense in its SG&A in each of the next three quarters.

TOLL BROTHERS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                        (Amounts in thousands)

January 31,          October 31,
                                         2009                 2008
                                      ----------           ----------
                                     (Unaudited)
 ASSETS
 Cash and cash equivalents            $1,533,524           $1,633,495
 Inventory                             3,932,957            4,127,475
 Property, construction and
  office equipment, net                   84,065               86,462
 Receivables, prepaid expenses
  and other assets                       107,010              113,762
 Mortgage loans receivable                53,724               49,255
 Customer deposits held in escrow         15,711               18,913
 Investments in and advances to
  unconsolidated entities                145,370              151,771
 Deferred tax assets, net                450,118              405,703
                                      ----------           ----------
                                      $6,322,479           $6,586,836
                                      ==========           ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
 Liabilities
   Loans payable                      $  581,297           $  613,594
   Senior notes                        1,143,730            1,143,445
   Senior subordinated notes             343,000              343,000
   Mortgage company warehouse loan        41,914               37,867
   Customer deposits                     112,489              135,591
   Accounts payable                      104,224              134,843
   Accrued expenses                      685,674              738,596
   Income taxes payable                  145,414              202,247
                                      ----------           ----------
     Total liabilities                 3,157,742            3,349,183
                                      ----------           ----------

Minority interest                         2,494

Stockholders' equity
   Common stock                            1,611                1,604
   Additional paid-in capital            295,616              282,090
   Retained earnings                   2,864,760            2,953,655
   Treasury stock                            (39)                 (21)
   Accumulated other
    comprehensive income                     295                  325
                                      ----------           ----------
     Total stockholders' equity        3,162,243            3,237,653
                                      ----------           ----------
                                      $6,322,479           $6,586,836
                                      ==========           ==========

TOLL BROTHERS, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (Amounts in thousands, except per share data)
                              (Unaudited)

Three months ended
                                                January 31,
                                      -------------------------------

2009                 2008
                                      ----------           ----------

Revenues                             $  409,023           $  842,329
                                      ----------           ----------

Cost of revenues                        485,980              868,049
 Selling, general and
  administrative expenses                 85,763              121,318
                                      ----------           ----------
                                         571,743              989,367
                                      ----------           ----------

Loss from operations                   (162,720)            (147,038)
 Other:
   Loss from unconsolidated entities      (5,097)             (24,086)
   Interest and other income              11,256               19,169
                                      ----------           ----------
 Loss before income taxes               (156,561)            (151,955)
 Income tax benefit                      (67,666)             (55,998)
                                      ----------           ----------
 Net loss                             $  (88,895)          $  (95,957)
                                      ==========           ==========

Loss per share:
   Basic                              $    (0.55)          $    (0.61)
                                      ==========           ==========
   Diluted                            $    (0.55)          $    (0.61)
                                      ==========           ==========

Weighted-average number of shares:
   Basic                                 160,700              157,813
   Diluted                               160,700              157,813

TOLL BROTHERS, INC. AND SUBSIDIARIES
                           SUPPLEMENTAL DATA
                       ($ Amounts in thousands)
                              (unaudited)

Impairment charges recognized:
   Cost of sales                      $  150,616           $  217,660
   Loss from unconsolidated entities       6,000               27,820
                                      ----------           ----------
                                      $  156,616           $  245,480
                                      ==========           ==========

Depreciation and amortization        $    5,861           $    7,418
                                      ==========           ==========
 Interest incurred                    $   28,285           $   33,105
                                      ==========           ==========
 Interest expense by source of
  revenue:
   Charged to cost of sales           $   15,224           $   20,965
   Charged to selling, general
    and administrative expense               812
   Charged to interest income
    and other                                112                    2
                                      ----------           ----------
     Total                            $   16,148           $   20,967
                                      ==========           ==========

Home sites controlled:
   Owned                                  32,326               35,322
   Optioned                                5,573               19,692
                                      ----------           ----------
                                          37,899               55,014
                                      ==========           ==========

Land sales reclassification:
   Revenue                                                 $      523
   Cost                                                          (434)
   Interest                                                        (2)
                                                           ----------
   Gross Margin                                            $       87
                                                           ==========

Toll Brothers operates in four geographic segments:

North:         Connecticut, Illinois, Massachusetts, Michigan,
                Minnesota, New Jersey, New York and Rhode Island
 Mid-Atlantic:  Delaware, Maryland, Pennsylvania, Virginia and
                West Virginia
 South:         Florida, Georgia, North Carolina, South Carolina and
                Texas
 West:          Arizona, California, Colorado and Nevada

Three Months              Three Months
                      Ended January 31,         Ended January 31,
                      -----------------     -------------------------
 HOME                       Units                $ (Millions)
  BUILDING            -----------------     -------------------------
  REVENUES (a)         2009        2008       2009            2008
 -----------------    -----       -----     ---------       ---------

North                  216         273     $   143.2       $   204.4
 Mid-Atlantic           220         399         130.5           250.3
 South                  107         282          55.2           145.3
 West                   122         254          80.1           226.5
 Other (b)                                                       15.8
                      -----       -----     ---------       ---------
           Total        665       1,208     $   409.0       $   842.3
                      =====       =====     =========       =========

CONTRACTS
 -----------------

North                   54         178     $    14.7       $   124.6
 Mid-Atlantic            83         224          39.6           130.5
 South                   78         179          36.5            89.4
 West                    51          66          37.0            30.6
                      -----       -----     ---------       ---------
           Total        266         647     $   127.8       $   375.1
                      =====       =====     =========       =========

Backlog
 -----------------

North                  708       1,357     $   434.0       $   982.6
 Mid-Atlantic           421         798         271.5           556.8
 South                  325         700         186.4           412.1
 West                   193         486         152.4           471.7
   Less revenue
    previously
    recognized (b)                                              (24.3)
                      -----       -----     ---------       ---------
           Total      1,647       3,341     $ 1,044.3       $ 2,398.9
                      =====       =====     =========       =========

(a) Excludes deliveries from projects accounted for using the
     percentage of completion accounting method. Information 
     regarding these deliveries in the three months ended
     January 31, 2008 is as follows:

2008              2008
                                           Units            $(MILL)
                                           -----          ---------

North                            45          $    27.3
             South                             3                7.7
                                           -----          ---------
                   Total                      48          $    35.0
                                           =====          =========

(b) Amount represents revenues recognized on projects accounted for
     using the percentage of completion  accounting method. Based
     upon the current accounting rules and interpretations, we do not
     believe that any of our current or future communities qualify 
     for percentage of completion accounting.

2009        2008       2009            2008
                      Units       Units      $(Mill)         $(Mill)
                      -----       -----     ---------       ---------
 Three months ended
  January 31,
   Revenues              14          15     $    10.3       $    11.3
   Contracts             (5)         23     $    (6.1)      $    17.8

Backlog at
  January 31,            16         116     $    10.8       $    85.8

CONTACT: Toll Brothers, Inc.
         Frederick N. Cooper
           (215) 938-8312
           fcooper@tollbrothersinc.com
         Joseph R. Sicree
           (215) 938-8045
           jsicree@tollbrothersinc.com