Condensed Consolidating Balance Sheet at April 30, 2012:



	Toll Brothers, Inc.		Subsidiary Issuer	Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	—		—	638,518		70,520		—		709,038
Marketable securities				158,420		60,014				218,434
Restricted cash	28,234			17,951		1,213				47,398
Inventory				3,516,493		251,384				3,767,877
Property, construction and office equipment, net				97,575		3,149				100,724
Receivables, prepaid expenses and other assets	146		10,354	111,970		24,968		(3,581	)	143,857
Mortgage loans held for sale						50,527				50,527
Customer deposits held in escrow				29,273		1,795				31,068
Investments in and advances to unconsolidated entities				80,384		119,908				200,292
Investments in non-performing loan portfolios and foreclosed real estate						95,870				95,870
Investments in and advances to consolidated entities	2,698,419		1,809,042	(1,180,603	)	(287,821	)	(3,039,037	)	—
	2,726,799		1,819,396	3,469,981		391,527		(3,042,618	)	5,365,085
LIABILITIES AND EQUITY
Liabilities:
Loans payable				72,875		31,005				103,880
Senior notes			1,791,942							1,791,942
Mortgage company warehouse loan						45,397				45,397
Customer deposits				124,415		4,506				128,921
Accounts payable				106,509		238				106,747
Accrued expenses	63		27,454	310,077		123,305		(3,625	)	457,274
Income taxes payable	101,107					(2,000	)			99,107
Total liabilities	101,170		1,819,396	613,876		202,451		(3,625	)	2,733,268
Equity:
Stockholders’ equity:
Common stock	1,687			3,054		2,003		(5,057	)	1,687
Additional paid-in capital	399,382			1,366		2,734		(4,100	)	399,382
Retained earnings	2,248,337			2,855,029		178,189		(3,033,218	)	2,248,337
Treasury stock, at cost	(20,395	)								(20,395	)
Accumulated other comprehensive loss	(3,382	)		(3,344	)	(38	)	3,382		(3,382	)
Total stockholders’ equity	2,625,629		—	2,856,105		182,888		(3,038,993	)	2,625,629
Noncontrolling interest						6,188				6,188
Total equity	2,625,629		—	2,856,105		189,076		(3,038,993	)	2,631,817
	2,726,799		1,819,396	3,469,981		391,527		(3,042,618	)	5,365,085

Condensed Consolidating Balance Sheet at October 31, 2011:



	Toll Brothers, Inc.		Subsidiary Issuer	Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents				775,300		131,040				906,340
Marketable securities				233,572						233,572
Restricted cash				19,084		676				19,760
Inventory				2,911,211		505,512				3,416,723
Property, construction and office equipment, net				77,001		22,711				99,712
Receivables, prepaid expenses and other assets			6,768	74,980		26,067		(2,239	)	105,576
Mortgage loans held for sale						63,175				63,175
Customer deposits held in escrow				10,682		4,177				14,859
Investments in and advances to unconsolidated entities				86,481		39,874				126,355
Investments in non-performing loan portfolios and foreclosed real estate						69,174				69,174
Investments in and advances to consolidated entities	2,694,419		1,508,550	(727,258	)	(477,322	)	(2,998,389	)	—
	2,694,419		1,515,318	3,461,053		385,084		(3,000,628	)	5,055,246
LIABILITIES AND EQUITY
Liabilities:
Loans payable				61,994		44,562				106,556
Senior notes			1,490,972							1,490,972
Mortgage company warehouse loan						57,409				57,409
Customer deposits				71,388		12,436				83,824
Accounts payable				96,645		172				96,817
Accrued expenses			24,346	320,021		178,965		(2,281	)	521,051
Income taxes payable	108,066					(2,000	)			106,066
Total liabilities	108,066		1,515,318	550,048		291,544		(2,281	)	2,462,695
Equity:
Stockholders’ equity:
Common stock	1,687			3,054		2,003		(5,057	)	1,687
Additional paid-in capital	400,382			1,366		2,734		(4,100	)	400,382
Retained earnings	2,234,251			2,909,487		82,605		(2,992,092	)	2,234,251
Treasury stock, at cost	(47,065	)								(47,065	)
Accumulated other comprehensive loss	(2,902	)		(2,902	)			2,902		(2,902	)
Total stockholders’ equity	2,586,353		—	2,911,005		87,342		(2,998,347	)	2,586,353
Noncontrolling interest						6,198				6,198
Total equity	2,586,353		—	2,911,005		93,540		(2,998,347	)	2,592,551
	2,694,419		1,515,318	3,461,053		385,084		(3,000,628	)	5,055,246

Condensed Consolidating Statement of Operations for the six months ended April 30, 2012 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					711,351		25,622		(41,337	)	695,636
Cost of revenues					581,320		1,285		(4,176	)	578,429
Selling, general and administrative	27		1,782		148,768		19,634		(32,318	)	137,893
Interest expense			56,109						(56,109	)	—
	27		57,891		730,088		20,919		(92,603	)	716,322
Loss from operations	(27	)	(57,891	)	(18,737	)	4,703		51,266		(20,686	)
Other
(Loss) income from unconsolidated entities					9,186		4,490				13,676
Other income - net	20		57,891		18,799		2,026		(62,485	)	16,251
Loss from subsidiaries	9,248								(9,248	)	—
Loss before income tax benefit	9,241		—		9,248		11,219		(20,467	)	9,241
Income tax benefit	(4,845	)			(4,849	)	(5,883	)	10,732		(4,845	)
Net income	14,086		—		14,097		17,102		(31,199	)	14,086

Condensed Consolidating Statement of Operations for the three months ended April 30, 2012 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					383,659		13,236		(23,214	)	373,681
Cost of revenues					308,436		611		(2,226	)	306,821
Selling, general and administrative	14		1,304		75,481		10,115		(18,658	)	68,256
Interest expense			30,823						(30,823	)	—
	14		32,127		383,917		10,726		(51,707	)	375,077
Loss from operations	(14	)	(32,127	)	(258	)	2,510		28,493		(1,396	)
Other
Income from unconsolidated entities					3,957		3,032				6,989
Other income - net	13		32,127		11,949		1,793		(35,826	)	10,056
Income from subsidiaries	15,650								(15,650	)	—
Income before income tax benefit	15,649		—		15,648		7,335		(22,983	)	15,649
Income tax benefit	(1,223	)			(1,231	)	(8,078	)	9,309		(1,223	)
Net income	16,872		—		16,879		15,413		(32,292	)	16,872

Condensed Consolidating Statement of Operations for the six months ended April 30, 2011 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					637,407		47,422		(31,038	)	653,791
Cost of revenues					536,628		27,505		(5,814	)	558,319
Selling, general and administrative	53		670		132,972		18,693		(24,087	)	128,301
Interest expense			52,483		1,504				(52,483	)	1,504
	53		53,153		671,104		46,198		(82,384	)	688,124
Loss from operations	(53	)	(53,153	)	(33,697	)	1,224		51,346		(34,333	)
Other
Income from unconsolidated entities					3,705		(26,050	)			(22,345	)
Other income - net			53,153		(18,486	)	(1,450	)	(25,070	)	8,147
Loss from subsidiaries	(48,478	)							48,478		—
Loss before income tax benefit	(48,531	)	—		(48,478	)	(26,276	)	74,754		(48,531	)
Income tax benefit	(31,175	)			(31,784	)	(16,866	)	48,650		(31,175	)
Net (loss) income	(17,356	)	—		(16,694	)	(9,410	)	26,104		(17,356	)

Condensed Consolidating Statement of Operations for the three months ended April 30, 2011 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					312,352		22,272		(14,949	)	319,675
Cost of revenues					265,713		13,198		(2,557	)	276,354
Selling, general and administrative	25		329		68,960		10,189		(12,453	)	67,050
Interest expense			26,638		392				(26,638	)	392
	25		26,967		335,065		23,387		(41,648	)	343,796
Loss from operations	(25	)	(26,967	)	(22,713	)	(1,115	)	26,699		(24,121	)
Other
Income from unconsolidated entities					(2,816	)	(8,527	)			(11,343	)
Other income - net			26,967		(5,930	)	88		(17,145	)	3,980
Income from subsidiaries	(31,459	)							31,459		—
Income (loss) before income tax benefit	(31,484	)	—		(31,459	)	(9,554	)	41,013		(31,484	)
Income tax benefit	(10,711	)			(9,425	)	3,194		6,231		(10,711	)
Net income	(20,773	)	—		(22,034	)	(12,748	)	34,782		(20,773	)

Condensed Consolidating Statement of Cash Flows for the six months ended April 30, 2012 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Cash flow from operating activities:
Net income	14,086		—		14,097		17,102		(31,199	)	14,086
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	8		1,739		8,883		68				10,698
Stock-based compensation	8,831										8,831
Recovery of investments in unconsolidated entities							(1,621	)			(1,621	)
Income from unconsolidated entities					(11,687	)	(368	)			(12,055	)
Distributions of earnings from unconsolidated entities					1,550						1,550
Income from non-performing loan portfolios and foreclosed real estate							(10,004	)			(10,004	)
Deferred tax benefit	(3,318	)									(3,318	)
Deferred tax valuation allowance	3,318										3,318
Inventory impairments and write-offs					10,128						10,128
Change in fair value of mortgage loans receivable and derivative instruments							284				284
Gain on marketable securities					(39	)					(39	)
Changes in operating assets and liabilities
Increase in inventory					(106,801	)	(95,665	)			(202,466	)
Origination of mortgage loans							(253,866	)			(253,866	)
Sale of mortgage loans							266,713				266,713
Decrease (increase) in restricted cash	(28,234	)			1,133		(537	)			(27,638	)
Decrease (increase) in receivables, prepaid expenses and other assets	(4,727	)	(301,074	)	(4,979	)	247,131		32,099		(31,550	)
Increase in customer deposits					34,386		(5,548	)			28,838
(Decrease) increase in accounts payable and accrued expenses	90		3,108		(8,109	)	(61,978	)	(900	)	(67,789	)
Decrease in income taxes payable	(6,959	)									(6,959	)
Net cash (used in) provided by operating activities	(16,905	)	(296,227	)	(61,438	)	101,711		—		(272,859	)
Cash flow from investing activities:
Purchase of property and equipment					(3,826	)	(921	)			(4,747	)
Purchase of marketable securities					(117,781	)	(60,052	)			(177,833	)
Sale and redemption of marketable securities					189,716						189,716
Investments in and advances to unconsolidated entities					(1,142	)	(73,866	)			(75,008	)
Return of investments from unconsolidated entities					19,509		1,059				20,568
Investment in non-performing loan portfolios and foreclosed real estate							(27,490	)			(27,490	)
Return of investments in non-performing loan portfolios and foreclosed real estate							11,582				11,582
Acquisition of a business					(144,746	)					(144,746	)
Net cash used in investing activities	—		—		(58,270	)	(149,688	)	—		(207,958	)
Cash flow from financing activities:
Net Proceeds from issuance of senior notes			296,227								296,227
Proceeds from loans payable							400,092				400,092
Principal payments of loans payable					(17,074	)	(412,635	)			(429,709	)
Proceeds from stock-based benefit plans	17,189										17,189
Purchase of treasury stock	(284	)									(284	)
Net cash (used in) provided by financing activities	16,905		296,227		(17,074	)	(12,543	)	—		283,515
Net (decrease) increase in cash and cash equivalents	—		—		(136,782	)	(60,520	)	—		(197,302	)
Cash and cash equivalents, beginning of period					775,300		131,040				906,340
Cash and cash equivalents, end of period	—		—		638,518		70,520		—		709,038

Condensed Consolidating Statement of Cash Flows for the six months ended April 30, 2011 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Cash flow from operating activities:
Net loss	(17,356	)	—		(16,694	)	(9,410	)	26,104		(17,356	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	28		1,614		8,202		493				10,337
Stock-based compensation	7,717										7,717
Impairments of investments in unconsolidated entities					10,000		29,600				39,600
Income from unconsolidated entities					(12,027	)	(5,228	)			(17,255	)
Distributions of earnings from unconsolidated entities					6,789						6,789
Income from non-performing loan portfolios and foreclosed real estate							(473	)			(473	)
Deferred tax benefit	(6,515	)									(6,515	)
Deferred tax valuation allowance	6,515										6,515
Inventory impairments					18,048						18,048
Change in fair value of mortgage loans receivable and derivative instruments							818				818
Changes in operating assets and liabilities
Increase in inventory					(35,860	)	(118,580	)			(154,440	)
Origination of mortgage loans							(301,778	)			(301,778	)
Sale of mortgage loans							365,328				365,328
Decrease in restricted cash					28,781						28,781
Decrease (increase) in receivables, prepaid expenses and other assets	(116,822	)	(1,614	)	5,654		145,274		(25,320	)	7,172
Decrease in customer deposits					9,467		8,087				17,554
Decrease in accounts payable and accrued expenses	(1,203	)			(26,473	)	(8,086	)	(784	)	(36,546	)
Decrease in income tax refund recoverable	141,590										141,590
Decrease in current income taxes payable	(18,241	)									(18,241	)
Net cash provided by (used in) operating activities	(4,287	)	—		(4,113	)	106,045		—		97,645
Cash flow used in investing activities:
Purchase of property and equipment — net					(1,929	)	(3,183	)			(5,112	)
Purchase of marketable securities					(329,105	)					(329,105	)
Sale and redemption of marketable securities					227,080						227,080
Return of investments in unconsolidated entities					8,051		7,700				15,751
Investment in non-performing loan portfolios and foreclosed real estate							(42,141	)			(42,141	)
Net cash used in investing activities	—		—		(95,903	)	(37,624	)	—		(133,527	)
Cash flow used in financing activities:
Proceeds from loans payable							438,713				438,713
Principal payments of loans payable					(7,709	)	(491,251	)			(498,960	)
Proceeds from stock-based benefit plans	4,676										4,676
Receipts related to noncontrolling interest							2,678				2,678
Purchase of treasury stock	(389	)									(389	)
Net cash (used in) provided by financing activities	4,287		—		(7,709	)	(49,860	)	—		(53,282	)
Net (decrease) increase in cash and cash equivalents	—		—		(107,725	)	18,561		—		(89,164	)
Cash and cash equivalents, beginning of period	—				930,387		108,673				1,039,060
Cash and cash equivalents, end of period	—		—		822,662		127,234		—		949,896