Condensed Consolidating Balance Sheet at July 31, 2012:



	Toll Brothers, Inc.		Subsidiary Issuer	Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	—		—	533,371		68,080		—		601,451
Marketable securities				215,809		60,119				275,928
Restricted cash	28,188			17,958		862				47,008
Inventory				3,555,007		229,698				3,784,705
Property, construction and office equipment, net				98,131		3,085				101,216
Receivables, prepaid expenses and other assets	203		9,943	77,334		58,507		(13,020	)	132,967
Mortgage loans held for sale						72,544				72,544
Customer deposits held in escrow				28,501		2,230				30,731
Investments in and advances to unconsolidated entities				72,781		238,702		(2	)	311,481
Investments in non-performing loan portfolios and foreclosed real estate						98,241				98,241
Investments in and advances to consolidated entities	2,752,091		1,820,550	(1,038,874	)	(429,597	)	(3,104,170	)	—
	2,780,482		1,830,493	3,560,018		402,471		(3,117,192	)	5,456,272
LIABILITIES AND EQUITY
Liabilities:
Loans payable				75,747		30,652				106,399
Senior notes			1,792,453							1,792,453
Mortgage company warehouse loan						63,128				63,128
Customer deposits				135,481		6,042				141,523
Accounts payable				106,543		(26	)			106,517
Accrued expenses			38,040	304,522		133,549		(11,389	)	464,722
Income taxes payable	81,724					(2,000	)			79,724
Total liabilities	81,724		1,830,493	622,293		231,345		(11,389	)	2,754,466
Equity:
Stockholders’ equity:
Common stock	1,687			48		3,006		(3,054	)	1,687
Additional paid-in capital	397,302					1,734		(1,734	)	397,302
Retained earnings	2,309,980			2,940,796		160,219		(3,101,015	)	2,309,980
Treasury stock, at cost	(10,211	)								(10,211	)
Accumulated other comprehensive loss				(3,119	)	(18	)			(3,137	)
Total stockholders’ equity	2,698,758		—	2,937,725		164,941		(3,105,803	)	2,695,621
Noncontrolling interest						6,185				6,185
Total equity	2,698,758		—	2,937,725		171,126		(3,105,803	)	2,701,806
	2,780,482		1,830,493	3,560,018		402,471		(3,117,192	)	5,456,272

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 nine months ended July 31, 2012 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					1,273,494		42,581		(66,120	)	1,249,955
Cost of revenues					1,033,992		1,774		(9,409	)	1,026,357
Selling, general and administrative	54		2,355		232,338		29,762		(51,724	)	212,785
Interest expense			84,111				318		(84,429	)	—
	54		86,466		1,266,330		31,854		(145,562	)	1,239,142
Income (loss) from operations	(54	)	(86,466	)	7,164		10,727		79,442		10,813
Other:
Income from unconsolidated entities					13,858		5,490				19,348
Other income - net	38		86,466		15,166		(197	)	(79,441	)	22,032
Income from subsidiaries	52,209				16,020				(68,229	)	—
Income before income tax benefit	52,193		—		52,208		16,020		(68,228	)	52,193
Income tax benefit	(23,536	)			(23,544	)	(7,224	)	30,768		(23,536	)
Net income	75,729		—		75,752		23,244		(98,996	)	75,729

Condensed Consolidating Statement of Operations for the three months ended July 31, 2012 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					562,143		16,959		(24,783	)	554,319
Cost of revenues					452,672		489		(5,233	)	447,928
Selling, general and administrative	27		573		83,570		10,128		(19,406	)	74,892
Interest expense			28,002				318		(28,320	)	—
	27		28,575		536,242		10,935		(52,959	)	522,820
Income (loss) from operations	(27	)	(28,575	)	25,901		6,024		28,176		31,499
Other:
Income from unconsolidated entities					4,672		1,000				5,672
Other income - net	18		28,575		7,586		(2,223	)	(28,175	)	5,781
Income from subsidiaries	42,961				4,801				(47,762	)	—
Income before income tax benefit	42,952		—		42,960		4,801		(47,761	)	42,952
Income tax benefit	(18,691	)			(18,695	)	(1,341	)	20,036		(18,691	)
Net income	61,643		—		61,655		6,142		(67,797	)	61,643

Condensed Consolidating Statement of Operations for the nine months ended July 31, 2011 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					1,022,423		77,545		(51,872	)	1,048,096
Cost of revenues					858,452		49,647		(9,833	)	898,266
Selling, general and administrative	91		1,000		200,646		28,772		(37,603	)	192,906
Interest expense			78,273		1,504				(78,273	)	1,504
	91		79,273		1,060,602		78,419		(125,709	)	1,092,676
Loss from operations	(91	)	(79,273	)	(38,179	)	(874	)	73,837		(44,580	)
Other:
Loss (income) from unconsolidated entities					12,597		(23,602	)			(11,005	)
Other income - net			82,687		8,910		(3,404	)	(73,837	)	14,356
Expenses related to retirement of debt			(3,414	)							(3,414	)
Loss from subsidiaries	(44,552	)			(27,880	)			72,432		—
Loss before income tax benefit	(44,643	)	—		(44,552	)	(27,880	)	72,432		(44,643	)
Income tax benefit	(69,395	)	—		(69,253	)	(43,338	)	112,591		(69,395	)
Net income	24,752		—		24,701		15,458		(40,159	)	24,752

Condensed Consolidating Statement of Operations for the three months ended July 31, 2011 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues					385,016		30,123		(20,834	)	394,305
Cost of revenues					321,824		22,142		(4,019	)	339,947
Selling, general and administrative	38		330		67,674		10,079		(13,516	)	64,605
Interest expense			25,790						(25,790	)	—
	38		26,120		389,498		32,221		(43,325	)	404,552
Loss from operations	(38	)	(26,120	)	(4,482	)	(2,098	)	22,491		(10,247	)
Other:
Income from unconsolidated entities					8,892		2,448				11,340
Other income - net			29,534		1,120		(1,954	)	(22,491	)	6,209
Expenses related to retirement of debt			(3,414	)							(3,414	)
Income (loss) from subsidiaries	3,926				(1,604	)			(2,322	)	—
Income (loss) before income tax benefit	3,888		—		3,926		(1,604	)	(2,322	)	3,888
Income tax benefit	(38,220	)			(37,469	)	(26,472	)	63,941		(38,220	)
Net income	42,108		—		41,395		24,868		(66,263	)	42,108

Condensed Consolidating Statement of Cash Flows for the nine months ended July 31, 2012 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Cash flow from operating activities:
Net income	75,729		—		75,752		23,244		(98,996	)	75,729
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	15		2,666		13,640		202				16,523
Stock-based compensation	12,227										12,227
Recovery of investments in unconsolidated entities							(1,621	)			(1,621	)
Income from unconsolidated entities					(13,858	)	(3,869	)			(17,727	)
Distributions of earnings from unconsolidated entities					4,028						4,028
Income from non-performing loan portfolios and foreclosed real estate							(12,725	)			(12,725	)
Deferred tax benefit	1,477										1,477
Deferred tax valuation allowance	(1,477	)									(1,477	)
Inventory impairments and write-offs					13,249						13,249
Change in fair value of mortgage loans receivable and derivative instruments							(244	)			(244	)
Gain on marketable securities					(40	)					(40	)
Changes in operating assets and liabilities
Increase in inventory					(141,871	)	(80,550	)			(222,421	)
Origination of mortgage loans							(434,780	)			(434,780	)
Sale of mortgage loans							426,559				426,559
Decrease (increase) in restricted cash	(28,188	)			1,126		(186	)			(27,248	)
Decrease (increase) in receivables, prepaid expenses and other assets	(54,988	)	(312,587	)	16,690		225,512		103,198		(22,175	)
Increase in customer deposits					46,224		(4,447	)			41,777
(Decrease) increase in accounts payable and accrued expenses	(2,584	)	13,694		(19,259	)	(46,514	)	(4,202	)	(58,865	)
Decrease in income taxes payable	(26,342	)									(26,342	)
Net cash (used in) provided by operating activities	(24,131	)	(296,227	)	(4,319	)	90,581		—		(234,096	)
Cash flow from investing activities:
Purchase of property and equipment					(6,447	)	(871	)			(7,318	)
Purchase of marketable securities					(257,431	)	(60,138	)			(317,569	)
Sale and redemption of marketable securities					270,503						270,503
Investments in and advances to unconsolidated entities					(112,717	)	(83,096	)			(195,813	)
Return of investments from unconsolidated entities					32,172		1,059				33,231
Investment in non-performing loan portfolios and foreclosed real estate							(30,090	)			(30,090	)
Return of investments in non-performing loan portfolios and foreclosed real estate							14,412				14,412
Acquisition of a business					(144,746	)					(144,746	)
Net cash used in investing activities	—		—		(218,666	)	(158,724	)	—		(377,390	)
Cash flow from financing activities:
Net Proceeds from issuance of senior notes			296,227								296,227
Proceeds from loans payable							675,481				675,481
Principal payments of loans payable					(18,944	)	(670,298	)			(689,242	)
Proceeds from stock-based benefit plans	24,515										24,515
Purchase of treasury stock	(384	)									(384	)
Net cash (used in) provided by financing activities	24,131		296,227		(18,944	)	5,183		—		306,597
Net decrease in cash and cash equivalents	—		—		(241,929	)	(62,960	)	—		(304,889	)
Cash and cash equivalents, beginning of period					775,300		131,040				906,340
Cash and cash equivalents, end of period	—		—		533,371		68,080		—		601,451

Condensed Consolidating Statement of Cash Flows for the nine months ended July 31, 2011 ($ in thousands):



	Toll Brothers, Inc.		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Cash flow from operating activities:
Net income	24,752		—		24,701		15,458		(40,159	)	24,752
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			2,416		14,055		652				17,123
Stock-based compensation	10,147										10,147
Impairments of investments in unconsolidated entities					10,000		29,600				39,600
Income from unconsolidated entities					(16,725	)	(11,870	)			(28,595	)
Distributions of earnings from unconsolidated entities					7,315						7,315
Income from non-performing loan portfolios and foreclosed real estate							(1,187	)			(1,187	)
Deferred tax benefit	4,329										4,329
Deferred tax valuation allowance	(4,329	)									(4,329	)
Inventory impairments and write-offs					34,861						34,861
Change in fair value of mortgage loans receivable and derivative instruments							628				628
Expenses related to early retirement of debt			3,414								3,414
Changes in operating assets and liabilities
Increase in inventory					(85,962	)	(122,242	)			(208,204	)
Origination of mortgage loans							(457,383	)			(457,383	)
Sale of mortgage loans							504,724				504,724
Decrease (increase) in restricted cash					38,584		(1,903	)			36,681
Decrease (increase) in receivables, prepaid expenses and other assets	(141,264	)	40,368		(202,417	)	259,947		40,411		(2,955	)
Increase in customer deposits					7,067		11,023				18,090
(Increase) decrease in accounts payable and accrued expenses	(2,032	)	2,239		75,257		(112,985	)	(252	)	(37,773	)
Decrease in income tax refund recoverable	141,590										141,590
Decrease in income taxes payable	(56,461	)									(56,461	)
Net cash provided by (used in) operating activities	(23,268	)	48,437		(93,264	)	114,462		—		46,367
Cash flow from investing activities:
Purchase of property and equipment — net					(3,756	)	(3,171	)			(6,927	)
Purchase of marketable securities					(420,087	)					(420,087	)
Sale and redemption of marketable securities					318,372						318,372
Return of investments in unconsolidated entities					40,485		(14,200	)			26,285
Investment in non-performing loan portfolios and foreclosed real estate							(42,141	)			(42,141	)
Return of investments in non-performing loan portfolios and foreclosed real estate							101				101
Net cash used in investing activities	—		—		(64,986	)	(59,411	)	—		(124,397	)
Cash flow from financing activities:
Proceeds from loans payable							666,659				666,659
Principal payments of loans payable					(11,377	)	(703,754	)			(715,131	)
Redemption of senior notes			(48,437	)							(48,437	)
Proceeds from stock-based benefit plans	23,731										23,731
Receipts related to noncontrolling interest							2,678				2,678
Purchase of treasury stock	(463	)									(463	)
Net cash (used in) provided by financing activities	23,268		(48,437	)	(11,377	)	(34,417	)	—		(70,963	)
Net (decrease) increase in cash and cash equivalents	—		—		(169,627	)	20,634		—		(148,993	)
Cash and cash equivalents, beginning of period	—				930,387		108,673				1,039,060
Cash and cash equivalents, end of period	—		—		760,760		129,307		—		890,067