10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 2010

or

o 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 1-9186

TOLL BROTHERS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	23-2416878
(State or other jurisdiction of	I.R.S. Employer
incorporation or organization)	Identification No.)
250 Gibraltar Road, Horsham, Pennsylvania	19044
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code
(215) 938-8000

Securities registered pursuant to Section 12(b) of the Act:

	Name of each exchange
Title of each class	on which registered
Common Stock (par value $.01)*	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 6.875% Senior Notes due 2012	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 5.95% Senior Notes due 2013	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 4.95% Senior Notes due 2014	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 5.15% Senior Notes due 2015	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 8.910% Senior Notes due 2017	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 6.750% Senior Notes due 2019	New York Stock Exchange

* Includes associated Right to Purchase Series A Junior Participating Preferred Stock

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the Registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act. Yes o No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of April 30, 2010, the aggregate market value of the Common Stock held by non-affiliates (all persons other than executive officers and directors of Registrant) of the Registrant was approximately $3,261,185,000.

As of December 10, 2010, there were approximately 166,508,000 shares of Common Stock outstanding.

Documents Incorporated by Reference: Portions of the proxy statement of Toll Brothers, Inc. with respect to the 2011 Annual Meeting of Stockholders, scheduled to be held on March 16, 2011, are incorporated by reference into Part III of this report.

TABLE OF CONTENTS

PART I
	ITEM 1. BUSINESS
	ITEM 1A. RISK FACTORS
	ITEM 1B. UNRESOLVED STAFF COMMENTS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. REMOVED AND RESERVED
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6. SELECTED FINANCIAL DATA
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	ITEM 9A. CONTROLS AND PROCEDURES
	ITEM 9B. OTHER INFORMATION
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
	ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
	ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES
Exhibit 10.34
Exhibit 10.40
Exhibit 10.42
Exhibit 10.43
Exhibit 10.44
Exhibit 12
Exhibit 21
Exhibit 23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I

ITEM 1. BUSINESS

General

Toll Brothers, Inc., a Delaware corporation formed in May 1986, began doing business through predecessor entities in 1967. When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires. References herein to “fiscal 2011,” and to “fiscal 2010,” “fiscal 2009,” and “fiscal 2008” refer to our fiscal year ending October 31, 2011, and our fiscal years ended October 31, 2010, October 31, 2009, and October 31, 2008, respectively.

We design, build, market and arrange financing for single-family detached and attached homes in luxury residential communities. We are also involved, directly and through joint ventures, in projects where we are building, or converting existing rental apartment buildings into, high-, mid- and low-rise luxury homes. We cater to move-up, empty-nester, active-adult, age-qualified and second-home buyers in 19 states of the United States. In the five years ended October 31, 2010, we delivered 26,062 homes from 549 communities, including 2,642 homes from 265 communities in fiscal 2010. Included in the five-year deliveries are 424 units that were delivered in four communities where we used the percentage of completion accounting method to recognize revenues and cost of revenues. Currently, we do not use percentage of completion accounting.

Our traditional, single-family communities are generally located on land we have either acquired and developed or acquired fully-approved and, in some cases, improved. We also operate through a number of joint ventures. Currently, we operate in the following major suburban and urban residential markets:

• Philadelphia, Pennsylvania metropolitan area

• Lehigh Valley area of Pennsylvania

• Central and northern New Jersey

• Virginia and Maryland suburbs of Washington, D.C.

• Baltimore, Maryland metropolitan area

• Eastern Shore of Maryland and Delaware

• Richmond, Virginia metropolitan area

• Boston, Massachusetts metropolitan area

• Fairfield, Hartford, New Haven and New London Counties, Connecticut

• Westchester, Dutchess, Ulster and Saratoga Counties, New York

• Boroughs of Manhattan and Brooklyn in New York City

• Los Angeles, California metropolitan area

• San Francisco Bay, Sacramento and San Jose areas of northern California

• San Diego and Palm Springs, California areas

• Phoenix, Arizona metropolitan area

• Raleigh and Charlotte, North Carolina metropolitan areas

• Dallas, San Antonio and Houston, Texas metropolitan areas

• Southeast and southwest coasts and the Jacksonville and Orlando areas of Florida

• Las Vegas and Reno, Nevada metropolitan areas

• Detroit, Michigan metropolitan area

• Chicago, Illinois metropolitan area

• Denver, Colorado metropolitan area, and

• Minneapolis/St. Paul, Minnesota metropolitan area.

1

We continue to explore additional geographic areas and markets for expansion, as appropriate.

We operate our own land development, architectural, engineering, mortgage, title, landscaping, security monitoring, lumber distribution, house component assembly, and manufacturing operations. We also develop, own and operate golf courses and country clubs associated with several of our master planned communities. We have investments in a number of joint ventures to develop land for the sole use of the venture participants, including ourselves, and to develop land for sale to the joint venture participants and to unrelated builders. We are a participant in joint ventures with unrelated parties to develop luxury condominium projects, including for-sale residential units and commercial space, and to develop a single master planned community. In addition, we formed Toll Brothers Realty Trust (“Trust”) and Toll Brothers Realty Trust II (“Trust II”) to invest in commercial real estate opportunities. In fiscal 2010, we formed Gibraltar Capital and Asset Management to invest in distressed real estate opportunities which may be different than our traditional homebuilding operations.

The U.S. housing market continues to struggle from a significant slowdown that began in the fourth quarter of our fiscal year end October 31, 2005 (“fiscal 2005”). The value of our net contracts signed in fiscal 2010 was 79.4% lower than the value of our net contracts signed in fiscal 2005, 12.8% higher than the value of our net contracts signed in fiscal 2009 and 8.5% and 51.1% lower than the value of our net contracts signed in fiscal 2008 and 2007, respectively. The slowdown, which we believe started with a decline in consumer confidence, an overall softening of demand for new homes and an oversupply of homes available for sale, has been exacerbated by, among other things, a decline in the overall economy, increased unemployment, the large number of homes that are vacant, and homes that have been or will be foreclosed on due to the current economic downturn, fear of job loss, a decline in home prices and the resulting reduction in home equity, the inability of some of our home buyers, or some prospective buyers of their homes, to sell their current homes, the deterioration in the credit markets, and the direct and indirect impact of the turmoil in the mortgage loan market.

We believe many of our markets and housing in general have reached bottom; however, we expect that there may be more periods of volatility in the future. We believe that, once the unemployment rate declines and confidence improves, pent-up demand will be released, and, gradually, more buyers will enter the market. We believe that the key to a full recovery in our business depends on these factors as well as a sustained stabilization of financial markets and home prices.

At October 31, 2010, we had $1.24 billion of cash and cash equivalents and marketable U.S. Treasury and Agency securities on hand and approximately $799.0 million available under our new $885.0 million revolving credit facility which extends to October 2014. During fiscal 2010, we used available cash to repay a $331.7 million bank term loan and repurchase or redeem $93.4 million of our senior and senior subordinated notes. Since October 31, 2006, we have increased our cash position (including U.S. Treasury and Agency securities) by approximately $604.4 million and reduced debt by approximately $636.8 million.

For information and analyses of recent trends in our operations and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual Report on Form 10-K (“Form 10-K”), and for financial information about our results of operations, assets, liabilities, stockholders’ equity and cash flows, see the accompanying Consolidated Financial Statements and Notes thereto in Item 8 of this Form 10-K.

At October 31, 2010, we had 407 communities containing approximately 34,852 home sites that we owned or controlled through options. Of the 407 communities, 228 communities containing 15,865 home sites were residential communities under construction (“current communities”) and 179, containing 18,987 home sites, were for future communities. Of our 228 current communities, 195 were offering homes for sale, 13 had been offering homes for sale but were temporarily closed due to business conditions and 20 were sold out but not all homes had been completed and delivered. Of the 15,865 home sites in current communities, 14,371 were available for sale and 1,494 were under agreement of sale but not yet delivered (“backlog”). We expect to be selling from 215 to 225 communities by October 31, 2011. Of the approximately 34,852 total home sites that we owned or controlled through options at October 31, 2010, we owned approximately 28,891 and controlled 5,961 through land purchase agreements.

At October 31, 2010, we were offering single-family detached homes in 143 communities at prices, excluding customized options, lot premiums and sales incentives, generally ranging from $193,000 to $1,958,000. During fiscal 2010, we delivered 1,548 single-family detached homes at an average base price of approximately $597,600. On average, our single-family detached home buyers added approximately 24.3%, or $145,000 per home, in customized options and lot premiums to the base price of single-family detached homes we delivered in fiscal 2010, as compared to 26% or $163,000 per home in fiscal 2009 and 24% or $164,500 in fiscal 2008.

At October 31, 2010, we were offering attached homes in 52 communities at prices, excluding customized options, lot premiums and sales incentives, generally ranging from $150,000 to $775,000, with some units offered at prices higher than $775,000. During fiscal 2010, we delivered 1,094 attached homes at an average base price of approximately $469,600. On average, our attached home buyers added approximately 9.7%, or $45,700 per home, in customized options and lot premiums to the base price of attached homes we delivered in fiscal 2010, as compared to 9% or $44,600 per home in fiscal 2009 and 10% or $48,900 in fiscal 2008.

2

We had a backlog of $852.1 million (1,494 homes) at October 31, 2010 and $874.8 million (1,531 homes) at October 31, 2009. Of the homes in backlog at October 31, 2010, approximately 97% are scheduled to be delivered by October 31, 2011.

We attempt to reduce certain risks by controlling land for future development through options whenever we can, thus allowing the necessary governmental approvals to be obtained before acquiring title to the land; generally commencing construction of a home only after executing an agreement of sale with a buyer; and using subcontractors to perform home construction and land development work on a fixed-price basis. In order to obtain better terms or prices, or due to competitive pressures, we may purchase properties outright or acquire an underlying mortgage prior to obtaining all of the governmental approvals necessary to commence development. During the current extended downturn in the homebuilding industry, we abandoned many options on properties that we believed were no longer feasible to develop, completed the purchase of properties that we believed were still desirable to develop and, due to the uncertainty in the market, have been selective about the new land purchase agreements we have entered into. We are currently evaluating many opportunities to acquire distressed properties from various sources. We believe that, in general, we will not be able to purchase these distressed properties through the use of purchase options, but will be required to purchase them outright.

Our risk reduction strategy of generally not commencing the construction of a home until we had an agreement of sale with a buyer was effective in the past but, due to the significant number of cancellations of agreements of sale during the current downturn in the housing market, many of which were for homes on which we had commenced construction, the number of homes under construction in detached single-family communities for which we do not have an agreement of sale increased from our historical levels. Over the past two years, however, we have reduced the number of these unsold units to more historical levels.

Our Communities

Our communities are generally located in affluent suburban areas near major highways providing access to major cities. We also operate in the affluent urban markets of Hoboken and Jersey City, New Jersey; New York City, New York; and Philadelphia, Pennsylvania. The following table lists the 19 states in which we operate and the fiscal years in which we or our predecessors commenced operations:

	Fiscal year
State	of entry
Pennsylvania		1967
New Jersey		1982
Delaware		1987
Massachusetts		1988
Maryland		1988
Virginia		1992
Connecticut		1992
New York		1993
California		1994
North Carolina		1994
Texas		1995
Florida		1995
Arizona		1995
Nevada		1998
Illinois		1998
Michigan		1999
Colorado		2001
South Carolina		2002
Minnesota		2005

We market our high-quality single-family homes to “upscale” luxury home buyers, generally comprised of those persons who have previously owned a principal residence and who are seeking to buy a larger or more desirable home — the so-called “move-up” market. We believe our reputation as a developer of homes for this market enhances our competitive position with respect to the sale of our smaller, more moderately priced, detached homes, as well as our attached homes.

We also market to the 50+ year-old “empty-nester” market, which we believe has strong growth potential. We have developed a number of home designs with features such as one-story living and first-floor master bedroom suites, as well as communities with recreational amenities such as golf courses, marinas, pool complexes, country clubs and recreation centers that we believe appeal to this category of home buyer. We have integrated certain of these designs and features in some of our other home types and communities.

3

We develop active-adult, age-qualified/targeted communities for households in which at least one member is 55 years of age. As of October 31, 2010, we were selling from 17 such communities and expect to open additional age-qualified/targeted communities during the next few years. Of the value and number of net contracts signed in fiscal 2010, approximately 11% and 15%, respectively, were in active-adult communities and, in fiscal 2009, approximately 10% and 13%, respectively, were in such communities.

We also have been selling homes in the second-home market for several years and currently offer them in Arizona, Florida, Nevada and South Carolina.

In order to serve a growing market of affluent move-up families, empty-nesters and young professionals seeking to live in or close to major cities, we have developed and are developing a number of high-density, high-, mid- and low-rise urban luxury communities and are in the process of converting several for-rent apartment buildings to condominiums. These communities, which we are currently developing on our own or through joint ventures, are located in Dublin and San Jose, California; Singer Island, Florida; Chicago, Illinois suburbs; North Bethesda, Maryland; Hoboken, Jersey City and Plainsboro, New Jersey; the boroughs of Manhattan and Brooklyn, New York; Philadelphia, Pennsylvania and its suburbs; and Leesburg, Virginia.

We believe that the demographics of the move-up, empty-nester, active-adult, age-qualified and second-home upscale markets will provide us with the potential for growth in the coming decade. According to the U.S. Census Bureau, the number of households earning $100,000 or more (in constant 2009 dollars) at March 2010, stood at 23.6 million, or approximately 20.1% of all U.S. households. This group has grown at four times the rate of increase of all U.S. households since 1980. According to a September 2010 Harvard University study, the number of projected new household formations during the 10-year period between 2010 and 2019 will be between 11.8 million and 13.8 million.

Although the leading edge of the baby boom generation is now in its early 60s, the largest group of baby boomers, the more than four million born annually between 1954 and 1964, is now in its peak move-up home buying years. The number of households with persons 55 to 64 years old, the focus of our age-qualified communities, is projected to increase significantly over the next 10 years.

We develop individual stand-alone communities as well as multi-product, master planned communities. We currently have 24 master planned communities. Our master planned communities, many of which include golf courses and other country club-type amenities, enable us to offer multiple home types and sizes to a broad range of move-up, empty-nester, active-adult and second-home buyers. We seek to realize efficiencies from shared common costs, such as land development and infrastructure, over the several communities within the master planned community. We currently have master planned communities in Arizona, California, Florida, Illinois, Maryland, Michigan, Nevada, North Carolina, Pennsylvania and Virginia.

Each of our single-family detached-home communities offers several home plans, with the opportunity for home buyers to select various exterior styles. We design each community to fit existing land characteristics. We strive to achieve diversity among architectural styles within a community by offering a variety of house models and several exterior design options for each model, preserving existing trees and foliage whenever practicable, and curving street layouts to allow relatively few homes to be seen from any vantage point. Normally, homes of the same type or color may not be built next to each other. Our communities have attractive entrances with distinctive signage and landscaping. We believe that our added attention to community detail avoids a “development” appearance and gives each community a diversified neighborhood appearance that enhances home values.

Our traditional attached home communities generally offer one- to four-story homes, provide for limited exterior options and often include commonly owned recreational facilities such as playing fields, swimming pools and tennis courts.

Our Homes

In most of our single-family detached home communities, we offer at least four different house floor plans, each with several substantially different architectural styles. In addition, the exterior of each basic floor plan may be varied further by the use of stone, stucco, brick or siding. Our traditional attached home communities generally offer several different floor plans with two, three or four bedrooms.

We offer some of the same basic home designs in similar communities. However, we are continuously developing new designs to replace or augment existing ones to ensure that our homes reflect current consumer tastes. We use our own architectural staff and also engage unaffiliated architectural firms to develop new designs. During the past year, we introduced 68 new single-family detached models, nine new single-family attached models and five new condominium models.

4

In all of our communities, a wide selection of options is available to home buyers for additional charges. The number and complexity of options typically increase with the size and base selling price of our homes. Major options include additional garages, extra fireplaces, guest suites, finished lofts, and other additional rooms. On average, options purchased by our detached home buyers, including lot premiums, added approximately 24.3%, or $145,000 per home, to the base price of homes delivered in fiscal 2010, as compared to 26% or $163,000 per home in fiscal 2009 and 24% or $164,500 in fiscal 2008. Options purchased by our attached home buyers, including lot premiums, added, on average, approximately 9.7%, or $45,700 per home, to the base price of homes delivered in fiscal 2010, as compared to 9% or $44,600 per home in fiscal 2009 and 10% or $48,900 in fiscal 2008.

As a result of our wide product and geographic diversity, we have a wide range of base sales prices. The general range of base sales prices for our different lines of homes at October 31, 2010, was as follows:

Detached homes
Move-up	$	196,000	to	$	870,000
Executive		193,000	to		975,000
Estate		334,000	to		1,958,000
Active-adult, age-qualified		216,000	to		566,000
Attached homes
Flats	$	180,000	to	$	675,000
Townhomes/Carriage homes		150,000	to		775,000
Active-adult, age-qualified		227,000	to		380,000
Mid-rise/high rise		291,000	to		733,000

A small number of mid-rise/high-rise projects that we are developing either on our own or through joint ventures, are offering units at prices in excess of $733,000.

The following table summarizes certain information with respect to our residential communities under development at October 31, 2010:

									Homes
	Total		Number of						under
Geographic	number of		selling		Homes		Homes		contract but		Home sites
Segment	communities		communities		approved		closed		not closed		available
North		59		49		9,398		4,338		521		4,539
Mid-Atlantic		65		53		10,030		5,124		475		4,431
South		53		49		5,701		2,104		296		3,301
West		51		44		5,100		2,798		202		2,100
Total		228		195		30,229		14,364		1,494		14,371

At October 31, 2010, significant site improvements had not yet commenced on approximately 5,400 of the 14,371 available home sites. Of the 14,371 available home sites, 619 were not yet owned by us, but were controlled through options.

Of our 228 communities under development at October 31, 2010, 195 were offering homes for sale, 13 that had previously been offering homes for sale were temporarily closed due to business conditions and 20 were sold out but not all homes had been completed and delivered. Of the 195 communities in which homes were being offered for sale at October 31, 2010, 143 were single-family detached home communities and 52 were attached home communities. At October 31, 2010, we had 727 homes (exclusive of model homes) under construction or completed but not under contract, of which 167 were in detached home communities and 560 were in attached home communities. In addition, we had 176 units that were temporarily being held as rental units. Of the 560 homes under construction or completed but not under contract in attached home communities at October 31, 2010, 174 were in high- and mid-rise projects and 19 were in two communities that we acquired and are converting to condominium units.

At the end of each fiscal quarter, we review the profitability of each of our operating communities. For those communities operating below certain profitability thresholds, we estimate the expected future cash flow for each of those communities. For each community whose estimated cash flow is not sufficient to recover its carrying value, we estimate the fair value of the community in accordance with U.S. generally accepted accounting principles (“GAAP”) and recognize an impairment charge for the difference between the estimated fair value of the community and its carrying value. In fiscal 2010, 2009 and 2008, we recognized impairment charges related to operating communities of $53.5 million, $267.4 million and $399.1 million, respectively.

5

For more information regarding revenues, gross contracts signed, contract cancellations, net contracts signed, and sales incentives provided on units delivered; (loss) income before income taxes; and assets by geographic segment; see “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Geographic Segments” in Item 7 of this Form 10-K and Note 17 to the Consolidated Financial Statements in Item 15 of this Form 10-K.

Land Policy

Before entering into an agreement to purchase a land parcel, we complete extensive comparative studies and analyses on detailed internally-designed forms that assist us in evaluating the acquisition. Historically, we have attempted to enter into option agreements to purchase land for future communities. However, in order to obtain better terms or prices, or due to competitive pressures, we acquire property outright from time to time. We have also entered into several joint ventures with other builders or developers to develop land for the use of the joint venture participants or for sale to outside third parties. In addition, we have, at times, acquired the underlying mortgage on a property and subsequently obtained title to that property.

We generally enter into agreements to purchase land, referred to in this Form 10-K as “land purchase contracts,” “purchase agreements,” “options” or “option agreements,” on a non-recourse basis, thereby limiting our financial exposure to the amounts expended in obtaining any necessary governmental approvals, the costs incurred in the planning and design of the community and, in some cases, some or all of our deposit. The use of options or purchase agreements may increase the price of land that we eventually acquire, but reduces our risk by allowing us to obtain the necessary development approvals before acquiring the land or allowing us to delay the acquisition to a later date. Historically, as approvals were obtained, the value of the options, purchase agreements and land generally increased. However, in any given time period, this may not happen. We have the ability to extend many of these options for varying periods of time, in some cases by making an additional payment and, in other cases, without any additional payment. Our purchase agreements are typically subject to numerous conditions including, but not limited to, the ability to obtain necessary governmental approvals for the proposed community. Our deposit under an agreement may be returned to us if all approvals are not obtained, although pre-development costs may not be recoverable. We generally have the right to cancel any of our agreements to purchase land by forfeiture of some or all of the deposits we have made pursuant to the agreement. We are currently evaluating many opportunities to acquire distressed properties from various sources. We believe that, in general, we will not be able to purchase these distressed properties through the use of purchase options, but will be required to purchase them outright

Our ability to continue development activities over the long-term will be dependent, among other things, upon a suitable economic environment and our continued ability to locate and enter into options or agreements to purchase land, obtain governmental approvals for suitable parcels of land, and consummate the acquisition and complete the development of such land.

The following is a summary of home sites for future communities that we either owned or controlled through purchase agreements at October 31, 2010, as distinguished from those communities currently under development:

	Number of		Number of
Geographic segment	communities		home sites
North		37		4,446
Mid-Atlantic		65		7,726
South		39		3,419
West		38		3,396
		179		18,987

Of the 18,987 planned home sites at October 31, 2010, we owned 13,645 and controlled 5,342 through options and purchase agreements. At October 31, 2010, the aggregate purchase price of land parcels subject to option and purchase agreements in operating communities and future communities was approximately $550.4 million (including $131.2 million of land to be acquired from joint ventures in which we have invested). Of the $550.4 million of land purchase commitments, we paid or deposited $47.1 million, we will receive a credit for prior investments in joint ventures of approximately $37.3 million and, if we acquire all of these land parcels, we will be required to pay an additional $466.0 million. Of the additional $466.0 million we would be required to pay, we recorded $77.7 million of this amount in accrued expenses at October 31, 2010. The purchases of these land parcels are scheduled over the next several years. We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts; these land parcels have either been written off or written down to the estimated amount that we expect to recover on them when the contract is terminated.

6

We evaluate all of the land owned or optioned for future communities on an ongoing basis for continued economic and market feasibility. During each of the fiscal years ended October 31, 2010, 2009 and 2008, such feasibility analyses resulted in approximately $61.8 million, $198.0 million and $245.9 million, respectively, of capitalized costs related to land owned or optioned for future communities being charged to cost of revenues because such costs were no longer deemed to be recoverable or exceeded the properties’ fair value.

We have a substantial amount of land currently under control for which approvals have been obtained or are being sought. We devote significant resources to locating suitable land for future development and obtaining the required approvals on land under our control. There can be no assurance that the necessary development approvals will be secured for the land currently under our control or for land which we may acquire control of in the future or that, upon obtaining such development approvals, we will elect to complete the purchases of land under option or complete the development of land that we own. We generally have been successful in obtaining governmental approvals in the past. Based upon our current decreased level of business, we believe that we have an adequate supply of land in our existing communities and proposed communities (assuming that all properties are developed) to maintain our operations at current levels for several years.

Based on our experience during prior downturns in the housing industry, we believe that attractive land acquisition opportunities may arise in difficult times for those builders that have the financial strength to take advantage of them. In the current challenging environment, we believe our strong balance sheet, liquidity, access to capital, broad geographic presence, diversified product line, experienced personnel and national brand name all position us well for such opportunities now and in the future. We have begun to see land being offered at prices that we believe are attractive based on current market conditions and in fiscal 2010 we entered into contracts to acquire approximately 5,600 home sites (net of options terminated). In fiscal 2009, the number of home sites controlled, excluding the homes delivered during fiscal 2009, declined by approximately 4,900.

Community Development

We expend considerable effort in developing a concept for each community, which includes determining the size, style and price range of the homes; the layout of the streets and individual home sites; and the overall community design. After the necessary governmental subdivision and other approvals have been obtained, which may take several years, we improve the land by clearing and grading it; installing roads, underground utility lines and recreational amenities; erecting distinctive entrance structures; and staking out individual home sites.

Each community is managed by a project manager. Working with sales staff, construction managers, marketing personnel and, when required, other in-house and outside professionals such as accountants, engineers, architects and legal counsel, a project manager is responsible for supervising and coordinating the various developmental steps such as land approval, land acquisition, marketing, selling, construction and customer service, and monitoring the progress of work and controlling expenditures. Major decisions regarding each community are made in consultation with senior members of our management team.

For our single-family detached and attached homes that generally take less than one year to build, we recognize revenue and costs from these home sales only when title and possession of a home are transferred to the buyer, which usually occurs shortly after home construction is substantially completed. For high-rise/mid-rise projects where the construction time is substantially longer than one year and which qualify for percentage of completion accounting, revenues and costs of individual communities are recognized on the individual projects’ aggregate value of units for which the home buyers have signed binding agreements of sale, less an allowance for cancellations, and are based on the percentage of total estimated construction costs which have been incurred. For high-rise/mid-rise projects that do not qualify for percentage of completion accounting, we recognize revenues and costs when title and possession of a home are transferred to the buyer. During fiscal 2008, we completed construction on four projects for which we used the percentage of completion accounting method to recognize revenues and costs. Subsequent to fiscal 2008, any remaining units in these projects have been accounted for using the completed contract method of accounting. Based upon the current accounting rules and interpretations, we do not believe that any of our current communities qualify for percentage of completion accounting.

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The most significant variable affecting the timing of our revenue stream, other than housing demand, is the opening of the community for sale, which generally occurs shortly after receipt of final land regulatory approvals. Receipt of approvals permits us to begin the process of obtaining executed sales contracts from home buyers. Although our sales and construction activities vary somewhat by season, which can affect the timing of closings, any such seasonal effect is relatively insignificant compared to the effect of the timing of receipt of final regulatory approvals, the opening of the community and the subsequent timing of closings. In the current economic and housing slowdown, we have delayed the opening of new communities and temporarily shut down a number of operating communities to reduce operating expenses and conserve cash.

We act as a general contractor for most of our projects. Subcontractors perform all home construction and land development work, generally under fixed-price contracts. We purchase most of the materials we use to build our homes and in our land development activities directly from the manufacturers or producers. We generally have multiple sources for the materials we purchase and we have not experienced significant delays due to unavailability of necessary materials. See “Manufacturing/Distribution Facilities” in Item 2 of this Form 10-K.

Our construction managers coordinate subcontracting activities and supervise all aspects of construction work and quality control. One of the ways in which we seek to achieve home buyer satisfaction is by providing our construction managers with incentive compensation arrangements based upon each home buyer’s satisfaction, as expressed by the buyers’ responses on pre- and post-closing questionnaires.

We maintain insurance, subject to deductibles and self-insured amounts, to protect us against various risks associated with our activities, including, among others, general liability, “all-risk” property, construction defects, workers’ compensation, automobile and employee fidelity. We accrue for our expected costs associated with the deductibles and self-insured amounts.

Marketing and Sales

We believe that our marketing strategy, which emphasizes our more expensive “Estate” and “Executive” lines of homes, has enhanced our reputation as a builder-developer of high-quality upscale housing. We believe this reputation results in greater demand for all of our lines of homes. We generally include attractive decorative features such as chair rails, crown moldings, dentil moldings, vaulted and coffered ceilings and other aesthetic elements, even in our less expensive homes, based on our belief that this additional construction expense enhances our image and improves our marketing and sales effort.

In determining the prices for our homes, we utilize, in addition to management’s extensive experience, an internally developed value analysis program that compares our homes with homes offered by other builders in each local marketing area. In our application of this program, we assign a positive or negative dollar value to differences between our product features and those of our competitors, such as house and community amenities, location and reputation.

We expend great effort in designing and decorating our model homes, which play an important role in our marketing. In our models, we attempt to create an attractive atmosphere, which may include bread baking in the oven, fires burning in fireplaces, and music playing in the background. Interior decorating varies among the models and is carefully selected to reflect the lifestyles of prospective buyers. During the past several years, we have received numerous awards from various home builder associations for our interior merchandising.

We typically have a sales office in each community that is staffed by our own sales personnel. Sales personnel are generally compensated with both salary and commission. A significant portion of our sales is also derived from the introduction of customers to our communities by local cooperating realtors.

We advertise in newspapers, in other local and regional publications, and on billboards. We also use attractive color brochures to market our communities. The internet is also an important resource we use in marketing and providing information to our customers. Visitors to our web site, www.tollbrothers.com, can obtain detailed information regarding our communities and homes across the country, take panoramic or video tours of our homes and design their own home based upon our available floor plans and options.

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Due to the current weak market conditions and in an effort to promote the sales of homes, including the significant number of speculative homes that we had due to sales contract cancellations, we increased the amount of sales incentives offered to home buyers. These incentives vary by type and amount on a community-by-community and home-by-home basis. In addition, due to the current downturn, we are selectively testing certain markets for acceptance of smaller homes, energy-efficient products and fewer high-end option offerings.

All of our homes are sold under our limited warranty as to workmanship and mechanical equipment. Many homes also come with a limited ten-year warranty as to structural integrity.

We have a two-step sales process. The first step takes place when a potential home buyer visits one of our communities and decides to purchase one of our homes, at which point the home buyer signs a non-binding deposit agreement and provides a small, refundable deposit. This deposit reserves, for a short period of time, the home site or unit that the home buyer has selected and locks in the base price of the home. Deposit rates are tracked on a weekly basis to help us monitor the strength or weakness in demand in each of our communities. If demand for homes in a particular community is strong, senior management determines whether the base selling prices in that community should be increased whereas if demand for the homes in a particular community is weak, we may determine whether sales incentives and/or discounts on home prices should be adjusted. Because these deposit agreements are non-binding, they are not recorded as signed contracts, nor are they recorded in backlog.

The second step in the sales process occurs when we actually sign a binding agreement of sale with the home buyer and the home buyer gives us a cash down payment which is generally non-refundable. Cash down payments currently average approximately 7.9% of the total purchase price of a home, although, historically, they have averaged approximately 7% of the total purchase price of a home. Between the time that the home buyer signs the non-binding deposit agreement and the binding agreement of sale, he or she is required to complete a financial questionnaire that gives us the ability to evaluate whether the home buyer has the financial resources necessary to purchase the home. If we determine that the home buyer is not financially qualified, we will not enter into an agreement of sale with the home buyer. During fiscal 2010, 2009 and 2008, our customers signed gross contracts for $1.57 billion (2,789 homes), $1.63 billion (2,903 homes) and $2.34 billion (3,920 homes), respectively. During fiscal 2010, fiscal 2009 and fiscal 2008, our home buyers cancelled home purchase contracts with a value of $98.3 million (184 homes), $321.2 million (453 homes) and $733.2 million (993 homes), respectively. Contract cancellations in a fiscal year include all contracts cancelled in that fiscal year, whether signed in that fiscal year or signed in prior fiscal years. When we report net contracts signed, the number and value of contracts signed are reported net of all cancellations occurring during the reporting period, whether signed in that reporting period or in a prior period. Only outstanding agreements of sale that have been signed by both the home buyer and us as of the end of the period for which we are reporting are included in backlog. As a result of cancellations, we retained $11.2 million, $21.8 million and $32.5 million of customer deposits in fiscal 2010, 2009 and 2008, respectively. These retained deposits are included in interest and other income in our consolidated statements of operations. At October 31, 2010, there is an additional $11.4 million of customer deposits related to sales contracts that were either cancelled or in default and are subject to dispute with the customer that we have not yet recognized in income.

While we try to avoid selling homes to speculators and generally do not build detached homes without first having a signed agreement of sale, we have been impacted by an overall increase in the supply of homes available for sale in many markets due primarily to the large number of homes that are or will be available for sale from increased foreclosures.

Our mortgage subsidiary provides mortgage financing for a portion of our home closings. Our mortgage subsidiary determines whether the home buyer qualifies for the mortgage he or she is seeking based upon information provided by the home buyer and other sources. For those home buyers that qualify, our mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”) that it uses, which is willing to honor the terms and conditions, including the interest rate, committed to the home buyer. We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary. At October 31, 2010, our mortgage subsidiary was committed to fund $433.0 million of mortgage loans. Of these commitments, $169.5 million, as well as $91.7 million of mortgage loans receivable, have “locked-in” interest rates. Our mortgage subsidiary has commitments from investors to acquire the entire $261.2 million of these locked-in loans and receivables. Our home buyers have not locked in the interest rate on the remaining $263.5 million.

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There has been significant media attention given to mortgage put-backs, a practice in which a buyer of a mortgage loan tries to recoup losses from the loan originator. We do not believe this is a material issue for our mortgage subsidiary. Only a very small number of our home buyers who used our mortgage subsidiary have defaulted on their loans. We believe that this is due to (i) our typical home buyer’s financial position and sophistication, (ii) on average, our home buyer paying approximately 30% of the purchase price in cash, (iii) our general practice of not originating certain loan types such as option adjustable rate mortgages and down payment assistance products, and our origination of very few sub-prime and high loan-to-value, no documentation loans, and (iv) our elimination of “early payment default” provisions from each of our agreements with our mortgage investors several years ago. Investors must demonstrate a material error on our part in issuing the mortgage or consumer fraud must exist in order for us to suffer a loss. In addition, the amount of any such loss would be reduced by any proceeds received on the disposition of the collateral associated with the mortgage.

Competition

The homebuilding business is highly competitive and fragmented. We compete with numerous home builders of varying sizes, ranging from local to national in scope, some of which have greater sales and financial resources than we do. Sales of existing homes, whether by a homeowner or by a financial institution that has acquired a home through a foreclosure, also provide competition. We compete primarily on the basis of price, location, design, quality, service and reputation; however, we believe our financial stability, relative to most others in our industry, has become an increasingly favorable competitive factor as more home buyers focus on builder solvency. We continue to see reduced competition from the small and mid-sized private builders that had been our primary competitors in the luxury market. We believe that access by these private builders to capital has been severely constrained. We believe that there will be fewer and more selective lenders serving our industry when the market rebounds and that those lenders likely will gravitate to the homebuilding companies that offer them the greatest security, the strongest balance sheets and the broadest array of potential business opportunities. We believe that this reduced competition, combined with attractive long-term demographics, will reward those well-capitalized builders that can persevere through the current challenging environment.

Regulation and Environmental Matters

We are subject to various local, state and federal statutes, ordinances, rules and regulations concerning zoning, building design, construction and similar matters, including local regulations that impose restrictive zoning and density requirements in order to limit the number of homes that can eventually be built within the boundaries of a particular property or locality. In a number of our markets, there has been an increase in state and local legislation authorizing the acquisition of land as dedicated open space, mainly by governmental, quasi-public and non-profit entities. In addition, we are subject to various licensing, registration and filing requirements in connection with the construction, advertisement and sale of homes in our communities. The impact of these laws has been to increase our overall costs, and may have delayed the opening of communities or caused us to conclude that development of particular communities would not be economically feasible, even if any or all necessary governmental approvals were obtained. See “Land Policy” in this Item 1. We also may be subject to periodic delays or may be precluded entirely from developing communities due to building moratoriums in one or more of the areas in which we operate. Generally, such moratoriums relate to insufficient water or sewage facilities or inadequate road capacity.

In order to secure certain approvals in some areas, we may be required to provide affordable housing at below market rental or sales prices. The impact on us depends on how the various state and local governments in the areas in which we engage, or intend to engage, in development implement their programs for affordable housing. To date, these restrictions have not had a material impact on us.

We also are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning protection of public health and the environment (“environmental laws”). The particular environmental laws that apply to any given community vary greatly according to the location and environmental condition of the site and the present and former uses of the site. Complying with these environmental laws may result in delays, may cause us to incur substantial compliance and other costs, and/or may prohibit or severely restrict development in certain environmentally sensitive regions or areas.

We maintain a policy of engaging independent environmental consultants to evaluate land for the potential of hazardous or toxic materials, wastes or substances before consummating an acquisition. Because we generally have obtained such assessments for the land we have purchased, we have not been significantly affected to date by the presence of such materials.

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Our mortgage subsidiary is subject to various state and federal statutes, rules and regulations, including those that relate to licensing, lending operations and other areas of mortgage origination and financing. The impact of those statutes, rules and regulations can increase our home buyers’ cost of financing, increase our cost of doing business, as well as restrict our home buyers’ access to some types of loans.

Employees

At October 31, 2010, we employed 2,117 persons full-time. At October 31, 2010, we were subject to one collective bargaining agreement that covered approximately 2% of our employees. We consider our employee relations to be good.

Available Information

Our principal internet address is www.tollbrothers.com. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The contents of our web site are not, however, a part of this Form 10-K.

Code of Ethics

The Company has adopted a Code of Ethics for Principal Executive Officer and Senior Financial Officers (“Code of Ethics”) that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions designated by the Company’s Board of Directors. The Code of Ethics is available on the Company’s internet website at www.tollbrothers.com under “Investor Relations: Company Information: Corporate Governance.” If the Company were to amend or waive any provision of its Code of Ethics, the Company intends to satisfy its disclosure obligations with respect to any such waiver or amendment by posting such information on its internet website set forth above rather than by filing a Form 8-K.

FORWARD-LOOKING STATEMENT

Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934. You can identify these statements by the fact that they do not relate to matters of strictly historical or factual nature and generally discuss or relate to estimates or other expectations regarding future events. They contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. Such statements may include, but are not limited to, information related to: anticipated operating results; home deliveries; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues; selling, general and administrative expenses; interest expense; inventory write-downs; anticipated tax refunds; sales paces; effects of home buyer cancellations; growth and expansion; joint ventures in which we are involved; anticipated income or benefits to be realized from our investments in unconsolidated entities; the ability to acquire land and pursue real estate opportunities; the ability to gain approvals and to open new communities; the ability to sell homes and properties; the ability to deliver homes from backlog; the ability to secure materials and subcontractors; the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities; legal proceedings and claims.

From time to time, forward-looking statements also are included in other periodic reports on Forms 10-Q and 8-K, in press releases, in presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Many factors mentioned in this report or in other reports or public statements made by us, such as government regulation and the competitive environment, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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For discussion of factors that we believe could cause our actual results to differ materially from expected and historical results see “Item 1A — Risk Factors” below. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all of our forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

ITEM 1A. RISK FACTORS

The homebuilding industry remains in an extended period of slowdown, and its duration and levels of severity are uncertain in the current state of the economy. A continued slowdown in our business would likely further adversely affect our operating results and financial condition.

The downturn in the homebuilding industry, which we believe began in the fourth quarter of our fiscal 2005, has become one of the most severe in U.S. history. This downturn, which we believe started with a decline in consumer confidence, a decline in home prices and an oversupply of homes available for sale, has been exacerbated by, among other things, a decline in the overall economy, increasing unemployment, fear of job loss, a decline in the securities markets, the number of homes that are or will be available for sale due to foreclosures, an inability of home buyers to sell their current homes, a deterioration in the credit markets, and the direct and indirect impact of the turmoil in the mortgage loan market. All of these factors have contributed to the significant decline in the demand for new homes. Moreover, it is still unclear whether the government’s legislative and administrative measures aimed at restoring liquidity to the credit markets and providing relief to homeowners facing foreclosure have helped to effectively stabilize prices and home values, or restore consumer confidence and increase demand in the homebuilding industry.

As a result of this continued downturn, our sales and results of operations have been adversely affected, we have incurred significant inventory impairments and other write-offs, our gross margins have declined significantly from historical levels, and we incurred substantial losses, after write-offs, during fiscal 2010, 2009 and 2008. We cannot predict the duration or levels of severity of the current challenging conditions, nor can we provide assurance that our responses to the current downturn or the government’s attempts to address the troubles in the economy will be successful. If these conditions persist or continue to worsen, they will further adversely affect our operating results and financial condition.

Additional adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our homes live could further reduce the demand for homes and, as a result, could continue to adversely affect our results of operations and financial condition.

Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our homes live have had and may continue to have a negative impact on our business. Adverse changes in employment levels, job growth, consumer confidence, interest rates and population growth, or an oversupply of homes for sale may further reduce demand, depress prices for our homes and cause home buyers to cancel their agreements to purchase our homes. This, in turn, could continue to adversely affect our results of operations and financial condition.

Continued cancellations of existing agreements of sale will have a continued adverse effect on our business.

Our backlog reflects agreements of sale with our home buyers for homes that have not yet been delivered. We have received a deposit from our home buyer for each home reflected in our backlog, and generally we have the right to retain the deposit if the home buyer does not complete the purchase. In some cases, however, a home buyer may cancel the agreement of sale and receive a complete or partial refund of the deposit for reasons such as state and local law, the home buyer’s inability to obtain mortgage financing, his or her inability to sell his or her current home or our inability to complete and deliver the home within the specified time. If the current industry downturn or the current decline in economic conditions continues, or if mortgage financing becomes less available, more home buyers may cancel their agreements of sale with us, which would have a continued adverse effect on our business and results of operations.

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The homebuilding industry is highly competitive and if others are more successful or offer better value to our customers, our business could decline.

We operate in a very competitive environment, which is characterized by competition from a number of other home builders in each market in which we operate. We compete with large national and regional homebuilding companies and with smaller local home builders for land, financing, raw materials and skilled management and labor resources. We also compete with the resale, also referred to as the “previously owned or existing,” home market, which has increased significantly due to the large number of homes that are vacant, and homes that have been foreclosed on or will be foreclosed on due to the current economic downturn. An oversupply of homes available for sale and the heavy discounting of home prices by some of our competitors have adversely affected demand for our homes and the results of our operations. Increased competition could require us to further increase our selling incentives and/or reduce our prices. If we are unable to compete effectively in our markets, our business could decline disproportionately to that of our competitors.

If we are not able to obtain suitable financing, our interest rates are increased or our credit ratings are lowered, our business and results of operations may decline.

Our business and results of operations depend substantially on our ability to obtain financing for the development of our residential communities, whether from bank borrowings or from financing in the public debt markets. Our revolving credit facility matures in October 2014 and $1.55 billion of our senior notes become due and payable at various times from November 2012 through November 2019. Due to the deterioration of the credit markets and the uncertainties that exist in the economy overall and for home builders in general, we cannot be certain that we will be able to continue to replace existing financing or find additional sources of financing in the future.

If we are not able to obtain suitable financing at reasonable terms or replace existing debt and credit facilities when they become due or expire, our costs for borrowings will likely increase and our revenues may decrease, or we could be precluded from continuing our operations at current levels.

Increases in interest rates can make it more difficult and/or expensive for us to obtain the funds we need to operate our business. The amount of interest we incur on our revolving bank credit facility fluctuates based on changes in short-term interest rates, the amount of borrowings we incur and the ratings that national rating agencies assign to our outstanding debt securities. Increases in interest rates generally and/or any downgrading in the ratings that national rating agencies assign to our outstanding debt securities could increase the interest rates we must pay on any subsequent issuances of debt securities, and any such ratings downgrade could also make it more difficult for us to sell such debt securities.

If we cannot obtain letters of credit and surety bonds, our ability to operate may be restricted.

We use letters of credit and surety bonds to secure our performance under various construction and land development agreements, escrow agreements, financial guarantees and other arrangements. Should banks decline to issue letters of credit or surety companies decline to issue surety bonds, our ability to operate could be significantly restricted and could have an adverse effect on our business and results of operations.

If our home buyers or our home buyers’ buyers are not able to obtain suitable financing, our results of operations may further decline.

Our results of operations also depend on the ability of our potential home buyers to obtain mortgages for the purchase of our homes. The uncertainties in the mortgage markets and their impact on the overall mortgage market, including the tightening of credit standards, could adversely affect the ability of our customers to obtain financing for a home purchase, thus preventing our potential home buyers from purchasing our homes. Moreover, future increases in the cost of home mortgage financing could prevent our potential home buyers from purchasing our homes. In addition, where our potential home buyers must sell their existing homes in order to buy a home from us, increases in mortgage costs and/or lack of availability of mortgages could prevent the buyers of our potential home buyers’ existing homes from obtaining the mortgages they need to complete their purchases, which would result in our potential home buyers’ inability to buy a home from us. Similar risks apply to those buyers whose contract is in our backlog of homes to be delivered. If our home buyers, potential buyers or buyers of our home buyers’ current homes cannot obtain suitable financing, our sales and results of operations would be adversely affected.

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If our ability to resell mortgages to investors is impaired, our home buyers will be required to find alternative financing.

Generally, when our mortgage subsidiary closes a mortgage for a home buyer at a previously locked-in rate, it already has an agreement in place with an investor to acquire the mortgage following the closing. Due to the deterioration of the credit and financial markets, the number of investors that are willing to purchase our mortgages has decreased and the underwriting standards of the remaining investors have become more stringent. Should the resale market for our mortgages further decline or the underwriting standards of our investors become more stringent, our ability to sell future mortgages could decline and our home buyers would be required to find an alternative source of financing. If our home buyers cannot obtain another source of financing in order to purchase our homes, our sales and results of operations could be adversely affected.

If land is not available at reasonable prices, our sales and results of operations could decrease.

In the long term, our operations depend on our ability to obtain land for the development of our residential communities at reasonable prices. Due to the current downturn in our business, our supply of available home sites, both owned and optioned, has decreased from a peak of approximately 91,200 home sites controlled at April 30, 2006 to approximately 34,900 at October 31, 2010. In the future, changes in the general availability of land, competition for available land, availability of financing to acquire land, zoning regulations that limit housing density and other market conditions may hurt our ability to obtain land for new residential communities at prices that will allow us to make a reasonable profit. If the supply of land appropriate for development of our residential communities becomes more limited because of these factors, or for any other reason, the cost of land could increase and/or the number of homes that we are able to sell and build could be reduced.

If the market value of our land and homes drops, our results of operations will likely decrease.

The market value of our land and housing inventories depends on market conditions. We acquire land for expansion into new markets and for replacement of land inventory and expansion within our current markets. If housing demand decreases below what we anticipated when we acquired our inventory, we may not be able to make profits similar to what we have made in the past, may experience less than anticipated profits and/or may not be able to recover our costs when we sell and build homes. Due to the significant decline in our business since September 2005, we have recognized significant write-downs of our inventory. If these adverse market conditions continue or worsen, we may have to write down our inventories further and/or may have to sell land or homes at a loss.

We participate in certain joint ventures where we may be adversely impacted by the failure of the joint venture or its participants to fulfill their obligations.

We have investments in and commitments to certain joint ventures with unrelated parties to develop land. These joint ventures usually borrow money to help finance their activities. In certain circumstances, the joint venture participants, including ourselves, are required to provide guarantees of certain obligations relating to the joint ventures. As a result of the continued downturn in the homebuilding industry, some of these joint ventures or their participants have or may become unable or unwilling to fulfill their respective obligations. In addition, in many of these joint ventures, we do not have a controlling interest and as a result, we are not able to require these joint ventures or their participants to honor their obligations or renegotiate them on acceptable terms. If the joint ventures or their participants do not honor their obligations, we may be required to expend additional resources or suffer losses, which could be significant.

Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses or limit our homebuilding activities, which could have a negative impact on our operations.

The approval of numerous governmental authorities must be obtained in connection with our development activities, and these governmental authorities often have broad discretion in exercising their approval authority. We incur substantial costs related to compliance with legal and regulatory requirements. Any increase in legal and regulatory requirements may cause us to incur substantial additional costs, or in some cases cause us to determine that the property is not feasible for development.

Various local, state and federal statutes, ordinances, rules and regulations concerning building, zoning, sales and similar matters apply to and/or affect the housing industry. Governmental regulation affects construction activities as well as sales activities, mortgage lending activities and other dealings with consumers. The industry also has experienced an increase in state and local legislation and regulations that limit the availability or use of land.

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Municipalities may also restrict or place moratoriums on the availability of utilities, such as water and sewer taps. In some areas, municipalities may enact growth control initiatives, which will restrict the number of building permits available in a given year. In addition, we may be required to apply for additional approvals or modify our existing approvals because of changes in local circumstances or applicable law. If municipalities in which we operate take actions like these, it could have an adverse effect on our business by causing delays, increasing our costs or limiting our ability to operate in those municipalities. Further, we may experience delays and increased expenses as a result of legal challenges to our proposed communities, whether brought by governmental authorities or private parties.

Increases in taxes or government fees could increase our costs, and adverse changes in tax laws could reduce demand for our homes.

Increases in real estate taxes and other local government fees, such as fees imposed on developers to fund schools, open space, road improvements, and/or provide low and moderate income housing, could increase our costs and have an adverse effect on our operations. In addition, increases in local real estate taxes could adversely affect our potential home buyers who may consider those costs in determining whether to make a new home purchase and decide, as a result, not to purchase one of our homes. In addition, any changes in the income tax laws that would reduce or eliminate tax deductions or incentives to homeowners, such as a change limiting the deductibility of real estate taxes or interest on home mortgages, could make housing less affordable or otherwise reduce the demand for housing, which in turn could reduce our sales and hurt our results of operations.

Adverse weather conditions, natural disasters and other conditions could disrupt the development of our communities, which could harm our sales and results of operations.

Adverse weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, floods and fires, can have serious effects on our ability to develop our residential communities. We also may be affected by unforeseen engineering, environmental or geological conditions or problems. Any of these adverse events or circumstances could cause delays in the completion of, or increase the cost of, developing one or more of our residential communities and, as a result, could harm our sales and results of operations.

If we experience shortages or increased costs of labor and supplies or other circumstances beyond our control, there could be delays or increased costs in developing our communities, which could adversely affect our operating results.

Our ability to develop residential communities may be adversely affected by circumstances beyond our control, including: work stoppages, labor disputes and shortages of qualified trades people, such as carpenters, roofers, electricians and plumbers; changes in laws relating to union organizing activity; lack of availability of adequate utility infrastructure and services; our need to rely on local subcontractors who may not be adequately capitalized or insured; and shortages, delays in availability, or fluctuations in prices of building materials. Any of these circumstances could give rise to delays in the start or completion of, or could increase the cost of, developing one or more of our residential communities. We may not be able to recover these increased costs by raising our home prices because the price for each home is typically set months prior to its delivery pursuant to the agreement of sale with the home buyer. If that happens, our operating results could be harmed.

We are subject to one collective bargaining agreement that covers approximately 2% of our employees. We have not experienced any work stoppages due to strikes by unionized workers, but we cannot assure you that there will not be any work stoppages due to strikes or other job actions in the future. We use independent contractors to construct our homes. At any given point in time, some or all of these subcontractors, who are not yet represented by a union, may be unionized.

Product liability claims and litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our business.

As a home builder, we are subject to construction defect and home warranty claims arising in the ordinary course of business. These claims are common in the homebuilding industry and can be costly. In addition, the costs of insuring against construction defect and product liability claims are high, and the amount of coverage offered by insurance companies is currently limited. There can be no assurance that this coverage will not be further restricted and become more costly. If the limits or coverages of our current and former insurance programs prove inadequate, or we are not able to obtain adequate, or reasonably priced, insurance against these types of claims in the future, or the amounts currently provided for future warranty or insurance claims are inadequate, we may experience losses that could negatively impact our financial results.

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Our cash flows and results of operations could be adversely affected if legal claims are brought against us and are not resolved in our favor.

Claims have been brought against us in various legal proceedings that have not had, and are not expected to have, a material adverse effect on our business or financial condition. Should such claims be resolved in an unfavorable manner or should additional claims be filed in the future, it is possible that our cash flows and results of operations could be adversely affected.

Our principal stockholders may effectively exercise control over matters requiring stockholder approval.

As of October 31, 2010, Robert I. Toll and his affiliates owned, directly or indirectly, or had the right to acquire within 60 days, approximately 10.9% of the outstanding shares of our common stock, and his brother Bruce E. Toll and his affiliates owned, directly or indirectly, or had the right to acquire within 60 days, approximately 3.1% of the outstanding shares of our common stock. All our directors and executive officers as a group and their affiliates (including the shares of Robert I. Toll and Bruce E. Toll and their affiliates) owned, directly or indirectly, or had the right to acquire within 60 days, approximately 16.1% of the outstanding shares of our common stock as of October 31, 2010. To the extent that Robert I. Toll, Bruce E. Toll and our other directors and executive officers vote their shares in the same manner, their combined stock ownership may have a significant or decisive effect on the election of our directors and control of our management, operations and affairs. Their ownership may discourage someone from making a significant equity investment in us, even if we needed the investment to operate our business. The size of their combined stock holdings could be a significant factor in delaying or preventing a change of control transaction that other stockholders may deem to be in their best interests, such as a transaction in which the other stockholders would receive a premium for their shares over their current trading prices.

Changes in tax laws or the interpretation of tax laws may negatively affect our operating results.

We believe that our recorded tax balances are adequate. However, it is not possible to predict the effects of possible changes in the tax laws or changes in their interpretation and whether they could have a material negative effect on our operating results. We have filed or expect to file claims for refunds of taxes paid in prior years based upon certain filing positions we believe are appropriate. If the Internal Revenue Service disagrees with these filing positions, we may not receive the full amount of the refunds we expect or we may have to return some of the refunds we have received.

We may not be able to realize our deferred tax assets.

At October 31, 2010, we had $409.2 million of deferred tax assets against which we have recognized valuation allowances equal to the entire amount of such deferred tax assets. Losses for federal income tax purposes can generally be carried back two years and carried forward for a period of 20 years. In order to realize our net deferred tax assets, we must generate sufficient taxable income in such future years.

In addition, our ability to utilize net operating losses (“NOLs”), built-in losses, and tax credit carryforwards to offset our future taxable income and/or to recover previously paid taxes would be limited if we were to undergo an “ownership change,” as determined under Internal Revenue Code Section 382 (“Section 382”). A Section 382 ownership change occurs if a stockholder or a group of stockholders who are deemed to own at least 5% of our common stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. If an ownership change occurs, Section 382 would impose an annual limit on the amount of NOLs we can use to reduce our taxable income equal to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced by certain items specified in Section 382) and the federal long-term tax-exempt interest rate in effect for the month of the ownership change. A number of special rules apply to calculating this annual limit.

While the complexity of Section 382’s provisions and the limited knowledge any public company has about the ownership of its publicly traded stock make it difficult to determine whether an ownership change has occurred, we currently believe that an ownership change has not occurred. However, if an ownership change were to occur, the annual limitation under Section 382 could result in a material amount of our NOLs expiring unused. This would significantly impair the value of our NOL asset and, as a result, have a negative impact on our financial position and results of operations.

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During 2010, our stockholders approved an amendment to our second restated certificate of incorporation that is designed to deter transfers of our common stock that could result in an ownership change. However, these measures cannot guarantee complete protection against an ownership change and it remains possible that one may occur.

Our business is seasonal in nature, so our quarterly operating results fluctuate.

Our quarterly operating results fluctuate with the seasons; normally, a significant portion of our agreements of sale are entered into with customers in the winter and spring months. Construction of a customer’s home typically proceeds after signing the agreement of sale and can require 12 months or more to complete. Weather-related problems may occur in the late winter and early spring, delaying starts or closings or increasing costs and reducing profitability. In addition, delays in opening new communities or new sections of existing communities could have an adverse impact on home sales and revenues. Expenses are not incurred and recognized evenly throughout the year. Because of these factors, our quarterly operating results may be uneven and may be marked by lower revenues and earnings in some quarters than in others.

Future terrorist attacks against the United States or increased domestic or international instability could have an adverse effect on our operations.

In the weeks following the September 11, 2001 terrorist attacks, we experienced a sharp decrease in the number of new contracts signed for homes and an increase in the cancellation of existing contracts. Although new home purchases stabilized and subsequently recovered in the months after that initial period, adverse developments in the war on terrorism, future terrorist attacks against the United States, or increased domestic or international instability could adversely affect our business.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Headquarters

Our corporate office, which we lease from an unrelated third party, contains approximately 200,000 square feet and is located in Horsham, Pennsylvania.

Manufacturing/Distribution Facilities

We own a manufacturing facility of approximately 300,000 square feet located in Morrisville, Pennsylvania, a manufacturing facility of approximately 186,000 square feet located in Emporia, Virginia and a manufacturing facility of approximately 134,000 square feet in Knox, Indiana. We lease, from an unrelated third party, a facility of approximately 144,000 square feet located in Fairless Hills, Pennsylvania. At these facilities, we manufacture open wall panels, roof and floor trusses, and certain interior and exterior millwork to supply a portion of our construction needs. These facilities supply components used in our North, Mid-Atlantic and South geographic segments. These operations also permit us to purchase wholesale lumber, plywood, windows, doors, certain other interior and exterior millwork and other building materials to supply to our communities. We believe that increased efficiencies, cost savings and productivity result from the operation of these plants and from the wholesale purchase of materials.

Office and Other Facilities

We own or lease from unrelated third parties office and warehouse space and golf course facilities in various locations, none of which are material to our business.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various claims and litigation arising principally in the ordinary course of business.

In January 2006, we received a request for information pursuant to Section 308 of the Clean Water Act from Region 3 of the U.S. Environmental Protection Agency (“EPA”) concerning storm water discharge practices in connection with our homebuilding projects in the states that comprise EPA Region 3. We provided information to the EPA pursuant to the request. The U.S. Department of Justice (“DOJ”) has now assumed responsibility for the oversight of this matter and has alleged that we have violated regulatory requirements applicable to storm water discharges and that it may seek injunctive relief and/or civil penalties. We are currently engaged in settlement discussions with representatives from the DOJ and the EPA.

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On April 17, 2007, a securities class action suit was filed against Toll Brothers, Inc. and Robert I. Toll and Bruce E. Toll in the U.S. District Court for the Eastern District of Pennsylvania on behalf of the purported class of purchasers of our common stock between December 9, 2004 and November 8, 2005. The original plaintiff has been replaced by two new lead plaintiffs: The City of Hialeah Employees’ Retirement System and the Laborers Pension Trust Funds for Northern California. On August 14, 2007, an amended complaint was filed and the following individual defendants, who are directors and/or officers of Toll Brothers, Inc., were added to the suit: Zvi Barzilay, Joel H. Rassman, Robert S. Blank, Richard J. Braemer, Carl B. Marbach, Paul E. Shapiro and Joseph R. Sicree. The amended complaint filed on behalf of the purported class alleges that the defendants violated federal securities laws by issuing various materially false and misleading statements that had the effect of artificially inflating the market price of our stock. They further allege that the individual defendants sold shares for substantial gains during the class period. The purported class is seeking compensatory damages, counsel fees, and expert costs. The parties reached a settlement agreement in October 2010, which is subject to approval by the U.S. District Court for the Eastern District of Pennsylvania. The entire settlement amount will be funded by the Company’s insurers.

On November 4, 2008, a shareholder derivative action was filed in the Chancery Court of Delaware by Milton Pfeiffer against Robert I. Toll, Zvi Barzilay, Joel H. Rassman, Bruce E. Toll, Paul E. Shapiro, Robert S. Blank, Carl B. Marbach, and Richard J. Braemer. The plaintiff purports to bring his claims on behalf of Toll Brothers, Inc. and alleges that the director and officer defendants breached their fiduciary duties to us and our stockholders with respect to the stock sales alleged in the securities class action discussed above, by selling while in possession of material inside information about us. The plaintiff seeks contribution and indemnification from the individual director and officer defendants for any liability found against us in the securities class action suit. In addition, again purportedly on our behalf, the plaintiff seeks disgorgement of the defendants’ profits from their stock sales.

On March 4, 2009, a second shareholder derivative action was brought by Oliverio Martinez in the U.S. District Court for the Eastern District of Pennsylvania. The case was brought against the eleven then-current members of our Board of Directors and Chief Accounting Officer. This complaint alleges breaches of fiduciary duty, waste of corporate assets, and unjust enrichment during the period from February 2005 to November 2006. The complaint further alleges that certain of the defendants sold our stock during this period while in possession of the allegedly non-public, material information about the role of speculative investors in our sales and plaintiff seeks disgorgement of profits from these sales. The complaint also asserts a claim for equitable indemnity for costs and expenses incurred by us in connection with defending the securities class action discussed above.

On April 1, 2009, a third shareholder derivative action was filed by William Hall, also in the U.S. District Court for the Eastern District of Pennsylvania, against the eleven then-current members of our Board of Directors and our Chief Accounting Officer. This complaint is identical to the previous shareholder complaint filed in Philadelphia and, on July 14, 2009, the two cases were consolidated. On April 30, 2010, the plaintiffs filed an amended consolidated complaint.

We believe that adequate provision for resolution of all claims and pending litigation have been made for probable losses and the disposition of these matters is not expected to have a material adverse effect on our results of operations and liquidity or on our financial condition.

Our Second Restated Certificate of Incorporation, as amended, and Bylaws provide for indemnification of our directors and officers. We have also entered into individual indemnification agreements with each of our directors.

Other than as set forth above, there are no proceedings required to be disclosed pursuant to Item 103 of Regulation S-K.

ITEM 4. REMOVED AND RESERVED

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the New York Stock Exchange (Symbol: TOL).

The following table sets forth the price range of our common stock on the New York Stock Exchange for each fiscal quarter during the two years ended October 31, 2010.

	Three months ended
	October 31		July 31		April 30		January 31
2010
High	$	19.33	$	23.31	$	23.66	$	21.80
Low	$	15.57	$	15.85	$	18.08	$	16.82
2009
High	$	23.62	$	21.45	$	21.25	$	24.29
Low	$	16.88	$	15.19	$	13.72	$	13.55

The closing price of our common stock on the New York Stock Exchange on the last trading day of our fiscal years ended October 31, 2010, 2009 and 2008 was $17.94, $17.32 and $23.12, respectively. At December 10, 2010, there were approximately 832 record holders of our common stock.

For information regarding securities authorized for issuance under equity compensation plans, see “Equity Compensation Plan Information” in Item 12 of this Form 10-K.

We have not paid any cash dividends on our common stock to date and expect that, for the foreseeable future, we will not do so. Rather, we expect to follow a policy of retaining earnings in order to finance our business and, from time to time, repurchase shares of our common stock. The payment of dividends is within the discretion of our Board of Directors and any decision to pay dividends in the future will depend upon an evaluation of a number of factors, including our results of operations, capital requirements, our operating and financial condition, and any contractual limitation then in effect. In this regard, our senior subordinated notes contain restrictions on the amount of dividends we may pay on our common stock. In addition, our bank credit agreement requires us to maintain a minimum tangible net worth (as defined in the agreement), which restricts the amount of dividends we may pay. At October 31, 2010, under the most restrictive of these provisions, we could have paid up to approximately $640 million of cash dividends.

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Issuer Purchases of Equity Securities

During the three months ended October 31, 2010, we repurchased the following shares under our repurchase program:

					Total number		Maximum
					of shares		number
					purchased as		of shares that
	Total		Average		part of a		may yet be
	number of		price		publicly		purchased
	shares		paid per		announced		under the plan
Period	purchased (a)(b)		share		plan or program (c)		or program (c)
August 1 to August 31, 2010		2,000	$	16.86		2,000		11,834,000
September 1 to September 30, 2010		3,000	$	18.29		2,000		11,832,000
October 1 to October 31, 2010		8,000	$	18.56		2,000		11,830,000
Total		13,000	$	18.30		6,000

(a)	The terms of our Restricted Stock Unit awards (“RSUs”) permit us to withhold from the total number of shares of our common stock that an employee is entitled to receive upon distribution pursuant to a RSU that number of shares having a fair market value at the time of distribution equal to the applicable income tax withholdings, and remit the remaining shares to the employee. During the three months ended October 31, 2010, we withheld 19 shares subject to RSUs with an average fair market value per share of $18.54 to cover income taxes on distributions, and distributed 242 shares to employees. The 19 shares withheld are not included in the total number of shares purchased in the table above.
(b)	Our stock incentive plans permit participants to exercise non-qualified stock options using a “net exercise” method at the discretion of the Executive Compensation Committee of our Board of Directors. In a net exercise, we generally withhold from the total number of shares that otherwise would be issued to the participant upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable income tax withholdings, and remit the remaining shares to the participant. During the three months ended October 31, 2010, the net exercise method was employed to exercise options to acquire 817,372 shares of our common stock; we withheld 590,490 of the shares subject to the options to cover $10.9 million of option exercise costs and income tax withholdings and issued the remaining 226,882 shares to the participants. In addition, our stock incentive plans also permit participants to use the fair market value of Company common stock they own to pay for the exercise of stock options (“stock swap method”). During the three months ended October 31, 2010, the Company received 7,669 shares with an average fair market value per share of $18.50 for the exercise of 14,696 options. The 590,490 shares withheld in connection with the net exercise method are not included in the total number of shares purchased in the table above. The 7,669 shares used under the stock swap method are included in the total number of shares purchased in the table above.
(c)	On March 20, 2003, our Board of Directors authorized the repurchase of up to 20 million shares of our common stock in open market transactions or otherwise, for the purpose of providing shares for our various employee benefit plans. The Board of Directors did not fix an expiration date for the repurchase program.

Except as set forth above, we did not repurchase any of our equity securities during the three-month period ended October 31, 2010.

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Stockholder Return Performance Graph

The following graph and chart compares the five-year cumulative total return (assuming an investment of $100 was made on October 31, 2005 and that dividends, if any, were reinvested) from October 31, 2005 to October 31, 2010 for (a) our common stock, (b) the Standard & Poor’s Homebuilding Index (the “S&P Homebuilding Index”) and (c) the Standard & Poor’s 500 Composite Stock Index (the “S&P 500 Index”):

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TOLL BROTHERS, INC.,
S&P HOMEBUILDING INDEX AND S&P 500 INDEX

	2005		2006		2007		2008		2009		2010
TOLL BROTHERS, INC.		100.00		78.33		62.07		62.64		46.92		48.60
S&P 500 INDEX		100.00		116.34		133.28		85.17		93.52		108.97
S&P HOMEBUILDING INDEX		100.00		80.30		41.47		23.38		25.46		24.78

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected consolidated financial and housing data at and for each of the five fiscal years in the period ended October 31, 2010. It should be read in conjunction with the Consolidated Financial Statements and Notes thereto, included in this Form 10-K beginning at page F-1, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Item 7 of this Form 10-K.

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Summary Consolidated Statements of Operations and Balance Sheets (amounts in thousands, except per share data):

Year ended October 31:	2010			2009			2008			2007		2006
Revenues	$	1,494,771		$	1,755,310		$	3,148,166		$	4,635,093	$	6,115,280
(Loss) income before income taxes	$	(117,187	)	$	(496,465	)	$	(466,787	)	$	70,680	$	1,126,616
Net (loss) income	$	(3,374	)	$	(755,825	)	$	(297,810	)	$	35,651	$	687,213
(Loss) earnings per share:
Basic	$	(0.02	)	$	(4.68	)	$	(1.88	)	$	0.23	$	4.45
Diluted	$	(0.02	)	$	(4.68	)	$	(1.88	)	$	0.22	$	4.17
Weighted average number of shares outstanding:
Basic		165,666			161,549			158,730			155,318		154,300
Diluted		165,666			161,549			158,730			164,166		164,852

At October 31:	2010		2009		2008		2007		2006
Cash, cash equivalents and marketable U.S. Treasury and Agency securities	$	1,236,927	$	1,908,894	$	1,633,495	$	900,337	$	632,524
Inventory	$	3,241,725	$	3,183,566	$	4,127,475	$	5,572,655	$	6,095,702
Total assets	$	5,171,555	$	5,634,444	$	6,586,836	$	7,220,316	$	7,583,541
Debt:
Loans payable	$	94,491	$	472,854	$	613,594	$	696,814	$	736,934
Senior debt		1,544,110		1,587,648		1,143,445		1,142,306		1,141,167
Senior subordinated debt				47,872		343,000		350,000		350,000
Mortgage company loan facility		72,367		27,015		37,867		76,730		119,705
Total debt	$	1,710,968	$	2,135,389	$	2,137,906	$	2,265,850	$	2,347,806
Equity	$	2,559,013	$	2,516,482	$	3,237,653	$	3,535,245	$	3,423,629

Housing Data

Year ended October 31:	2010		2009		2008		2007		2006
Closings (1):
Number of homes		2,642		2,965		4,743		6,687		8,601
Value (in thousands)	$	1,494,761	$	1,755,310	$	3,106,293	$	4,495,600	$	5,945,169
Revenues — percentage of completion (in thousands)					$	41,873	$	139,493	$	170,111
Net contracts signed:
Number of homes		2,605		2,450		2,927		4,440		6,164
Value (in thousands)	$	1,472,030	$	1,304,656	$	1,608,191	$	3,010,013	$	4,460,734

At October 31:	2010		2009		2008		2007		2006
Backlog:
Number of homes		1,494		1,531		2,046		3,950		6,533
Value (in thousands) (2)	$	852,106	$	874,837	$	1,325,491	$	2,854,435	$	4,488,400
Number of selling communities		195		200		273		315		300
Home sites:
Owned		28,891		26,872		32,081		37,139		41,808
Controlled		5,961		5,045		7,703		22,112		31,960
Total		34,852		31,917		39,784		59,251		73,768

(1)	Excludes 88 units and 336 units delivered in fiscal 2008 and 2007, respectively, which were accounted for using the percentage of completion accounting method with an aggregate delivered value of $86.1 million in fiscal 2008 and $263.3 million in fiscal 2007.
(2)	Net of revenues of $55.2 million and $170.1 million of revenue recognized in fiscal 2007 and 2006, respectively, under the percentage of completion accounting method. At October 31, 2008 and thereafter, we did not have any revenue recognized on undelivered units accounted for under the percentage of completion accounting method.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise stated, net contracts signed represents a number or value equal to the gross number or value of contracts signed during the relevant period, less the number or value of contracts cancelled during the relevant period, which includes contracts that were signed during the relevant period and in prior periods.

OVERVIEW

This housing downturn is the longest and most severe since the Great Depression. However, we believe that the medium and long-term futures for our company and industry are bright. A recent Harvard University study projects that under both low- and high- growth scenarios housing demand should exceed that of the previous three decades. With very low housing production over the past few years, we believe that pent-up demand exists and it will be released once the employment and economic picture improves and as people regain confidence in a home as a dependable investment.

In many markets, the pipeline of approved and improved home sites has dwindled as builders and developers have lacked both the capital and the rationale for bringing sites through approvals. Therefore, when demand picks up, builders and developers with approved land in well-located markets will be poised to benefit. We believe that this will be particularly true for us. Our land portfolio is heavily weighted to the metro-DC to metro-Boston corridor where land is scarce, approvals are more difficult to obtain and overbuilding has been relatively less prevalent than in the Southeast and Western regions.

The U.S. housing market continues to struggle from a significant slowdown that began in the fourth quarter of our fiscal 2005. The value of our net contracts signed in fiscal 2010 was 79.4% lower than the value of our net contracts signed in fiscal 2005, 12.8% higher than the value of our net contracts signed in fiscal 2009 and 8.5% and 51.1% lower than the value of our net contracts signed in fiscal 2008 and 2007, respectively. The slowdown, which we believe started with a decline in consumer confidence, an overall softening of demand for new homes and an oversupply of homes available for sale, has been exacerbated by, among other things, a decline in the overall economy, increased unemployment, the increased number of vacant homes, fear of job loss, a decline in home prices and the resulting reduction in home equity, the large number of homes that are vacant and homes that are or will be available due to foreclosures, the inability of some of our home buyers or some prospective buyers of their homes to sell their current home, the deterioration in the credit markets, and the direct and indirect impact of the turmoil in the mortgage loan market.

We believe many of our markets and housing in general have reached bottom; however, we expect that there may be more periods of volatility in the future. We do not expect the housing market to recover in the near term. We believe that, once the unemployment rate declines and confidence improves, pent-up demand will be released and, gradually, more buyers will enter the market. We believe that the key to a full recovery in our business depends on these factors as well as a sustained stabilization of financial markets and home prices.

In fiscal 2010, we recognized $1.49 billion of revenues and recorded a net loss of $3.4 million. In fiscal 2009, we recognized $1.76 billion of revenues and recorded a net loss of $755.8 million and in fiscal 2008, we recognized $3.15 billion of revenues and recorded a net loss of $297.8 million. The losses recognized in fiscal 2010, fiscal 2009 and fiscal 2008 were due to the recognition of inventory impairment charges and write-offs, joint venture impairment charges, the negative impact on profit margins of higher sales incentives given on the homes delivered during each of the fiscal years and the reduced level of construction activity. Fiscal 2010 results of operations benefited from the reversal of $128.6 million of prior year valuation allowances through the carryback of losses recognized for income tax purposes in the current year that were recognized in prior years for financial reporting, offset, in part, by $67.9 million of new valuation allowances recognized in fiscal 2010. The fiscal 2009 loss was also significantly impacted by $458.3 million of valuation allowances recognized against our deferred tax assets.

We continue to seek a balance between our short-term goal of selling homes in a tough market and our long-term goal of maximizing the value of our communities. We continue to believe that many of our communities are in desirable locations that are difficult to replace and in markets where approvals have been increasingly difficult to achieve. We believe that many of these communities have substantial embedded value that may be realized in the future and that this value should not necessarily be sacrificed in the current soft market.

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We maintain relationships with a widely diversified group of mortgage financial institutions, many of which are among the largest and, we believe, most reliable in the industry. We believe that regional and community banks continue to recognize the long-term value in creating relationships with high-quality, affluent customers such as our home buyers, and these banks continue to provide such customers with financing.

We believe that our home buyers generally are, and should continue to be, better able to secure mortgages due to their typically lower loan-to-value ratios and attractive credit profiles as compared to the average home buyer. Nevertheless, in recent years, tightened credit standards have shrunk the pool of potential home buyers and the availability of certain loan products previously available to our home buyers. Our home buyers continue to face stricter mortgage underwriting guidelines, higher down payment requirements and narrower appraisal guidelines than in the past. However, recently we have seen some loosening of guidelines as they pertain to private mortgage insurance. While the range of mortgage product available to a potential home buyer is not what it was in 2005 — 2007, it has improved in the past several months. Some of our home buyers continue to find it more difficult to sell their existing homes as their prospective buyers of such homes may face difficulties obtaining a mortgage. In addition, other potential buyers may have little or negative equity in their existing homes and are not able or willing to purchase a larger or more expensive home.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted on July 21, 2010, provides for a number of new requirements relating to residential mortgage lending practices, many of which are to be developed further by implementing rules. These include, among others, minimum standards for mortgages and lender practices in making mortgages, limitations on certain fees, prohibition of certain tying arrangements, and remedies for borrowers in foreclosure proceedings in the event of lender violations of fee limitations and minimum standards. The ultimate effect of such provisions on lending institutions, including our mortgage subsidiary, will depend on the rules that are ultimately promulgated.

There has been significant media attention given to mortgage put-backs, a practice in which a buyer of a mortgage loan tries to recoup losses from the loan originator. We do not believe this is a material issue for our mortgage subsidiary. Only a very small number of our home buyers who used our mortgage subsidiary have defaulted on their loans. We believe that this is due to (i) our typical home buyer’s financial position and sophistication, (ii) on average, our home buyer paying approximately 30% of the purchase price in cash, (iii) our general practice of not originating certain loan types such as option adjustable rate mortgages and down payment assistance products, and our origination of very few sub-prime and high loan-to-value, no documentation loans, and (iv) our elimination of “early payment default” provisions from each of our agreements with our mortgage investors several years ago. Investors must demonstrate a material error on our part in issuing the mortgage or consumer fraud must exist in order for us to suffer a loss. In addition, the amount of any such loss would be reduced by any proceeds received on the disposition of the collateral associated with the mortgage.

Based on our experience during prior downturns in the housing industry, we believe that attractive land acquisition opportunities may arise in difficult times for those builders that have the financial strength to take advantage of them. In the current challenging environment, we believe our strong balance sheet, liquidity, access to capital, broad geographic presence, diversified product line, experienced personnel and national brand name all position us well for such opportunities now and in the future. We have begun to see land being offered at prices that we believe are attractive based on current market conditions and in fiscal 2010 we entered into contracts to acquire approximately 5,600 home sites (net of options terminated). In fiscal 2009, the number of home sites controlled, excluding the homes delivered during fiscal 2009, declined by approximately 4,900. In addition, in fiscal 2010, we formed Gibraltar Capital and Asset Management to invest in distressed real estate opportunities that may be different than our traditional homebuilding operations.

We continue to see reduced competition from the small and mid-sized private builders that had been our primary competitors in the luxury market. We believe that many of these builders are no longer in business and that access by the surviving private builders to capital is already severely constrained. We envision that there will be fewer and more selective lenders serving our industry when the market rebounds and that those lenders likely will gravitate to the homebuilding companies that offer them the greatest security, the strongest balance sheets and the broadest array of potential business opportunities. We believe that this reduced competition, combined with attractive long-term demographics, will reward those well-capitalized builders that can persevere through the current challenging environment.

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Notwithstanding the current market conditions, we believe that geographic and product diversification, access to lower-cost capital, and strong demographics have in the past and will in the future, as market conditions improve over time, benefit those builders that can control land and persevere through the increasingly difficult regulatory approval process. We believe that these factors favor the large publicly traded homebuilding companies with the capital and expertise to control home sites and gain market share. We believe that over the past five years, many builders and land developers reduced the number of home sites that were taken through the approval process. The process continues to be difficult and lengthy, and the political pressure from no-growth proponents continues to increase. We believe our expertise in taking land through the approval process and our already approved land positions will allow us to grow in the years to come, as market conditions improve.

Because of the length of time that it takes to obtain the necessary approvals on a property, complete the land improvements on it, and deliver a home after a home buyer signs an agreement of sale, we are subject to many risks. We attempt to reduce certain risks by controlling land for future development through options (also referred to herein as “land purchase contracts” or “option and purchase agreements”), thus allowing the necessary governmental approvals to be obtained before acquiring title to the land; generally commencing construction of a detached home only after executing an agreement of sale and receiving a substantial down payment from the buyer; and using subcontractors to perform home construction and land development work on a fixed-price basis. Our risk reduction strategy of generally not commencing the construction of a home until we have an agreement of sale with a buyer was effective in the past but, due to the number of cancellations of agreements of sale that we had during the current downturn in the housing market, many of which were for homes on which we had commenced construction, the number of homes under construction in detached single-family communities for which we do not have an agreement of sale increased from our historical levels. Over the past two years, however, we have reduced the number of these unsold units to more historical levels. In addition, over the past several years, the number of our attached-home communities has grown, resulting in an increase in the number of unsold units under construction.

In response to the decline in market conditions over the past several years, we have re-evaluated and renegotiated or cancelled many of our land purchase contracts. In addition, we have sold, and may continue to sell, certain parcels of land that we have identified as non-strategic. As a result, we reduced our land position from a high of approximately 91,200 home sites at April 30, 2006, to approximately 34,900 home sites at October 31, 2010. We continue to position ourselves for this recovery through the opportunistic and, we believe, prudent purchase of land and the continued growth of our community count. Based on our belief that the housing market has bottomed, the increased attractiveness of land available for purchase and the revival of demand in certain areas, we have begun to increase our land positions. During fiscal 2010, we acquired control of approximately 5,600 home sites (net of options terminated), increasing the number of home sites controlled to approximately 34,900 home sites at October 31, 2010. Of the 34,900 home sites controlled at October 31, 2010, we owned approximately 28,900. Of these 28,900 home sites, significant improvements were completed on approximately 10,500. At October 31, 2010, we were selling from 195 communities, compared to 200 communities at October 31, 2009. For the first time in four years, we expect our community count will grow in fiscal 2011. We expect to be selling from 215 to 225 communities at October 31, 2011. In addition, at October 31, 2010, we had 48 communities that were temporarily closed due to market conditions, of which we expect to reopen approximately 13 prior to October 31, 2011.

CONTRACTS AND BACKLOG

The aggregate value of gross sales contracts signed decreased 3.4% in fiscal 2010, as compared to fiscal 2009, and 30.6% in fiscal 2009, as compared to fiscal 2008. The value of gross sales contracts signed was $1.57 billion (2,789 homes) in fiscal 2010, $1.63 billion (2,903 homes) in fiscal 2009 and $2.34 billion (3,920 homes) in fiscal 2008. The decrease in fiscal 2010, as compared to fiscal 2009, was the result of a 3.9% decrease in the number of gross contracts signed, offset, in part, by a slight increase in the average value of each contract signed. The decrease in fiscal 2009, as compared to fiscal 2008, was the result of a 25.9% decrease in the number of gross contracts signed and a 6.2% decrease in the average value of each contract signed.

Our contract cancellation rate over the past 18 months has been comparable to the cancellation rates prior to fiscal 2006. In fiscal 2010, home buyers cancelled $98.3 million (184 homes) of signed contracts, as compared to $321.2 million (453 homes) in fiscal 2009 and $733.2 million (993 homes) in fiscal 2008. As a percentage of the number of gross contracts signed in fiscal 2010, 2009 and 2008, home buyers cancelled 6.6%, 15.6% and 25.3%, in those respective years, and 6.3%, 19.8% and 31.3% of the value of gross contracts signed in those respective years. In the last half of fiscal 2009, we saw an improvement in our contract cancellation rate; in the fourth quarter and third quarter of fiscal 2009, our contract cancellation rate (the number of contracts cancelled in the period divided by the number of gross contracts signed in the period) was 6.9% and 8.5%, respectively, as compared to 30.2% and 19.4% in the comparable periods of fiscal 2008.

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The aggregate value of net sales contracts signed increased 12.8% in fiscal 2010, as compared to fiscal 2009, and the value of such contracts was $1.47 billion (2,605 homes) in fiscal 2010, as compared to $1.30 billion (2,450 homes) in fiscal 2009. This increase was the result of a 6.3% increase in the number of net contracts signed and a 6.1% increase in the average value of each contract signed. The increase in the average value of net contracts signed in fiscal 2010, as compared to fiscal 2009, was due primarily to a 24.7% lower average value of the contracts cancelled in fiscal 2010, as compared to the average value of contracts cancelled in fiscal 2009, and lower sales incentives given to home buyers in fiscal 2010, as compared to fiscal 2009, offset, in part, by a shift in the number of contracts signed to less expensive products in fiscal 2010, as compared to fiscal 2009.

The aggregate value of net sales contracts signed decreased 18.9% in fiscal 2009, as compared to fiscal 2008. The value of net sales contracts signed was $1.30 billion (2,450 homes) in fiscal 2009 and $1.61 billion (2,927 homes) in fiscal 2008. The decrease in fiscal 2009, as compared to fiscal 2008, was the result of a 16.3% decrease in the number of net contracts signed and a 3.1% decrease in the average value of each contract signed. The decrease in the average value of net contracts signed in fiscal 2009, as compared to fiscal 2008, was due primarily to the higher average value of the contracts cancelled, higher sales incentives given to home buyers, and a shift in the number of contracts signed to less expensive areas and/or products in fiscal 2009, as compared to fiscal 2008.

At October 31, 2010, our backlog of homes under contract was $852.1 million (1,494 homes), 2.6% lower than our $874.8 million (1,531 homes) backlog at October 31, 2009. Our backlog at October 31, 2008 of $1.33 billion (2,046 homes) was 34% higher than our backlog at October 31, 2009. Backlog consists of homes under contract but not yet delivered to our home buyers. The decreases in backlog at October 31, 2010, as compared to the backlog at October 31, 2009 and at October 31, 2009, as compared to October 31, 2008, were primarily attributable to the continued decline in the new home market in fiscal 2010 and 2009, and the decrease in the value and number of net contracts signed in fiscal 2010, as compared to fiscal 2009, as well as in fiscal 2009, as compared to fiscal 2008, offset, in part, by lower deliveries in both fiscal 2010 and 2009, as compared to the preceding fiscal years.

For more information regarding revenues, gross contracts signed, contract cancellations, net contracts signed and sales incentives provided on units delivered by geographic segment, see “Geographic Segments” in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operation” (“MD&A”).

CRITICAL ACCOUNTING POLICIES

We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

Inventory

Inventory is stated at cost unless an impairment exists, in which case it is written down to fair value in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition to direct land acquisition, land development and home construction costs, costs also include interest, real estate taxes and direct overhead related to development and construction, which are capitalized to inventory during periods beginning with the commencement of development and ending with the completion of construction. For those communities that have been temporarily closed, no additional interest is allocated to the community’s inventory until it re-opens, and other carrying costs are expensed as incurred. Once a parcel of land has been approved for development and we open the community, it can typically take four or more years to fully develop, sell and deliver all the homes. Longer or shorter time periods are possible depending on the number of home sites in a community and the sales and delivery pace of the homes in a community. Our master planned communities, consisting of several smaller communities, may take up to ten years or more to complete. Because of the downturn in our business, the estimated community lives will likely be significantly longer. Because our inventory is considered a long-lived asset under GAAP, we are required to regularly review the carrying value of each of our communities and write down the value of those communities for which we believe the values are not recoverable.

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Current Communities: When the profitability of a current community deteriorates, the sales pace declines significantly or some other factor indicates a possible impairment in the recoverability of the asset, the asset is reviewed for impairment by comparing the estimated future undiscounted cash flow for the community to its carrying value. If the estimated future undiscounted cash flow is less than the community’s carrying value, the carrying value is written down to its estimated fair value. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. The impairment is charged to cost of revenues in the period in which the impairment is determined. In estimating the future undiscounted cash flow of a community, we use various estimates such as: (a) the expected sales pace in a community, based upon general economic conditions that will have a short-term or long-term impact on the market in which the community is located and on competition within the market, including the number of home sites available and pricing and incentives being offered in other communities owned by us or by other builders; (b) the expected sales prices and sales incentives to be offered in a community; (c) costs expended to date and expected to be incurred in the future, including, but not limited to, land and land development costs, home construction costs, interest costs and overhead costs; (d) alternative product offerings that may be offered in a community that will have an impact on sales pace, sales price, building cost or the number of homes that can be built in a particular community; and (e) alternative uses for the property, such as the possibility of a sale of the entire community to another builder or the sale of individual home sites.

Future Communities: We evaluate all land held for future communities or future sections of current communities, whether owned or optioned, to determine whether or not we expect to proceed with the development of the land as originally contemplated. This evaluation encompasses the same types of estimates used for current communities described above, as well as an evaluation of the regulatory environment in which the land is located and the estimated probability of obtaining the necessary approvals, the estimated time and cost it will take to obtain those approvals and the possible concessions that will be required to be given in order to obtain them. Concessions may include cash payments to fund improvements to public places such as parks and streets, dedication of a portion of the property for use by the public or as open space or a reduction in the density or size of the homes to be built. Based upon this review, we decide (a) as to land under contract to be purchased, whether the contract will likely be terminated or renegotiated, and (b) as to land we own, whether the land will likely be developed as contemplated or in an alternative manner, or should be sold. We then further determine whether costs that have been capitalized to the community are recoverable or should be written off. The write-off is charged to cost of revenues in the period in which the need for the write-off is determined.

The estimates used in the determination of the estimated cash flows and fair value of both current and future communities are based on factors known to us at the time such estimates are made and our expectations of future operations and economic conditions. Should the estimates or expectations used in determining estimated fair value deteriorate in the future, we may be required to recognize additional impairment charges and write-offs related to current and future communities.

The table below provides, for the periods indicated, the number of operating communities that we tested for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and, as of the end of the period indicated, the fair value of those communities, net of impairment charges ($ amounts in millions).

			Impaired Communities
					Fair Value of
					Communities
	Number of				Net of
	Communities		Number of		Impairment		Impairment
Three months ended:	Tested		Communities		Charges		Charges
Fiscal 2010:
January 31		260		14	$	60.5	$	22.8
April 30		161		7	$	53.6		15.0
July 31		155		7	$	21.5		6.6
October 31		144		12	$	39.2		9.1
							$	53.5
Fiscal 2009:
January 31		289		41	$	216.2	$	108.3
April 30		288		36	$	181.8		67.4
July 31		288		14	$	67.7		46.8
October 31		254		21	$	116.4		44.9
							$	267.4
Fiscal 2008:
January 31		211		36	$	328.2	$	134.3
April 30		297		39	$	272.2		121.0
July 31		296		18	$	144.5		59.9
October 31		270		37	$	198.2		83.9
							$	399.1

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Variable Interest Entities: We have land purchase contracts and several investments in unconsolidated entities which we evaluate for consolidation in accordance with GAAP. In accordance with GAAP, an enterprise that absorbs a majority of the expected losses or receives a majority of the expected residual returns of a variable interest entity (“VIE”) is considered to be the primary beneficiary and must consolidate the VIE. A VIE is an entity with insufficient equity investment or in which the equity investors lack some of the characteristics of a controlling financial interest. For land purchase contracts with sellers meeting the definition of a VIE, we perform a review to determine which party is the primary beneficiary of the VIE. This review requires substantial judgment and estimation. These judgments and estimates involve assigning probabilities to various estimated cash flow possibilities relative to the entity’s expected profits and losses and the cash flows associated with changes in the fair value of the land under contract. At October 31, 2010, the Company had determined that 32 land purchase contracts, with an aggregate purchase price of $250.1 million, on which it had made aggregate deposits totaling $12.6 million, were VIEs, and that it was not the primary beneficiary of any VIE related to its land purchase contracts.

Income Taxes — Valuation Allowance

Significant judgment is required in estimating valuation allowances for deferred tax assets. In accordance with GAAP, a valuation allowance is established against a deferred tax asset if, based on the available evidence, it is more likely than not that such asset will not be realized. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under tax law. We periodically assess the need for valuation allowances for deferred tax assets based on GAAP’s “more-likely-than-not” realization threshold criteria. In our assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and magnitude of current and cumulative income and losses, forecasts of future profitability, the duration of statutory carryback or carryforward periods, our experience with operating loss and tax credit carryforwards being used before expiration, and tax planning alternatives.

Our assessment of the need for a valuation allowance on our deferred tax assets includes assessing the likely future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. We base our estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, on business plans and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results and our future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Our accounting for deferred tax assets represents our best estimate of future events.

Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods (carryforward period assumptions), it is possible that actual results could differ from the estimates used in our historical analyses. Our assumptions require significant judgment because the residential homebuilding industry is cyclical and is highly sensitive to changes in economic conditions. If our results of operations are less than projected and there is insufficient objectively positive verifiable evidence to support the likely realization of our deferred tax assets, a valuation allowance would be required to reduce or eliminate our deferred tax assets.

Since the beginning of fiscal 2007, we recorded significant deferred tax assets. These deferred tax assets were generated primarily by inventory impairments and impairments of investments in and advances to unconsolidated entities. In accordance with GAAP, we assessed whether a valuation allowance should be established based on our determination of whether it is “more likely than not” that some portion or all of the deferred tax assets would not be realized. We believe that the continued downturn in the housing market, the uncertainty as to its length and magnitude, and our continued recognition of impairment charges are significant evidence of the need for a valuation allowance against our net deferred tax assets. We have recorded valuation allowances against all of our net deferred tax assets.

We are allowed to carry forward tax losses for 20 years and apply such tax losses to future taxable income to realize federal deferred tax assets. In addition, we will be able to reverse previously recognized valuation allowances during any future period in which we report book income before taxes. We will continue to review our deferred tax assets in accordance with GAAP.

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On November 6, 2009, the Worker, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted into law. The Act amended Section 172 of the Internal Revenue Code to allow net operating losses realized in a tax year ending after December 31, 2007 and beginning before January 1, 2010 to be carried back for up to five years (such losses were previously limited to a two-year carryback). This change allowed us to carry back our fiscal 2010 taxable losses to prior years and recognize a tax benefit of $113.8 million in our consolidated statement of operations for fiscal 2010. In addition, the Act will allow us to file for a refund of previously paid federal income taxes. We estimate that we will be able to carryback $404.5 million of fiscal 2010 tax losses and receive a tax refund in fiscal 2011 of approximately $141.6 million. The ultimate amount of such refunds realized is dependent on our actual taxable losses for fiscal 2010, which may vary significantly from its current expectations. We have reflected the expected refund of $141.6 million in our October 31, 2010 consolidated financial statements.

For state tax purposes, due to past losses and projected future losses in certain jurisdictions where we do not have carryback potential and/or cannot sufficiently forecast future taxable income, we recognized net cumulative valuation allowances against our state deferred tax assets of $45.0 million as of October 31, 2010 and 2009. Future valuation allowances in these jurisdictions may continue to be recognized if we believe we will not generate sufficient future taxable income to utilize future state deferred tax assets.

Revenue and Cost Recognition

The construction time of our homes is generally less than one year, although some homes may take more than one year to complete. Revenues and cost of revenues from these home sales are recorded at the time each home is delivered and title and possession are transferred to the buyer. Closing normally occurs shortly after construction is substantially completed. In addition, we have several high-rise/mid-rise projects that do not qualify for percentage of completion accounting in accordance with GAAP that are included in this category of revenues and costs. During fiscal 2007 and 2008, we completed construction on four projects for which we used the percentage of completion accounting method to recognize revenues and costs; the remaining units in these projects have been or will be accounted for using the completed contract method of accounting. Based upon the current accounting rules and interpretations, we do not believe that any of our current communities qualify for percentage of completion accounting.

For our standard attached and detached homes, land, land development and related costs, both incurred and estimated to be incurred in the future, are amortized to the cost of homes closed based upon the total number of homes to be constructed in each community. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs subsequent to the commencement of delivery of homes are allocated to the remaining undelivered homes in the community. Home construction and related costs are charged to the cost of homes closed under the specific identification method. The estimated land, common area development and related costs of master planned communities, including the cost of golf courses, net of their estimated residual value, are allocated to individual communities within a master planned community on a relative sales value basis. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs are allocated to the remaining home sites in each of the communities of the master planned community.

For high-rise/mid-rise projects, land, land development, construction and related costs, both incurred and estimated to be incurred in the future, are generally amortized to the cost of units closed based upon an estimated relative sales value of the units closed to the total estimated sales value. Any changes resulting from a change in the estimated total costs or revenues of the project are allocated to the remaining units to be delivered.

Forfeited customer deposits are recognized in other income in the period in which we determine that the customer will not complete the purchase of the home and we have the right to retain the deposit.

Sales Incentives: In order to promote sales of our homes, we grant our home buyers sales incentives from time-to-time. These incentives will vary by type of incentive and by amount on a community-by-community and home-by-home basis. Incentives that impact the value of the home or the sales price paid, such as special or additional options, are generally reflected as a reduction in sales revenues. Incentives that we pay to an outside party, such as paying some or all of a home buyer’s closing costs, are recorded as an additional cost of revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds.

OFF-BALANCE SHEET ARRANGEMENTS

The trends, uncertainties or other factors that have negatively impacted our business and the industry in general and are discussed in the “— Overview” section have also impacted the unconsolidated entities in which we have investments. We review each of our investments in unconsolidated entities on a quarterly basis to determine the recoverability of our investment. We evaluate the recoverability of our investment in unconsolidated entities using similar methodology that we use to evaluate our inventories. This evaluation entails a detailed cash flow analysis using many estimates including, but not limited to, expected sales pace, expected sales prices, expected incentives, costs incurred and anticipated, sufficiency of financing and capital, competition, and market conditions. When markets deteriorate and it is no longer probable that we can recover our investment in a joint venture, we impair our investment. If a joint venture has its own loans or is principally a joint venture to hold an option, such impairment may result in the majority or all of our investment being impaired. See “— Critical Accounting Policies — Inventory” for more detailed disclosure on our evaluation of inventory.

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We have investments in and advances to various unconsolidated entities. At October 31, 2010, we had investments in and advances to these entities, net of impairment charges recognized, of $198.4 million, and were committed to invest or advance $11.8 million (net of amounts accrued) of additional funds to certain of these entities if they require additional funding. At October 31, 2010, we had accrued $88.1 million of our commitments to our unconsolidated entities. In addition, we guarantee certain debt of a number of these unconsolidated entities on a several and pro-rata basis. At October 31, 2010, we guaranteed an aggregate of approximately $67.8 million (net of amounts that we have accrued) of debt relating to three joint ventures, which had aggregate borrowings of approximately $782.0 million.

In connection with certain land joint ventures to which we are a party, we executed completion guarantees and conditional repayment guarantees. The obligations under the completion guarantees and conditional repayment guarantees are several and not joint, and are limited to our pro-rata share of the loan obligations of the respective joint ventures. At October 31, 2010, the maximum amount of the completion guarantees and conditional repayment guarantees (net of amounts that we have accrued) is estimated to be approximately $57.8 million, if any liability is determined to be due thereunder, which amount is included in the $67.8 million of guarantees disclosed above.

Our investments in these entities are accounted for using the equity method. See Note 3 to the consolidated financial statements for more information regarding our investments in and advances to various unconsolidated entities.

RESULTS OF OPERATIONS

The following table compares certain items in our statement of operations for fiscal 2010, 2009 and 2008

($ amounts in millions):

	2010					2009					2008
	$			%		$			%		$			%
Revenues		1,494.8					1,755.3					3,148.2
Cost of revenues		1,383.1			92.5		1,951.3			111.2		3,119.8			99.1
Selling, general and administrative		263.2			17.6		313.2			17.8		429.9			13.7
Interest expense		22.8			1.5		7.9			0.5
Goodwill impairment												3.2			0.1
		1,669.1			111.7		2,272.5			129.5		3,552.9			112.9
Loss from operations		(174.3	)				(517.2	)				(404.8	)
Other
Income (loss) from unconsolidated entities		23.5					(7.5	)				(186.4	)
Interest and other income		34.8					41.9					124.4
Expenses related to early retirement of debt		(1.2	)				(13.7	)
Loss before income taxes		(117.2	)				(496.5	)				(466.8	)
Income tax (benefit) provision		(113.8	)				259.4					(169.0	)
Net loss		(3.4	)				(755.8	)				(297.8	)

Note: Amounts may not add due to rounding.

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FISCAL 2010 COMPARED TO FISCAL 2009

RESULTS OF OPERATIONS

In fiscal 2010, we recognized $1.49 billion of revenues and a net loss of $3.4 million, as compared to $1.76 billion of revenues and a net loss of $755.8 million in fiscal 2009. In fiscal 2010 and fiscal 2009, we recognized $115.3 million and $465.4 million of inventory impairments and write-offs, respectively. In fiscal 2010, we recognized an income tax benefit of $113.8 million, as compared to an income tax provision of $259.4 million in fiscal 2009. In addition, we recognized $11.3 million of joint venture impairment charges and write-offs in fiscal 2009.

REVENUES AND COST OF REVENUES

Revenues in fiscal 2010 were lower than those in fiscal 2009 by approximately $260.5 million, or 14.8%. This decrease was attributable to a 10.9% decrease in the number of homes delivered and a 4.4% decrease in the average price of the homes delivered. The decrease in the number of homes delivered in fiscal 2010 was primarily due to a 25.2% decline in the number of homes in backlog at October 31, 2009, as compared to October 31, 2008, offset, in part, by a 6.3% increase in the number of net contracts signed in fiscal 2010, as compared to fiscal 2009. The 4.4% decrease in the average price of the homes delivered in fiscal 2010, as compared to fiscal 2009, was due to a shift in product mix to lower priced product, offset, in part, by a decrease in sales incentives, as a percentage of the homes’ gross sales price, given on homes closed in fiscal 2010, as compared to fiscal 2009. Average sales incentives given on homes delivered in fiscal 2010 amounted to approximately $82,600 per home or 12.7% of the gross price of the home delivered, as compared to approximately $93,200 per home or 13.6% of the gross price of the home delivered in fiscal 2009. The decrease in per home sales incentives in fiscal 2010, as compared to fiscal 2009, was primarily due to lower sales incentives provided on contracts in backlog at October 31, 2009, as compared to value of sales incentives on contracts in backlog at October 31, 2008, and the decrease in sales incentives given on contracts signed in fiscal 2010 that were delivered in fiscal 2010, as compared to contracts signed in fiscal 2009 and delivered in fiscal 2009.

Cost of revenues as a percentage of revenues was 92.5% in fiscal 2010, as compared to 111.2% in fiscal 2009. In fiscal 2010 and 2009, we recognized inventory impairment charges and write-offs of $115.3 million and $465.4 million, respectively. Interest cost as a percentage of revenues was 5.1% in fiscal 2010, as compared to 4.5% in fiscal 2009. The higher interest cost as a percentage of revenue was due to inventory generally being held for a longer period of time, fewer qualifying assets to which interest can be allocated which resulted in higher amounts of capitalized interest allocated to qualifying inventory, and lower average prices of homes delivered. Cost of revenues as a percentage of revenues, excluding impairments and interest, was 79.7% of revenues in fiscal 2010, as compared to 80.2% in fiscal 2009. This decline was primarily due to lower incentives given on homes delivered and lower overhead and closing costs, offset, in part, by higher cost of land, land improvement and house construction costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”)

SG&A expense decreased by $50.0 million, or 16.0%, in fiscal 2010, as compared to fiscal 2009. As a percentage of revenues, SG&A was 17.6% in fiscal 2010, as compared to 17.8% in fiscal 2009. The reduction in SG&A expense in fiscal 2010, as compared to fiscal 2009, was due primarily to lower compensation and related costs, reduced advertising, promotion and model operating costs, reduced insurance costs and a decrease in the write-off of deferred marketing costs related to closed communities.

INTEREST EXPENSE

Interest incurred on average homebuilding indebtedness in excess of average qualified inventory is charged directly to the statement of operations in the period incurred. Interest expensed directly to the statement of operations in fiscal 2010 was $22.8 million, as compared to $7.9 million in fiscal 2009 due to the lower amounts of qualified inventory.

INCOME (LOSS) FROM UNCONSOLIDATED ENTITIES

We are a participant in several joint ventures and in the Trust and Trust II. We recognize our proportionate share of the earnings and losses from these entities. The trends, uncertainties or other factors that have negatively impacted our business and the industry in general and that are discussed in the “— Overview” section have also impacted the unconsolidated entities in which we have investments. Many of our joint ventures are land development projects or high-rise/mid-rise construction projects and do not generate revenues and earnings for a number of years during the development of the property. Once development is complete, the joint ventures will generally, over a relatively short period of time, generate revenues and earnings until all the assets of the entity are sold. Because there is not a steady flow of revenues and earnings from these entities, the earnings recognized from these entities will vary significantly from quarter to quarter and year to year.

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In fiscal 2010, we recognized $23.5 million of income from unconsolidated entities, as compared to a $7.5 million loss in fiscal 2009. The loss in fiscal 2009 included $11.3 million of impairment charges that we recognized on two of our investments in unconsolidated entities. In the fourth quarter of fiscal 2010, we reversed $11.0 million of accrued costs related to litigation against us and an unconsolidated entity in which we had an investment, due to settlement of the litigation for an amount that was less than we had previously estimated.

INTEREST AND OTHER INCOME

Interest and other income were $34.8 million in fiscal 2010 and $41.9 million in fiscal 2009. The decrease in interest and other income in fiscal 2010, as compared to fiscal 2009, was primarily due to declines in fiscal 2010, as compared to fiscal 2009, of $11.2 million of retained customer deposits and $4.4 million in interest income, offset, in part, by an increase in income from ancillary businesses and management fee income in fiscal 2010, as compared to fiscal 2009.

EXPENSES RELATED TO EARLY RETIREMENT OF DEBT

In fiscal 2010, we purchased $45.5 million of our senior notes in open market purchases at various prices and expensed $1.2 million related to the premium/loss paid and other debt redemption costs of our senior notes and the write-off of the unamortized costs related to our old revolving credit facility that was terminated in October 2010.

In fiscal 2009, we redeemed $295.1 million principal amount of senior subordinated notes, conducted a tender offer for $200.0 million principal amount of senior notes and incurred $13.7 million of expenses related to the redemption and the tender offer, representing the call premium, the write-off of unamortized debt issuance costs and costs incurred to complete the tender offer.

LOSS BEFORE INCOME TAX (BENEFIT) PROVISION

In fiscal 2010 and 2009, we reported a loss before income tax (benefit) provision of $117.2 million and $496.5 million, respectively.

INCOME TAX (BENEFIT) PROVISION

In fiscal 2010 and 2009, we recognized an income tax benefit of $113.8 million and an income tax provision of $259.4 million, respectively. Excluding the valuation allowances recognized against our federal and state deferred tax assets in fiscal 2010 and 2009 and recoveries of previously recognized valuation allowances, we recognized a tax benefit in fiscal 2010 and 2009 of $40.7 million and $198.9 million, respectively.

In fiscal 2010 and 2009, we recognized $55.4 million and $458.3 million of valuation allowance, respectively. In addition, in fiscal 2010, we reversed $128.6 million of valuation allowances previously recognized. The decline in the valuation allowances recognized in fiscal 2010, as compared to fiscal 2009, was due primarily to the decline in the amount of inventory impairments and impairments of investments in and advances to unconsolidated entities recognized in fiscal 2010, as compared to fiscal 2009. The reversal of valuation allowances previously recognized in fiscal 2010 is due to our expected recovery of certain deferred tax assets through our ability to carryback fiscal 2010 tax losses to prior years and receive a refund of the applicable federal taxes. The recovery of deferred tax assets principally related to inventory impairments and impairments of investments in and advances to unconsolidated entities recognized for income tax purposes in fiscal 2010 that were recognized for book purposes in prior years. See “— Critical Accounting Policies — Income Taxes — Valuation Allowance”, above, for information regarding the valuation allowances against our net deferred tax assets.

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Excluding valuation adjustments, the difference in the effective tax rate for fiscal 2010, as compared to fiscal 2009, was primarily due to: (a) the reversal in fiscal 2010 of $39.5 million of accruals against potential tax assessments, which were no longer needed due to our settlement of various federal and state audits and the expiration of the applicable statute of limitations for federal and state tax purposes, as compared to $77.3 million in fiscal 2009; (b) the recording of $35.6 million of unrecognized tax benefits in fiscal 2010, as compared to $39.5 million in fiscal 2009; (c) the recognition of $9.3 million of interest and penalties in fiscal 2010, as compared to $6.8 million of interest and penalties recognized in fiscal 2009; (d) the recognition of a $3.8 million state tax benefit, before valuation allowance, in fiscal 2010, as compared to a $14.5 million state tax benefit, before valuation allowance, recognized in fiscal 2009; and (e) the loss of tax credits recognized in years prior to fiscal 2009 that were lost due to the elimination of taxable income in those years as a result of the carryback of fiscal 2009 tax losses. The increase in the interest and penalties recognized is due to the increase in number of tax years open to assessment and potential additional taxes due The decline in the state tax benefit is due primarily to the decline in the reported loss in fiscal 2010, as compared to fiscal 2009.

FISCAL 2009 COMPARED TO FISCAL 2008

REVENUES AND COST OF REVENUES

In fiscal 2009, we recognized $1.76 billion of revenues and a net loss of $755.8 million, as compared to $3.15 billion of revenues and a net loss of $297.8 million in fiscal 2008. In fiscal 2009, we recognized inventory and joint venture impairment charges and write-offs of $476.7 million, as compared to $845.6 million of inventory and joint venture impairment charges and write-offs in fiscal 2008. In addition, in fiscal 2009, we recognized $458.3 million of valuation allowances against our federal and state deferred tax assets, as compared to $24.1 million of valuation allowances against our state deferred tax assets in fiscal 2008. See “Critical Accounting Policies: Income Taxes — Valuation Allowance” above for an expanded discussion relating to the valuation allowances recognized.

Excluding $41.9 million of revenues recognized under the percentage of completion accounting method in fiscal 2008, revenues in fiscal 2009 were lower than those in fiscal 2008 by approximately $1.35 billion, or 43.5%. This decrease was attributable to a 37.5% decrease in the number of homes delivered and a 9.6% decrease in the average price of the homes delivered. The decrease in the number of homes delivered in fiscal 2009 was primarily due to a 48.2% decline in our backlog at October 31, 2008, as compared to our backlog at October 31, 2007, and a 16.3% decrease in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008. The 9.6% decrease in the average price of the homes delivered in fiscal 2009, as compared to fiscal 2008, was due to the impact of a shift in product mix to lower priced product and less expensive areas, and an increase in incentives given on homes closed in fiscal 2009, as compared to fiscal 2008. Average sales incentives given on homes delivered in fiscal 2009 amounted to approximately $93,200 per home or 13.6% of the gross sales price of the home, as compared to approximately $70,200 per home, or 9.7% of the gross sales price of the home, in fiscal 2008.

Cost of revenues as a percentage of revenue was 111.2% in fiscal 2009, as compared to 99.1% in fiscal 2008. In fiscal 2009 and 2008, we recognized inventory impairment charges and write-offs of $465.4 million and $645.0 million, respectively. Cost of revenues, excluding inventory impairment charges and write-offs (collectively “home costs”), was 84.7% of revenues in fiscal 2009, as compared to 78.6% in fiscal 2008. The increase in the home costs percentage was due primarily to higher sales incentives on the homes delivered, higher interest costs and a change in the mix of product delivered. Sales incentives as a percentage of revenues were 15.7% in fiscal 2009 and 10.7% in fiscal 2008. Interest cost as a percentage of revenues was 4.5% in fiscal 2009, as compared to 2.8% in fiscal 2008. The higher interest cost percentage in fiscal 2009 was due to inventory generally being held for a longer period of time and fewer qualifying assets to which interest can be allocated, resulting in higher amounts of capitalized interest allocated to qualifying inventory.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”)

SG&A spending decreased by $108.7 million, or 25.3%, in fiscal 2009, as compared to fiscal 2008. As a percentage of revenues, SG&A was 18.3% in fiscal 2009, as compared to 13.7% in fiscal 2008. The reduction in spending was due primarily to reduced compensation and related costs and reduced costs for advertising, promotions and marketing offset, in part, by the expensing of interest incurred not eligible to be capitalized in fiscal 2009 and the higher amount of deferred marketing costs that were written off with regard to communities that were temporarily closed, sold or redesigned in fiscal 2009, as compared to fiscal 2008. Due to the decline in qualified inventory, interest incurred on homebuilding indebtedness exceeded amounts eligible for capitalization in fiscal 2009 by $7.9 million, which was expensed to SG&A in fiscal 2009. Prior to November 1, 2008, qualified inventory exceeded homebuilding indebtedness and all interest incurred was capitalized. The write-off of deferred marketing costs related to communities that were temporarily closed, sold or redesigned in fiscal 2009 and 2008 was $9.9 million and $1.7 million, respectively.

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GOODWILL IMPAIRMENT

During fiscal 2008, due to the continued decline of the Nevada and Florida housing markets, we re-evaluated the carrying value of goodwill associated with the acquisition of two small home builders in these markets. We estimated the fair value of our assets in these markets, including goodwill. Fair value was determined based on the discounted future cash flow expected to be generated in these markets. Based upon this evaluation and our expectation that these markets would not recover for a number of years, we determined that the related goodwill had been impaired. We recognized $3.2 million of impairment charges in fiscal 2008. After recognizing these charges, we did not have any goodwill remaining on our balance sheet at October 31, 2008.

LOSS FROM UNCONSOLIDATED ENTITIES

We are a participant in several joint ventures and in Toll Brothers Realty Trust (“Trust”) and Toll Brothers Realty Trust II (“Trust II”). We recognize our proportionate share of the earnings and losses from these entities. The trends, uncertainties or other factors that have negatively impacted our business and the industry in general and that are discussed in “— Overview” have also impacted the unconsolidated entities in which we have investments. Many of our joint ventures are land development projects or high-rise/mid-rise construction projects and do not generate revenues and earnings for a number of years during the development of the property. Once development is complete, the joint ventures will generally, over a relatively short period of time, generate revenues and earnings until all the assets of the entity are sold. Because there is not a steady flow of revenues and earnings from these entities, the earnings recognized from these entities will vary significantly from quarter to quarter and year to year.

In fiscal 2009, we recognized $7.5 million of losses from unconsolidated entities, as compared to $186.4 million of losses in fiscal 2008. The loss in fiscal 2009 was attributable to $11.3 million of impairment charges recognized on our investments in unconsolidated entities. The loss in fiscal 2008 was attributable to $200.7 million of impairment charges recognized on our investments in unconsolidated entities.

INTEREST AND OTHER INCOME

Interest and other income were $41.9 million and $124.4 million in fiscal 2009 and fiscal 2008, respectively. The decrease in other income in fiscal 2009, as compared to fiscal 2008, was primarily due to a $40.2 million gain recognized in fiscal 2008 on a condemnation judgment in our favor, a $23.0 million decline in interest income in fiscal 2009, as compared to fiscal 2008, a $10.7 million decline in retained customer deposits in fiscal 2009, as compared to fiscal 2008, a $4.4 million decline in income from land sales in fiscal 2009, as compared to fiscal 2008, and a $2.6 million decline in income from ancillary businesses and management fee income in fiscal 2009, as compared to fiscal 2008.

EXPENSES RELATED TO EARLY RETIREMENT OF DEBT

In fiscal 2009, we redeemed $295.1 million principal amount of senior subordinated notes and conducted a tender offer for $200.0 million principal amount of senior notes and incurred $13.7 million of expenses related to the redemption and the tender offer, representing the call premium, the write-off of unamortized debt issuance costs and costs incurred to complete the tender offer.

LOSS BEFORE INCOME TAXES

We reported a loss before income taxes of $496.5 million and $466.8 million in fiscal 2009 and 2008, respectively.

INCOME TAXES

In fiscal 2009, we recognized a provision for taxes of $259.4 million and an income tax benefit of $169.0 million in fiscal 2008. In fiscal 2009 and fiscal 2008, we recorded $458.3 million and $24.1 million, respectively, of valuation allowances against our net deferred tax assets. See “Critical Accounting Policies — Income Taxes — Valuation Allowance” in this MD&A for information regarding the valuation allowances against our net deferred tax assets. Excluding the valuation allowances against our net deferred tax assets in fiscal 2009 and 2008, we recognized a tax benefit in fiscal 2009 of $198.9 million at an effective rate of 40.1% and $193.0 million at an effective rate of 41.4% in fiscal 2008.

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The difference in the effective tax rates in fiscal 2009, as compared to fiscal 2008, excluding the deferred tax asset valuation allowances that we recognized, was primarily due to: (a) the increased reversal in fiscal 2009, over fiscal 2008, of state tax provision (net of federal tax provision) accrued in prior years against potential tax assessments, which were no longer needed due to our settlement of various federal and state audits and the expiration of the applicable statute of limitations for federal and state tax purposes; (b) a lower blended state tax rate in fiscal 2009, as compared to fiscal 2008, due to the combination of a shift in the state tax jurisdictions where the losses occurred and the applicable state income tax rates in those jurisdictions; (c) the recognition of additional tax provision in fiscal 2009 due to uncertainties of tax positions taken on prior year tax returns; (d) the reversal of tax credits recognized in prior years that will be lost due to the elimination of taxable income in those years due to the carryback of tax losses; and (e) an increase in the fiscal 2008 rates due to tax free income recognized in fiscal 2008 but not in fiscal 2009.

We operate in 21 states and are subject to various state tax jurisdictions. We estimate our state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction and our ability to utilize certain tax-saving strategies. Due primarily to a change in our estimate of the allocation of income or loss, as the case may be, among the various state taxing jurisdictions and changes in tax regulations and their impact on our strategies, we estimated that our state income tax rate, net of a 35% federal tax benefit, was 2.9% for fiscal 2009 and 5.9% for fiscal 2008.

CAPITAL RESOURCES AND LIQUIDITY

Funding for our business has been and continues to be provided principally by cash flow from operating activities before inventory additions, unsecured bank borrowings and the public debt and equity markets. Prior to fiscal 2008, we used our cash flow from operating activities before inventory additions, bank borrowings and the proceeds of public debt and equity offerings to acquire additional land for new communities, fund additional expenditures for land development, fund construction costs needed to meet the requirements of our backlog, invest in unconsolidated entities, purchase our stock and repay debt.

At October 31, 2010, we had $1.24 billion of cash and cash equivalents and marketable U.S. Treasury and Agency securities on hand and approximately $799.0 million available under our new $885 million revolving credit facility which extends to October 2014. During fiscal 2010, we used available cash to repay a $331.7 million bank term loan and repurchase or redeem $94.0 million of our senior and senior subordinated notes. Since October 31, 2006, we have increased our cash position (including marketable U.S. Treasury and Agency securities) by approximately $604.4 million and reduced debt by approximately $636.8 million.

At October 31, 2010, we had $1.24 billion of cash and cash equivalents and marketable U.S. Treasury and Agency securities on hand, a decrease of $672.0 million compared to October 31, 2009. In fiscal 2010, cash flow used in operating activities was $146.3 million. Cash used in operating activities during fiscal 2010 was primarily used to acquire inventory, collateralize approximately $54.4 million of letters of credit and fund an increase in mortgage loan originations in excess of mortgage loan sales, offset, in part, by cash flow generated from our earnings before inventory impairments, depreciation and amortization. We used $151.4 million of cash in our investing activities in fiscal 2010, primarily for investments in marketable U.S. Treasury and Agency securities and for investments made in our unconsolidated entities. We also used $471.0 million of cash in financing activities in fiscal 2010, principally for the repayment of our $331.7 million bank term loan, $94.0 million for the redemption of senior and senior subordinated notes, and repayment of $103.2 million of other loans payable, offset, in part, by $45.4 million of net borrowings on our mortgage company warehouse loan, $7.6 million of proceeds from stock-based benefit plans and $5.0 million of tax benefits from stock-based compensation.

In fiscal 2009, our cash and cash equivalents and marketable U.S. Treasury securities increased by $275.4 million. In fiscal 2009, cash flow provided by operating activities was $283.2 million. Cash provided by operating activities was primarily generated by a reduction in inventory and the receipt of income tax refunds on previously paid taxes, offset, in part, by the payment of accounts payable and accrued liabilities and income tax payments made for the settlement of previously accrued tax audits. The decreases in inventory, accounts payable and accrued liabilities were primarily due to the decline in our business as previously discussed. We used $132.2 million of cash in our investing activities in fiscal 2009, primarily for investments in marketable U.S. Treasury securities and for investments in our unconsolidated entities. We also generated a net of $23.2 million of cash from financing activities in fiscal 2009, principally from the issuance of an aggregate of $650.0 million principal amount of senior notes in the public debt markets (net proceeds amounted to $635.8 million), $637.0 million of other borrowings (primarily from our mortgage company warehouse loan), and issuance of securities under our stock-based benefit plans and the tax benefits of stock-based compensation, offset, in part, by the redemption of, and tender for, an aggregate of $495.1 million principal amount of senior and senior subordinated notes, $12.0 million of expenses related to such redemption and tender offer, and the repayment of $785.9 million of other borrowings, of which $624.2 million was on our mortgage company warehouse loan.

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In fiscal 2008, our cash and cash equivalents increased by $733.2 million to $1.63 billion. Cash flow from operating activities was $826.8 million. Cash flow from operating activities was generated primarily from income before inventory and investment impairment losses, reductions in inventory and a decrease in contracts receivable related to percentage of completion accounting, offset in part by a decrease in accounts payable and accrued expenses (excluding accruals of estimated liabilities to various joint ventures), a decrease in customer deposits and an increase in deferred tax assets. The decreased inventory, contracts receivable, accounts payable and customer deposits were primarily due to the decline in our business as previously discussed. We used $64.6 million of cash flow in investing activities, primarily for additional investments in unconsolidated entities. In addition, we used $29.0 million of cash flow in financing activities, primarily for the repayment of debt, offset in part by cash generated from issuance of securities under our stock-based benefit plans and the tax benefits of stock-based compensation.

In general, our cash flow from operating activities assumes that, as each home is delivered, we will purchase a home site to replace it. Because we own several years’ supply of home sites, we do not need to buy home sites immediately to replace those which we deliver. In addition, we generally do not begin construction of our single-family detached homes until we have a signed contract with the home buyer, although in the past several years, due to the high cancellation rate of customer contracts and the increase in the number of attached-home communities from which we were operating (all of the units of which are generally not sold prior to the commencement of construction), the number of speculative homes in our inventory increased significantly. Should our business remain at its current level or further decline, we believe that our inventory levels would continue to decrease as we complete and deliver the homes under construction but do not commence construction of as many new homes, as we complete the improvements on the land we already own and as we sell and deliver the speculative homes that are currently in inventory, resulting in additional cash flow from operations. In addition, we might continue to delay or curtail our acquisition of additional land, as we have since the second half of fiscal 2006, which would further reduce our inventory levels and cash needs. At October 31, 2010, we owned or controlled through options approximately 34,852 home sites, as compared to approximately 31,900 at October 31, 2009, 39,800 at October 31, 2008 and approximately 91,200 at April 30, 2006, the high point of our home sites owned and controlled. Of the 34,852 home sites owned or controlled through options at October 31, 2010, we owned 28,891; of our owned home sites, significant improvements were completed on approximately 10,500.

At October 31, 2010, the aggregate purchase price of land parcels under option and purchase agreements was approximately $550.4 million (including $131.2 million of land to be acquired from joint ventures in which we have invested). Of the $550.4 million of land purchase commitments, we had paid or deposited $47.1 million, we will receive a credit for prior investments in joint ventures of approximately $37.3 million and, if we acquire all of these land parcels, we will be required to pay an additional $466.0 million. Of the $466.0 million we would be required to pay, we recorded $77.6 million of this amount in accrued expenses at October 31, 2010. The purchases of these land parcels are scheduled over the next several years. We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.

During the past several years, we have had a significant amount of cash invested in either short-term cash equivalents or short-term interest-bearing marketable securities. In addition, we have made a number of investments in unconsolidated entities related to the acquisition and development of land for future home sites or in entities that are constructing or converting apartment buildings into luxury condominiums. Our investment activities related to marketable securities and to investments in and distributions of investments from unconsolidated entities are contained in the “Consolidated Statements of Cash Flows” under “Cash flow used in investing activities.”

In October 2010, we entered into an $885 million revolving credit facility with 12 banks, which extends to October 2014. The facility replaced a $1.89 billion credit facility consisting of a $1.56 billion unsecured revolving credit facility and a $331.7 million term loan facility with 30 banks, which extended to March 17, 2011. Prior to the closing of the new credit facility, we repaid the term loan under the old credit facility from cash on hand. At October 31, 2010, we had no outstanding borrowings under the new credit facility but had outstanding letters of credit of approximately $86.0 million. At October 31, 2010, interest would have been payable on borrowings under our credit facility at 2.50% (subject to adjustment based upon our debt rating and leverage ratios) above the Eurodollar rate or at other specified variable rates as selected by us from time to time. We are obligated to pay an undrawn commitment fee of 0.50% (subject to adjustment based upon our debt rating and leverage ratios) based on the average daily unused amount of the credit facility. Under the terms of the credit facility, we are not permitted to allow our maximum leverage ratio (as defined in the credit agreement) to exceed 1.75 to 1.00, and we are required to maintain a minimum tangible net worth (as defined in the credit agreement) of approximately $1.88 billion at October 31, 2010. At October 31, 2010, our leverage ratio was approximately 0.19 to 1.00, and our tangible net worth was approximately $2.52 billion. Based upon the minimum tangible net worth requirement, our ability to pay dividends and repurchase our common stock was limited to an aggregate amount of approximately $640 million at October 31, 2010. In addition, at October 31, 2010, we had $54.4 million of letters of credit outstanding with three banks which were not part of our new credit facility; these letters of credit were collateralized by $54.4 million of cash deposits.

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In fiscal 2009, we issued $400 million principal amount of 8.91% Senior Notes due 2017 and $250 million principal amount of 6.75% Senior Notes due 2019. We received $635.8 million of aggregate net proceeds from the issuances of these senior notes.

In May 2009, we redeemed $293.0 million outstanding principal amount of our senior subordinated notes due 2011 and in June 2009 purchased an additional $2.1 million principal amount of such notes through open market purchases. In fiscal 2009, we recognized a charge of $2.1 million representing the write-off of unamortized debt issuance costs and the call premium on one of the series of notes. In December 2009, we redeemed the remaining $47.9 million principal amount of our senior subordinated notes due 2011.

In October 2009, we concluded a tender offer for $105.1 million principal amount of our 6.875% Senior Notes due 2012 and $94.9 million principal amount of our 5.95% Senior Notes due 2013. In fiscal 2009, we recognized a charge of $11.6 million representing the tender premium, the write-off of unamortized debt issuance costs and costs incurred to complete the tender offer.

In August 2009, TBI Mortgage Company, our wholly-owned mortgage subsidiary, entered into a Master Repurchase Agreement with Comerica Bank, as agent and representative of itself as a buyer and the other buyers named therein. The agreement replaced TBI Mortgage Company’s warehouse credit facility which expired in August 2009. The purpose of the agreement is to finance the origination of mortgage loans by TBI Mortgage Company. The agreement provides for loan purchases up to $75 million, subject to certain sublimits. In addition, the agreement provides for an accordion feature under which TBI Mortgage Company may request that the aggregate commitments under the agreement be increased to an amount up to $100 million. The agreement, as amended, expires on July 28, 2011.

We believe that we will be able to continue to fund our current operations and meet our contractual obligations through a combination of existing cash resources and our existing sources of credit. Due to the deterioration of the credit markets and the uncertainties that exist in the economy and for home builders in general, we cannot be certain that we will be able to replace existing financing or find sources of additional financing in the future.

CONTRACTUAL OBLIGATIONS

The following table summarizes our estimated contractual payment obligations at October 31, 2010 (amounts in millions):

	2011		2012 - 2013		2014 - 2015		Thereafter		Total
Senior notes (a)	$	103.1	$	531.7	$	702.8	$	788.8	$	2,126.4
Loans payable (a)		33.5		29.3		5.4		38.9		107.1
Mortgage company warehouse loan (a)		74.8								74.8
Operating lease obligations		11.6		15.9		11.1		13.1		51.7
Purchase obligations (b)		312.9		232.8		38.9		105.2		689.8
Retirement plans (c)		5.1		11.3		10.1		46.0		72.5
Other		0.6		1.0		0.7		0.2		2.5
	$	541.6	$	822.0	$	769.0	$	992.2	$	3,124.8

(a)	Amounts include estimated annual interest payments until maturity of the debt. Of the amounts indicated, $1.54 billion of the senior notes, $94.5 million of loans payable and $72.4 million of the mortgage company warehouse loan were recorded on the October 31, 2010 Consolidated Balance Sheet.
(b)	Amounts represent our expected acquisition of land under options or purchase agreements and the estimated remaining amount of the contractual obligation for land development agreements secured by letters of credit and surety bonds. Of the total amount indicated, $77.6 million was recorded on the October 31, 2010 Consolidated Balance Sheet.
(c)	Amounts represent our obligations under our deferred compensation and supplemental executive retirement plans. Of the total amount indicated, $44.5 million was recorded on the October 31, 2010 Consolidated Balance Sheet.

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INFLATION

The long-term impact of inflation on us is manifested in increased costs for land, land development, construction and overhead. We generally contract for land significantly before development and sales efforts begin. Accordingly, to the extent land acquisition costs are fixed, increases or decreases in the sales prices of homes will affect our profits. Prior to the current downturn in the economy and the decline in demand for homes, the sales prices of our homes generally increased. Because the sales price of each of our homes is fixed at the time a buyer enters into a contract to purchase a home and because we generally contract to sell our homes before we begin construction, any inflation of costs in excess of those anticipated may result in lower gross margins. We generally attempt to minimize that effect by entering into fixed-price contracts with our subcontractors and material suppliers for specified periods of time, which generally do not exceed one year. The slowdown in the homebuilding industry over the past several years and the decline in the sales prices of our homes, without a corresponding reduction in the costs, have had an adverse impact on our profitability.

In general, housing demand is adversely affected by increases in interest rates and housing costs. Interest rates, the length of time that land remains in inventory and the proportion of inventory that is financed affect our interest costs. If we are unable to raise sales prices enough to compensate for higher costs, or if mortgage interest rates increase significantly, affecting prospective buyers’ ability to adequately finance home purchases, our revenues, gross margins and net income would be adversely affected. Increases in sales prices, whether the result of inflation or demand, may affect the ability of prospective buyers to afford new homes.

GEOGRAPHIC SEGMENTS

We operate in four geographic segments around the United States: the North, consisting of Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York; the Mid-Atlantic, consisting of Delaware, Maryland, Pennsylvania and Virginia; the South, consisting of Florida, North Carolina, South Carolina and Texas; and the West, consisting of Arizona, California, Colorado and Nevada. We stopped selling homes in Rhode Island in the first quarter of fiscal 2008 and delivered our last home there in fiscal 2008. Our operations in Rhode Island were immaterial to the North geographic segment. In fiscal 2010, we discontinued the sale of homes in West Virginia and Georgia. The operations of West Virginia and Georgia were immaterial to the Mid-Atlantic and South geographic segments, respectively.

The following tables summarize information related to revenues, gross contracts signed, contract cancellations, net contracts signed and sales incentives provided on units delivered by geographic segment for fiscal years 2010, 2009 and 2008, and information related to backlog and assets by geographic segment at October 31, 2010, 2009 and 2008.

Units Delivered and Revenues:

	2010		2009		2008		2010		2009		2008
	Units		Units		Units		(In millions)		(In millions)		(In millions)
North (a)		774		983		1,300	$	407.7	$	585.3	$	894.4
Mid-Atlantic		876		862		1,443		488.4		492.7		878.6
South (a)		498		544		1,095		264.3		288.2		556.2
West		494		576		905		334.4		389.1		777.1
Other (b)												41.9
		2,642		2,965		4,743	$	1,494.8	$	1,755.3	$	3,148.2

Gross Contracts Signed:

	2010		2009		2008		2010		2009		2008
	Units		Units		Units		(In millions)		(In millions)		(In millions)
North		813		847		1,018	$	418.6	$	442.8	$	616.1
Mid-Atlantic		902		899		1,233		502.5		498.7		708.5
South		551		559		907		297.1		281.6		453.9
West		523		598		762		352.1		402.8		562.9
		2,789		2,903		3,920	$	1,570.3	$	1,625.9	$	2,341.4

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Contracts Cancelled:

	2010		2009		2008		2010		2009		2008
	Units		Units		Units		(In millions)		(In millions)		(In millions)
North		68		184		271	$	35.2	$	136.4	$	203.3
Mid-Atlantic		44		102		205		23.4		74.7		144.3
South		39		87		250		21.1		50.5		127.8
West		33		80		267		18.6		59.6		257.8
		184		453		993	$	98.3	$	321.2	$	733.2

Net Contracts Signed:

	2010		2009		2008		2010		2009		2008
	Units		Units		Units		(In millions)		(In millions)		(In millions)
North		745		663		747	$	383.4	$	306.4	$	412.8
Mid-Atlantic		858		797		1,028		479.1		424.0		564.2
South		512		472		657		276.0		231.1		326.1
West		490		518		495		333.5		343.2		305.1
		2,605		2,450		2,927	$	1,472.0	$	1,304.7	$	1,608.2

Contract Cancellation Rates:
(as a percentage of gross contracts signed, based on units and dollars)

	2010			2009			2008			2010			2009			2008
	Units			Units			Units			$			$			$
North		8.4	%		21.7	%		26.6	%		8.4	%		30.8	%		33.0	%
Mid-Atlantic		4.9	%		11.3	%		16.6	%		4.7	%		15.0	%		20.4	%
South		7.1	%		15.6	%		27.6	%		7.1	%		17.9	%		28.2	%
West		6.3	%		13.4	%		35.0	%		5.3	%		14.8	%		45.8	%
Total		6.6	%		15.6	%		25.3	%		6.3	%		19.8	%		31.3	%

Backlog at October 31:

	2010		2009		2008		2010		2009		2008
	Units		Units		Units		(In millions)		(In millions)		(In millions)
North		521		550		870	$	259.3	$	283.6	$	562.5
Mid-Atlantic		475		493		558		284.4		293.6		362.3
South		296		282		354		159.7		148.0		205.1
West		202		206		264		148.7		149.6		195.6
		1,494		1,531		2,046	$	852.1	$	874.8	$	1,325.5

(a) Excludes deliveries from projects accounted for using the percentage of completion accounting method. Information regarding these deliveries in fiscal 2008 is as follows:

	2008		2008
	Units		(In millions)
North		74	$	45.6
South		14		40.5
		88	$	86.1

(b) 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.

Sales Incentives:

	2010		2009		2008		2010			2009			2008
	(In millions)		(In millions)		(In millions)		% of Gross Revenues*
North	$	42.2	$	44.1	$	36.0		9.4	%		7.0	%		3.9	%
Mid-Atlantic		83.5		94.7		100.3		14.6	%		16.1	%		10.2	%
South		39.0		42.4		69.7		12.9	%		12.8	%		11.1	%
West		52.7		95.1		126.9		13.6	%		19.6	%		14.0	%
Total	$	217.4	$	276.3	$	332.9		12.7	%		13.6	%		9.7	%

* Excludes from gross revenues, percentage of completion revenues recognized in fiscal 2008.

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Revenues and (Loss) Income Before Taxes:

The following table summarizes by geographic segment total revenues and (loss) income before income taxes for each of the years ended October 31, 2010, 2009 and 2008 ($ amounts in millions):

							(Loss) income before
	Revenues						income taxes
	2010		2009		2008		2010			2009			2008
North (a)	$	407.7	$	585.3	$	931.9	$	(4.0	)	$	(103.3	)	$	0.9
Mid-Atlantic		488.4		492.7		878.6		31.8			(25.0	)		(10.9	)
South (b)		264.3		288.2		560.6		(36.3	)		(49.4	)		(170.0	)
West		334.4		389.1		777.1		(13.4	)		(209.0	)		(190.5	)
Corporate and other(c)								(95.3	)		(109.8	)		(96.3	)
Total	$	1,494.8	$	1,755.3	$	3,148.2	$	(117.2	)	$	(496.5	)	$	(466.8	)

(a)	Includes percentage of completion revenues of $37.5 million in fiscal 2008.
(b)	Includes percentage of completion revenues of $4.4 million in fiscal 2008.
(c)	Corporate and other is comprised principally of general corporate expenses such as the offices of the Executive Chairman, Chief Executive Officer and President, and the corporate finance, accounting, audit, tax, human resources, risk management, marketing and legal groups, directly expensed interest, offset in part by interest income and income from our ancillary businesses.

Total Assets:

Total assets for each of the Company’s geographic segments at October 31, 2010, 2009 and 2008 are shown in the table below ($ amounts in millions).

	2010		2009		2008
North	$	961.3	$	1,009.0	$	1,244.7
Mid-Atlantic		1,161.5		1,081.9		1,220.3
South		693.8		573.1		688.0
West		712.4		759.3		1,134.0
Corporate and other		1,642.6		2,211.1		2,299.8
Total	$	5,171.6	$	5,634.4	$	6,586.8

FISCAL 2010 COMPARED TO FISCAL 2009

North

Revenues for the year ended October 31, 2010 were lower than those for the year ended October 31, 2009 by $177.6 million, or 30.3%. The decrease in revenues was attributable to a 21.3% decrease in the number of homes delivered and a 11.5% decrease in the average price of the homes delivered. The decrease in the number of homes delivered in fiscal 2010, as compared to fiscal 2009, was primarily due to our lower backlog at October 31, 2009, as compared to October 31, 2008. The decline in backlog at October 31, 2009, as compared to October 31, 2008, was due primarily to an 11.2% decrease in the number of net contracts signed in fiscal 2009 over fiscal 2008. The decrease in the average price of the homes delivered in the year ended October 31, 2010, as compared to fiscal 2009, was primarily due to a shift in the number of homes delivered to less expensive products and/or locations and higher sales incentives given on the homes delivered in fiscal 2010 as compared to fiscal 2009.

The value of net contracts signed in the year ended October 31, 2010 was $77.0 million, a 25.1% increase from the $306.4 million of net contracts signed during the year ended October 31, 2009. This increase was primarily due to a 12.4% increase in the number of net contracts signed and an 11.4% increase in the average value of each net contract. The increase in the number of net contracts signed in fiscal 2010, as compared to fiscal 2009, was primarily due to a decrease in the number of contracts cancelled in the year ended October 31, 2010, as compared to the year ended October 31, 2009, and an improvement in housing demand in the first two quarters of fiscal 2010, as compared to fiscal 2009. The increase in the average sales price of net contracts signed in fiscal 2010, as compared to fiscal 2009, was primarily attributable to a decrease in cancellations in fiscal 2010 at one of our high-rise communities located in a New Jersey urban market, which had higher average prices than our typical home. The average sales price of gross contracts signed in the year ended October 31, 2010 was $514,800, a 1.5% decrease from the $522,800 average sales price of gross contracts signed during the year ended October 31, 2009.

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We reported losses before income taxes of $4.0 million in the year ended October 31, 2010, as compared to $103.3 million in fiscal 2009. The decrease in the loss was primarily due to lower cost of revenues as a percentage of revenues, lower selling, general and administrative expenses in the year ended October 31, 2010, as compared to the year ended October 31, 2009, and $12.7 million of income recognized from unconsolidated entities in fiscal 2010, as compared to $2.5 million of loss recognized from unconsolidated entities in fiscal 2009. Cost of revenues before interest as a percentage of revenues was 89.4% in fiscal 2010, as compared to 107.3% in fiscal 2009. The lower cost of revenues was primarily the result of lower impairment charges in fiscal 2010, as compared to fiscal 2009, partially offset by increased sales incentives given to home buyers on the homes delivered. We recognized inventory impairment charges of $29.4 million in fiscal 2010, as compared to $145.4 million in fiscal 2009. As a percentage of revenues, higher sales incentives increased cost of revenues by approximately 2.1% in the year ended October 31, 2010, as compared to fiscal 2009. The loss from unconsolidated entities in fiscal 2009 included a $6.0 million impairment charge related to one of the unconsolidated entities.

Mid-Atlantic

For the year ended October 31, 2010, revenues were lower than those for fiscal 2009 by $4.3 million, or 0.9%, primarily due to a 2.5% decrease in the average sales price of the homes delivered, offset, in part, by a 1.6% increase in the number of homes delivered. The decrease in the average price of the homes delivered in fiscal 2010, as compared to fiscal 2009, was primarily related to a shift in the number of homes delivered to less expensive products and/or locations. The increase in the number of homes delivered in the year ended October 31, 2010, as compared to the year ended October 31, 2009, was primarily due to a 41.7% increase in the number of gross contracts signed and a decline of 75.8% in the number of contracts canceled in the first three months of fiscal 2010, as compared to the comparable period of fiscal 2009. The increased number of contracts signed early in fiscal 2010 and the reduced number of contracts canceled from that year’s beginning backlog allowed us to deliver more units in fiscal 2010 than in fiscal 2009.

The value of net contracts signed during the year ended October 31, 2010 increased by $55.1 million, or 13.0%, from the year ended October 31, 2009. The increase was due to a 7.7% increase in the number of net contracts signed and a 5.0% increase in the average value of each net contract signed. The increase in the number of net contracts signed was due primarily to a decrease in the number of contracts cancelled in fiscal 2010, as compared to fiscal 2009. The increase in the average value of each net contract signed was primarily due to cancellations of higher priced homes in fiscal 2009, as compared to cancellations of lower priced homes in fiscal 2010.

We reported income before income taxes for the year ended October 31, 2010 of $31.8 million as compared to a loss before income taxes in fiscal 2009 of $25.0 million. The increase in the income before income taxes was primarily due to lower impairment charges and lower selling, general and administrative expenses, in the twelve months ended October 31, 2010, as compared to the twelve months ended October 31, 2009. We recognized inventory impairment charges of $11.0 million in fiscal 2010, as compared to $59.7 million in fiscal 2009.

South

Revenues during the year ended October 31, 2010 were lower than those in fiscal 2009 by $23.9 million, or 8.3%. This decrease was attributable to an 8.5% decrease in the number of homes delivered, offset, in part, by a 0.2% increase in the average price of the homes delivered. The decrease in the number of homes delivered in fiscal 2010, as compared to fiscal 2009, was primarily due to lower backlog at October 31, 2009, as compared to October 31, 2008. The decline in backlog at October 31, 2009, as compared to October 31, 2008, was due primarily to a 28.2% decrease in the number of net contracts signed in fiscal 2009 over fiscal 2008.

In fiscal 2010, the value of net contracts signed increased by $45.0 million, or 19.5%, as compared to fiscal 2009. The increase was attributable to increases of 8.5% and 10.1% in the number and average value of net contracts signed, respectively. The increase in the number of net contracts signed in fiscal 2010, as compared to fiscal 2009, was primarily due to a decrease in the number of contract cancellations from 87 in fiscal 2009 to 39 in fiscal 2010. The increase in the average sales price of net contracts signed was primarily due to a decrease in the number of cancellations in fiscal 2010, as compared to fiscal 2009, which had a higher average sales price, and to a shift in the number of contracts signed to more expensive areas and/or products in fiscal 2010, as compared to fiscal 2009.

We reported losses before income taxes for the years ended October 31, 2010 and 2009 of $36.3 million and $49.4 million, respectively. The decline in the loss before income taxes was primarily due to lower impairment charges and lower selling, general and administrative costs in fiscal 2010, as compared to fiscal 2009, offset, in part, by lower revenues in fiscal 2010, as compared to fiscal 2009. Impairment charges decreased from $52.8 million in the year ended October 31, 2009 to $37.2 million in the year ended October 31, 2010.

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West

Revenues in the year ended October 31, 2010 were lower than those in the year ended October 31, 2009 by $54.8 million, or 14.1%. The decrease in revenues was attributable to a 14.2% decrease in the number of homes delivered, offset in part, by a 0.2% increase in the average price of homes delivered. The decrease in the number of homes delivered in fiscal 2010 was primarily attributable to lower backlog at October 31, 2009, as compared to October 31, 2008. The increase in the average price of the homes delivered was primarily due to lower sales incentives given on the homes delivered in fiscal 2010, as compared to fiscal 2009, partially offset, by a shift in the number of homes delivered to less expensive products and/or locations in fiscal 2010, as compared to fiscal 2009.

The value of net contracts signed during the twelve months ended October 31, 2010 decreased $9.7 million, or 2.8%, as compared to fiscal 2009. This decrease was due to a 5.4% decrease in the number of net contracts signed, offset in part, by a 2.7% increase in the average value of each net contract signed. The decrease in the number of net contracts signed was primarily due to a 28% decline in the number of selling communities in fiscal 2010, as compared to fiscal 2009, partially offset by a decrease in the number of contracts canceled in fiscal 2010, as compared to fiscal 2009. The increase in the average sales price of net contracts signed was primarily due to a shift in the number of contracts signed in more expensive areas and/or product in fiscal 2010, as compared to fiscal 2009.

We reported losses before income taxes in fiscal 2010 of $13.4 million, as compared to $208.9 million in fiscal 2009. The decrease in the loss before income taxes was primarily due to lower impairment charges, lower selling, general and administrative expenses and decreased sales incentives given to home buyers on homes delivered in fiscal 2010, as compared to fiscal 2009, and income of $10.7 million recognized from unconsolidated entities in fiscal 2010, as compared to a $5.0 million loss recognized from unconsolidated entities in fiscal 2009, offset, in part, by a shift in product mix of homes delivered to lower margin product or areas. We recognized inventory impairment charges of $37.7 million and $207.5 million in the years ended October 31, 2010 and 2009, respectively. As a percentage of revenues, lower sales incentives decreased cost of revenues by approximately 5.0% in fiscal 2010, as compared to fiscal 2009. The income from unconsolidated entities in fiscal 2010 included a reversal of $11.0 million of accrued costs related to litigation against us and an unconsolidated entity in which we had an investment, due to settlement of the litigation for an amount that was less than we had previously estimated.

The loss from unconsolidated entities in fiscal 2009 included a $5.3 million impairment charge related to one of the unconsolidated entities.

Corporate and Other

Other loss before income taxes for the year ended October 31, 2010 was $95.2 million, a decrease of $14.6 million from the $109.8 million loss before income taxes reported for the year ended October 31, 2009. This decrease was primarily the result of lower unallocated selling, general and administrative expenses of $22.7 million in fiscal 2010, as compared to fiscal 2009, and an increase of $5.9 million in income from ancillary businesses and management fee income in fiscal 2010, as compared to fiscal 2009, offset, in part, by a $14.9 million increase in interest directly expensed in fiscal 2010, as compared to fiscal 2009, and a $3.3 million decline in interest income in fiscal 2010, as compared to fiscal 2009. Interest expensed directly was $22.8 million and $7.9 million in fiscal 2010 and 2009, respectively. See “Fiscal 2010 Compared to Fiscal 2009 -Interest Expense” for additional information on interest directly expensed.

FISCAL 2009 COMPARED TO FISCAL 2008

North

Revenues for the year ended October 31, 2009 were lower than those for the year ended October 31, 2008 by $346.6 million, or 37%. The decrease in revenues was attributable to a 24% decrease in the number of homes delivered, a 13% decrease in the average price of homes delivered and a decrease of $37.5 million in percentage of completion revenues. The decrease in the number of homes delivered in fiscal 2009, as compared to fiscal 2008, was primarily due to lower backlog at October 31, 2008, as compared to October 31, 2007, and an 11% decrease in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008. The decline in backlog at October 31, 2008, as compared to October 31, 2007, was due primarily to a 50% decrease in the number of net contracts signed in fiscal 2008 over fiscal 2007. The decrease in the average price of homes delivered in the year ended October 31, 2009, as compared to the year ended October 31, 2008, was primarily due to a shift in the number of settlements to less expensive products and/or locations and higher sales incentives given on the homes delivered in fiscal 2009, as compared to fiscal 2008.

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The value of net contracts signed in the year ended October 31, 2009 was $306.4 million, a 26% decline from the $412.8 million of net contracts signed in the year ended October 31, 2008. The number of net contracts signed and the average value of each net contract decreased 11% and 16%, respectively. The decline in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008, was primarily due to the continued slowdown in the housing market, offset, in part, by a decrease in the number of contracts cancelled in fiscal 2009, as compared to fiscal 2008. The decrease in average sales price of net contracts signed was primarily attributable to a shift in the number of contracts signed to less expensive areas and/or products in fiscal 2009 and higher sales incentives given to home buyers in fiscal 2009, as compared to fiscal 2008.

We reported losses before income taxes of $103.3 million in the year ended October 31, 2009, as compared to income before income taxes of $0.9 million in the year ended October 31, 2008. This decrease was primarily due to a decline in revenues and higher cost of revenues as a percentage of revenues in fiscal 2009, as compared to fiscal 2008, partially offset by a $43.6 million decrease in losses from unconsolidated entities in fiscal 2009, as compared to fiscal 2008, and lower selling, general and administrative expenses in fiscal 2009, as compared to fiscal 2008. We recognized inventory impairment charges of $145.4 million during the year ended October 31, 2009, as compared to $112.5 million in the year ended October 31, 2008. Excluding inventory impairment charges, cost of revenues before interest as a percentage of revenues was 79.9% in fiscal 2009, as compared to 73.5% in fiscal 2008. The higher cost of revenues was primarily the result of increased sales incentives given to home buyers on the homes delivered and a shift in product mix of homes delivered to lower margin product or areas. As a percentage of revenues, higher sales incentives increased cost of revenues by approximately 2.8% in fiscal 2009 over the fiscal 2008 percentage.

Mid-Atlantic

Revenues in fiscal 2009 were lower than those in fiscal 2008 by $385.9 million, or 44%. The decrease in revenues was attributable to a 40% decrease in the number of homes delivered and a 6% decrease in the average sales price of the homes delivered. The decrease in the number of homes delivered was primarily due to lower backlog at October 31, 2008, as compared to October 31, 2007, and a 22% decrease in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008. The decrease in backlog was primarily the result of a 32% decrease in the number of net contracts signed in fiscal 2008 over fiscal 2007 due to weak demand. The decrease in the average price of the homes delivered in fiscal 2009, as compared to fiscal 2008, was primarily related to higher sales incentives given on the homes delivered in fiscal 2009, as compared to fiscal 2008.

The value of net contracts signed during the year ended October 31, 2009 decreased by $140.2 million, or 25%, from the year ended October 31, 2008. The decline was due to a 22% decrease in the number of net contracts signed and a 3% decrease in the average value of each net contract. The decline in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008, was due primarily to continued weak demand in the housing market, partially offset by a decrease in the number of contracts cancelled in fiscal 2009, as compared to fiscal 2008. The decrease in the average value of each net contract signed in the year ended October 31, 2009, as compared to the year ended October 31, 2008, was primarily due to a shift in the number of contracts signed to less expensive areas and/or products in fiscal 2009, as compared to fiscal 2008.

We reported a loss before income taxes for the year ended October 31, 2009 of $25.0 million, as compared to $10.9 million in fiscal 2008. The increase in the loss was primarily due to a decline in revenues and higher cost of revenues, excluding impairments, as a percentage of revenues in fiscal 2009, as compared to fiscal 2008, partially offset by lower impairment charges and lower selling, general and administrative expenses in fiscal 2009. We recognized inventory impairment charges of $59.7 million and $136.4 million for the years ended October 31, 2009 and 2008, respectively. Cost of revenues, excluding impairment charges and interest, as a percentage of revenues for the years ended October 31, 2009 and 2008 was 79.8% and 75.6%, respectively. The increase in the percentage was primarily due to higher sales incentives given to home buyers on the homes delivered in fiscal 2009, as compared to fiscal 2008. The higher sales incentives in fiscal 2009 increased cost of revenues as a percentage of revenue by approximately 5.1%.

South

Revenues for the year ended October 31, 2009 were lower than those for the year ended October 31, 2008 by $272.4 million, or 49%. The decrease in revenues was attributable to a 50% decrease in the number of homes delivered and a decrease of $4.4 million in percentage of completion revenues, offset, in part, by a 4% increase in the average price of homes delivered. The decrease in the number of homes delivered in fiscal 2009, as compared to fiscal 2008, was primarily due to lower backlog at October 31, 2008, as compared to October 31, 2007, and a 28% decrease in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008. The decline in backlog at October 31, 2008, as compared to October 31, 2007, was due primarily to a 21% decrease in the number of net contracts signed in fiscal 2008 over fiscal 2007. The increases in the average price of homes delivered were primarily attributable to a shift in number of homes delivered to more expensive areas and/or products in fiscal 2009, as compared to fiscal 2008.

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For the year ended October 31, 2009, the value of net contracts signed was lower than the year ended October 31, 2008 by $95.0 million, or 29%. The decline was due to a 28% decrease in the number of net contracts signed and a 1% decrease in the average value of each contract. The decrease in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008, was attributable to overall weak market conditions, offset, in part, by a decrease in the number of cancelled contracts in fiscal 2009, as compared to fiscal 2008. The decrease in the average sales price of net contracts signed was primarily due to a higher average sales price on contracts cancelled in fiscal 2009, as compared to fiscal 2008.

We reported a loss before income taxes for the year ended October 31, 2009 of $49.4 million, as compared to $170.0 million for fiscal 2008. The decline in the loss before income taxes in fiscal 2009, as compared to fiscal 2008, was primarily due to a lower cost of revenues as a percentage of total revenues and lower selling, general and administrative expenses in fiscal 2009, as compared to fiscal 2008. Cost of revenues before interest as a percentage of revenues was 99.5% in fiscal 2009, as compared to 116.3% in fiscal 2008. The decreased percentage in fiscal 2009 was primarily due to the reduction in the amount of inventory impairment charges recognized from $200.1 million in fiscal 2008 to $52.8 million in fiscal 2009.

West

Revenues in fiscal 2009 were lower than those in fiscal 2008 by $388.0 million, or 50%. The decrease in revenues was attributable to a 36% decrease in the number of homes delivered and a 21% decrease in the average sales price of the homes delivered. The decrease in the number of homes delivered was primarily attributable to the lower number of homes in backlog at October 31, 2008, as compared to October 31, 2007, which was the result of the number of homes delivered in fiscal 2008 exceeding the number of net signed contracts in fiscal 2008. The decrease in the average price of homes delivered was primarily due to higher sales incentives and a shift in the number of settlements to less expensive products and/or locations in fiscal 2009, as compared to fiscal 2008.

The value of net contracts signed during the year ended October 31, 2009 increased by $38.1 million, or 12%, from the year ended October 31, 2008. The increase in the value of net contracts was due to a 5% increase in the number of net contracts signed in fiscal 2009, as compared to fiscal 2008, and a 7% increase in the average value of each net contract signed in fiscal 2009, versus fiscal 2008. The increase in the number of net contracts signed was primarily due to a decrease in the number of contracts cancelled from 267 units in fiscal 2008 to 80 units in fiscal 2009. The increase in the average value of each net contract signed was attributable to decreases in the number and average value of contracts cancelled in fiscal 2009, as compared to fiscal 2008. Excluding the impact of contract cancellations, the average value of gross contracts signed decreased 9% in the year ended October 31, 2009, as compared to the year ended October 31, 2008. The decrease in average sales price of gross contracts signed was primarily attributable to a shift in the number of contracts signed to less expensive areas and/or products in fiscal 2009 and higher sales incentives given to home buyers in fiscal 2009, as compared to fiscal 2008.

We reported a loss before income taxes of $209.0 million for the year ended October 31, 2009, as compared to $190.5 million for fiscal 2008. The increased losses in fiscal 2009, as compared to fiscal 2008, were attributable to lower revenues and higher cost of revenues as a percentage of revenues in fiscal 2009, as compared to fiscal 2008, partially offset by impairment charges related to unconsolidated entities in which we have investments of $5.3 million in fiscal 2009, as compared to $141.3 million in fiscal 2008. We recognized inventory impairment charges of $207.5 million in fiscal 2009, as compared to $196.0 million in fiscal 2008. For fiscal 2009, cost of revenues before impairment charges and interest as a percentage of revenues was 80.2%, as compared to 75.4% in fiscal 2008. The increase in the fiscal 2009 percentage was primarily the result of higher sales incentives given to home buyers on homes delivered and a shift in the product mix of homes delivered to lower margin product or areas in fiscal 2009 as compared to fiscal 2008. The higher sales incentives in fiscal 2009 increased cost of revenues as a percentage of revenue by approximately 5.2%. The West geographic segment benefited from the recognition of $40.2 million of income in the year ended October 31, 2008, attributable to net proceeds received by us from a condemnation award.

Corporate and Other

Other loss before income taxes for the year ended October 31, 2009 was $109.8 million, an increase of $13.5 million from the $96.3 million loss before income taxes reported for the year ended October 31, 2008. This increase was primarily the result of a $23.0 million decline in interest income and a $2.6 million decline in income from ancillary businesses and management fee income in fiscal 2009, as compared to fiscal 2008, interest expense of $7.9 million included in SG&A in fiscal 2009 due to interest on homebuilding indebtedness exceeding the amount eligible for capitalization, and the recognition of a $13.9 million charge in fiscal 2009 in connection with the redemption of $295.1 million of senior subordinated notes and $200.0 million of senior notes, offset, in part, by lower unallocated general and administrative expenses of $32.0 million in fiscal 2009, as compared to fiscal 2008.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk primarily due to fluctuations in interest rates. We utilize both fixed-rate and variable-rate debt. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not our earnings or cash flow. Conversely, for variable-rate debt, changes in interest rates generally do not affect the fair market value of the debt instrument but do affect our earnings and cash flow. We do not have the obligation to prepay fixed-rate debt prior to maturity and, as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we are required to refinance such debt.

At October 31, 2010, our debt obligations, principal cash flows by scheduled maturity, weighted-average interest rates and estimated fair value were as follows ($ amounts in thousands):

	Fixed-Rate Debt					Variable-Rate Debt (a)
				Weighted-				Weighted-
				Average				Average
Fiscal Year of				Interest				Interest
Maturity	Amount			Rate (%)		Amount		Rate (%)
2011	$	30,405			3.99	$	72,517		4.49
2012		15,561			3.41		150		.50
2013		346,288			6.41		150		.50
2014		269,800			4.94		150		.50
2015		300,557			5.15		150		.50
Thereafter		673,344			7.99		12,245		.50
Discount		(10,350	)
Total	$	1,625,605			6.51	$	85,362		3.89
Fair value at October 31, 2010	$	1,753,808				$	85,362

(a) Based upon the amount of variable-rate debt outstanding at October 31, 2010 and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $0.9 million per year.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the financial statements, listed in Item 15(a)(1) and (2), which appear at pages F-1 through F-46 of this report and which are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Any controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. However, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

45

Our chief executive officer and chief financial officer, with the assistance of management, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of the end of the period covered by this report (the “Evaluation Date”). Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Independent Registered Public Accounting Firm

Management’s Annual Report on Internal Control Over Financial Reporting and the report of our independent registered public accounting firm on internal control over financial reporting are incorporated herein from pages F-1 and F-2, respectively.

Changes in Internal Control Over Financial Reporting

There has not been any change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our quarter ended October 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table includes information with respect to all persons serving as executive officers as of the date of this Form 10-K. All executive officers serve at the pleasure of our Board of Directors.

Name	Age	Positions
Robert I. Toll	69	Executive Chairman of the Board and Director
Douglas C. Yearley, Jr.	50	Chief Executive Officer and Director
Zvi Barzilay	64	President, Chief Operating Officer and Director
Martin P. Connor	46	Senior Vice President, Chief Financial Officer and Treasurer

Robert I. Toll, with his brother Bruce E. Toll, the Vice Chairman of the Board and a Director of Toll Brothers, Inc., co-founded our predecessors’ operations in 1967. Robert I. Toll served as Chairman of the Board and Chief Executive Officer from our inception until June 2010, when he assumed the new position of Executive Chairman of the Board.

Douglas C. Yearley, Jr. joined us in 1990 as assistant to the Chief Executive Officer with responsibility for land acquisitions. He has been an officer since 1994, holding the position of Senior Vice President from January 2002 until November 2005, the position of Regional President from November 2005 until November 2009, and the position of Executive Vice President from November 2009 until June 2010 when he was promoted to his current position of Chief Executive Officer. Mr. Yearley was elected a Director of Toll Brothers, Inc. in June 2010.

Zvi Barzilay joined us as a project manager in 1980 and has been an officer since 1983. Mr. Barzilay was elected a Director of Toll Brothers, Inc. in 1994. He has held the position of Chief Operating Officer since May 1998 and the position of President since November 1998.

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Martin P. Connor joined the Company as Vice President and Assistant Chief Financial Officer in December 2008 and was elected a Senior Vice President in December 2009. Mr. Connor was appointed to his current position of Senior Vice President, Chief Financial Officer and Treasurer in September 2010. From June 2008 to December 2008, Mr. Connor was President of Marcon Advisors LLC, a finance and accounting consulting firm which he founded. From October 2006 to June 2008, Mr. Connor was Chief Financial Officer and Director of Operations for O’Neill Properties, a diversified commercial real estate developer in the Mid-Atlantic area. Prior to October 2006, he spent over 20 years at Ernst & Young LLP as an Audit and Advisory Business Services Partner, responsible for the real estate practice for Ernst & Young LLP in the Philadelphia marketplace. During the period from 1998 to 2005, he served on the Toll Brothers, Inc. engagement.

The other information required by this item will be included in the “Election of Directors” and “Corporate Governance” sections of our Proxy Statement for the 2011 Annual Meeting of Stockholders (the “2011 Proxy Statement”) and is incorporated herein by reference.

Code of Ethics

The Company has adopted a Code of Ethics for Principal Executive Officer and Senior Financial Officers (“Code of Ethics”) that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions designated by the Company’s Board of Directors. The Code of Ethics is available on the Company’s internet website at www.tollbrothers.com under “investor Relations: Company Information: Corporate Governance.” If the Company were to amend or waive any provision of its Code of Ethics, the Company intends to satisfy its disclosure obligations with respect to any such waiver or amendment by posting such information on its internet website set forth above rather than by filing a Form 8-K.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be included in the “Executive Compensation” section of our 2011 Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Except as set forth below, the information required in this item will be included in the “Voting Securities and Beneficial Ownership” section of our 2011 Proxy Statement and is incorporated herein by reference.

The following table provides information as of October 31, 2010 with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

Equity Compensation Plan Information

	Number of securities to				Number of securities
	be issued upon exercise		Weighted-average		remaining available for future
	of outstanding		exercise price		issuance under equity compensation
	options, warrants		of outstanding		plans (excluding securities
	and rights		options, warrants		reflected in column (a))
Plan Category	(in thousands)		and rights		(in thousands)
	(a)		(b)		(c)
Equity compensation plans approved by security holders		14,339	$	19.36		8,038
Equity compensation plans not approved by security holders		—		—		—
Total		14,339	$	19.36		8,038

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ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required in this item will be included in the “Corporate Governance and “Certain Transactions” sections of our 2011 Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required in this item will be included in the “Ratification of the Re-Appointment of Independent Registered Public Accounting Firm” section of the 2011 Proxy Statement and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedules

1. Financial Statements

	Page
Management’s Annual Report on Internal Control Over Financial Reporting	F-1
Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations for the Years Ended October 31, 2010, 2009 and 2008	F-4
Consolidated Balance Sheets as of October 31, 2010 and 2009	F-5
Consolidated Statements of Changes in Equity for the Years Ended October 31, 2010, 2009 and 2008	F-6
Consolidated Statements of Cash Flows for the Years Ended October 31, 2010, 2009 and 2008	F-7
Notes to Consolidated Financial Statements	F-8

2. Financial Statement Schedules

None

Financial statement schedules have been omitted because they are either not applicable or the required information is included in the financial statements or notes hereto.

(b) Exhibits

The following exhibits are included with this report or incorporated herein by reference:

Exhibit
Number		Description
	3.1	Second Restated Certificate of Incorporation of the Registrant, dated September 8, 2005, is hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10-Q for the quarter ended July 31, 2005.
	3.2	Certificate of Amendment of the Second Restated Certificate of Incorporation of the Registrant, filed with the Secretary of State of the State of Delaware, is hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2010.

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Exhibit
Number		Description
	3.3	By-laws of the Registrant, as Amended and Restated June 11, 2008, are hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2008.
	3.4	Amendment to the By-laws of the Registrant, dated as of September 24, 2009, is hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2009.
	3.5	Certificate of Designations, Preferences and Rights of Series B Junior Participating Preferred Stock of the Registrant is hereby incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 19, 2009.
	3.6	Certificate of Elimination of Series B Junior Participating Preferred Stock of the Registrant filed with the Secretary of State of the State of Delaware on June 18, 2010 is hereby incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2010.
	4.1	Specimen Stock Certificate is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-K for the fiscal year ended October 31, 1991.
	4.2	Form of Indenture for Senior Debt Securities is hereby incorporated by reference to Exhibit 4.10 of the Registrant’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on October 29, 2008.
	4.3	Form of Indenture for Subordinated Debt Securities is hereby incorporated by reference to Exhibit 4.11 of the Registrant’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on October 29, 2008.
	4.4	Indenture dated as of January 25, 2001, among Toll Corp., as issuer, the Registrant, as guarantor, and Bank One Trust Company, NA, as Trustee, including form of guarantee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended January 31, 2001.
	4.5	Joint Resolution Adopted by the Board of Directors of Toll Corp. and the Shelf Terms Committee of Toll Brothers, Inc. dated as of January 23, 2001, relating to $200,000,000 principal amount of 8 1/4% Senior Subordinated Notes of Toll Corp. due 2011, guaranteed on a Senior Subordinated basis by the Registrant is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2001.
	4.6	Authorizing Resolutions, dated as of November 27, 2001, relating to $150,000,000 principal amount of 8.25% Senior Subordinated Notes of Toll Corp. due 2011, guaranteed on a Senior Subordinated basis by the Registrant is hereby incorporated by reference to Exhibit 4 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 6, 2001.
	4.7	Indenture dated as of November 22, 2002 among Toll Brothers Finance Corp., as issuer, the Registrant, as guarantor, and Bank One Trust Company, NA, as Trustee, including form of guarantee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 27, 2002.
	4.8	Authorizing Resolutions, dated as of November 15, 2002, relating to $300,000,000 principal amount of 6.875% Senior Notes of Toll Brothers Finance Corp. due 2012, guaranteed on a senior basis by the Registrant and certain subsidiaries of the Registrant is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 27, 2002.
	4.9	Authorizing Resolutions, dated as of September 3, 2003, relating to $250,000,000 principal amount of 5.95% Senior Notes of Toll Brothers Finance Corp. due 2013, guaranteed on a senior basis by the Registrant and certain subsidiaries of the Registrant is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on September 29, 2003.

49

Exhibit
Number		Description
	4.10	Authorizing Resolutions, dated as of March 9, 2004, relating to $300,000,000 principal amount of 4.95% Senior Notes of Toll Brothers Finance Corp. due 2014, guaranteed on a senior basis by the Registrant and certain subsidiaries of the Registrant is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2004.
	4.11	Authorizing Resolutions, dated as of May 26, 2005, relating to $300,000,000 principal amount of 5.15% Senior Notes of Toll Brothers Finance Corp. due 2015, guaranteed on a senior basis by the Registrant and certain subsidiaries of the Registrant is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 8, 2005.
	4.12	First Supplemental Indenture dated as of May 1, 2003 by and among the parties listed on Schedule A thereto, and Bank One Trust Company, National Association, as Trustee, is hereby incorporated by reference to Exhibit 4.4 of the Registrant’s Registration Statement on Form S-4/A filed with the Securities and Exchange Commission on June 16, 2003, File Nos. 333-103931, 333-103931-01, 333-103931-02, 333-103931-03 and 333-103931-04.
	4.13	Second Supplemental Indenture dated as of November 3, 2003 by and among the parties listed on Schedule A thereto, and Bank One Trust Company, National Association, as Trustee, is hereby incorporated by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-4/A filed with the Securities and Exchange Commission on November 5, 2003, File Nos. 333-109604, 333-109604-01, 333-109604-02, 333-109604-03 and 333-109604-04.
	4.14	Third Supplemental Indenture dated as of January 26, 2004 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended January 31, 2004.
	4.15	Fourth Supplemental Indenture dated as of March 1, 2004 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended January 31, 2004.
	4.16	Fifth Supplemental Indenture dated as of September 20, 2004 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.9 of the Registrant’s Form 10-K for the fiscal year ended October 31, 2004.
	4.17	Sixth Supplemental Indenture dated as of October 28, 2004 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.10 of the Registrant’s Form 10-K for the fiscal year ended October 31, 2004.
	4.18	Seventh Supplemental Indenture dated as of October 31, 2004 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.11 of the Registrant’s Form 10-K for the fiscal year ended October 31, 2004.
	4.19	Eighth Supplemental Indenture dated as of January 31, 2005 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended April 30, 2005.
	4.20	Ninth Supplemental Indenture dated as of June 6, 2005 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended July 31, 2005.

50

Exhibit
Number		Description
	4.21	Tenth Supplemental Indenture dated as of August 1, 2005 by and among the parties listed on Schedule A thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.13 of the Registrant’s Registration Statement on Form S-4 filed with the Securities and Exchange Commission on September 29, 2005, File Nos. 333-128683, 333-128683-01, 333-128683-02, 333-128683-03 and 333-128683-04.
	4.22	Eleventh Supplemental Indenture dated as of January 31, 2006 by and among the parties listed on Schedule I thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended April 30, 2006.
	4.23	Twelfth Supplemental Indenture dated as of April 30, 2006 by and among the parties listed on Schedule I thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended July 31, 2006.
	4.24	Thirteenth Supplemental Indenture dated as of July 31, 2006 by and among the parties listed on Schedule I thereto, and J.P. Morgan Trust Company, National Association, as successor Trustee, is hereby incorporated by reference to Exhibit 4.16 of the Registrant’s Form 10-K for the year ended October 31, 2006.
	4.25	Fourteenth Supplemental Indenture dated as October 31, 2006 by and among the parties listed on Schedule I thereto, and The Bank of New York Trust Company, N.A. as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended April 30, 2007.
	4.26	Fifteenth Supplemental Indenture dated as of June 25, 2007 by and among the parties listed on Schedule I thereto, and The Bank of New York Trust Company, N.A. as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
	4.27	Sixteenth Supplemental Indenture dated as of June 27, 2007 by and among the parties listed on Schedule I thereto, and The Bank of New York Trust Company, N.A. as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
	4.28	Seventeenth Supplemental Indenture dated as of January 31, 2008, by and among the parties listed on Schedule A thereto, and The Bank of New York Trust Company, N.A. as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-Q for the quarter ended April 30, 2009.
	4.29	Indenture, dated as of April 20, 2009, among Toll Brothers Finance Corp., the Registrant and the other guarantors named therein and The Bank of New York Mellon, as trustee, is hereby incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.
	4.30	Authorizing Resolutions, dated as of April 20, 2009, relating to the $400,000,000 principal amount of 8.910% Senior Notes due 2017 of Toll Brothers Finance Corp. guaranteed on a Senior Basis by the Registrant and certain of its subsidiaries, is hereby incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.
	4.31	Form of Global Note for Toll Brothers Finance Corp.’s 8.910% Senior Notes due 2017, is hereby incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2009.

51

Exhibit
Number			Description
	4.32		Authorizing Resolutions, dated as of September 22, 2009, relating to the $250,000,000 principal amount of 6.750% Senior Notes due 2019 of Toll Brothers Finance Corp. guaranteed on a Senior Basis by the Registrant and certain of its subsidiaries, is hereby incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 22, 2009.
	4.33		Form of Global Note for Toll Brothers Finance Corp.’s 6.750% Senior Notes due 2019, is hereby incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 22, 2009.
	4.34		Registration Rights Agreement dated as of November 22, 2002 by and among Toll Brothers Finance Corp., the Registrant, Salomon Smith Barney Inc., Banc of America Securities LLC and Banc One Capital Markets, Inc. and each of the other initial purchasers named on Schedule A attached thereto is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended January 31, 2003.
	4.35		Registration Rights Agreement dated as of September 3, 2003 by and among Toll Brothers Finance Corp., the Registrant and Citigroup Global Markets, Inc. is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2003.
	4.36		Registration Rights Agreement dated as of March 16, 2004 by and among Toll Brothers Finance Corp., the Registrant and Citigroup Global Markets Inc. and each of the other initial purchasers named on Schedule A attached thereto is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2004.
	4.37		Registration Rights Agreement dated as of June 2, 2005 by and among Toll Brothers Finance Corp., the Registrant and Citigroup Global Markets Inc. and each of the other initial purchasers named on Schedule A attached thereto is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 8, 2005.
	4.38		Rights Agreement dated as of June 13, 2007, by and between the Registrant and American Stock Transfer & Trust Company, as Rights Agent, is hereby incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 18, 2007.
	4.39		Rights Agreement, dated June 17, 2009, by and among the Registrant and American Stock Transfer & Trust Company, LLC, as Rights Agent, is hereby incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 19, 2009.
	4.40		Toll Brothers, Inc. Employee Stock Purchase Plan (amended and restated effective January 1, 2008), is hereby incorporated by reference to Exhibit 4.31 of the Registrant’s Form 10-K for the year ended October 31, 2007.
	10.1		Credit Agreement by and among First Huntingdon Finance Corp., the Registrant and the lenders which are parties thereto dated October 22, 2010, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 27, 2010.
	10.2		Amended and Restated Credit Agreement by and among First Huntingdon Finance Corp., the Registrant and the lenders which are parties thereto dated March 17, 2006, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended January 31, 2010.
	10.3	*	Toll Brothers, Inc. Stock Option and Incentive Stock Plan (1995) is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended April 30, 1995.

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Exhibit
Number			Description
	10.4	*	Amendment to the Toll Brothers, Inc. Stock Option and Incentive Stock Plan (1995) dated May 29, 1996 is hereby incorporated by reference to Exhibit 10.9 the Registrant’s Form 10-K for the fiscal year ended October 31, 1996.
	10.5	*	Amendment to the Toll Brothers, Inc. Stock Option and Incentive Stock Plan (1995) effective March 22, 2001 is hereby incorporated by reference to Exhibit 10.3 of the Registrant’s Form 10-Q for the quarter ended July 31, 2001.
	10.6	*	Amendment to the Toll Brothers, Inc. Stock Option and Incentive Stock Plan (1995) effective December 12, 2007 is hereby incorporated by reference to Exhibit 10.9 of the Registrant’s Form 10-K for the year ended October 31, 2007.
	10.7	*	Toll Brothers, Inc. Stock Incentive Plan (1998) is hereby incorporated by reference to Exhibit 4 of the Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 25, 1998, File No. 333-57645.
	10.8	*	Amendment to the Toll Brothers, Inc. Stock Incentive Plan (1998) effective March 22, 2001 is hereby incorporated by reference to Exhibit 10.4 of the Registrant’s Form 10-Q for the quarter ended July 31, 2001.
	10.9	*	Amendment to the Toll Brothers, Inc. Stock Incentive Plan (1998) effective December 12, 2007 is hereby incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2008.
	10.10	*	Stock Award to Robert I. Toll pursuant to the Toll Brothers, Inc. Stock Incentive Plan (1998) is hereby incorporated by reference to Exhibit 10.3 of the Registrant’s Form 10-Q for the quarter ended January 31, 2007.
	10.11	*	Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) (amended and restated as of September 17, 2008, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Amendment No. 1 to Toll Brothers, Inc.’s Registration Statement on Form S-8 (No. 333-143367) filed with the Securities and Exchange Commission on October 29, 2008.
	10.12	*	Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) (amended and restated as of September 17, 2008) is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Amendment No. 1 to Toll Brothers, Inc.’s Registration Statement on Form S-8 (No. 333-144230) filed with the Securities and Exchange Commission on October 29, 2008.
	10.13	*	Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Employees (2007) is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 19, 2007.
	10.14	*	Form of Addendum to Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Employees (2007) is hereby incorporated by reference to Exhibit 10.3 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
	10.15	*	Form of Stock Award Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Employees (2007) is hereby incorporated by reference to Exhibit 10.4 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
	10.16	*	Form of Restricted Stock Unit Award pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) is hereby incorporated by reference to Exhibit 10.19 of the Registrant’s Form 10-K for the period ended October 31, 2008.
	10.17	*	Restricted Stock Unit Award to Robert I. Toll, dated December 19, 2008, pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) is incorporated by reference to Exhibit 10.20 of the Registrant’s Form 10-K for the period ended October 31, 2008.

53

Exhibit
Number			Description
	10.18	*	Restricted Stock Unit Award to Robert I. Toll, dated December 21, 2009, pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) is incorporated by reference to Exhibit 10.17 of the Registrant’s Form 10-K for the period ended October 31, 2009.
	10.19	*	Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Non-Employee Directors (2007) is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2007.
	10.20	*	Form of Addendum to Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) is hereby incorporated by reference to Exhibit 10.6 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
	10.21	*	Form of Stock Award Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Non-Employee Directors (2007) is hereby incorporated by reference to Exhibit 10.7 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
	10.22		Form of Stock Award Amendment pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) is hereby incorporated by reference to Exhibit 10.4 of the Registrant’s Form 10-Q for the quarter ended January 31, 2010.
	10.23	*	Toll Brothers, Inc. Cash Bonus Plan (amended and restated as of December 9, 2009) is incorporated by reference to Exhibit 10.21 of the Registrant’s Form 10-K for the period ended October 31, 2009.
	10.24	*	Toll Brothers, Inc. Executive Officer Cash Bonus Plan, as amended, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2005.
	10.25	*	Toll Brothers, Inc. Senior Officer Bonus Plan is hereby incorporated by reference to Addendum C to Toll Brothers, Inc.’s definitive proxy statement on Schedule 14A for the Toll Brothers, Inc. 2010 Annual Meeting of Stockholders held on March 17, 2010 filed with the Securities and Exchange Commission on February 1, 2010.
	10.26	*	Toll Brothers, Inc. Supplemental Executive Retirement Plan (amended and restated effective as of December 12, 2007) is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended July 31, 2010.
	10.27	*	Stock Redemption Agreement between the Registrant and Robert I. Toll, dated October 28, 1995, is hereby incorporated by reference to Exhibit 10.7 of the Registrant’s Form 10-K for the fiscal year ended October 31, 1995.
	10.28	*	Agreement dated May 1, 2005 to Abolish Stock Redemption Agreement between the Registrant and Robert I. Toll, dated October 28, 1995, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2005.
	10.29	*	Stock Redemption Agreement between the Registrant and Bruce E. Toll, dated October 28, 1995, is hereby incorporated by reference to Exhibit 10.8 of the Registrant’s Form 10-K for the fiscal year ended October 31, 1995.
	10.30	*	Agreement dated May 1, 2005 to Abolish Stock Redemption Agreement between the Registrant and Bruce E. Toll, dated October 28, 1995, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2005.
	10.31	*	Agreement dated March 5, 1998 between the Registrant and Bruce E. Toll regarding Mr. Toll’s resignation and related matters is hereby incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q for the quarter ended April 30, 1998.

54

Exhibit
Number			Description
	10.32	*	Consulting and Non-Competition Agreement dated March 5, 1998 between the Registrant and Bruce E. Toll is hereby incorporated by reference to Exhibit 10.3 to the Registrant’s Form 10-Q for the quarter ended April 30, 1998.
	10.33	*	Amendment to the Agreement dated March 5, 1998 between the Registrant and Bruce E. Toll and to the Consulting and Non-Competition Agreement dated March 5, 1998 between the Registrant and Bruce E. Toll is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended July 31, 2000.
	10.34	**	Advisory and Non-Competition Agreement between the Registrant and Bruce E. Toll, dated as of November 1, 2010, is filed herewith.
	10.35	*	Advisory and Non-Competition Agreement between the Registrant and Bruce E. Toll, dated as of November 1, 2004, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 4, 2005.
	10.36	*	Amendment dated as of June 13, 2007 to the Advisory and Non-Competition Agreement, dated as of November 1, 2004, between the Registrant and Bruce E. Toll is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 18, 2007.
	10.37	*	Amendment dated as of November 24, 2008 to the Advisory and Non-Competition Agreement, dated as of November 1, 2004, between the Registrant and Bruce E. Toll is incorporated by reference to Exhibit 10.43 of the Registrant’s Form 10-K for the period ended October 31, 2008.
	10.38	*	Agreement between the Registrant and Joel H. Rassman, dated June 30, 1988, is hereby incorporated by reference to Exhibit 10.8 of Toll Corp.’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on September 9, 1988, File No. 33-23162.
	10.39	*	Toll Bros., Inc. Non-Qualified Deferred Compensation Plan, amended and restated as of November 1, 2008, is incorporated by reference to Exhibit 10.45 of the Registrant’s Form 10-K for the period ended October 31, 2008.
	10.40	**	Amendment Number 1 dated November 1, 2010 to the Toll Bros., Inc. Non-Qualified Deferred Compensation Plan, amended and restated as of November 1, 2008, is filed herewith.
	10.41		Form of Indemnification Agreement between the Registrant and the members of its Board of Directors, is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2009.
	10.42	**	Restricted Stock Unit Award to Douglas C. Yearley, Jr., dated December 20, 2010, pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007), is filed herewith.
	10.43	**	Restricted Stock Unit Award to Martin P. Connor, dated December 20, 2010, pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007), is filed herewith.
	10.44	**	Restricted Stock Unit Award to Robert I. Toll, dated December 20, 2010, pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007), is filed herewith.
	12	***	Statement re: Computation of Ratios of Earnings to Fixed Charges.
	21	***	Subsidiaries of the Registrant.
	23	***	Consent of Independent Registered Public Accounting Firm.
	31.1	***	Certification of Douglas C. Yearley, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	***	Certification of Martin P. Connor pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	***	Certification of Douglas C. Yearley, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	***	Certification of Martin P. Connor pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

55

Exhibit
Number	Description
101.INS***	XBRL Instance Document
101.SCH***	XBRL Schema Document
101.CAL***	XBRL Calculation Linkbase Document
101.LAB***	XBRL Labels Linkbase Document
101.PRE***	XBRL Presentation Linkbase Document
101.DEF***	XBRL Definition Linkbase Document

*	This exhibit is a management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.
**	This exhibit is a management contract or compensatory plan or arrangement required to be filed as an exhibit to this report as is furnished electronically herewith.
***	Furnished electronically herewith.

56

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Township of Horsham, Commonwealth of Pennsylvania on December 22, 2010.

TOLL BROTHERS, INC.
By:	/s/ Douglas C. Yearly, Jr. Douglas C. Yearley, Jr.
	Chief Executive Officer
	(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Robert I. Toll	Executive Chairman of the Board of Directors	December 22, 2010
Robert I. Toll
/s/ Bruce E. Toll	Vice Chairman of the Board and Director	December 22, 2010
Bruce E. Toll
/s/ Douglas C. Yearley, Jr.	Chief Executive Officer and Director	December 22, 2010
Douglas C. Yearley, Jr.	(Principal Executive Officer)
/s/ Zvi Barzilay	President, Chief Operating Officer and Director	December 22, 2010
Zvi Barzilay
/s/ Martin P. Connor	Senior Vice President, Chief Financial Officer	December 22, 2010
Martin P. Connor	and Treasurer (Principal Financial Officer)
/s/ Joseph R. Sicree	Senior Vice President and Chief Accounting	December 22, 2010
Joseph R. Sicree	Officer (Principal Accounting Officer)
/s/ Robert S. Blank	Director	December 22, 2010
Robert S. Blank
/s/ Edward G. Boehne	Director	December 22, 2010
Edward G. Boehne
/s/ Richard J. Braemer	Director	December 22, 2010
Richard J. Braemer
/s/ Christine N. Garvey	Director	December 22, 2010
Christine N. Garvey
/s/ Carl B. Marbach	Director	December 22, 2010
Carl B. Marbach
/s/ Stephen A. Novick	Director	December 22, 2010
Stephen A. Novick
/s/ Paul E. Shapiro	Director	December 22, 2010
Paul E. Shapiro

57

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of October 31, 2010.

Our independent registered public accounting firm, Ernst & Young LLP, has issued its report, which is included herein, on the effectiveness of our internal control over financial reporting.

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Toll Brothers, Inc.

We have audited Toll Brothers, Inc.’s internal control over financial reporting as of October 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Toll Brothers, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Toll Brothers, Inc. maintained, in all material respects, effective internal control over financial reporting as of October 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Toll Brothers, Inc. and subsidiaries as of October 31, 2010 and 2009, and the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended October 31, 2010 of Toll Brothers, Inc. and subsidiaries and our report dated December 22, 2010 expressed an unqualified opinion thereon.

/s/Ernst & Young LLP

Philadelphia, Pennsylvania
December 22, 2010

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Toll Brothers, Inc.

We have audited the accompanying consolidated balance sheets of Toll Brothers, Inc. and subsidiaries as of October 31, 2010 and 2009, and the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended October 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Toll Brothers, Inc. and subsidiaries at October 31, 2010 and 2009, and the consolidated results of their operations, changes in equity and their cash flows for each of the three years in the period ended October 31, 2010, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Toll Brothers Inc.’s internal control over financial reporting as of October 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 22, 2010 expressed an unqualified opinion thereon.

/s/Ernst & Young LLP

Philadelphia, Pennsylvania
December 22, 2010

F-3

CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)

	Year ended October 31,
	2010			2009			2008
Revenues	$	1,494,771		$	1,755,310		$	3,148,166
Cost of revenues		1,383,075			1,951,312			3,119,805
Selling, general and administrative		263,224			313,209			429,894
Interest expense		22,751			7,949
Goodwill impairment								3,233
		1,669,050			2,272,470			3,552,932
Loss from operations		(174,279	)		(517,160	)		(404,766	)
Other:
Income (loss) from unconsolidated entities		23,470			(7,518	)		(186,393	)
Interest and other income		34,830			41,906			124,372
Expenses related to early retirement of debt		(1,208	)		(13,693	)
Loss before income taxes		(117,187	)		(496,465	)		(466,787	)
Income tax (benefit) provision		(113,813	)		259,360			(168,977	)
Net loss	$	(3,374	)	$	(755,825	)	$	(297,810	)
Loss per share:
Basic	$	(0.02	)	$	(4.68	)	$	(1.88	)
Diluted	$	(0.02	)	$	(4.68	)	$	(1.88	)
Weighted-average number of shares:
Basic		165,666			161,549			158,730
Diluted		165,666			161,549			158,730

See accompanying notes

F-4

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	October 31,
	2010			2009
ASSETS
Cash and cash equivalents	$	1,039,060		$	1,807,718
Marketable U.S. Treasury and Agency securities		197,867			101,176
Restricted cash		60,906
Inventory		3,241,725			3,183,566
Property, construction and office equipment, net		79,916			70,441
Receivables, prepaid expenses and other assets		97,039			95,774
Mortgage loans receivable		93,644			43,432
Customer deposits held in escrow		21,366			17,653
Investments in and advances to unconsolidated entities		198,442			152,844
Income tax refund recoverable		141,590			161,840
	$	5,171,555		$	5,634,444
LIABILITIES AND EQUITY
Liabilities
Loans payable	$	94,491		$	472,854
Senior notes		1,544,110			1,587,648
Senior subordinated notes					47,872
Mortgage company warehouse loan		72,367			27,015
Customer deposits		77,156			88,625
Accounts payable		91,738			79,097
Accrued expenses		570,321			640,221
Income taxes payable		162,359			174,630
Total liabilities		2,612,542			3,117,962
Equity:
Stockholders’ equity
Preferred stock, none issued
Common stock, 166,413 and 164,732 shares issued at October 31, 2010 and 2009, respectively		1,664			1,647
Additional paid-in capital		360,006			316,518
Retained earnings		2,194,456			2,197,830
Treasury stock, at cost - 5 shares and 7 shares at October 31, 2010 and 2009, respectively		(96	)		(159	)
Accumulated other comprehensive loss		(577	)		(2,637	)
Total stockholders’ equity		2,555,453			2,513,199
Noncontrolling interest		3,560			3,283
Total equity		2,559,013			2,516,482
	$	5,171,555		$	5,634,444

See accompanying notes

F-5

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)

															Accum-
															ulated
															Other
															Compre-
							Additional								hensive			Non-
	Common						Paid-In		Retained			Treasury			Income			Controlling			Total
	Stock						Capital		Earnings			Stock			(Loss)			Interest			Equity
	Shares			$			$		$			$			$			$			$
Balance, November 1, 2007		157,008			1,570			227,561		3,298,925			(425	)		(397	)		8,011			3,535,245
Net loss										(297,810	)											(297,810	)
Purchase of treasury stock		(94	)		(1	)							(1,994	)								(1,995	)
Exercise of stock options		3,423			34			30,612					2,398									33,044
Impact of adoption of FIN 48										(47,460	)											(47,460	)
Employee benefit plan issuances		31			1			662														663
Issuance of restricted stock		1						26														26
Stock-based compensation								22,559														22,559
Amortization of unearned compensation								670														670
Deconsolidation of majority-owned joint venture																			(8,011	)		(8,011	)
Other comprehensive income																722						722
Balance, October 31, 2008		160,369			1,604			282,090		2,953,655			(21	)		325			—			3,237,653
Net loss										(755,825	)											(755,825	)
Purchase of treasury stock		(79	)		(1	)		1					(1,473	)								(1,473	)
Exercise of stock options		4,415			44			22,954					1,322									24,320
Employee benefit plan issuances		26						486														486
Conversion of restricted stock units to stock		1						35					13									48
Stock-based compensation								10,925														10,925
Issuance of restricted stock								27														27
Formation of majority-owned joint venture																			3,283			3,283
Other comprehensive loss																(2,962	)					(2,962	)
Balance, October 31, 2009		164,732			1,647			316,518		2,197,830			(159	)		(2,637	)		3,283			2,516,482
Net loss										(3,374	)											(3,374	)
Purchase of treasury stock		(31	)										(588	)								(588	)
Exercise of stock options		1,684			17			33,638					620									34,275
Employee benefit plan issuances		24						435														435
Conversion of restricted stock units to stock		3						61					31									92
Stock-based compensation								9,332														9,332
Issuance of restricted stock		1						22														22
Other comprehensive income																2,060						2,060
Capital contribution																			277			277
Balance, October 31, 2010		166,413			1,664			360,006		2,194,456			(96	)		(577	)		3,560			2,559,013

See accompanying notes

F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

	Year ended October 31
	2010			2009			2008
Cash flow (used in) provided by operating activities:
Net loss	$	(3,374	)	$	(755,825	)	$	(297,810	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		20,044			23,925			28,333
Stock-based compensation		11,677			10,987			23,255
Excess tax benefits from stock-based compensation		(4,954	)		(24,817	)		(25,780	)
Impairments of investments in unconsolidated entities					11,300			200,652
Income from unconsolidated entities		(23,470	)		(3,782	)		(14,259	)
Distributions of earnings from unconsolidated entities		10,297			816			41,937
Deferred tax benefit		60,697			(52,577	)		(259,856	)
Deferred tax valuation allowances		(60,697	)		458,280			24,050
Inventory impairments		115,258			465,411			644,991
Change in fair value of mortgage loans receivable and derivative instruments		(970	)
Expenses related to early retirement of debt		1,208			13,693
Goodwill impairment charge								3,233
Deconsolidation of majority-owned joint venture								(31	)
Changes in operating assets and liabilities
(Increase) decrease in inventory		(140,344	)		489,213			662,769
Origination of mortgage loans		(628,154	)		(571,158	)		(896,365	)
Sale of mortgage loans		579,221			577,263			940,299
Increase in restricted cash		(60,906	)
Decrease in contract receivables								46,525
(Increase) decrease in receivables, prepaid expenses and other assets		(3,115	)		20,045			18,738
Decrease in customer deposits		(15,182	)		(45,706	)		(109,110	)
Decrease in accounts payable and accrued expenses		(38,598	)		(149,065	)		(194,427	)
Decrease (increase) in income tax refund recoverable		20,250			(161,840	)
Increase (decrease) in current income taxes payable		14,828			(22,972	)		(10,348	)
Net cash (used in) provided by operating activities		(146,284	)		283,191			826,796
Cash flow used in investing activities:
Purchase of property and equipment — net		(4,830	)		(2,712	)		(8,158	)
Purchase of marketable securities		(157,962	)		(101,324	)		(1,468,440	)
Sale and redemption of marketable securities		60,000						1,463,487
Investment in and advances to unconsolidated entities		(58,286	)		(31,342	)		(54,787	)
Return of investments in unconsolidated entities		9,696			3,205			3,268
Net cash used in investing activities		(151,382	)		(132,173	)		(64,630	)
Cash flow (used in) provided by financing activities:
Net proceeds from issuance of senior notes					635,765
Proceeds from loans payable		927,233			636,975			994,833
Principal payments of loans payable		(1,316,514	)		(785,883	)		(1,058,612	)
Redemption of senior subordinated notes		(47,872	)		(296,503	)		(7,000	)
Redemption of senior notes		(46,114	)		(210,640	)
Proceeds from stock-based benefit plans		7,589			22,147			17,982
Excess tax benefits from stock-based compensation		4,954			24,817			25,780
Purchase of treasury stock		(588	)		(1,473	)		(1,994	)
Change in noncontrolling interest		320			(2,000	)		3
Net cash (used in) provided by financing activities		(470,992	)		23,205			(29,008	)
Net (decrease) increase in cash and cash equivalents		(768,658	)		174,223			733,158
Cash and cash equivalents, beginning of year		1,807,718			1,633,495			900,337
Cash and cash equivalents, end of year	$	1,039,060		$	1,807,718		$	1,633,495

See accompanying notes

F-7

Notes to Consolidated Financial Statements

1. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company”), a Delaware corporation, and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in 50% or less owned partnerships and affiliates are accounted for using the equity method unless it is determined that the Company has effective control of the entity, in which case the entity would be consolidated.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Liquid investments or investments with original maturities of three months or less are classified as cash equivalents. The carrying value of these investments approximates their fair value.

Marketable U.S. Treasury and Agency Securities

Marketable securities, currently consisting of U.S. Treasury and Agency securities, are classified as available-for-sale, and accordingly, are stated at fair value, which is based on quoted market prices. Unrealized gains and losses are excluded from earnings and are reported as other comprehensive income, net of income tax effects.

Restricted Cash

Restricted cash represents cash deposits collateralizing outstanding letters of credit with three banks that were in the Company’s prior bank revolving credit facility that chose not to participate in the Company’s new revolving credit facility and cash deposited into a voluntary employee benefit association to fund certain future employee benefits. The Company expects to replace the letters of credit in fiscal 2011 with new letters of credit to be issued under its new revolving credit facility; once the letters of credit are replaced, the restricted cash related to the letters of credit will be returned to the Company.

Inventory

Inventory is stated at cost unless an impairment exists, in which case it is written down to fair value in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment” (“ASC 360”). In addition to direct land acquisition costs, land development costs and home construction costs, costs also include interest, real estate taxes and direct overhead related to development and construction, which are capitalized to inventory during the period beginning with the commencement of development and ending with the completion of construction. For those communities that have been temporarily closed, no additional interest is allocated to a community’s inventory until it re-opens. While the community remains closed, carrying costs such as real estate taxes are expensed as incurred.

The Company capitalizes certain interest costs to qualified inventory during the development and construction period of its communities in accordance with ASC 835-20, “Capitalization of Interest” (“ASC 835-20”). Capitalized interest is charged to cost of revenues when the related inventory is delivered. Interest incurred on homebuilding indebtedness in excess of qualified inventory, as defined in ASC 835-20, is charged to the statement of operations in the period incurred. Prior to November 1, 2008, qualified inventory exceeded homebuilding indebtedness and all interest incurred was capitalized.

Once a parcel of land has been approved for development and the Company opens one of its typical communities, it may take four to five years to fully develop, sell and deliver all the homes in such community. Longer or shorter time periods are possible depending on the number of home sites in a community and the sales and delivery pace of the homes in a community. The Company’s master planned communities, consisting of several smaller communities, may take up to ten years or more to complete. Because of the downturn in the Company’s business, the aforementioned estimated community lives could be significantly longer. Because the Company’s inventory is considered a long-lived asset under GAAP, it is required, under ASC 360, to regularly review the carrying value of each community and write down the value of those communities for which it believes the values are not recoverable.

F-8

Current Communities: When the profitability of a current community deteriorates, the sales pace declines significantly or some other factor indicates a possible impairment in the recoverability of the asset, the asset is reviewed for impairment by comparing the estimated future undiscounted cash flow for the community to its carrying value. If the estimated future undiscounted cash flow is less than the community’s carrying value, the carrying value is written down to its estimated fair value. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. The impairment is charged to cost of revenues in the period in which the impairment is determined. In estimating the future undiscounted cash flow of a community, the Company uses various estimates such as: (a) the expected sales pace in a community, based upon general economic conditions that will have a short-term or long-term impact on the market in which the community is located and on competition within the market, including the number of home sites available and pricing and incentives being offered in other communities owned by the Company or by other builders; (b) the expected sales prices and sales incentives to be offered in a community; (c) costs expended to date and expected to be incurred in the future, including, but not limited to, land and land development costs, home construction costs, interest costs and overhead costs; (d) alternative product offerings that may be offered in a community that will have an impact on sales pace, sales price, building cost or the number of homes that can be built on a particular site; and (e) alternative uses for the property such as the possibility of a sale of the entire community to another builder or the sale of individual home sites.

Future Communities: The Company evaluates all land held for future communities or future sections of current communities, whether owned or under contract, to determine whether or not it expects to proceed with the development of the land as originally contemplated. This evaluation encompasses the same types of estimates used for current communities described above, as well as an evaluation of the regulatory environment in which the land is located and the estimated probability of obtaining the necessary approvals, the estimated time and cost it will take to obtain the approvals and the possible concessions that will be required to be given in order to obtain them. Concessions may include cash payments to fund improvements to public places such as parks and streets, dedication of a portion of the property for use by the public or as open space or a reduction in the density or size of the homes to be built. Based upon this review, the Company decides (a) as to land under contract to be purchased, whether the contract will likely be terminated or renegotiated, and (b) as to land owned, whether the land will likely be developed as contemplated or in an alternative manner, or should be sold. The Company then further determines whether costs that have been capitalized to the community are recoverable or should be written off. The write-off is charged to cost of revenues in the period in which the need for the write-off is determined.

The estimates used in the determination of the estimated cash flows and fair value of both current and future communities are based on factors known to the Company at the time such estimates are made and its expectations of future operations and economic conditions. Should the estimates or expectations used in determining estimated fair value deteriorate in the future, the Company may be required to recognize additional impairment charges and write-offs related to current and future communities.

Variable Interest Entities: The Company has a significant number of land purchase contracts and several investments in unconsolidated entities which it evaluates in accordance with ASC 810, “Consolidation” (“ASC 810”). Pursuant to ASC 810, an enterprise that absorbs a majority of the expected losses or receives a majority of the expected residual returns of a variable interest entity (“VIE”) is considered to be the primary beneficiary and must consolidate the VIE. A VIE is an entity with insufficient equity investment or in which the equity investors lack some of the characteristics of a controlling financial interest. For land purchase contracts with sellers meeting the definition of a VIE, the Company performs a review to determine which party is the primary beneficiary of the VIE. This review requires substantial judgment and estimation. These judgments and estimates involve assigning probabilities to various estimated cash flow possibilities relative to the entity’s expected profits and losses and the cash flows associated with changes in the fair value of the land under contract.

Property, Construction and Office Equipment

Property, construction and office equipment are recorded at cost and are stated net of accumulated depreciation of $146.3 million and $145.9 million at October 31, 2010 and 2009, respectively. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets.

Mortgage Loans Receivable

Effective November 1, 2008, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” as codified in ASC 825, “Financial Instruments” (“ASC 825”) on a prospective basis for residential mortgage loans it holds for sale. In accordance with the provisions of ASC 825, residential mortgage loans held for sale originated subsequent to November 1, 2008 are measured at fair value. The adoption of ASC 825 for residential mortgage loans held for sale improves the consistency of mortgage loan valuation between the date the borrower locks in the interest rate on the pending mortgage loan and the date of the mortgage loan sale. In addition, the recognition of net origination costs and fees associated with residential mortgage loans originated on or after November 1, 2008 are no longer deferred until the time of sale. There were no required cumulative adjustments to retained earnings because the Company continued to account for residential mortgage loans held for sale originated prior to November 1, 2008 at the lower of cost or market value. The implementation of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

F-9

Investments in and Advances to Unconsolidated Entities

The trends, uncertainties or other factors that have negatively impacted the Company’s business and the industry in general have also impacted the unconsolidated entities in which the Company has investments. The Company reviews each of its investments in unconsolidated entities on a quarterly basis to determine the recoverability of its investment. The Company evaluates the recoverability of its investment in unconsolidated entities using similar methodology that it uses to evaluate its inventories. This evaluation entails a detailed cash flow analysis using many estimates including but not limited to expected sales pace, expected sales prices, expected incentives, costs incurred and anticipated, sufficiency of financing and capital, competition, and market conditions. When markets deteriorate and it is no longer probable that the Company can recover its investment in a joint venture, the Company impairs its investment. If a joint venture has its own loans or is principally a joint venture to hold an option, such impairment may result in the majority or all of the Company’s investment being impaired. See “Inventory” above for more detailed disclosure on the Company’s evaluation of inventory.

The Company is a party to several joint ventures with independent third parties to develop and sell land that was owned by its joint venture partners. The Company recognizes its proportionate share of the earnings from the sale of home sites to other builders. The Company does not recognize earnings from the home sites it purchases from these ventures, but reduces its cost basis in the home sites by its share of the earnings from those home sites.

The Company is also a party to several other joint ventures, effectively owns one-third of the Toll Brothers Realty Trust Group and owns 50% of Toll Brothers Realty Trust II. The Company recognizes its proportionate share of the earnings of these entities.

Treasury Stock

Treasury stock is recorded at cost. Issuance of treasury stock is accounted for on a first-in, first-out basis. Differences between the cost of treasury stock and the re-issuance proceeds are charged to additional paid-in capital.

Revenue and Cost Recognition

The construction time of the Company’s homes is generally less than one year, although some homes may take more than one year to complete. Revenues and cost of revenues from these home sales are recorded at the time each home is delivered and title and possession are transferred to the buyer. Closing normally occurs shortly after construction is substantially completed. In addition, the Company has several high-rise/mid-rise projects that do not qualify for percentage of completion accounting in accordance with ASC 360, which are included in this category of revenues and costs. During fiscal 2007 and 2008, the Company completed construction on four projects for which it used the percentage of completion accounting method to recognize revenues and costs; after completion of construction, the remaining units in these projects were or will be accounted for using the completed contract method of accounting. Based upon the current accounting rules and interpretations, the Company does not believe that any of its current or future communities currently qualify or will qualify in the future for percentage of completion accounting.

For the Company’s standard attached and detached homes, land, land development and related costs, both incurred and estimated to be incurred in the future, are amortized to the cost of homes closed based upon the total number of homes to be constructed in each community. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs subsequent to the commencement of delivery of homes are allocated to the remaining undelivered homes in the community. Home construction and related costs are charged to the cost of homes closed under the specific identification method. The estimated land, common area development and related costs of master planned communities, including the cost of golf courses, net of their estimated residual value, are allocated to individual communities within a master planned community on a relative sales value basis. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs are allocated to the remaining home sites in each of the communities of the master planned community.

F-10

For high-rise/mid-rise projects that do not qualify for percentage of completion accounting, land, land development, construction and related costs, both incurred and estimated to be incurred in the future, are generally amortized to the cost of units closed based upon an estimated relative sales value of the units closed to the total estimated sales value. Any changes resulting from a change in the estimated total costs or revenues of the project are allocated to the remaining units to be delivered.

Forfeited customer deposits are recognized in other income in the period in which the Company determines that the customer will not complete the purchase of the home and it has the right to retain the deposit.

Sales Incentives: In order to promote sales of its homes, the Company grants its home buyers sales incentives from time to time. These incentives will vary by type of incentive and by amount on a community-by-community and home-by-home basis. Incentives that impact the value of the home or the sales price paid, such as special or additional options, are generally reflected as a reduction in sales revenues. Incentives that the Company pays to an outside party, such as paying some or all of a home buyer’s closing costs, are recorded as an additional cost of revenues. Incentives are recognized at the time the home is delivered to the home buyer and the Company receives the sales proceeds.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $9.2 million, $11.5 million and $23.1 million for the years ended October 31, 2010, 2009 and 2008, respectively.

Warranty Costs

The Company provides all of its home buyers with a limited warranty as to workmanship and mechanical equipment. The Company also provides many of its home buyers with a limited ten-year warranty as to structural integrity. The Company accrues for expected warranty costs at the time each home is closed and title and possession have been transferred to the buyer. Costs are accrued based upon historical experience.

Insurance Costs

The Company accrues for the expected costs associated with the deductibles and self-insured amounts under its various insurance policies.

Stock-Based Compensation

The Company accounts for its stock-based compensation in accordance with ASC 718, “Compensation — Stock Compensation” (“ASC 718”). The option pricing models used are designed to estimate the value of options that, unlike employee stock options and restricted stock units, can be traded at any time and are transferable. In addition to restrictions on trading, employee stock options and restricted stock units may include other restrictions such as vesting periods. Further, such models require the input of highly subjective assumptions, including the expected volatility of the stock price.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recorded based on temporary differences between the amounts reported for financial reporting purposes and the amounts deductible for income tax purposes. In accordance with the provisions of ASC 740, the Company assesses the realizability of its deferred tax assets. A valuation allowance must be established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. See “Income Taxes — Valuation Allowance” below.

Provisions (benefits) for federal and state income taxes are calculated on reported pretax earnings (losses) based on current tax law and also include, in the applicable period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions (benefits) differ from the amounts currently receivable or payable because certain items of income and expense are recognized for financial reporting purposes in different periods than for income tax purposes. Significant judgment is required in determining income tax provisions (benefits) and evaluating tax positions. The Company establishes reserves for income taxes when, despite the belief that its tax positions are fully supportable, it believes that its positions may be challenged and disallowed by various tax authorities. The consolidated tax provision (benefits) and related accruals include the impact of such reasonably estimable disallowances as deemed appropriate. To the extent that the probable tax outcome of these matters changes, such changes in estimates will impact the income tax provision (benefit) in the period in which such determination is made.

F-11

On November 1, 2007, the Company adopted the provisions of the Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”) as codified in ASC 740. ASC 740 clarifies the accounting for uncertainty in income taxes recognized and prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. ASC 740 requires a company to recognize the financial statement effect of a tax position when it is “more-likely-than-not” (defined as a substantiated likelihood of more than 50%), based on the technical merits of the position, that the position will be sustained upon examination. A tax position that meets the “more-likely-than-not” recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. The inability of the Company to determine that a tax position meets the “more-likely-than-not” recognition threshold does not mean that the Internal Revenue Service (“IRS”) or any other taxing authority will disagree with the position that the Company has taken.

If a tax position does not meet the “more-likely-than-not” recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of operations and the Company is required to accrue potential interest and penalties until the uncertainty is resolved. Potential interest and penalties are recognized as a component of the provision for income taxes which is consistent with the Company’s historical accounting policy. Differences between amounts taken in a tax return and amounts recognized in the financial statements are considered unrecognized tax benefits. The Company believes that it has a reasonable basis for each of its filing positions and intends to defend those positions if challenged by the IRS or another taxing jurisdiction. If the IRS or other taxing authorities do not disagree with the Company’s position, and after the statute of limitations expires, the Company will recognize the unrecognized tax benefit in the period that the uncertainty of the tax position is eliminated.

As of November 1, 2007, the Company recorded a $47.5 million charge to retained earnings to recognize the net cumulative effect of the adoption of FIN 48. As of November 1, 2007, after adoption of FIN 48, the Company’s cumulative gross unrecognized tax benefits were $364.3 million.

Income Taxes — Valuation Allowance

Significant judgment is required in estimating valuation allowances for deferred tax assets. In accordance with ASC 740, a valuation allowance is established against a deferred tax asset if, based on the available evidence, it is more likely than not that such asset will not be realized. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under tax law. The Company periodically assesses the need for valuation allowances for deferred tax assets based on ASC 740’s “more-likely-than-not” realization threshold criterion. In the Company’s assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative income and losses, forecasts of future profitability, the duration of statutory carryback or carryforward periods, its experience with operating loss and tax credit carryforwards being used before expiration, and tax planning alternatives.

In accordance with ASC 740, the Company assesses whether a valuation allowance should be established based on its determination of whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company’s assessment of the need for a valuation allowance on its deferred tax assets includes assessing the likely future tax consequences of events that have been recognized in its consolidated financial statements or tax returns. The Company bases its estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, on business plans and other expectations about future outcomes. Changes in existing tax laws or rates could affect actual tax results and future business results may affect the amount of deferred tax liabilities or the valuation of deferred tax assets over time. The Company’s accounting for deferred tax assets represents its best estimate of future events using the guidance provided by ASC 740.

Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods (carryforward period assumptions), it is reasonably possible that actual results could differ from the estimates used in the Company’s historical analyses. The Company’s assumptions require significant judgment because the residential homebuilding industry is cyclical and is highly sensitive to changes in economic conditions. If the Company’s results of operations are less than projected and there is insufficient objectively verifiable evidence to support the likely realization of its deferred tax assets, a valuation allowance would be required to reduce or eliminate its deferred tax assets.

F-12

Noncontrolling Interest

The Company has a 67% interest in an entity that is developing land. The financial statements of this entity are consolidated in the Company’s consolidated financial statements. The amount shown in the Company’s consolidated balance sheet under “Noncontrolling interest” represents the noncontrolling interest attributable to the 33% minority interest not owned by the Company.

Geographic Segment Reporting

The Company has determined that its home building operations operate in four geographic segments: North, Mid-Atlantic, South and West. The states comprising each geographic segment are as follows:

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

The Company stopped selling homes in Rhode Island in the first quarter of fiscal 2008 and delivered its last home there in fiscal 2008. The operations in Rhode Island were immaterial to the North geographic segment. In fiscal 2010, the Company discontinued the sale of homes in West Virginia and Georgia. At October 31, 2010, the Company had no backlog in West Virginia and Georgia. The operations in West Virginia and Georgia were immaterial to the Mid-Atlantic and South geographic segments, respectively.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” as codified in ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 provides guidance for using fair value to measure assets and liabilities. ASC 820 also responds to investors’ requests for expanded information about the extent to which a company measures assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The Company adopted ASC 820 with respect to financial instruments effective for its fiscal year beginning November 1, 2008. See Note 11, “Fair Value Disclosures,” for information concerning the adoption of ASC 820. In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2 (“FSP 157-2”) (codified in ASC 820) which delayed the effective date of ASC 820 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP 157-2 applies to, but is not limited to, long-lived assets (asset groups) measured at fair value for an impairment assessment (i.e., inventory impairment assessments). FSP 157-2 deferred the effective date of ASC 820 for nonfinancial assets and nonfinancial liabilities for the Company to November 1, 2009. The adoption of ASC 820 related to nonfinancial assets and nonfinancial liabilities did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment to ARB No. 51,” as codified in ASC 810, “Consolidation” (“ASC 810”). Under the provisions of ASC 810, a noncontrolling interest in a subsidiary, or minority interest, must be classified as equity and the amount of consolidated net income (loss) specifically attributable to the minority interest must be clearly identified in the consolidated statement of operations. ASC 810 also requires consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling interest retained in a deconsolidation. ASC 810 was effective for the Company’s fiscal year beginning November 1, 2009. The adoption of ASC 810 did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

In June 2008, the FASB issued FSP Emerging Issues Task Force 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” as codified in ASC 260, “Earnings per Share” (“ASC 260”). Under ASC 260, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and their respective participation rights in undistributed earnings. ASC 260 was effective for the Company’s fiscal year beginning November 1, 2009. The adoption of ASC 260 did not have a material impact on the Company’s reported earnings per share.

F-13

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”), as codified in ASC 860, “Transfers and Serving” (“ASC 860”). SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. SFAS 166 is applicable for annual periods beginning after November 15, 2009 and interim periods therein and thereafter. SFAS 166 will be effective for the Company’s fiscal year beginning November 1, 2010. The Company is currently assessing the impact, if any, of SFAS 166 on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”) codified in ASC 810. SFAS 167 eliminates FASB Interpretation No. 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary of a variable interest entity, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 is effective for annual reporting periods beginning after November 15, 2009. Earlier application is prohibited. SFAS 167 will be effective for the Company’s fiscal year beginning November 1, 2010. The Company is currently assessing the impact, if any, of SFAS 167 on its consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-5, “Fair Value Measurements and Disclosures (Topic 820) — Measuring Liabilities at Fair Value,” (“ASU 2009-5”), which amends ASC 820 to provide additional guidance to clarify the measurement of liabilities at fair value in the absence of observable market information. The Company adopted ASU 2009-5 as of November 1, 2009. The adoption of ASU 2009-5 did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

In January 2010, the FASB issued ASU No. 2010-6, “Improving Disclosure about Fair Value Measurements,” (“ASU 2010-6”), which amends ASC 820 to increase disclosure requirements regarding recurring and non-recurring fair value measurements. The Company adopted ASU 2010-6 as of February 1, 2010, except for the disclosures about Level 3 fair value disclosures which will be effective for the Company on November 1, 2011. The adoption of ASU 2010-6 did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

Reclassification

In accordance with ASC 810, the Company has reclassified the minority interest in a consolidated entity to equity. The presentation of certain other prior period amounts have been reclassified to conform to the fiscal 2010 presentation.

2. Inventory

Inventory at October 31, 2010 and 2009 consisted of the following (amounts in thousands):

	2010		2009
Land controlled for future communities	$	31,899	$	60,611
Land owned for future communities		923,972		775,083
Operating communities		2,285,854		2,347,872
	$	3,241,725	$	3,183,566

Operating communities include communities offering homes for sale, communities that have sold all available home sites but have not completed delivery of the homes, communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within twelve months of the end of the fiscal year being reported on, and communities preparing to open for sale. Communities that were previously offering homes for sale but are temporarily closed due to business conditions that do not have any remaining backlog and are not expected to reopen within twelve months of the end of the fiscal period being reported on have been classified as land owned for future communities. At October 31, 2010, the Company included $78.1 million of inventory related to 13 temporarily closed communities in operating communities and $212.9 million related to 36 temporarily closed communities in land owned for future communities. At October 31, 2009, the Company included $91.5 million of inventory related to 16 temporarily closed communities in operating communities and $75.9 million related to 16 temporarily closed communities in land owned for future communities.

F-14

The value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities and the carrying cost of model homes.

During fiscal 2010, the Company reclassified $18.7 million of inventory related to two non-equity golf course facilities to property, construction and office equipment. The $18.7 million was reclassified due to the completion of construction of the facilities and the substantial completion of the master planned communities of which the golf facilities are a part.

The Company provided for inventory impairment charges and the expensing of costs that it believed not to be recoverable in each of the three fiscal years ended October 31, 2010, 2009 and 2008 as shown in the table below (amounts in thousands).

	2010		2009		2008
Land controlled for future communities	$	6,069	$	28,518	$	101,466
Land owned for future communities		55,700		169,488		144,450
Operating communities		53,489		267,405		399,075
	$	115,258	$	465,411	$	644,991

The Company reviews the profitability of each of its operating communities during each fiscal quarter. For those communities operating below certain profitability thresholds, or where other negative factors, such as a decline in market or economic conditions in the market where the community is located, or high cancellation rates and a significant increase in speculative inventory in the community or in the market in general exist, the Company determines the estimated fair value of those communities and whether the estimated fair value exceeds their carrying value.

The table below provides, for the periods indicated, the number of operating communities that the Company tested for potential impairment, the number of operating communities in which the Company recognized impairment charges, and the amount of impairment charges recognized, and, as of the end of the period indicated, the fair value of those communities, net of impairment charges ($ amounts in millions).

			Impaired Communities
					Fair Value of
					Communities
	Number of				Net of
	Communities		Number of		Impairment		Impairment
Three months ended:	Tested		Communities		Charges		Charges
Fiscal 2010:
January 31		260		14	$	60.5	$	22.8
April 30		161		7	$	53.6		15.0
July 31		155		7	$	21.5		6.6
October 31		144		12	$	39.2		9.1
							$	53.5
Fiscal 2009:
January 31		289		41	$	216.2	$	108.3
April 30		288		36	$	181.8		67.4
July 31		288		14	$	67.7		46.8
October 31		254		21	$	116.4		44.9
							$	267.4
Fiscal 2008:
January 31		211		36	$	328.2	$	134.3
April 30		297		39	$	272.2		121.0
July 31		296		18	$	144.5		59.9
October 31		270		37	$	198.2		83.9
							$	399.1

F-15

At October 31, 2010, the Company evaluated its land purchase contracts to determine if any of the selling entities were variable interest entities (“VIEs”) and, if they were, whether the Company was the primary beneficiary of any of them. Under these land purchase contracts, the Company does not possess legal title to the land and its risk is generally limited to deposits paid to the sellers; the creditors of the sellers generally have no recourse against the Company. At October 31, 2010, the Company had determined that 32 land purchase contracts, with an aggregate purchase price of $250.1 million, on which it had made aggregate deposits totaling $12.6 million, were VIEs, and that it was not the primary beneficiary of any VIE related to its land purchase contracts.

Interest incurred, capitalized and expensed in each of the three fiscal years ended October 31, 2010, 2009 and 2008 was as follows (amounts in thousands):

	2010			2009			2008
Interest capitalized, beginning of year	$	259,818		$	238,832		$	215,571
Interest incurred		114,975			118,026			116,340
Interest expensed to cost of revenues		(75,876	)		(78,661	)		(87,866	)
Interest directly expensed to statement of operations		(22,751	)		(7,949	)
Write-off against other income		(8,369	)		(10,116	)		(1,434	)
Interest reclassified to property, construction and office equipment		(519	)
Capitalized interest applicable to inventory transferred to joint ventures					(314	)		(3,779	)
Interest capitalized, end of year	$	267,278		$	259,818		$	238,832

During fiscal 2010 and 2009, the Company sold non-strategic inventory for $22.5 million and $47.7 million, respectively and recognized income of $0.9 million in fiscal 2010 and a loss of $0.1 million in fiscal 2009. The net gain/loss, including the related capitalized interest, is included in interest and other income in the Company’s Consolidated Statements of Operations for fiscals 2010 and 2009.

Inventory impairment charges are recognized against all inventory costs of a community, such as land, land improvements, cost of home construction and capitalized interest. The amounts included in the table directly above reflect the gross amount of capitalized interest without allocation of any impairment charges recognized. The Company estimates that, had inventory impairment charges been allocated on a pro rata basis to the individual components of inventory, capitalized interest at October 31, 2010, 2009 and 2008 would have been reduced by approximately $53.3 million, $57.5 million and $42.2 million, respectively.

In fiscal 2008, a joint venture in which the Company has an 86.6% interest and which was included in its consolidated financial statements, defaulted on a $77.2 million non-recourse purchase money mortgage secured by a parcel of land owned by the joint venture. The mortgage holder’s only recourse was to foreclose on the parcel of land owned by the joint venture. The event of default represented a re-consideration event under ASC 810 and the Company determined that the mortgage holder is now the primary beneficiary of the joint venture. As of October 31, 2008, the Company no longer consolidated this joint venture. In fiscal 2007, the Company recognized an inventory impairment charge for its investment in this joint venture. The Company has surrendered its interest in this joint venture to its joint venture partner.

3. Investments in and Advances to Unconsolidated Entities

Development Joint Ventures

The Company has investments in, and advances to, a number of joint ventures with unrelated parties to develop land (“Development Joint Ventures”). Some of these Development Joint Ventures develop land for the sole use of the venture participants, including the Company, and others develop land for sale to the joint venture participants and to unrelated builders. The Company recognizes its share of earnings from the sale of home sites by Development Joint Ventures to other builders. With regard to home sites the Company purchases from the Development Joint Ventures, the Company reduces its cost basis in those home sites by its share of the earnings on the home sites. At October 31, 2010, the Company had approximately $58.6 million, net of impairment charges, invested in or advanced to Development Joint Ventures. In addition, the Company has a funding commitment of $3.5 million to one Development Joint Venture, should an additional investment in that venture be required.

F-16

As of October 31, 2010, the Company had recognized cumulative impairment charges in connection with its current Development Joint Ventures of $178.9 million. These impairment charges are attributable to investments in certain Development Joint Ventures that the Company did not believe were fully recoverable. The Company did not recognize any impairment charges in connection with the Development Joint Ventures in fiscal 2010. The Company recognized impairment charges in connection with its Development Joint Ventures of $5.3 million and $114.3 million in fiscal 2009 and 2008, respectively.

At October 31, 2010, the Development Joint Ventures had aggregate loan commitments of $1.07 billion and had approximately $1.07 billion borrowed against these commitments, net of amounts related to the foreclosure discussed below. These loans are non-recourse to the Company; however, with respect to loans obtained by some of the Development Joint Ventures, the Company executed completion guarantees and conditional repayment guarantees. The obligations under such completion guarantees and conditional repayment guarantees are several and not joint, and are limited to the Company’s pro-rata share of the loan obligations of each such Development Joint Venture.

In October 2008, the lending syndicate for one of the Development Joint Ventures completed a foreclosure on the land owned by that Development Joint Venture and filed a lawsuit against its members, including the parent companies of the members, seeking to recover damages under the completion guarantees. As noted above, each of the completion guarantees delivered by the members of that Development Joint Venture is several and not joint; therefore, the liability of the Company is limited to the Company’s pro-rata share of damages, if any, awarded under such completion guarantees. In November 2010, the parties reached an agreement in principle to settle the litigation.

In December 2008, the lending syndicate for another Development Joint Venture filed separate lawsuits against the members of the Development Joint Venture and their parent companies, seeking to recover damages under the completion guarantees and damages allegedly caused by the venture’s failure to repay the lenders. In December 2010, three of the lenders in this syndicate filed an involuntary bankruptcy petition against this joint venture entity. The Company does not believe that this alleged Development Joint Venture default and related lawsuit and the involuntary bankruptcy petition against this joint venture entity, will have a material impact on the Company’s results of operations, cash flows and financial condition.

The Company is a participant with an unrelated party in a Development Joint Venture which owns land within a master planned community. The Company contributed $5.7 million of cash to this joint venture and the other party contributed $4.7 million of cash and $1.0 million of impact fee credits. The Company sold land to this joint venture and received a cash payment of $8.3 million and the rights to the $1.0 million of impact fee credits, the estimated fair value of the land.

The Company estimates that, at October 31, 2010, the maximum liability, if any, under the joint venture completion guarantees and conditional repayment guarantees, including such completion guarantees and conditional repayment guarantees that are the subject of the litigation matters described above (net of amounts that the Company has accrued), is approximately $57.8 million.

Planned Community Joint Ventures

The Company is a participant in a joint venture with an unrelated party to develop a single master planned community (the “Planned Community Joint Venture”). In fiscal 2009, the Company and the other participant each contributed assets with an agreed-upon fair value of $48.0 million, including $3.0 million of cash. At October 31, 2010, the Company had an investment of $51.7 million in this Planned Community Joint Venture. At October 31, 2010, each participant had agreed to contribute additional funds up to $8.3 million if required. If a participant fails to make a required capital contribution, the other participant may make the additional contribution and diminish the non-contributing participant’s ownership interest.

Condominium Joint Ventures

At October 31, 2010, the Company had an aggregate of $47.6 million of investments in four joint ventures with unrelated parties to develop luxury condominium projects, including for-sale residential units and commercial space (“Condominium Joint Ventures”). At October 31, 2010, the Condominium Joint Ventures had aggregate loan commitments of $202.8 million, against which approximately $184.2 million had been borrowed. At October 31, 2010, the Company had guaranteed $10.0 million of the loans and other liabilities of these Condominium Joint Ventures.

As of October 31, 2010, the Company had recognized cumulative impairment charges against its investments in the Condominium Joint Ventures and its pro-rata share of impairment charges recognized by these Condominium Joint Ventures in the amount of $63.9 million. The Company did not recognize any impairment charges in connection with its Condominium Joint Ventures in fiscal 2010; however; it recognized $6.0 million and $57.9 million of impairment charges in fiscal 2009 and 2008, respectively. At October 31, 2010, the Company did not have any commitments to make contributions to any Condominium Joint Venture in excess of those that the Company already has accrued.

F-17

Structured Asset Joint Venture

In July 2010, the Company invested $29.1 million in a joint venture in which it is a 20% participant with two unrelated parties to purchase a 40% interest in an entity that owns and controls a portfolio of loans and real estate (“Structured Asset Joint Venture”). At October 31, 2010, the Company had an investment of $29.3 million in this Structured Asset Joint Venture. At October 31, 2010, the Company did not have any commitments to make additional contributions to the joint venture and has not guaranteed any of the joint ventures liabilities. If the joint venture needs additional capital and a participant fails to make a requested capital contribution, the other participant may make a contribution in consideration for a preferred return or may make the additional capital contribution and diminish the non-contributing participant’s ownership interest.

Toll Brothers Realty Trust II

In fiscal 2005, the Company, together with the Pennsylvania State Employees Retirement System (“PASERS”), formed Toll Brothers Realty Trust II (“Trust II”) to be in a position to take advantage of commercial real estate opportunities. Trust II is owned 50% by the Company and 50% by an affiliate of PASERS. At October 31, 2010, the Company had an investment of $11.2 million in Trust II. Prior to the formation of Trust II, the Company used Toll Brothers Realty Trust (the “Trust”) to invest in commercial real estate opportunities. (See Note 16, “Related Party Transactions”, for additional information regarding the Trust.)

General

At October 31, 2010, the Company had accrued $88.1 million of its aggregate exposure with respect to Development Joint Ventures, the Planned Community Joint Venture, Condominium Joint Ventures and the Structured Asset Joint Venture. The Company’s investments in these entities are accounted for using the equity method. The Company recognized $11.3 million and $200.7 million of impairment charges related to its investments in and advances to unconsolidated entities in fiscal 2009 and 2008, respectively. The Company did not recognize any impairment charges related to its investments in and advances to unconsolidated entities in fiscal 2010. Impairment charges related to these entities are included in “Income (loss) from unconsolidated entities” in the Company’s Consolidated Statements of Operations. In the fourth quarter of fiscal 2010, the Company reversed $11.0 million of accrued costs recognized in its 2008 fiscal year related to litigation against the Company and one of its unconsolidated entities. An agreement in principle to settle the litigation was reached for an amount that was less than the Company had previously estimated.

4. Goodwill Impairment

Intangible assets, including goodwill, that are not subject to amortization are tested for impairment and possible write-down. Due to the continued decline of the Company’s markets located in its North, South and West geographic segments, the Company re-evaluated the carrying value of goodwill that resulted from several acquisitions in accordance with ASC 350, “Intangibles - Goodwill and Other”. The Company estimated the fair value of its assets in these markets including goodwill. Fair value was determined based on the discounted future cash flow expected to be generated in these markets. Based upon this evaluation the Company determined that the related goodwill was impaired. The Company recognized a $3.2 million impairment charge in fiscal 2008. After recognizing this charge, the Company does not have any goodwill remaining.

5. Credit Facility, Loans Payable, Senior Notes, Senior Subordinated Notes and Mortgage Company Warehouse Loan

Credit Facility

On October 22, 2010, the Company entered into an $885 million revolving credit facility (“New Credit Facility”) with 12 banks, which extends to October 2014. The New Credit Facility replaced a $1.89 billion credit facility consisting of a $1.56 billion unsecured revolving credit facility and a $331.7 million term loan facility (collectively, the “Old Credit Facility”) with 30 banks, which extended to March 17, 2011. Prior to the closing of the New Credit Facility, the Company repaid the term loan under the Old Credit Facility from cash on hand.

F-18

At October 31, 2010, the Company had no outstanding borrowings under the New Credit Facility but had outstanding letters of credit of approximately $86.0 million. At October 31, 2010, interest would have been payable on borrowings under the New Credit Facility at 2.50% (subject to adjustment based upon the Company’s debt rating and leverage ratios) above the Eurodollar rate or at other specified variable rates as selected by the Company from time to time. Under the terms of the New Credit Facility, the Company is not permitted to allow its maximum leverage ratio (as defined in the credit agreement) to exceed 1.75 to 1.00 and is required to maintain a minimum tangible net worth (as defined in the New Credit Facility agreement) of approximately $1.88 billion at October 31, 2010. At October 31, 2010, the Company’s leverage ratio was approximately 0.19 to 1.00 and its tangible net worth was approximately $2.52 billion. Based upon the minimum tangible net worth requirement, the Company’s ability to pay dividends and repurchase its common stock was limited to an aggregate amount of approximately $640 million at October 31, 2010. The Company is obligated to pay an undrawn commitment fee of 0.50% (subject to adjustment based upon the Company’s debt rating and leverage ratios) based on the average daily unused amount of the facility.

Loans Payable

Loans payable at October 31, 2010 and 2009 consisted of the following (amounts in thousands):

	2010		2009
Term loan of the Old Credit Facility			$	331,667
Other	$	94,491		141,187
	$	94,491	$	472,854

The Company had $94.5 million of loans payable at October 31, 2010, which represent purchase money mortgages on properties the Company has acquired that the seller has financed and various revenue bonds that were issued by government entities on behalf of the Company to finance community infrastructure and the Company’s manufacturing facilities. The weighted average interest rate on these loans was 3.75% at October 31, 2010 and ranged from 0.50% to 8.00%. At October 31, 2010, $93.0 million of loans payable was secured by assets of approximately $257.6 million.

Senior Notes

At October 31, 2010 and 2009, the Company’s senior notes consisted of the following (amounts in thousands):

	2010			2009
6.875% Senior Notes due November 15, 2012	$	194,865		$	194,865
5.95% Senior Notes due September 15, 2013		141,635			155,135
4.95% Senior Notes due March 15, 2014		267,960			300,000
5.15% Senior Notes due May 15, 2015		300,000			300,000
8.91% Senior Notes due October 15, 2017		400,000			400,000
6.75% Senior Notes due November 1, 2019		250,000			250,000
Bond discount		(10,350	)		(12,352	)
	$	1,544,110		$	1,587,648

The senior notes are the unsecured obligations of Toll Brothers Finance Corp., a 100%-owned subsidiary of the Company. The payment of principal and interest is fully and unconditionally guaranteed, jointly and severally, by the Company and a majority of its home building subsidiaries (together with Toll Brothers Finance Corp., the “Senior Note Parties”). The senior notes rank equally in right of payment with all the Senior Note Parties’ existing and future unsecured senior indebtedness, including the New Credit Facility. The senior notes are structurally subordinated to the prior claims of creditors, including trade creditors, of the subsidiaries of the Company that are not guarantors of the senior notes. The senior notes are redeemable in whole or in part at any time at the option of the Company, at prices that vary based upon the then-current rates of interest and the remaining original term of the notes.

On April 13, 2009, the Company, through Toll Brothers Finance Corp., its wholly-owned subsidiary, issued $400 million principal amount of 8.91% Senior Notes due 2017 (the “8.91% Senior Notes”). The Company received $389.4 million of net proceeds from the issuance of the 8.91% Senior Notes.

On September 22, 2009, the Company, through Toll Brothers Finance Corp., issued $250 million principal amount of 6.75% Senior Notes due 2019 (the “6.75% Senior Notes”). The Company received $246.4 million of net proceeds from the issuance of the 6.75% Senior Notes.

F-19

The Company has repurchased, and may from time to time in the future repurchase, its senior notes in the open market or otherwise. In fiscal 2010, the Company purchased $45.5 million of its senior notes in open market purchases at various prices and expensed $1.2 million related to the premium/loss paid and other debt redemption costs.

On October 8, 2009, the Company, through Toll Brothers Finance Corp., completed a tender offer for $105.1 million principal amount of its 6.875% Senior Notes due 2012, and for $94.9 million principal amount of its 5.95% Senior Notes due 2013 and recognized a charge of $11.6 million representing the tender premium, the write-off of unamortized debt issuance costs and the tender offer costs associated with both series of notes.

Senior Subordinated Notes

At October 31, 2009, the Company’s only outstanding senior subordinated notes consisted of $47.9 million of 8.25% Senior Subordinated Notes due December 1, 2011. On December 1, 2009, the Company redeemed the remaining $47.9 million outstanding principal amount of its Toll Corp. 8.25% Senior Subordinated Notes due December 2011 at a cash redemption price of 100.0% of the principal amount plus accrued and unpaid interest on December 1, 2009.

In fiscal 2009, the Company redeemed all of the remaining $193.0 million outstanding principal amount of its Toll Corp. 8 1/4% Senior Subordinated Notes due February 2011 and redeemed or repurchased in open market transactions $102.1 million of principal amount of its Toll Corp. 8.25% Senior Subordinated Notes due December 2011. In fiscal 2009, the Company recognized a charge of $2.1 million representing the write-off of unamortized debt issuance costs associated with both series of notes and the call premium on the 8.25% Senior Subordinated Notes due December 2011.

In fiscal 2008, the Company purchased $7.0 million principal amount of its Toll Corp. 8 1/4% Senior Subordinated Notes due February 2011 through open-market purchases for $6.8 million.

The senior subordinated notes were the unsecured obligations of Toll Corp., a 100%-owned subsidiary of the Company; were guaranteed on a senior subordinated basis by the Company; were subordinated to all existing and future senior indebtedness of the Company; and were structurally subordinated to the prior claims of creditors, including trade creditors, of the Company’s subsidiaries other than Toll Corp. The indentures governing these notes restricted certain payments by the Company, including cash dividends and repurchases of Company stock.

Mortgage Company Loan Facilities

In August 2009, TBI Mortgage Company (“TBI Mortgage”), the Company’s wholly-owned mortgage subsidiary, entered into a Master Repurchase Agreement with Comerica Bank, as agent and representative of itself as a buyer and the other buyers named therein (the “Repurchase Agreement”). The Repurchase Agreement replaced TBI Mortgage’s previous warehouse credit facility which expired on August 13, 2009. The purpose of the Repurchase Agreement is to finance the origination of mortgage loans by TBI Mortgage and it is accounted for as a secured borrowing under ASC 860. The Repurchase Agreement provides for loan purchases up to $75 million, subject to certain sublimits. In addition, the Repurchase Agreement provides for an accordion feature under which TBI Mortgage may request that the aggregate commitments under the Repurchase Agreement be increased to an amount up to $100 million. The Repurchase Agreement, as amended, expires on July 28, 2011 and bears interest at LIBOR plus 2.5%, with a minimum rate of 4.50%. Borrowings under this facility are included in the fiscal 2011 maturities.

At October 31, 2010 and 2009, there were $72.4 million and $27.0 million, respectively, outstanding under the Repurchase Agreement, which are included in liabilities in the accompanying consolidated balance sheets. At October 31, 2010 and 2009, amounts outstanding under the Repurchase Agreement are collateralized by $93.6 million and $43.4 million, respectively, of mortgage loans held for sale, which are included in assets in the Company’s balance sheets. As of October 31, 2010, there were no aggregate outstanding purchase price limitations reducing the amount available to TBI Mortgage. There are several restrictions on purchased loans under the Repurchase Agreement, including that they cannot be sold to others, they cannot be pledged to anyone other than the agent, and they cannot support any other borrowing or repurchase agreement.

General

As of October 31, 2010, the annual aggregate maturities of the Company’s loans and notes during each of the next five fiscal years are: 2011 — $102.9 million; 2012 — $15.7 million; 2013 — $346.4 million; 2014 — $270.0 million; and 2015 — $300.7 million.

F-20

6. Accrued Expenses

Accrued expenses at October 31, 2010 and 2009 consisted of the following (amounts in thousands):

	2010		2009
Land, land development and construction	$	110,301	$	132,890
Compensation and employee benefit		95,107		90,828
Insurance and litigation		143,421		165,343
Commitments to unconsolidated entities		88,121		107,490
Warranty		45,835		53,937
Interest		26,998		27,445
Other		60,538		62,288
	$	570,321	$	640,221

The Company accrues expected warranty costs at the time each home is closed and title and possession have been transferred to the home buyer. Changes in the warranty accrual during fiscal 2010, 2009 and 2008 were as follows (amounts in thousands):

	2010			2009			2008
Balance, beginning of year	$	53,937		$	57,292		$	59,249
Additions — homes closed during the year		9,147			10,499			20,116
Additions (reductions) to accruals for homes closed in prior years		(4,684	)		1,697			(585	)
Charges incurred		(12,565	)		(15,551	)		(21,488	)
Balance, end of year	$	45,835		$	53,937		$	57,292

7. Income Taxes

A reconciliation of the Company’s effective tax rate from the federal statutory tax rate for the fiscal years ended October 31, 2010, 2009 and 2008 is set forth below (amounts in thousands).

	2010						2009						2008
	$			%*			$			%*			$			%*
Federal tax (benefit) provision at statutory rate		(41,015	)		35.0			(173,763	)		35.0			(163,375	)		35.0
State taxes, net of federal benefit		(3,809	)		3.3			(14,522	)		2.9			(27,307	)		5.9
Reversal of expiring state tax provisions		(39,485	)		33.7			(77,337	)		15.6			(5,558	)		1.2
Accrued interest on anticipated tax assessments		9,263			(7.9	)		6,828			(1.4	)		7,250			(1.6	)
Increase in unrecognized tax benefits		35,575			(30.3	)		39,500			(8.0	)
Valuation allowance — recognized		55,492			(47.4	)		458,280			(92.3	)		24,050			(5.1	)
Valuation allowance — reversed		(128,640	)		109.7
Non-taxable earnings														(3,943	)		0.8
Reversal (benefit) from tax credits								10,000			(2.0	)
Other		(1,194	)		1.0			10,374			(2.1	)		(94	)
Tax provision (benefit)		(113,813	)		97.1			259,360			(52.3	)		(168,977	)		36.2

* Due to rounding, amounts may not add.

The Company currently operates in 19 states and is subject to various state tax jurisdictions. The Company estimates its state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction and the Company’s ability to utilize certain tax-saving strategies. Due primarily to a change in the Company’s estimate of the allocation of income or loss, as the case may be, among the various taxing jurisdictions and changes in tax regulations and their impact on the Company’s tax strategies, the Company’s estimated rate for state income taxes was 5.0% for fiscal 2010, 4.5% for fiscal 2009 and 9.0% for fiscal 2008.

F-21

The (benefit) provision for income taxes for each of the fiscal years ended October 31, 2010, 2009 and 2008 is set forth below (amounts in thousands).

	2010			2009			2008
Federal	$	(67,318	)	$	333,311		$	(168,068	)
State		(46,495	)		(73,951	)		(909	)
	$	(113,813	)	$	259,360		$	(168,977	)
Current	$	(156,985	)	$	(229,003	)	$	39,144
Deferred		43,172			488,363			(208,121	)
	$	(113,813	)	$	259,360		$	(168,977	)

A reconciliation of the change in the unrecognized tax benefits for the years ended October 31, 2010, 2009 and 2008 is set forth below (amounts in thousands).

	2010			2009			2008
Balance, beginning of year	$	171,366		$	320,679
Adoption of FIN 48							$	364,300
Increase in benefit as a result of tax positions taken in prior years		14,251			11,000			12,340
Increase in benefit as a result of tax positions taken in current year		15,675			47,500			22,237
Decrease in benefit as a result of settlements					(138,333	)		(56,748	)
Decrease in benefit as a result of lapse of statute of limitation		(40,846	)		(69,480	)		(21,450	)
Balance, end of year	$	160,446		$	171,366		$	320,679

During fiscal 2010, the Company recorded a benefit for the reversal of federal and state income taxes due to the expiration of statutes of limitations, as well as the filing of a number of required amended state returns based on final IRS audits, offset by new reserve requirements for fiscal 2009 filings and estimates for fiscal 2010.

During fiscal 2009, the Company reached final settlement of its federal tax returns for fiscal years through 2006, State of California tax returns for fiscal years through 2006, and State of New Jersey and State of Arizona tax returns for fiscal years through 2007. The federal and state settlements resulted in a reduction in the Company’s unrecognized tax benefits. The state impact of any amended federal return remains subject to examination by various states for a period of up to one year after formal notification of such amendments is made to the states. The Company’s and its subsidiaries’ fiscal 2007 and 2008 federal income tax returns and various state and other income tax returns are in the process of examination or administrative appeal.

The Company’s unrecognized tax benefits are included in “Income taxes payable” on the Company’s Consolidated Balance Sheets. If these unrecognized tax benefits reverse in the future, they would have a beneficial impact on the Company’s effective tax rate at that time. During the next twelve months, it is reasonably possible that the amount of unrecognized tax benefits will change. The anticipated changes will be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken and the accrual of estimated interest and penalties.

During fiscal 2010, 2009 and 2008, the Company recognized in its tax provision (benefit), before reduction for applicable taxes, potential interest and penalties of approximately $14.3 million, $11.0 million and $12.5 million, respectively. At October 31, 2010, 2009 and 2008, the Company had accrued potential interest and penalties, before reduction of applicable taxes, of $39.2 million, $39.8 million and $142.2 million, respectively; these amounts were included in “Income taxes payable” on the Company’s Consolidated Balance Sheets. The decrease in the October 31, 2009 accrued interest and penalty balance, as compared to the October 31, 2008 balance, relates primarily to the payment of interest on settled audits and the reversal of interest accrued in prior years against potential tax assessments no longer needed due to the expiration of the applicable federal and state statute of limitations or the settlement with state tax authorities, offset, in part, by additional interest accrued during the period.

F-22

The components of net deferred tax assets and liabilities at October 31, 2010 and 2009 is set forth below (amounts in thousands).

	2010			2009
Deferred tax assets:
Accrued expenses	$	4,917		$	2,561
Impairment charges		415,801			457,526
Inventory valuation differences		13,093			26,976
Stock-based compensation expense		48,657			25,715
FIN 48 deferred tax asset		55,090			70,902
State tax net operating loss carryforward		11,159			20,756
Other		3,497			1,496
Total assets		552,214			605,932
Deferred tax liabilities:
Capitalized interest		91,731			86,718
Deferred income		(10,097	)		(2,161	)
Depreciation		29,334			21,912
Deferred marketing		(3,635	)		976
Other		35,698			16,157
Total liabilities		143,031			123,602
Net deferred tax assets before valuation allowances		409,183			482,330
Cumulative valuation allowance — state		(45,030	)		(45,030	)
Cumulative valuation allowance — federal		(364,153	)		(437,300	)
Net deferred tax assets	$	—		$	—

Since the beginning of fiscal 2007, the Company has recorded significant deferred tax assets. These deferred tax assets were generated primarily by inventory impairments and impairments of investments in and advances to unconsolidated entities. In accordance with ASC 740, the Company assessed whether a valuation allowance should be established based on its determination of whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company believes that the continued downturn in the housing market, the uncertainty as to its length and magnitude, and the Company’s continued recognition of impairment charges, are significant evidence of the need for a valuation allowance against its net deferred tax assets. The Company has recorded valuation allowances against its entire net deferred tax asset.

For federal income tax purposes, the Company carried back tax losses incurred in fiscal 2009 against taxable income it reported in fiscal 2007 and received a tax refund in fiscal 2010 of $152.7 million. The tax losses generated in fiscal 2009 were primarily from the recognition for tax purposes of previously recognized book impairments and the recognition of stock option expenses not recognized for book purposes.

The Company is allowed to carry forward tax losses for 20 years and apply such tax losses to future taxable income to realize federal deferred tax assets. As of October 31, 2010, the Company believes it will have approximately $10.0 million of tax loss carryforwards, resulting from losses that it recognized on its fiscal 2009 tax return, in excess of the amount it could carry back against its fiscal 2007 federal taxable income. In addition, the Company will be able to reverse its previously recognized valuation allowances during any future period for which it reports book income before income taxes. The Company will continue to review its deferred tax assets in accordance with ASC 740.

On November 6, 2009, the Worker, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted into law. The Act amended Section 172 of the Internal Revenue Code to allow net operating losses realized in a tax year ending after December 31, 2007 and beginning before January 1, 2010 to be carried back for up to five years (such losses were previously limited to a two-year carryback).This change allowed the Company to carry back its fiscal 2010 taxable losses to prior years and recognize a tax benefit of $113.8 million in its statement of operations for fiscal 2010. In addition, the Act will allow the Company to file for a refund of previously paid federal income taxes. The Company estimates that it will be able to carryback $404.5 million of fiscal 2010 tax losses and expects to receive a tax refund in fiscal 2011 of approximately $141.6 million. The ultimate amount of such refund realized is dependent on the Company’s actual taxable losses for fiscal 2010, which may vary significantly from its current expectations. The Company has reflected the expected refund of $141.6 million in its October 31, 2010 consolidated financial statements.

F-23

For state tax purposes, due to past and projected losses in certain jurisdictions where the Company does not have carryback potential and/or cannot sufficiently forecast future taxable income, the Company has recognized net cumulative valuation allowances against its state deferred tax assets of $45.0 million as of October 31, 2010 and 2009. Future valuation allowances in these jurisdictions may continue to be recognized if the Company believes it will not generate sufficient future taxable income to utilize any future state deferred tax assets.

8. Stockholders’ Equity

The Company’s authorized capital stock consists of 400 million shares of common stock, $.01 par value per share and 15 million shares of preferred stock, $.01 par value per share. At October 31, 2010, the Company had 166.4 million shares of common stock issued and outstanding, 14.8 million shares of common stock reserved for outstanding stock options and restricted stock units, 8.0 million shares of common stock reserved for future stock option and award issuances and 0.6 shares of common stock reserved for issuance under the Company’s employee stock purchase plan. As of October 31, 2010, the Company had not issued any shares of preferred stock.

Issuance of Common Stock

In fiscal 2010, 2009 and 2008, the Company issued 1,250 shares, 1,250 shares and 1,250 shares, respectively, of restricted common stock pursuant to its stock incentive plans to certain outside directors. The Company is amortizing the fair market value of the awards on the date of grant over the period of time that each award vests. At October 31, 2010, 1,725 shares of the fiscal 2010 and 2009 restricted stock awards were unvested.

Stock Repurchase Program

In March 2003, the Company’s Board of Directors authorized the repurchase of up to 20 million shares of its common stock from time to time, in open market transactions or otherwise, for the purpose of providing shares for its various benefit plans. At October 31, 2010, the Company had approximately 11.8 million shares remaining under the repurchase authorization.

Stockholder Rights Plans

Shares of the Company’s outstanding common stock were subject to two series of stock purchase rights described below, one adopted in June 2007, which is currently in effect, and a second adopted in June 2009, which expired in June 2010. The rights, which are exercisable only under certain conditions, entitle the holder, other than an acquiring person (and certain related parties of an acquiring person), as defined in the plan, to purchase common shares at prices specified in the rights agreements. See Note 9, “Stock-Based Benefit Plans” for issuances of stock under the Company’s stock-based benefit plans.

In June 2007, the Company adopted a shareholder rights plan (“2007 Rights Plan”). The rights issued pursuant to the 2007 Rights Plan will become exercisable upon the earlier of (i) ten days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of the Company’s common stock or (ii) ten business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of the outstanding shares of Common Stock. No rights were exercisable at October 31, 2010.

In June 2009, the Company adopted a shareholder rights plan (the “2009 Rights Plan”) to help preserve the value of the Company’s deferred tax assets, by reducing the risk of limitation of net operating loss carryforwards and certain other tax benefits under Section 382 of the Internal Revenue Code. The rights were to expire on July 16, 2019 or earlier in the event of certain conditions, one of which related to the failure of the Company’s stockholders to approve the 2009 Rights Plan by June 17, 2010. The Company’s stockholders did not approve the 2009 Rights Plan at the 2010 Annual Meeting of Stockholders held on March 17, 2010 (“2010 Annual Meeting”) and, therefore, it expired in accordance with its terms on June 17, 2010.

Amendment to the Second Restated Certificate of Incorporation and Increase in Authorized Share Capital

On March 17, 2010, the Board of Directors of the Company adopted a Certificate of Amendment to the Second Restated Certificate of Incorporation of the Company (the “Certificate of Amendment”). The Certificate of Amendment includes an amendment approved by the Company’s stockholders at the 2010 Annual Meeting which restricts certain transfers of the Company’s common stock in order to preserve the tax treatment of the Company’s net operating and unrealized tax losses. The Certificate of Amendment’s transfer restrictions generally restrict any direct or indirect transfer of the Company’s common stock if the effect would be to increase the direct or indirect ownership of any Person (as defined in the Certificate of Amendment) from less than 4.95% to 4.95% or more of the Company’s common stock, or increase the ownership percentage of a Person owning or deemed to own 4.95% or more of the Company’s common stock. Any direct or indirect transfer attempted in violation of this restriction would be void as of the date of the prohibited transfer as to the purported transferee.

F-24

The Certificate of Amendment also includes an amendment, authorized by the Company’s stockholders at the Company’s 2005 Annual Meeting, increasing the Company’s authorized shares from 201,000,000 shares to 415,000,000 shares consisting of two classes of stock. The Certificate of Amendment provides for 400,000,000 authorized shares of common stock, $.01 par value, an increase from the 200,000,000 shares previously authorized, and 15,000,000 authorized shares of preferred stock, $.01 par value, an increase from the 1,000,000 preferred shares previously authorized. In March 2010, the Board of Directors approved the increase in the authorized shares to 400,000,000 shares of common stock and 15,000,000 shares of preferred stock.

9. Stock-Based Benefit Plans

Stock-Based Compensation Plans

The Company used a lattice model for the valuation for all option grants in fiscal 2010, 2009 and 2008. The weighted-average assumptions and fair value used for stock option grants in each of the fiscal years ended October 31, 2010, 2009 and 2008 are set forth below.

	2010	2009	2008
Expected volatility	46.74% - 51.41%	46.74% - 50.36%	46.67% - 48.63%
Weighted-average volatility	49.51%	48.06%	47.61%
Risk-free interest rate	2.15% - 3.47%	1.24% - 1.90%	3.32% - 3.85%
Expected life (years)	4.44 - 8.69	4.29 - 8.52	4.29 - 8.32
Dividends	none	none	none
Weighted-average fair value per share of options granted	$7.63	$8.60	$9.50

Expected volatilities are based on implied volatilities from traded options on the Company’s stock and the historical volatility of the Company’s stock. The expected life of options granted is derived from the historical exercise patterns and anticipated future patterns and represents the period of time that options granted are expected to be outstanding; the range given above results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of stock option grants is recognized evenly over the vesting period of the options or over the period between the grant date and the time the option becomes non-forfeitable by the employee, whichever is shorter. Stock option expense is included in the Company’s selling, general and administrative expenses. Information regarding the stock-based compensation for fiscal 2010, 2009 and 2008 is set forth below (amounts in thousands).

	2010		2009		2008
Stock-based compensation expense recognized	$	9,332	$	10,925	$	22,559
Income tax benefit recognized	$	3,266	$	4,370	$	8,975

In fiscal 2010 and 2009, as part of severance plans for certain employees, the Company extended the period in which an option could be exercised on 175,813 options and 46,052 options, respectively. The Company expensed $552,000 and $322,000 of stock option expense in fiscal 2010 and 2009, respectively. These amounts are included in the stock-based compensation in the table above.

At October 31, 2010, total compensation cost related to non-vested awards not yet recognized was approximately $7.3 million, unrecognized income tax benefits from non-vested awards was approximately $2.5 million and the weighted-average period over which the Company expects to recognize such compensation costs and tax benefit is 2.3 years.

F-25

In the quarter ended July 31, 2008, pursuant to stockholder-approved amendments to the Company’s Stock Incentive Plan (1998) and the Company’s Stock Incentive Plan for Employees (2007), the Company offered certain eligible employees the ability to exchange certain out-of-the-money stock options (“old options”) in exchange for replacement options with the same terms and conditions as the old options, except for the number of shares subject to the replacement options and the per share exercise price. The Company accepted for exchange old options to purchase approximately 2.5 million shares with a weighted-average exercise price per share of $33.18 and issued replacement options to purchase approximately 1.6 million shares with a weighted-average exercise price per share of $18.92. The assumptions and fair value used for the valuation of the replacement option grants and old option grants were as follows:

	Replacement options	Old options
Expected volatility	51.01% - 51.92%	51.08% - 51.71%
Weighted-average volatility	51.44%	51.36%
Risk-free interest rate	3.38% - 3.70%	3.28% - 3.58%
Expected life (years)	4.84 - 6.96	4.36 - 6.10
Dividends	none	none
Weighted-average exchange date fair value per share of options	$9.94	$6.25

The difference between the aggregate fair value of the old options and the replacement options was immaterial.

Stock Incentive Plans

The Company has two active stock incentive plans, one for employees (including officers) and one for non-employee directors. The Company’s active stock incentive plans provide for the granting of incentive stock options (solely to employees) and non-qualified stock options with a term of up to ten years at a price not less than the market price of the stock at the date of grant. Stock options granted to employees generally vest over a four-year period, although certain grants may vest over a longer or shorter period, and stock options granted to non-employee directors generally vest over a two-year period. The Company’s active stock incentive plans also provide for the issuance of stock appreciation rights and restricted and unrestricted stock awards and stock units, which may be performance based.

The Company has two additional stock incentive plans for employees, officers and directors that are inactive except for outstanding stock option grants at October 31, 2010. No additional options may be granted under these plans. Stock options granted under these plans were made with a term of up to ten years at a price not less than the market price of the stock at the date of grant and generally vested over a four-year period for employees and a two-year period for non-employee directors.

Shares issued upon the exercise of a stock option are either from shares held in treasury or newly issued shares.

The following table summarizes stock option activity for the Company’s plans during each of the fiscal years ended October 31, 2010, 2009 and 2008 (amounts in thousands, except per share amounts):

	2010					2009					2008
				Weighted-					Weighted-					Weighted-
	Number			average		Number			average		Number			average
	of			exercise		of			exercise		of			exercise
	options			price		options			price		options			price
Balance, beginning		16,123		$	17.73		19,854		$	14.73		24,080		$	14.60
Granted		1,015			18.39		1,092			21.68		3,292			19.92
Exercised		(2,498	)		8.72		(4,436	)		5.03		(4,660	)		6.73
Cancelled		(301	)		17.03		(387	)		20.49		(2,858	)		32.70
Balance, ending		14,339		$	19.36		16,123		$	17.73		19,854		$	14.73
Options exercisable, at October 31,		11,670		$	19.00		13,171		$	16.53		16,327		$	12.64
Options available for grant at October 31,		8,038					9,168					10,371

The fiscal year 2008 cancellations and grants include options for approximately 2.5 million shares issued in fiscal 2006, 2005 and 2004 that were exchanged for options for approximately 1.6 million shares. See “Stock-Based Compensation Plans” above for more information.

F-26

The following table summarizes information about stock options outstanding and exercisable at October 31, 2010:

	Options outstanding						Options exercisable
			Weighted-						Weighted-
			average						average
			remaining		Weighted-				remaining		Weighted-
Range of	Number		contractual		average		Number		contractual		average
exercise	outstanding		life		exercise		exercisable		life		exercise
prices	(in 000s)		(in years)		price		(in 000s)		(in years)		price
$9.65 - $10.88		4,826		1.39	$	10.64		4,826		1.39	$	10.64
$18.92 - $20.21		4,319		5.07	$	19.37		3,223		3.83	$	19.68
$20.76 - $22.18		2,434		7.52	$	21.13		1,078		2.07	$	21.00
$31.82 - $35.97		2,760		5.04	$	33.04		2,543		4.94	$	33.15
		14,339		4.24	$	19.36		11,670		3.38	$	19.00

The intrinsic value of options outstanding and exercisable is the difference between the fair market value of the Company’s common stock on the applicable date (“Measurement Value”) and the exercise price of those options that had an exercise price that was less than the Measurement Value. The intrinsic value of options exercised is the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price.

Information pertaining to the intrinsic value of options outstanding and exercisable at October 31, 2010, 2009 and 2008 is provided below (amounts in thousands):

	2010		2009		2008
Intrinsic value of options outstanding	$	35,214	$	54,646	$	194,261
Intrinsic value of options exercisable	$	35,214	$	54,646	$	187,351

Information pertaining to the intrinsic value of options exercised and the fair value of options which became vested or modified in each of the fiscal years ended October 31, 2010, 2009 and 2008 is provided below (amounts in thousands):

	2010		2009		2008
Intrinsic value of options exercised	$	25,327	$	74,659	$	81,308
Fair value of options vested	$	12,336	$	15,528	$	21,862

The Company’s stock incentive plans permit optionees to exercise stock options using a “net exercise” method at the discretion of the Executive Compensation Committee of the Board of Directors (“Executive Compensation Committee”). In a net exercise, the Company withholds from the total number of shares that otherwise would be issued to an optionee upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable income tax withholdings and remits the remaining shares to the optionee. Information regarding the use of the net exercise method for fiscal 2010, 2009 and 2008 is set forth below.

	2010		2009		2008
Options exercised		1,201,372		93,000		2,356,152
Shares withheld		798,420		21,070		1,232,023
Shares issued		402,952		71,930		1,124,129
Average fair market value per share withheld	$	17.96	$	21.29	$	25.57
Aggregate fair market value of shares withheld (in thousands)	$	14,341	$	400	$	31,500

F-27

In addition, pursuant to the provisions of the Company’s stock incentive plans, optionees are permitted to use the value of the Company’s common stock that they own to pay for the exercise of options (“stock swap method”). Information regarding the use of the stock swap method for fiscal 2010, 2009 and 2008 is set forth below.

	2010		2009		2008
Options exercised		29,512		38,379		18,576
Shares tendered		14,459		9,237		5,114
Average fair market value per share withheld	$	19.71	$	21.40	$	22.35

In December 2009, the Company issued restricted stock units (“2009 RSUs”) relating to 19,663 shares of the Company’s common stock to seven employees with an aggregate fair value of $361,000. The 2009 RSUs will vest in annual installments over a four-year period. The value of the 2009 RSUs were determined to be equal to the number of shares of the Company’s common stock to be issued pursuant to the 2009 RSUs, multiplied by $18.38, the closing price of the Company’s common stock on the New York Stock Exchange (“NYSE”) on December 21, 2009, the date the 2009 RSUs were awarded. In fiscal 2010, the Company recognized $138,000 of expense related to the 2009 RSUs. At October 31, 2010, the Company had $224,000 of unamortized value related to the 2009 RSUs.

On December 7, 2009, the Executive Compensation Committee of the Company’s Board of Directors approved the award of a performance-based restricted stock unit (“2009 Performance-Based RSU”) relating to 200,000 shares of the Company’s common stock to Robert I. Toll. The 2009 Performance-Based RSU will vest and Mr. Toll will be entitled to receive the underlying shares if the average closing price of the Company’s common stock on the NYSE, measured over any twenty consecutive trading days ending on or prior to December 19, 2014, increases 30% or more over $18.38, the closing price of the Company’s common stock on the NYSE on December 21, 2009; provided Mr. Toll continues to be employed by the Company or serve as a member of its Board of Directors until December 19, 2012. The 2009 Performance-Based RSU will also vest if Mr. Toll dies, becomes disabled or the Company experiences a change of control prior to satisfaction of the aforementioned performance criteria.

On December 18, 2008, the Executive Compensation Committee approved the award of a performance-based restricted stock unit (“2008 Performance-Based RSU”) relating to 200,000 shares of the Company’s common stock to Robert I. Toll. The 2008 Performance-Based RSU will vest and Mr. Toll will be entitled to receive the underlying shares if the average closing price of the Company’s common stock on the New York Stock Exchange (“NYSE”), measured over any twenty consecutive trading days ending on or prior to December 19, 2013, increases 30% or more over $21.70, the closing price of the Company’s common stock on the NYSE on December 19, 2008; provided Mr. Toll continues to be employed by the Company or serve as a member of its Board of Directors until December 19, 2011. The 2008 Performance-Based RSU will also vest if Mr. Toll dies, becomes disabled or the Company experiences a change of control prior to satisfaction of the aforementioned performance criteria.

The Company used a lattice based option pricing model to determine the fair value of the 2009 and 2008 Performance-Based RSUs. Information regarding the performance-based RSUs is set forth below.

	2009			2008
	Performance-			Performance-
	Based RSU			Based RSU
Expected volatility		49.92	%		48.14	%
Risk Free interest rate		2.43	%		1.35	%
Expected life	3.0 years			3.0 years
Aggregate fair value of RSU (in thousands)	$	3,160		$	3,642

Expenses related to the performance-based RSUs are included in the Company’s selling, general and administrative expenses. In fiscal 2010 and 2009, the Company recognized $2.1 million and $1.0 million, respectively, of stock-based compensation expense related to the 2009 Performance-Based RSU and 2008 Performance-Based RSU. At October 31, 2010 and 2009, the Company had an aggregate of $3.6 million and $2.6 million, respectively, of unamortized value of the 2009 Performance-Based RSU and 2008 Performance-Based RSU.

F-28

On December 19, 2009, the Company issued restricted stock units (“RSUs”) relating to 62,051 shares of the Company’s common stock to a number of employees in lieu of a portion of the employees’ bonuses and in lieu of a portion of one employee’s 2009 salary. These RSUs, although not subject to forfeiture, will vest in annual installments over a four-year period, unless accelerated due to death, disability or termination of employment, as more fully described in the RSU award document. Because the RSUs are non-forfeitable, the value of the RSUs was determined to be equal to the number of shares of the Company’s common stock to be issued pursuant to the RSUs, multiplied by $21.70, the closing price of the Company’s common stock on the NYSE on December 19, 2008, the date the RSUs were awarded. The amount applicable to employee bonuses was charged to the Company’s accrual for bonuses that it made in fiscal 2008 and the amount applicable to salary deferral ($130,000) was charged to selling, general and administrative expense in the three-month period ended January 31, 2009. The Company’s stock incentive plan permits the Company to withhold from the total number of shares that otherwise would be issued to a RSU recipient upon distribution that number of shares having a fair market value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the RSU participant. During fiscal 2010, the Company withheld 924 shares subject to RSUs to cover $17,000 of income tax withholdings and issued 2,749 shares to the RSU recipients. During fiscal 2009, the Company withheld 836 shares subject to RSUs to cover $15,000 of income tax withholdings and issued 1,509 shares to the RSU recipients.

Bonus Award Shares

In December 2007, the Board of Directors adopted the Toll Brothers, Inc. CEO Cash Bonus Plan, which was approved by stockholders at the Company’s 2008 Annual Meeting and subsequently amended and restated by the Executive Compensation Committee in December 2009 to clarify certain provisions (as amended, the “Bonus Plan”), to provide a bonus program to Mr. Robert I. Toll in fiscal 2008 and subsequent years.

The Bonus Plan provides that a bonus will be paid to Mr. Toll for each plan year in an amount equal to the sum of (a) 2.0% of the Company’s income before taxes and bonus (as defined in the Bonus Plan), and (b) a performance bonus based on the achievement of one or more pre-established performance goals established by the Executive Compensation Committee. Under the terms of the Bonus Plan, the maximum bonus that can be paid in any one plan year is $25.0 million and may be paid in cash, shares of Company common stock, or a combination of both, at the discretion of the Executive Compensation Committee. For fiscal 2010, Mr. Toll was awarded a bonus of $1.0 million under the Bonus Plan. Mr. Toll did not receive a bonus with respect to fiscal 2009 or fiscal 2008 under the Bonus Plan.

Employee Stock Purchase Plan

The Company’s employee stock purchase plan enables substantially all employees to purchase the Company’s common stock at 95% of the market price of the stock on specified offering dates without restriction, or at 85% of the market price of the stock on specified offering dates subject to restrictions. The plan, which terminates in December 2017, provides that 1.2 million shares be reserved for purchase. At October 31, 2010, 635,000 shares were available for issuance.

Information regarding the Company’s employee stock purchase plan for fiscal 2010, 2009 and 2008 is set forth below.

	2010		2009		2008
Shares issued		23,587		25,865		30,927
Average price per share	$	16.20	$	16.49	$	18.84
Compensation expense recognized (in thousands)	$	57	$	64	$	86

10. Earnings Per Share Information

Information pertaining to the calculation of earnings per share for each of the fiscal years ended October 31, 2010, 2009 and 2008 is as follows (amounts in thousands):

	2010		2009		2008
Basic weighted-average shares		165,666		161,549		158,730
Common stock equivalents
Diluted weighted-average shares		165,666		161,549		158,730
Common stock equivalents excluded from diluted weighted-average shares due to anti-dilutive effect (a)		1,968		3,936		6,135
Weighted average number of anti-dilutive options (b)		8,401		7,604		5,154
Shares issued under stock incentive and employee stock purchase plans		1,728		4,442		3,455

(a)	Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method. For fiscal 2010, 2009 and 2008, there were no incremental shares attributed to outstanding options to purchase common stock because the Company had a net loss in fiscal 2010, fiscal 2009 and fiscal 2008 and any incremental shares would be anti-dilutive.
(b)	Based upon the average quarterly closing price of the Company’s common stock on the NYSE for the period.

F-29

11. Fair Value Disclosures

Effective November 1, 2008, the Company adopted ASC 820 for its financial instruments measured at fair value on a recurring basis. ASC 820 provides a framework for measuring fair value under generally accepted accounting principles, expands disclosures about fair value measurements, and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

Level 1: Fair value determined based on quoted prices in active markets for identical assets or liabilities.

Level 2: Fair value determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities or quoted prices in markets that are not active.

Level 3: Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

A summary of assets and (liabilities) at October 31, 2010 and 2009 related to the Company’s financial instruments, measured at fair value on a recurring basis, is set forth below (amounts in thousands).

	Fair Value	Fair Value
Financial Instrument	Hierarchy	2010			2009
U.S. Treasury Securities	Level 1	$	175,370		$	101,176
U.S. Agency Securities	Level 1	$	22,497
Residential Mortgage Loans Held for Sale	Level 2	$	93,644		$	43,432
Forward Loan Commitments — Residential Mortgage Loans Held for Sale	Level 2	$	(459	)	$	(135	)
Interest Rate Lock Commitments (“IRLCs”)	Level 2	$	130		$	(117	)
Forward Loan Commitments — IRLCs	Level 2	$	(130	)	$	117

At October 31, 2010 and 2009, the carrying value of cash and cash equivalents approximates fair value.

At the end of the reporting period, the Company determines the fair value of its mortgage loans held for sale and its forward loan commitments it has entered into as a hedge against the interest rate risk of its mortgage loans. The Company recognizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale as a gain or loss. In addition, the Company recognizes the fair value of its forward loan commitment as a gain or loss. These gains and losses are included in interest and other income. Interest income on mortgage loans held for sale is calculated based upon the stated interest rate of each loan and is included in “interest and other income”.

As of October 31, 2010, the aggregate fair value of the unpaid principal balance of mortgage loans held for sale and the forward loan commitments was greater than the aggregate cost by $1.6 million and $0.5 million, respectively.

As of October 31, 2009, the aggregate fair value of the unpaid principal balance of mortgage loans held for sale and the forward loan commitments was greater than the aggregate cost by $0.3 million and $0.1 million, respectively.

IRLCs represent individual borrower agreements that commit the Company to lend at a specified price for a specified period as long as there is no violation of any condition established in the commitment contract. These commitments have varying degrees of interest rate risk. The Company utilizes best-efforts forward loan commitments (“Forward Commitments”) to hedge the interest risk of the IRLCs and residential mortgage loans held for sale. Forward Commitments represent contracts with third-party investors for the future delivery of loans whereby the Company agrees to make delivery at a specified future date at a specified price. The IRLCs and Forward Commitments are considered derivative financial instruments under ASC 815, “Derivatives and Hedging”, which requires derivative financial instruments to be recorded at fair value. The Company estimates the fair value of such commitments based on the estimated fair value of the underlying mortgage loan and, in the case of IRLCs, the probability that the mortgage loan will fund within the terms of the IRLC. To manage the risk of nonperformance of investors regarding the Forward Commitments, the Company assesses the credit worthiness of the investors on a periodic basis.

F-30

In fiscal 2010, the Company recognized inventory impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. The fair value of the aforementioned inventory was determined using Level 3 criteria. See Note 1, Significant Accounting Policies, “Inventory” for additional information regarding the Company’s methodology on determining fair value. The table below provides, for the periods indicated, the fair value of inventory whose carrying value was adjusted and the amount of impairment charges recognized (amounts in millions).

	Fair value of		Impairment
	inventory, net		charges
Three months ended:	of impairment		recognized
January 31, 2010	$	82.5	$	31.8
April 30, 2010	$	65.0		41.8
July 31, 2010	$	40.1		12.4
October 31, 2010	$	67.9		23.2
			$	109.2

As of October 31, 2010 and 2009, the amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of marketable securities were as follows (in thousands):

	2010		2009
Amortized cost	$	197,699	$	101,132
Gross unrealized holding gains	$	180	$	56
Gross unrealized holding losses	$	12	$	12
Fair value	$	197,867	$	101,176

The remaining contractual maturities of marketable securities as of October 31, 2010 ranged from less than one month to eleven months.

The book value and estimated fair value of the Company’s debt at October 31, 2010 and 2009 was as follows (amounts in thousands):

	October 31, 2010				October 31, 2009
			Estimated				Estimated
	Book value		fair value		Book value		fair value
Loans payable (a)	$	94,491	$	87,751	$	472,854	$	471,236
Senior notes (b)		1,554,460		1,679,052		1,600,000		1,624,119
Senior subordinated notes (c)						47,872		48,111
Mortgage company warehouse loan (d)		72,367		72,367		27,015		27,015
	$	1,721,318	$	1,839,170	$	2,147,741	$	2,170,481

(a)	The estimated fair value of loans payable was based upon the interest rates that the Company believed were available to it for loans with similar terms and remaining maturities as of the applicable valuation date.
(b)	The estimated fair value of the Company’s senior notes is based upon their indicated market prices.
(c)	The estimated fair value of the Company’s senior subordinated notes is based upon their indicated market prices.
(d)	The Company believes that the carrying value of its mortgage company loan borrowings approximates their fair value.

12. Employee Retirement and Deferred Compensation Plans

The Company maintains salary deferral savings plans covering substantially all employees. The plans provide for discretionary Company contributions of up to 2% of all eligible compensation, plus 2% of eligible compensation above the Social Security wage base, plus matching contributions of up to 2% of eligible compensation of employees electing to contribute via salary deferrals. During the first quarter of fiscal 2009, due to the continued downturn in the Company’s business, it suspended its matching contributions and discretionary contributions to one of the plans. The Company recognized an expense, net of plan forfeitures, with respect to the plans of $0.5 million and $8.2 million for the fiscal years ended October 31, 2009 and 2008, respectively. The Company recognized $38,000 of expense for one plan in fiscal 2010.

F-31

The Company has an unfunded, non-qualified deferred compensation plan that permits eligible employees to defer a portion of their compensation. The deferred compensation, together with certain Company contributions, earns various rates of return depending upon when the compensation was deferred and the length of time that it has been deferred. A portion of the deferred compensation and interest earned may be forfeited by a participant if he or she elects to withdraw the compensation prior to the end of the deferral period. At October 31, 2010 and 2009, the Company had accrued $18.4 million and $16.9 million, respectively, for its obligations under the plan.

The Company has two unfunded defined benefit retirement plans. Interests vest when the participant has completed 20 years of service with the Company and reaches normal retirement age (age 62). Unrecognized prior service costs are being amortized over the period from the date participants enter the plans until their interests are fully vested. The Company used a 4.99%, 5.30% and 7.21% discount rate in its calculation of the present value of its projected benefit obligations at October 31, 2010, 2009 and 2008, respectively, which represented the approximate long-term investment rate at October 31 of the fiscal year for which the present value was calculated. Information related to the plans is based on actuarial information calculated as of October 31, 2010, 2009 and 2008.

Information related to the Company’s plans for each of the fiscal years ended October 31, 2010, 2009 and 2008 is as follows (amounts in thousands):

	2010			2009			2008
Plan costs:
Service cost	$	270		$	132		$	210
Interest cost		1,396			1,366			1,224
Amortization of prior service cost		1,248			1,076			1,370
Acceleration of benefits		72
Amortization of unrecognized gains					(1,272	)		(640	)
	$	2,986		$	1,302		$	2,164
Projected benefit obligation:
Beginning of year	$	25,161		$	19,005		$	18,170
Plan amendments adopted during year		202						5,091
Service cost		270			132			210
Interest cost		1,396			1,366			1,224
Benefit payments		(125	)		(125	)		(125	)
Change in unrecognized gain		(867	)		4,783			(5,565	)
Projected benefit obligation, end of year	$	26,037		$	25,161		$	19,005
Unamortized prior service cost:
Beginning of year	$	5,145		$	6,221		$	2,500
Plan amendments adopted during year		130						5,091
Amortization of prior service cost		(1,248	)		(1,076	)		(1,370	)
Unamortized prior service cost, end of year	$	4,027		$	5,145		$	6,221
Accumulated unrecognized (loss) gain, October 31	$	1,574		$	707		$	6,762
Accumulated benefit obligation, October 31	$	26,037		$	25,161		$	19,005
Accrued benefit obligation, October 31	$	26,037		$	25,161		$	19,005

Based upon the estimated retirement dates of the participants in the plans, the Company would be required to pay the following benefits in each of the next five fiscal years (in thousands): 2011, $478; 2012, $796; 2013, $1,009; 2014, $1,638; and 2015, $1,645 and, for the five fiscal years ended October 31, 2020, $11,025 in the aggregate.

F-32

13. Accumulated Other Comprehensive Loss and Total Comprehensive Loss

Accumulated other comprehensive loss at October 31, 2010 and 2009 was $0.6 million and $2.6 million, respectively, and was primarily related to employee retirement plans.

The table below provides, for each of the fiscal years ended October 31, 2010, 2009 and 2008, the components of total comprehensive loss (amounts in thousands):

	2010			2009			2008
Net loss per Consolidated Statements of Operations	$	(3,374	)	$	(755,825	)	$	(297,810	)
Changes in pension liability, net of tax benefit provision		1,986			(2,988	)		722
Change in fair value of available-for-sale securities, net of tax provision		74			26
Total comprehensive loss	$	(1,314	)	$	(758,787	)	$	(297,088	)
Tax benefit recognized in total comprehensive loss	$	—		$	1,975		$	500

14. Legal Proceedings

The Company is involved in various claims and litigation arising principally in the ordinary course of business.

In January 2006, the Company received a request for information pursuant to Section 308 of the Clean Water Act from Region 3 of the U.S. Environmental Protection Agency (“EPA”) concerning storm water discharge practices in connection with its homebuilding projects in the states that comprise EPA Region 3. The Company provided information to the EPA pursuant to the request. The U.S. Department of Justice (“DOJ”) has now assumed responsibility for the oversight of this matter and has alleged that the Company has violated regulatory requirements applicable to storm water discharges and that it may seek injunctive relief and/or civil penalties. The Company is now engaged in settlement discussions with representatives from the DOJ and the EPA.

In April 2007, a securities class action suit was filed against Toll Brothers, Inc. and Robert I. Toll and Bruce E. Toll in the U.S. District Court for the Eastern District of Pennsylvania on behalf of a purported class of purchasers of the Company’s common stock between December 9, 2004 and November 8, 2005. In August 2007, an amended complaint was filed adding additional directors and officers as defendants. The amended complaint filed on behalf of the purported class alleges that the defendants violated federal securities laws by issuing various materially false and misleading statements that had the effect of artificially inflating the market price of the Company’s stock. It further alleges that the individual defendants sold shares for substantial gains during the class period. The purported class is seeking compensatory damages, counsel fees, and expert costs. The parties reached a settlement agreement in October 2010, which is subject to approval by the U.S. District Court for the Eastern District of Pennsylvania. The entire settlement amount will be funded by the Company’s insurers.

In November 2008, a shareholder derivative action was filed in the Chancery Court of Delaware by Milton Pfeiffer against Robert I. Toll, Zvi Barzilay, Joel H. Rassman, Bruce E. Toll, Paul E. Shapiro, Robert S. Blank, Carl B. Marbach, and Richard J. Braemer. The plaintiff purports to bring his claims on behalf of Toll Brothers, Inc. and alleges that the director and officer defendants breached their fiduciary duties to the Company and its stockholders with respect to the stock sales alleged in the securities class action discussed above, by selling while in possession of material inside information about the Company. The plaintiff seeks contribution and indemnification from the individual director and officer defendants for any liability found against the Company in the securities class action suit. In addition, again purportedly on the Company’s behalf, the plaintiff seeks disgorgement of the defendants’ profits from their stock sales.

On March 4, 2009, a second shareholder derivative action was brought by Olivero Martinez in the U.S. District Court for the Eastern District of Pennsylvania. This case was brought against the eleven then-current members of the Company’s board of directors and the Company’s Chief Accounting Officer. The complaint alleges breaches of fiduciary duty, waste of corporate assets, and unjust enrichment during the period from February 2005 to November 2006. The complaint further alleges that certain of the defendants sold Company stock during this period while in possession of the allegedly non-public, material information about the role of speculative investors in the Company’s sales and plaintiff seeks disgorgement of profits from these sales. The complaint also asserts a claim for equitable indemnity for costs and expenses incurred by the Company in connection with defending the securities class action discussed above.

F-33

On April 1, 2009, a third shareholder derivative action was filed by William Hall, also in the U.S. District Court for the Eastern District of Pennsylvania, against the eleven then-current members of the Company’s board of directors and the Company’s Chief Accounting Officer. This Complaint is identical to the previous shareholder complaint filed in Philadelphia, PA and, on July 14, 2009, the two cases were consolidated. On April 30, 2010, the plaintiffs filed an amended consolidated complaint.

The Company’s Certificate of Incorporation and Bylaws provide for indemnification of its directors and officers. The Company has also entered into individual indemnification agreements with each of its directors.

Due to the high degree of judgment required in determining the amount of potential loss related to the various claims and litigation in which the Company is involved in, including those noted above and in Note 15, Commitments and Contingencies, and the inherent variability in predicting future settlements and judicial decisions, the Company cannot estimate a range of reasonably possible losses in excess of its accruals for these matters. The Company believes that adequate provision for resolution of all claims and pending litigation has been made for probable losses and the disposition of these matters is not expected to have a material adverse effect on the Company’s results of operations and liquidity or on its financial condition.

15. Commitments and Contingencies

Generally, the Company’s option and purchase agreements to acquire land parcels do not require the Company to purchase those land parcels, although the Company may, in some cases, forfeit any deposit balance outstanding if and when it terminates an option and purchase agreement. If market conditions are weak, approvals needed to develop the land are uncertain or other factors exist that make the purchase undesirable, the Company may not expect to acquire the land. Whether an option and purchase agreement is legally terminated or not, the Company reviews the amount recorded for the land parcel subject to the option and purchase agreement to determine if the amount is recoverable. While the Company may not have formally terminated the option and purchase agreements for those land parcels that it does not expect to acquire, it has written off any non-refundable deposits and costs previously capitalized to such land parcels in the periods that it determined such costs were not recoverable. At October 31, 2010, the aggregate purchase price of land parcels under option and purchase agreements, excluding parcels under option that the Company does not expect to acquire, was approximately $550.4 million (including $131.2 million of land to be acquired from unconsolidated entities in which the Company has investments). Of the $550.4 million aggregate purchase price of land parcels subject to option and purchase agreements that the Company expects to acquire, at October 31, 2010, it had deposited $47.1 million on such parcels, was entitled to receive a credit for prior investments in unconsolidated entities of approximately $37.3 million and, if the Company acquired all of these land parcels, would be required to pay an additional $466.0 million. Of the additional $466.0 million the Company would be required to pay, it had recorded $77.6 million of this amount in accrued expenses at October 31, 2010. The Company has additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since it does not believe that it will complete the purchase of these land parcels and no additional funds will be required from the Company to terminate these contracts.

At October 31, 2010, the Company had investments in and advances to a number of unconsolidated entities, was committed to invest or advance additional funds and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 3, “Investments in and Advances to Unconsolidated Entities,” for more information regarding the Company’s commitments to these entities.

At October 31, 2010, the Company had outstanding surety bonds amounting to $373.1 million, primarily related to its obligations to various governmental entities to construct improvements in the Company’s various communities. The Company estimates that $160.2 million of work remains on these improvements. The Company has an additional $67.4 million of surety bonds outstanding that guarantee other obligations of the Company. The Company does not believe it is probable that any outstanding bonds will be drawn upon.

F-34

At October 31, 2010, the Company had outstanding letters of credit of $140.4 million, including $86.0 million under its New Credit Facility and $54.4 million collateralized by restricted cash. These letters of credit were issued to secure various financial obligations of the Company including insurance policy deductibles and other claims, land deposits and security to complete improvements in communities which it is operating. The Company believes it is not probable that any outstanding letters of credit will be drawn upon.

At October 31, 2010, the Company had agreements of sale outstanding to deliver 1,494 homes with an aggregate sales value of $852.1 million.

The Company’s mortgage subsidiary provides mortgage financing for a portion of the Company’s home closings. For those home buyers to whom the Company’s mortgage subsidiary provides mortgages, it determines whether the home buyer qualifies for the mortgage he or she is seeking based upon information provided by the home buyer and other sources. For those home buyers that qualify, the Company’s mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, the Company’s mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”), which is willing to honor the terms and conditions, including interest rate, committed to the home buyer. The Company believes that these investors have adequate financial resources to honor their commitments to its mortgage subsidiary. At October 31, 2010, the Company’s mortgage subsidiary was committed to fund $433.0 million of mortgage loans. Of these commitments, $169.5 million are IRLCs. The Company’s mortgage subsidiary has commitments from investors to acquire all $169.5 million of these IRLCs and $91.7 million of its mortgage loans receivable. The Company’s home buyers have not “locked-in” the interest rate on the remaining $263.5 million.

As of October 31, 2010, the Company has confirmed the presence of defective Chinese-made drywall in a small number of its West Florida homes, which were delivered between May 2006 and January 2008. The anticipated cost of the remediation of these homes is included in the amounts that the Company previously accrued. The Company is inspecting homes, gathering information from its drywall subcontractors and suppliers, and continuing to investigate this issue. The Company believes that adequate provision for costs associated with the remediation of homes containing Chinese-made drywall has been made and that such costs are not expected to have a material adverse effect on the Company’s results of operations and liquidity or on its financial condition. On December 9, 2009 and February 10, 2010, the Company was named as a defendant in three purported class action suits filed by homeowners relating to allegedly defective drywall manufactured in China. These suits are all pending in the United States District Court for the Eastern District of Louisiana as part of In re: Chinese-Manufactured Drywall Products Liability Litigation, MDL No. 2047. The complaints also name as defendants other home builders, as well as other parties claimed to be involved in the manufacture, sale, importation, brokerage, distribution, and installation of the drywall. The plaintiffs claim that the drywall, which was installed by independent subcontractors in certain homes built by the Company, caused damage to certain items and building materials in the homes, as well as personal injuries. The complaints seek damages for, among other things, the costs of repairing the homes, diminution in value to the homes, replacement of certain personal property, and personal injuries. The Company has not yet responded to these suits.

The Company leases certain facilities and equipment under non-cancelable operating leases. Rental expense incurred by the Company amounted to $11.8 million in fiscal 2010, $13.1 million in fiscal 2009 and $15.1 million in fiscal 2008. At October 31, 2010, future minimum rent payments under these operating leases were (amounts in thousand):

Year ending October 31,	Amount
2011	$	11,605
2012		8,727
2013		7,195
2014		5,848
2015		5,270
Thereafter		13,082
	$	51,727

16. Related Party Transactions

The Company formed the Trust in 1998 to take advantage of commercial real estate opportunities. The Trust is effectively owned one-third by the Company; one-third by Robert I. Toll, Bruce E. Toll (and members of his family), Zvi Barzilay (and members of his family), Douglas C. Yearley, Jr. and former members of the Company’s senior management; and one-third by an affiliate of the Pennsylvania State Employees Retirement System (collectively, the “Shareholders”). As of October 31, 2010, the Company had a net investment in the Trust of $182,000. The Company provides development, finance and management services to the Trust and recognized fees under the terms of various agreements in the amounts of $3.1 million, $2.1 million and $2.2 million in the fiscal years ended October 31, 2010, 2009 and 2008, respectively. The Company believes that the transactions between itself and the Trust were on terms no less favorable than it would have agreed to with unrelated parties.

F-35

17. Information on Geographic Segments

The table below summarizes revenue and (loss) income before income taxes for each of the Company’s geographic segments for each of the fiscal years ended October 31, 2010, 2009 and 2008 (amounts in millions):

							(Loss) income before
	Revenues						income taxes
	2010		2009		2008		2010			2009			2008
North	$	407.7	$	585.3	$	931.9	$	(4.0	)	$	(103.3	)	$	0.9
Mid-Atlantic		488.4		492.7		878.6		31.8			(25.0	)		(10.9	)
South		264.3		288.2		560.6		(36.3	)		(49.4	)		(170.0	)
West		334.4		389.1		777.1		(13.4	)		(209.0	)		(190.5	)
Corporate and other								(95.3	)		(109.8	)		(96.3	)
Total	$	1,494.8	$	1,755.3	$	3,148.2	$	(117.2	)	$	(496.5	)	$	(466.8	)

“Corporate and other” is comprised principally of general corporate expenses such as the Offices of the Chief Executive Officer and President, and the corporate finance, accounting, audit, tax, human resources, risk management, marketing and legal groups, directly expensed interest, offset in part by interest income and income from the Company’s ancillary businesses.

Total assets for each of the Company’s geographic segments at October 31, 2010, 2009 and 2008 are shown in the table below (amounts in millions):

	2010		2009		2008
North	$	961.3	$	1,009.0	$	1,244.7
Mid-Atlantic		1,161.5		1,081.9		1,220.3
South		693.8		573.1		688.0
West		712.4		759.3		1,134.0
Corporate and other		1,642.6		2,211.1		2,299.8
Total	$	5,171.6	$	5,634.4	$	6,586.8

“Corporate and other” is comprised principally of cash and cash equivalents, marketable U.S. Treasury and Agency securities, income tax refund recoverable and the assets of the Company’s manufacturing facilities and mortgage subsidiary.

F-36

The Company provided for inventory impairment charges and the expensing of costs that it believed not to be recoverable and write-downs of investments in unconsolidated entities that it does not believe it will be able to recover (including the Company’s pro-rata share of impairment charges recognized by the unconsolidated entities in which it has an investment) for the years ended October 31, 2010, 2009 and 2008 as shown in the table below; the net carrying value of inventory and investments in and advances to unconsolidated entities for each of the Company’s geographic segments at October 31, 2010 and 2009 is also shown (amounts in millions).

	Net Carrying Value				Impairments
	At October 31,				Year ended October 31,
	2010		2009		2010			2009		2008
Inventory:
Land controlled for future communities:
North	$	3.6	$	30.2	$	4.0		$	17.3	$	28.1
Mid-Atlantic		14.8		16.9		(0.1	)		7.8		13.6
South		11.0		8.4		(0.2	)		0.4		42.0
West		2.5		5.1		2.4			3.0		17.8
		31.9		60.6		6.1			28.5		101.5
Land owned for future communities:
North		208.5		224.6	$	9.6			51.0		12.0
Mid-Atlantic		452.9		390.9		2.1			23.8		67.7
South		119.8		66.6		23.4			1.2		33.5
West		142.8		93.0		18.4			93.5		31.2
		924.0		775.1		53.5			169.5		144.4
Operating communities:
North		685.3		685.6	$	15.9			77.1		72.3
Mid-Atlantic		662.4		646.2		9.0			28.0		55.1
South		443.3		436.7		14.0			51.2		124.6
West		494.8		579.4		16.8			111.1		147.1
		2,285.8		2,347.9		55.7			267.4		399.1
Total	$	3,241.7	$	3,183.6	$	115.3		$	465.4	$	645.0
Investments in and advances to unconsolidated entities:
North	$	47.6	$	25.5				$	6.0	$	57.9
South		51.7		50.0							1.5
West		58.5		64.2					5.3		141.3
Corporate		40.6		13.1
Total	$	198.4	$	152.8	$	—		$	11.3	$	200.7

F-37

18. Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for each of the fiscal years ended October 31, 2010, 2009 and 2008 (amounts in thousands):

	2010			2009			2008
Cash flow information:
Interest paid, net of amount capitalized	$	34,333		$	33,003		$	22,612
Income taxes paid	$	3,994		$	144,753		$	78,231
Income taxes refunded	$	152,770		$	105,584
Non-cash activity:
Cost of inventory acquired through seller financing or recorded due to VIE criteria	$	41,276		$	6,263		$	7,430
Cost of inventory acquired under specific performance contracts	$	(4,889	)	$	14,889
Cost of other inventory acquired	$	1,725		$	431
Reclassification of inventory to property, construction and office equipment	$	18,711					$	16,103
Increase in inventory for reclassification of minority interest contribution				$	5,283
Contribution of inventory, net of related debt, to unconsolidated entities							$	45,000
Land returned to seller subject to loan payable							$	7,750
Reduction in inventory related to debt cancellation				$	16,150
Adoption of FIN 48							$	47,460
Increase (decrease) in unrecognized gains in defined benefit plans	$	867		$	(4,783	)	$	5,565
Defined benefit retirement plan amendment	$	202					$	5,091
Income tax benefit related to exercise of employee stock options	$	27,150		$	2,672		$	33,307
Reduction of investment in unconsolidated entities due to reduction of letters of credit or accrued liabilities	$	7,679		$	20,489		$	10,495
Reversal of litigation costs previously accrued	$	10,981
Reclassification of accrued liabilities to loans payable				$	7,800		$	2,163
Miscellaneous increases (decreases) to investments in unconsolidated entities	$	2,495		$	1,759		$	(856	)
Stock awards	$	22		$	27		$	26
Deconsolidation of a majority-owned joint venture:
Fair value of assets removed							$	92,506
Liabilities removed							$	84,513
Minority interest eliminated							$	8,014

19. Supplemental Guarantor Information

A 100% owned subsidiary of the Company, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), issued $300 million of 6.875% Senior Notes due 2012 on November 22, 2002; $250 million of 5.95% Senior Notes due 2013 on September 3, 2003; $300 million of 4.95% Senior Notes due 2014 on March 16, 2004; $300 million of 5.15% Senior Notes due 2015 on June 2, 2005; $400 million of 8.91% Senior Notes due 2017 on April 13, 2009; and $250 million of 6.75% Senior Notes due 2019 on September 22, 2009. In fiscal 2009, the Subsidiary Issuer redeemed $105.1 million of its 6.875% Senior Notes due 2012 and $94.9 million of its 5.95% Senior Notes due 2013. The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest is guaranteed jointly and severally on a senior basis by the Company and substantially all of the Company’s 100%-owned home building subsidiaries (the “Guarantor Subsidiaries”). The guarantees are full and unconditional. The Company’s non-home building subsidiaries and several of its home building subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the debt. Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management has determined that such disclosures would not be material to investors. Prior to the senior debt issuances, the Subsidiary Issuer did not have any operations.

Supplemental consolidating financial information of Toll Brothers, Inc., the Subsidiary Issuer, the Guarantor Subsidiaries, the Non-Guarantor Subsidiaries and the eliminations to arrive at Toll Brothers, Inc. on a consolidated basis is presented below (amounts in thousands $).

F-38

Consolidating Balance Sheet at October 31, 2010

	Toll								Non-
	Brothers,			Subsidiary		Guarantor			Guarantor
	Inc.			Issuer		Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents							930,387			108,673						1,039,060
Marketable U.S. Treasury and Agency securities							197,867									197,867
Restricted cash							60,906									60,906
Inventory							2,862,796			378,929						3,241,725
Property, construction and office equipment, net							79,516			400						79,916
Receivables, prepaid expenses and other assets		27			8,104		66,280			24,565			(1,937	)		97,039
Mortgage loans receivable										93,644						93,644
Customer deposits held in escrow							13,790			7,576						21,366
Investments in and advances to unconsolidated entities							116,247			82,195						198,442
Income tax refund recoverable		141,590														141,590
Investments in and advances to consolidated entities		2,578,195			1,562,109		(871,125	)		(315,074	)		(2,954,105	)		—
		2,719,812			1,570,213		3,456,664			380,908			(2,956,042	)		5,171,555
LIABILITIES AND EQUITY
Liabilities:
Loans payable							63,442			31,049						94,491
Senior notes					1,544,110											1,544,110
Mortgage company warehouse loan										72,367						72,367
Customer deposits							72,819			4,337						77,156
Accounts payable							91,498			240						91,738
Accrued expenses					26,103		242,793			303,413			(1,988	)		570,321
Income taxes payable		164,359								(2,000	)					162,359
Total liabilities		164,359			1,570,213		470,552			409,406			(1,988	)		2,612,542
Equity:
Stockholders’ equity:
Common stock		1,664								2,003			(2,003	)		1,664
Additional paid-in capital		360,006					4,420			2,734			(7,154	)		360,006
Retained earnings		2,194,456					2,982,269			(36,795	)		(2,945,474	)		2,194,456
Treasury stock, at cost		(96	)													(96	)
Accumulated other comprehensive loss		(577	)				(577	)					577			(577	)
Total stockholders’ equity		2,555,453			—		2,986,112			(32,058	)		(2,954,054	)		2,555,453
Noncontrolling interest										3,560						3,560
Total equity		2,555,453			—		2,986,112			(28,498	)		(2,954,054	)		2,559,013
		2,719,812			1,570,213		3,456,664			380,908			(2,956,042	)		5,171,555

F-39

Consolidating Balance Sheet at October 31, 2009

	Toll								Non-
	Brothers,			Subsidiary		Guarantor			Guarantor
	Inc.			Issuer		Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents							1,700,351			107,367						1,807,718
Marketable U.S. Treasury and Agency securities							101,176									101,176
Inventory							2,951,387			232,179						3,183,566
Property, construction and office equipment, net							69,328			1,113						70,441
Receivables, prepaid expenses and other assets		51			9,436		66,240			22,201			(2,154	)		95,774
Mortgage loans receivable										43,432						43,432
Customer deposits held in escrow							16,779			874						17,653
Investments in and advances to unconsolidated entities							112,201			40,643						152,844
Income tax refund recoverable		161,840														161,840
Investments in and advances to consolidated entities		2,527,938			1,598,537		(945,308	)		(237,029	)		(2,944,138	)		—
		2,689,829			1,607,973		4,072,154			210,780			(2,946,292	)		5,634,444
LIABILITIES AND EQUITY
Liabilities:
Loans payable							409,264			63,590						472,854
Senior notes					1,587,648											1,587,648
Senior subordinated notes							47,872									47,872
Mortgage company warehouse loan										27,015						27,015
Customer deposits							85,521			3,104						88,625
Accounts payable							78,685			412						79,097
Accrued expenses					20,325		399,807			222,217			(2,128	)		640,221
Income taxes payable		176,630								(2,000	)					174,630
Total liabilities		176,630			1,607,973		1,021,149			314,338			(2,128	)		3,117,962
Equity:
Stockholders’ equity:
Common stock		1,647								2,003			(2,003	)		1,647
Additional paid-in capital		316,518					4,420			2,734			(7,154	)		316,518
Retained earnings		2,197,830					3,049,222			(111,578	)		(2,937,644	)		2,197,830
Treasury stock, at cost		(159	)													(159	)
Accumulated other comprehensive loss		(2,637	)				(2,637	)					2,637			(2,637	)
Total stockholders’ equity		2,513,199			—		3,051,005			(106,841	)		(2,944,164	)		2,513,199
Noncontrolling interest										3,283						3,283
Total equity		2,513,199			—		3,051,005			(103,558	)		(2,944,164	)		2,516,482
		2,689,829			1,607,973		4,072,154			210,780			(2,946,292	)		5,634,444

F-40

Consolidating Statement of Operations for the fiscal year ended October 31, 2010

	Toll									Non-
	Brothers,			Subsidiary			Guarantor			Guarantor
	Inc.			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues								1,441,773			52,998						1,494,771
Cost of revenues								1,311,709			69,521			1,845			1,383,075
Selling, general and administrative		77			1,365			260,492			22,661			(21,371	)		263,224
Interest expense					106,411			22,751						(106,411	)		22,751
		77			107,776			1,594,952			92,182			(125,937	)		(1,669,050	)
Loss from operations		(77	)		(107,776	)		(153,179	)		(39,184	)		125,937			(174,279	)
Other:
Income from unconsolidated entities								5,905			17,565						23,470
Interest and other					108,520			31,372			31,460			(136,522	)		34,830
Expenses related to early retirement of debt					(744	)		(1,208	)					744			(1,208	)
Loss from consolidated subsidiaries		(117,110	)											117,110			—
Loss before income tax benefit		(117,187	)		—			(117,110	)		9,841			107,269			(117,187	)
Income tax provision (benefit)		113,813						124,695			(9,596	)		(115,099	)		113,813
Net loss		(3,374	)		—			7,585			245			(7,830	)		(3,374	)

Consolidating Statement of Operations for the fiscal year ended October 31, 2009

	Toll									Non-
	Brothers,			Subsidiary			Guarantor			Guarantor
	Inc.			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues								1,596,491			158,819						1,755,310
Cost of revenues								1,767,228			181,825			2,259			1,951,312
Selling, general and administrative		47			1,033			308,393			25,028			(21,292	)		313,209
Interest expense					87,501			7,949						(87,501	)		7,949
		47			88,534			2,083,570			206,853			(106,534	)		2,272,470
Loss from operations		(47	)		(88,534	)		(487,079	)		(48,034	)		106,534			(517,160	)
Other:
Loss from unconsolidated entities								(2,218	)		(5,300	)					(7,518	)
Interest and other					100,160			6,572			27,776			(92,602	)		41,906
Expenses related to early retirement of debt					(11,626	)		(13,693	)					11,626			(13,693	)
Loss from consolidated subsidiaries		(496,418	)											496,418			—
Loss before income tax benefit		(496,465	)		—			(496,418	)		(25,558	)		521,976			(496,465	)
Income tax provision (benefit)		259,360						(259,329	)		(13,351	)		272,680			259,360
Net loss		(755,825	)		—			(237,089	)		(12,207	)		249,296			(755,825	)

F-41

Consolidating Statement of Operations for the fiscal year ended October 31, 2008

	Toll									Non-
	Brothers,			Subsidiary			Guarantor			Guarantor
	Inc.			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues								3,088,633			59,533						3,148,166
Cost of revenues					66,194			3,062,744			56,148			(65,281	)		3,119,805
Selling, general and administrative		5			702			430,085			29,174			(30,072	)		429,894
Goodwill impairment								3,233									3,233
		5			66,896			3,496,062			85,322			(95,353	)		3,552,932
Loss from operations		(5	)		(66,896	)		(407,429	)		(25,789	)		95,353			(404,766	)
Other:
Loss from unconsolidated entities								(78,784	)		(107,609	)					(186,393	)
Interest and other					66,896			121,242			31,587			(95,353	)		124,372
Loss from consolidated subsidiaries		(466,782	)					(101,811	)					568,593			—
Loss before income taxes		(466,787	)		—			(466,782	)		(101,811	)		568,593			(466,787	)
Income tax benefit		(168,977	)					(196,816	)		(41,100	)		237,916			(168,977	)
Net loss		(297,810	)		—			(269,966	)		(60,711	)		330,677			(297,810	)

F-42

Consolidating Statement of Cash Flows for the fiscal year ended October 31, 2010

	Toll									Non-
	Brothers,			Subsidiary			Guarantor			Guarantor
	Inc.			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow (used in) provided by operating activities:
Net loss		(3,374	)					7,585			245			(7,830	)		(3,374	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		28			3,262			15,961			793						20,044
Stock-based compensation		11,677															11,677
Excess tax benefit from stock-based compensation		(4,954	)														(4,954	)
Loss from unconsolidated entities								(5,773	)		(17,697	)					(23,470	)
Distributions of earnings from unconsolidated entities								10,297									10,297
Deferred tax provision		60,697															60,697
Deferred tax valuation allowance		(60,697	)														(60,697	)
Inventory impairments								107,508			7,750						115,258
Change in fair value of mortgage loans receivable and derivative instruments											(970	)					(970	)
Expenses related to early retirement of debt					744			464									1,208
Changes in operating assets and liabilities:
Decrease in inventory								(16,730	)		(123,614	)					(140,344	)
Origination of mortgage loans											(628,154	)					(628,154	)
Sale of mortgage loans											579,221						579,221
Increase in restricted cash								(60,906	)								(60,906	)
(Increase) decrease in receivables, prepaid expenses and other assets		(50,136	)		36,330			(143,435	)		144,502			9,624			(3,115	)
Decrease in customer deposits								(9,713	)		(5,469	)					(15,182	)
(Decrease) increase in accounts payable and accrued expenses		(274	)		5,778			(133,422	)		91,114			(1,794	)		(38,598	)
Decrease in income tax refund recoverable		20,250															20,250
Decrease in current income taxes payable		14,828															14,828
Net cash (used in) provided by operating activities		(11,955	)		46,114			(228,164	)		47,721			—			(146,284	)
Cash flow used in investing activities:
Purchase of property and equipment, net								(4,750	)		(80	)					(4,830	)
Purchase of marketable securities								(157,962	)								(157,962	)
Redemption of marketable securities								60,000									60,000
Investments in and advances to unconsolidated entities								(28,493	)		(29,793	)					(58,286	)
Return of investment in unconsolidated entities								9,696									9,696
Net cash used in investing activities		—			—			(121,509	)		(29,873	)		—			(151,382	)
Cash flow (used in) provided by financing activities:
Proceeds from issuance of senior notes
Proceeds from loans payable											927,233						927,233
Principal payments of loans payable								(372,419	)		(944,095	)					(1,316,514	)
Redemption of senior subordinated notes								(47,872	)								(47,872	)
Redemption of senior notes					(46,114	)											(46,114	)
Proceeds from stock-based benefit plans		7,589															7,589
Excess tax benefit from stock-based compensation		4,954															4,954
Purchase of treasury stock		(588	)														(588	)
Change in noncontrolling interest											320						320
Net cash (used in) provided by financing activities		11,955			(46,114	)		(420,291	)		(16,542	)		—			(470,992	)
Net (decrease) increase in cash and cash equivalents		—			—			(769,964	)		1,306			—			(768,658	)
Cash and cash equivalents, beginning of period								1,700,351			107,367						1,807,718
Cash and cash equivalents, end of period		—			—			930,387			108,673			—			1,039,060

F-43

Consolidating Statement of Cash Flows for the fiscal year ended October 31, 2009

	Toll									Non-
	Brothers,			Subsidiary			Guarantor			Guarantor
	Inc.			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow provided by (used in) operating activities:
Net loss		(755,825	)					(237,089	)		(11,327	)		248,416			(755,825	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		28			2,652			20,363			882						23,925
Stock-based compensation		10,987															10,987
Excess tax benefit from stock-based compensation		(24,817	)														(24,817	)
Impairment of investment in unconsolidated entities								6,000			5,300						11,300
(Loss) earnings from unconsolidated entities								1,518			(5,300	)					(3,782	)
Distributions of earnings from unconsolidated entities								816									816
Deferred tax provision		(52,577	)														(52,577	)
Deferred tax valuation allowance		458,280															458,280
Inventory impairments								419,311			46,100						465,411
Expenses related to early retirement of debt					11,626			2,067									13,693
Changes in operating assets and liabilities:
Decrease in inventory								377,146			112,067						489,213
Origination of mortgage loans											(571,158	)					(571,158	)
Sale of mortgage loans											577,263						577,263
Decrease (increase) in receivables, prepaid expenses and other assets		508,224			(439,154	)		185,744			16,228			(250,997	)		20,045
Decrease in customer deposits								(22,842	)		(22,864	)					(45,706	)
Decrease in accounts payable and accrued expenses		(4,979	)		(249	)		(111,030	)		(35,388	)		2,581			(149,065	)
Increase in income tax refund recoverable		(161,840	)														(161,840	)
Decrease in current income taxes payable		(22,972	)														(22,972	)
Net cash provided by (used in) operating activities		(45,491	)		(425,125	)		642,004			111,803			—			283,191
Cash flow used in investing activities:
Purchase of property and equipment, net								(2,719	)								(2,712	)
Purchase of marketable securities								(101,324	)								(101,324	)
Investments in and advances to unconsolidated entities								(31,342	)								(31,342	)
Return of investment in unconsolidated entities								3,205									3,205
Net cash used in investing activities		—			—			(132,180	)		—			—			(132,173	)
Cash flow provided by (used in) financing activities:
Proceeds from issuance of senior notes					635,765												635,765
Proceeds from loans payable											636,975						636,975
Principal payments of loans payable								(28,587	)		(757,296	)					(785,883	)
Redemption of senior subordinated notes								(296,503	)								(296,503	)
Redemption of senior notes					(210,640	)											(210,640	)
Proceeds from stock-based benefit plans		22,147															22,147
Excess tax benefit from stock-based compensation		24,817															24,817
Purchase of treasury stock		(1,473	)														(1,473	)
Change in noncontrolling interest											(2,000	)					(2,000	)
Net cash provided by (used in) financing activities		45,491			425,125			(325,090	)		(122,321	)		—			23,205
Net increase (decrease) in cash and cash equivalents		—			—			184,734			(10,511	)		—			174,223
Cash and cash equivalents, beginning of period								1,515,617			117,878						1,633,495
Cash and cash equivalents, end of period		—			—			1,700,351			107,367			—			1,807,718

F-44

Consolidating Statement of Cash Flows for the fiscal year ended October 31, 2008

	Toll									Non-
	Brothers,			Subsidiary			Guarantor			Guarantor
	Inc.			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow provided by (used in) operating activities:
Net loss		(297,810	)					(269,966	)		(60,711	)		330,677			(297,810	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Inventory impairments								634,491			10,500						644,991
Impairment of investment in unconsolidated entities								93,192			107,460						200,652
(Loss) earnings from unconsolidated entities								(14,408	)		149						(14,259	)
Distributions of earnings from unconsolidated entities								41,937									41,937
Depreciation and amortization					1,831			25,682			820						28,333
Stock-based compensation		23,255															23,255
Excess tax benefit from stock-based compensation		(25,780	)														(25,780	)
Deferred tax benefit		(259,856	)														(259,856	)
Deferred tax valuation allowance		24,050															24,050
Goodwill impairment charge								3,233									3,233
Deconsolidation of majority-owned joint venture											(31	)					(31	)
Changes in operating assets and liabilities:
Decrease (increase) in inventory								715,551			(52,782	)					662,769
Origination of mortgage loans											(896,365	)					(896,365	)
Sale of mortgage loans											940,299						940,299
Decrease in contracts receivable								45,472			1,053						46,525
Decrease (increase) in receivables, prepaid expenses and other assets		521,100			(1,086	)		(198,897	)		31,638			(334,017	)		18,738
Decrease in customer deposits								(104,827	)		(4,283	)					(109,110	)
Decrease in accounts payable and accrued expenses		(16,379	)		(745	)		(138,310	)		(42,333	)		3,340			(194,427	)
Decrease in current income taxes payable		(10,348	)														(10,348	)
Net cash provided by (used in) operating activities		(41,768	)		—			833,150			35,414			—			826,796
Cash flow used in investing activities:
Purchase of property and equipment, net								(7,768	)		(390	)					(8,158	)
Purchase of marketable securities								(1,239,715	)		(228,725	)					(1,468,440	)
Sale of marketable securities								1,234,762			228,725						1,463,487
Investments in and advances to unconsolidated entities								(28,236	)		(26,551	)					(54,787	)
Return of investment in unconsolidated entities								3,268									3,268
Net cash used in investing activities		—			—			(37,689	)		(26,941	)		—			(64,630	)
Cash flow (used in) provided by financing activities:
Proceeds from loans payable								533			994,300						994,833
Principal payments of loans payable								(57,268	)		(1,001,344	)					(1,058,612	)
Redemption of senior subordinated notes								(7,000	)								(7,000	)
Proceeds from stock-based benefit plans		17,982															17,982
Excess tax benefit from stock-based compensation		25,780															25,780
Purchase of treasury stock		(1,994	)														(1,994	)
Change in minority interest											3						3
Net cash (used in) provided by financing activities		41,768			—			(63,735	)		(7,041	)		—			(29,008	)
Net increase in cash and cash equivalents		—			—			731,726			1,432			—			733,158
Cash and cash equivalents, beginning of period								783,891			116,446						900,337
Cash and cash equivalents, end of period		—			—			1,515,617			117,878			—			1,633,495

F-45

20. Summary Consolidated Quarterly Financial Data (Unaudited)

The table below provides summary income statement data for each quarter of fiscal 2010 and 2009 (Amounts in thousands, except per share data).

	Three Months Ended,
	October 31			July 31			April 30			January 31
Fiscal 2010
Revenue	$	402,600		$	454,202		$	311,271		$	326,698
Gross profit	$	35,448		$	61,786		$	5,532		$	8,930
(Loss) income before income taxes	$	(9,467	)	$	823		$	(51,789	)	$	(56,754	)
Net income (loss)	$	50,479		$	27,302		$	(40,401	)	$	(40,754	)
Income (loss) per share (1)
Basic	$	0.30		$	0.16		$	(0.24	)	$	(0.25	)
Diluted	$	0.30		$	0.16		$	(0.24	)	$	(0.25	)
Weighted-average number of shares
Basic		166,269			165,752			165,407			165,237
Diluted (2)		167,777			167,658			165,407			165,237
Fiscal 2009
Revenue	$	486,585		$	461,375		$	398,327		$	409,023
Gross loss	$	(19,439	)	$	(50,173	)	$	(49,433	)	$	(76,957	)
Loss before income taxes	$	(106,736	)	$	(111,264	)	$	(121,904	)	$	(156,561	)
Net loss	$	(111,434	)	$	(472,331	)	$	(83,165	)	$	(88,895	)
Loss per share (1)
Basic	$	(0.68	)	$	(2.93	)	$	(0.52	)	$	(0.55	)
Diluted	$	(0.68	)	$	(2.93	)	$	(0.52	)	$	(0.55	)
Weighted-average number of shares
Basic		163,117			161,245			161,134			160,700
Diluted (2)		163,117			161,245			161,134			160,700

(1)	Due to rounding, the sum of the quarterly earnings per share amounts may not equal the reported earnings per share for the year.
(2)	For the three months ended April 30, 2010 and January 31, 2010 and for each quarter in fiscal 2009, there were no incremental shares attributed to outstanding options to purchase common stock because the Company reported a net loss for each period, and any incremental shares would be anti-dilutive.

F-46

EX-10.34

EXHIBIT 10.34

ADVISORY AND NON-COMPETITION AGREEMENT (2010)

This Advisory and Non-Competition Agreement (2010) (hereinafter sometimes referred to as the “Agreement”), dated as of November 1, 2010, is by and between Toll Brothers, Inc. (hereinafter “Company”) and Bruce E. Toll (hereinafter “BET”).

WHEREAS, BET, a founder of the Company, was employed by the Company for many years as its President, Chief Operating Officer and Secretary and in various capacities with respect to the Company’s subsidiaries, and, more recently, has been retained continuously since 1998 under a Consulting and Non-Competition Agreement, dated March 5, 1998, as amended by an Amendment Agreement, dated June 6, 2000, followed by an Advisory and Non-Competition Agreement, dated as of November 1, 2004, and Amendments thereto dated as of June 13, 2007 and November 24, 2008 (such agreements and amendments, to the extent in effect immediately prior to the date hereof, are sometimes, for convenience, referred to herein collectively as “Original Agreement”).

WHEREAS, the latest term of the Original Agreement expires on October 31, 2010;

WHEREAS, BET, during his many years of service with the Company in executive and other capacities, has gained knowledge and received information concerning the Company’s business and operations of a proprietary and confidential nature;

WHEREAS, the Company desires to have the valuable and special knowledge, expertise and services of BET available to the Company on a continuing basis after expiration of the Original Agreement, and the Company further desires that BET agree, among other things, to preserve the Company’s confidences and not compete with the Company during the term of this Agreement and thereafter to the extent provided herein; and

WHEREAS, in recognition of BET’s continuing contributions to the Company and in exchange for BET’s covenants contained herein, the Company desires to continue to employ BET and provide him with the benefits contained in this Agreement; and

WHEREAS, the parties mutually wish to enter into this Agreement.

NOW, therefore, in consideration of the mutual obligations and promises contained herein, and intending to be legally bound, the Company and BET hereby agree as follows:

1. Recitals. The foregoing recitals are hereby incorporated by reference as if set forth fully herein.

2. Services; Term, and Title. During the six (6) year period commencing November 1, 2010 and ending October 31, 2016 (hereinafter the “Term”), the Company agrees to employ BET as follows: BET agrees to make himself available to the Company and, in particular, to the Chairman of the Board (“Chairman”) and the Chief Executive Officer of the Company (“CEO”), on a reasonable basis and at reasonable times and places so as not to interfere with BET’s other business interests, to consult with the Company, the Chairman and the CEO concerning matters within his knowledge or expertise. BET’s services shall include, among other things, providing advice, assistance, information and recommendations with regard to suitable investments to be made by the Company relating to or compatible with the real estate industry. BET’s title, in connection with his services hereunder, shall be Special Advisor.

2

3. Compensation. In consideration of BET’s continued availability and services to the Company, as provided in Paragraph 2, hereof, and in further consideration of other agreements of BET herein, including those set forth in Paragraphs 5, 6, 7, 8 and 9, hereof, the Company agrees to pay BET the amount set forth beside the respective 12 month period of the Term in the following table:

November 1, 2010 — October 31, 2011	$	675,000
November 1, 2011 — October 31, 2012	$	600,000
November 1, 2012 — October 31, 2013	$	525,000
November 1, 2013 — October 31, 2014	$	450,000
November 1, 2014 — October 31, 2015	$	375,000
November 1, 2015 — October 31, 2016	$	300,000

payable in accordance with the Company’s regular pay schedule (which is currently every two weeks).

4. Health Insurance. BET will continue to be entitled during the Term to group health insurance of the type and amount currently being provided to Company executives.

5. Termination of Compensation.

a. Notwithstanding anything to the contrary in Paragraphs 3 and 4, above, the payments provided for under Paragraph 3, and the benefit provided in Paragraph 4, hereof, shall terminate immediately upon BET’s death, Disability or discharge for Cause. For purposes of this Agreement, the term (i) “Disability” shall mean the inability of BET to fully perform his services under Paragraph 2, hereof, due to physical, mental or other illness or limitations during a period of 90 consecutive calendar days during the Term or any 90 business days during any 180 consecutive calendar days during the Term, and (ii) “Cause” shall mean any act of BET that constitutes embezzlement, theft, commission of a felony or proven dishonesty in the course of his services with the Company, any material violation by BET of Paragraphs 6, 7, 8 or 9, hereof, or any willful refusal by BET to perform his services, as described in Paragraph 2, hereof.

b. BET agrees that his benefit under the Company’s Supplemental Executive Retirement Plan (“SERP”) shall commence to be paid to him by reason of, and following, his separation from service, as provided for under the terms of the SERP, as amended to comply with applicable provisions of the Internal Revenue Code (the “Code”) and applicable Treasury Regulations, including new Code Section 409A added by the American Jobs Creation Act of 2004.

3

6. Non-Compete. During the longer of (i) the Term and (ii) the remaining period of BET’s service as Vice Chairman of the Company, BET shall not, without the written consent of the Company, engage in any of the following prohibited activities (which shall be in addition to any restrictions or prohibitions contained in any other agreement between Bruce E. Toll and the Company or in any benefit plan of which BET is a participant, such as the SERP):

a. BET shall not (as an individual, principal, agent, employee, advisor or otherwise), directly or indirectly, engage in activities relating to or render services:

i. to any firm or business in the homebuilding business, or

ii. so long as BET (including any immediate family members, trusts or other entities for the benefit of any such persons) is an officer, director, partner or limited partner of, or otherwise actively, directly or indirectly, engaged in the operation or activities of, a real estate investment trust (or related operating partnership) formed or sponsored by the Company, to any real estate investment trust (whether in corporate, trust or partnership form) or operating partnership (or other similar entity) affiliated with a real estate investment trust; provided that BET shall not be deemed to be an officer, director, partner or limited partner of a Company-formed or Company-sponsored real estate investment trust or related operating partnership solely by reason of his status or conduct as a shareholder or a director of the Company.

iii. so long as Dulles Green, L.P. (or its property), or its general partner, continues to be controlled or jointly controlled by BET, to any real estate investment trust (whether in corporate, trust or partnership form) or operating partnership (or other similar entity) affiliated with a real estate investment trust.

4

The restrictions in this Paragraph 6.a. shall not prohibit BET from holding an interest in any public corporation or real estate investment trust in an amount less than 1% of any class of any such entity’s outstanding equity securities. The restrictions of this Paragraph 6.a. are not intended to curtail the business of BET Investments, Inc. and its controlled entities or of family trusts created by BET, except to the extent that any such entities are operated in such a way as to violate this Paragraph 6.a.

b. BET shall not solicit, induce or encourage any employee, independent contractor, consultant or advisor to the Company to terminate his, her or its employment or other relationship with the Company;

c. BET shall not solicit, induce or encourage any customer or vendor of the Company to terminate his, her or its relationship with the Company, to cease doing business with the Company or to refrain from giving new business or additional business to the Company.

Given the breadth of BET’s responsibilities, the restrictions in this Paragraph 6 shall apply (i) in all foreign countries in which the Company owns or owned property or engaged in business during the Term, and (ii) in any geographical area of the United States.

BET further acknowledges that these restrictions, in view of his long employment, membership on the Board of Directors, consulting, advisory and other relationships with the Company and the nature of the business in which the Company is engaged, are reasonable and necessary in order to protect the legitimate interests of the Company, and that any violation thereof would result in irreparable injuries to the Company, as to which the Company has no adequate remedy at law. BET, therefore, acknowledges that, in the event of his violation of any of these restrictions, the Company shall be entitled to obtain from any court of competent jurisdiction preliminary and permanent injunctive relief to restrain any such violation, plus reasonable legal fees, costs and expenses, incurred in connection with any such action which rights shall be cumulative to and in addition to any other rights or remedies to which the Company may be entitled to the extent permissible under the laws of the Commonwealth of Pennsylvania.

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7. Confidential Information. BET shall not, either during the Term or at any time thereafter, use for his own personal benefit, or disclose, communicate or divulge or use for the direct or indirect benefit of any person, firm, association or company other than the Company, any confidential information regarding the business methods, plans, policies, procedures, techniques, research or development projects or results, financial results and projections, trade secrets or other confidential knowledge or confidential processes or information of or developed by the Company, any confidential information furnished to the Company by customers or clients or any names and addresses of customers or clients or any data on or relating to past, present or prospective customers or clients or any other confidential information relating to or dealing with the business condition, operations or activities of the Company made known to BET or learned or acquired by him either while in the employ of the Company, including the Term of this Agreement and the term of any predecessor agreement or amendment described in the first WHEREAS clause, above.

8. Limitation on Authority. BET shall have no authority during the Term to enter into binding obligations on behalf of the Company without the express written consent of the Company, and shall not represent to any to any third party that he has such authority.

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9. Name Confusion. BET shall not use, in any personal or business venture with which he is associated, at any time during or after the Term, the name “Toll Brothers” nor, for a period of two years following the execution of this Agreement, the name “Toll”, in connection with any business name, nor shall he conduct, at any time during or after the Term, any business in a manner that may cause confusion with the Company name or business. Notwithstanding the above, this paragraph will not prohibit BET from conducting personal or business ventures (a) using the name Bruce Toll, Bruce E. Toll or Toll Management or (b) using the name “Toll” in conjunction with the name “Reedman” in connection with the automobile business.

10. Delegation; Assignability. BET may not assign his rights, or delegate his obligations, under this Agreement. This Agreement may be assigned by the Company to any successor in ownership of all or any part of the Company’s business.

11. Arbitration. Other than claims for equitable remedies, all claims, demands, disputes, controversies, differences or misunderstandings between the parties arising out of, or by virtue of, this Agreement shall be submitted to and determined by arbitration, which shall be conducted before the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules then in effect, except as otherwise provided herein. The arbitration shall be conducted in Philadelphia, Pennsylvania, at a specific location to be agreed upon by the parties or, if no agreement can be reached, in the Philadelphia office of the AAA. Only one arbitrator, who shall be neutral, shall be appointed. The parties shall negotiate in an attempt to select a mutually agreeable arbitrator; in the event they cannot agree within 30 days of the service of the demand for arbitration, the AAA shall select an arbitrator from its panel of arbitrators. Discovery shall be permitted in connection with the arbitration only to the extent, if any, expressly authorized by the arbitrator upon a showing of substantial need by the party seeking discovery. The arbitrator’s decision shall be binding and conclusive on the parties, shall not be appealable and shall include a finding for payment of costs of the arbitration. Judgment on the arbitration award may be entered in any court having jurisdiction.

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12. Miscellaneous.

a. Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

b. This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

c. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. The paragraph headings in this document are descriptive only and shall not be deemed to be a complete summary of the contents of such paragraph.

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d. This Agreement contains the entire understanding between the parties hereto, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, with respect to the subject matter hereof, including the Original Agreement, provided, however, that this Agreement shall not affect or supercede that certain “Agreement,” dated March 5, 1998, between the parties hereto, as amended by paragraph 1 of an “Amendment Agreement,” dated June 6, 2000. The express terms hereof control and supercede any course of performance of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

e. Nothing in this Agreement shall lessen, or detract from, any obligations, responsibilities or fiduciary or other duties owed by BET to the Company or its stockholders in his role as an officer, director, affiliate or employee of the Company or any of its affiliates.

13. Notices. Any notices, demands or other communications arising from this Agreement shall be effective if in writing given in person or sent by U.S. mail or a nationally recognized courier service, in all such cases with written acknowledgement of receipt, addressed to:

[If to Company:]	Toll Brothers, Inc 250 Gibraltar Road Horsham, PA 19044 Attention: Douglas Yearley, Chief Executive Officer With a copy to: John McDonald, General Counsel
[If to BET:]	Bruce E. Toll 250 Gibraltar Road Horsham, PA 19044

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WHEREFORE, with the intention of being legally bound, BET and Company hereby execute this Agreement as of the date first set forth above.

BRUCE E. TOLL	TOLL BROTHERS, INC.
/s/ Bruce E. Toll	By:	/s/ Douglas C. Yearley, Jr.
Date: September 22, 2010	Date: September 22, 2010

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EX-10.40

Exhibit 10.40

AMENDMENT NUMBER 1
TO THE
TOLL BROS., INC.

NONQUALIFIED DEFERED COMPENSATION PLAN

WHEREAS, the Toll Bros., Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan” or the “Plan”) was originally established effective as of November 5, 2001 and was amended and restated effective as of November 1, 2008, by Toll Bros., Inc. (“Toll Brothers”) to be in compliance with Section 409A of the Internal Revenue Code (the “Code”); and

WHEREAS, Section 6.6 of the Plan provides that, consistent with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulations Section 1.409A-1(c)(3), payments to certain “Specified Employees” must be delayed for a period of six months following a “Separation from Service” as defined under Treasury Regulation Section 1.409A-1(h); and

WHEREAS, Section 409A(a)(2)(B)(i) of the Code and Treasury Regulations Section 1.409A-1(c)(3)(v) provides an exception to the six month delay in payment in rule for Specified Employees in the event of death; and

WHEREAS, Section 9.1 of the Plan provides that the Board of Directors of Toll Brothers has the right to amend the Plan; and

WHEREAS, Treasury Regulation Section 1.409A-3(j)(2) provides that a plan subject to Section 409A of the Code may be amended to include death as a permissible payment event without violating the Section 409A of the Code prohibition on accelerated benefits; and

WHEREAS, Toll Brothers wishes to amend the Plan to add the death exception to the six month delay in payment rule for Specified Employees effective as of the date of execution of this Amendment.

NOW, THEREFORE, effective as of the date of execution of this Amendment, the Plan shall be amended as follows:

1. Six Month Delay in Payment For Specified Employees. Section 6.6 of the Plan provides for a six month delay in payment for Specified Employees, as defined in Section 409A(a)(2)(B)(i) and Treasury Regulations Section 1.409A-1(i). Notwithstanding any provisions therein to the contrary, as permitted under Section 409A(a)(2)(B)(i) of the Code and Treasury Regulations Section 1.409A-1(c)(3)(v), the six month delay in payment rule shall not apply in the event of a death of a Specified Employee.

2. Specified Employee Determination Date. The Plan does not define a Specified Employee Designation Date. Accordingly, in accordance with Treasury Regulation Section 1.409A-1(i)(3), the Specified Employee Determination Date is December 31 of each Plan Year. This Amendment Number 1 to the Plan clarifies that Toll Brothers acknowledges December 31 is the Specified Employee Determination Date under the Plan.

3. Date of Death. The provisions of this Amendment shall apply regardless of the date of death of any Specified Employee.

This Amendment Number 1 to the Toll Bros., Inc. Nonqualified Deferred Compensation Plan is executed this 1st day of November, 2010.

TOLL BROS., INC.
BY:	/s/ Robert I. Toll

EX-10.42

EXHIBIT 10.42

TOLL BROTHERS, INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN FOR EMPLOYEES (2007)
RESTRICTED STOCK UNIT AWARD

This Restricted Stock Unit Agreement (the “RSU” or “RSU Agreement”) documents the grant of Restricted Stock Units by Toll Brothers, Inc. (the “Company”) pursuant to the terms of the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) (the “Plan”). This RSU consists of a grant of a right to receive a number of shares of Common Stock at the date specified herein. This RSU relates to 100,000 shares of Common Stock (the “Shares”), and is granted on this 20th day of December, 2010 (the “Date of Grant”) to Douglas C. Yearley, Jr. (the “Grantee”), and is subject to all applicable terms and conditions set forth in the Plan.

1. Definitions. All capitalized terms contained in this RSU Agreement shall have the meaning set forth in the Plan unless otherwise defined herein or as may be required by the context.

2. Performance-Based Vesting. Grantee’s rights under this RSU shall, except to the extent greater vesting is provided for under the terms of the Plan or as set forth in this RSU, become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU only if, and at such time as, the average closing price of the Common Stock on the New York Stock Exchange (“NYSE”), measured over any twenty (20) consecutive trading days ending on or prior to December 20, 2015, increases 30% or more over the closing price of the Common Stock on the NYSE on the Date of Grant; provided that in no event shall Grantee’s rights under this RSU become vested if Grantee does not continue to be employed by, or be a member of the Board of, the Company until December 20, 2013.

3. Vesting Upon Death or Disability. Notwithstanding any of the provisions in Section 2, Grantee’s rights under this RSU shall become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU in the event the Grantee’s service as an employee or as a member of the Board of the Company terminates by reason of the Grantee’s death, or by reason of the Grantee’s “disability” (as hereinafter defined).

For purposes of this RSU Agreement, the term “disability” shall mean any condition that would qualify as a “disability” as that term is defined in the Plan, or any other condition that the Committee determines to be a medically determinable physical or mental impairment which can be expected (a) to prevent the Grantee from being able to perform his usual duties (or another job deemed appropriate by the Committee taking into account the Grantee’s education, prior experience and past earnings) and (b) to last for one year or longer.

4. Vesting Upon Change of Control. Notwithstanding any of the provisions of Section 2, Grantee’s rights under this RSU shall become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU in the event there is a Change of Control while Grantee is employed by, or a member of the Board of, the Company.

5. Delivery of Shares. The Shares shall be delivered to Grantee (or the person to whom ownership rights may have passed by will or the laws of descent and distribution), on or as soon as practicable after the first to occur of the following:

(a) The date the performance-based vesting conditions set forth in Section 2 are satisfied;

(b) The occurrence of a Change of Control; provided, however, that the event that constitutes a Change of Control also constitutes a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company that permits a payment of deferred compensation pursuant to Section 409A of the Internal Revenue Code; or

(c) The date of Grantee’s termination of employment with, or as a member of the Board of, the Company due to death or disability; provided, however, that delivery of the Shares by reason of Grantee’s termination of employment shall be delayed until the six (6) month anniversary of the date of Grantee’s termination of employment if and to the extent necessary to comply with Code Section 409A(a)(B)(i), and the determination of whether or not there has been a termination of Grantee’s employment with the Company shall be made by the Committee consistent with the definition of “separation from service” (as that phrase is used for purposes of Code Section 409A, and as set forth in Treasury Regulation Section 1.409A-1(h)).

The Company shall, without payment from Grantee (or the person to whom ownership rights may have passed by will or the laws of descent and distribution) for the Shares, other than any required withholding taxes, as provided in Section 9, below, (i) deliver to Grantee (or such other person) a certificate for the Shares being delivered or (ii) if consented to by Grantee (or such other person), deliver electronically to an account designated by Grantee (or such other person) the Shares being delivered, in either case without any legend or restrictions, except for such restrictions as may be imposed by the Committee, in its sole judgment, consistent with the terms of the Plan. The Company may condition delivery of the Shares upon the prior receipt from Grantee (or such other person) of any undertakings which it may determine are required to assure that the Shares being delivered are being issued in compliance with federal and state securities laws. The right to any fractional Shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a Share on the date the Share would otherwise have been delivered, as determined by the Committee. Notwithstanding anything to the contrary herein, in the event of a Change of Control, the Grantee shall receive, at the time that delivery of the Shares is provided for hereunder, the Shares and/or such other property or other consideration as is appropriate so that the Grantee receives, as of such date of delivery, whatever the Grantee would have received had the Grantee held the Shares at the time of the Change of Control

6. Dividends. Grantee shall not be entitled to any cash, securities or property that would have been paid or distributed as dividends with respect to the Shares subject to this RSU Agreement prior to the date the Shares are delivered to Grantee; provided, however, that the Company shall keep a hypothetical account in which any such items shall be recorded, and shall pay to Grantee the amount of such dividends in kind on the same date that the Shares to which such payments or distributions relate are delivered to Grantee (or forfeited).

7. Non-Transferability of this RSU. Grantee shall not be permitted to sell, transfer, pledge, assign or otherwise dispose of this RSU at any time. Notwithstanding the foregoing, in the event of Grantee’s death, this RSU may be transferred by will or by the laws of descent and distribution.

8. Rights of Grantee. Grantee shall have none of the rights of a shareholder at any time prior to the delivery of the Shares subject to this RSU Agreement, except as expressly set forth in the Plan or herein.

9. Withholding Taxes. Grantee shall be responsible to pay to the Company the amount of withholding taxes as determined by the Company on the date the Shares are delivered. At the Grantee’s option, Grantee shall have the right to relinquish to the Company a portion of the Shares having a fair market value, based on the closing price of the Common Stock on the NYSE on such delivery date, equal to the amount the Grantee would otherwise be required to pay to the Company on such delivery date by reason of applicable withholding taxes, in lieu of paying that amount to the Company in cash. Grantee authorizes the Company to withhold in accordance with applicable law from any compensation payable to him or her any taxes required to be withheld for federal, state or local law in connection with this RSU.

10. Notices. Any notice to the Company under this Agreement shall be made in care of the Committee to the office of the General Counsel, at the Company’s main offices. All notices under this Agreement shall be deemed to have been given when hand delivered or mailed, first class postage prepaid, and shall be irrevocable once given.

11. Securities Laws. The Committee may from time to time impose any conditions on the Shares as it deems necessary or advisable to ensure that Shares are issued and resold in compliance with the Securities Act of 1933, as amended.

12. Grant of RSU Not to Affect Service. The grant of this RSU shall not confer upon Grantee any right to continue as an employee of the Company or to serve in any other capacity for the Company or any Affiliate.

13. Amendment to RSU Agreement; Acceleration. Notwithstanding anything contained herein to the contrary, the Committee shall have the authority to amend or modify the terms and conditions set forth in this RSU Agreement if the Committee determines, at its discretion, that any such amendment or modification is necessary or appropriate; provided, however, that the terms of this RSU Agreement may not be changed in a manner that is unfavorable to Grantee without Grantee’s consent.

14. Miscellaneous.

(a) The address for Grantee to which notice, demands and other communications to be given or delivered under or by reason of the provisions hereof shall be Grantee’s address as reflected in the Company’s personnel records.

(b) Grantee acknowledges receipt of a copy of the Plan prospectus, included in which is a summary of the terms of the Plan. The summary contained therein is qualified in its entirety by reference to the terms of the Plan, copies of which are available with the Company’s public filings with the United States Securities and Exchange Commission at www.sec.gov, or by oral or written request directed to the Company. Grantee represents that he is familiar with the terms and provisions of the Plan, and hereby accepts this RSU, subject to all of the terms and provisions thereof. Grantee agrees to hereby accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

(c) This RSU Agreement may be executed in one or more counterparts and shall become effective when one or more counterparts taken together bears the signature of all the parties listed below.

(d) The validity, performance, construction and effect of this RSU shall be governed by the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of law.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

IN WITNESS WHEREOF, this RSU Agreement has been executed as of the 20^th day of December, 2010.

TOLL BROTHERS, INC.			GRANTEE:
By:	/s/ Robert I. Toll		/s/ Douglas C. Yearley, Jr.
	Name:	Robert I. Toll	Douglas C. Yearley, Jr.
	Title:	Executive Chairman of the Board

EX-10.43

EXHIBIT 10.43

TOLL BROTHERS, INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN FOR EMPLOYEES (2007)
RESTRICTED STOCK UNIT AWARD

This Restricted Stock Unit Agreement (the “RSU” or “RSU Agreement”) documents the grant of Restricted Stock Units by Toll Brothers, Inc. (the “Company”) pursuant to the terms of the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) (the “Plan”). This RSU consists of a grant of a right to receive a number of shares of Common Stock at the date specified herein. This RSU relates to 6,000 shares of Common Stock (the “Shares”), and is granted on this 20th day of December, 2010 (the “Date of Grant”) to Martin P. Connor (the “Grantee”), and is subject to all applicable terms and conditions set forth in the Plan.

1. Definitions. All capitalized terms contained in this RSU Agreement shall have the meaning set forth in the Plan unless otherwise defined herein or as may be required by the context.

2. Performance-Based Vesting. Grantee’s rights under this RSU shall, except to the extent greater vesting is provided for under the terms of the Plan or as set forth in this RSU, become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU only if, and at such time as, the average closing price of the Common Stock on the New York Stock Exchange (“NYSE”), measured over any twenty (20) consecutive trading days ending on or prior to December 20, 2015, increases 30% or more over the closing price of the Common Stock on the NYSE on the Date of Grant; provided that in no event shall Grantee’s rights under this RSU become vested if Grantee does not continue to be employed by the Company until December 20, 2013.

3. Vesting Upon Death or Disability. Notwithstanding any of the provisions in Section 2, Grantee’s rights under this RSU shall become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU in the event the Grantee’s service as an employee of the Company terminates by reason of the Grantee’s death, or by reason of the Grantee’s “disability” (as hereinafter defined).

For purposes of this RSU Agreement, the term “disability” shall mean any condition that would qualify as a “disability” as that term is defined in the Plan, or any other condition that the Committee determines to be a medically determinable physical or mental impairment which can be expected (a) to prevent the Grantee from being able to perform his usual duties (or another job deemed appropriate by the Committee taking into account the Grantee’s education, prior experience and past earnings) and (b) to last for one year or longer.

4. Vesting Upon Change of Control. Notwithstanding any of the provisions of Section 2, Grantee’s rights under this RSU shall become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU in the event there is a Change of Control while Grantee is employed by the Company.

5. Delivery of Shares. The Shares shall be delivered to Grantee (or the person to whom ownership rights may have passed by will or the laws of descent and distribution), on or as soon as practicable after the first to occur of the following:

(a) The date the performance-based vesting conditions set forth in Section 2 are satisfied;

(b) The occurrence of a Change of Control; provided, however, that the event that constitutes a Change of Control also constitutes a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company that permits a payment of deferred compensation pursuant to Section 409A of the Internal Revenue Code; or

(c) The date of Grantee’s termination of employment with the Company due to death or disability; provided, however, that delivery of the Shares by reason of Grantee’s termination of employment shall be delayed until the six (6) month anniversary of the date of Grantee’s termination of employment if and to the extent necessary to comply with Code Section 409A(a)(B)(i), and the determination of whether or not there has been a termination of Grantee’s employment with the Company shall be made by the Committee consistent with the definition of “separation from service” (as that phrase is used for purposes of Code Section 409A, and as set forth in Treasury Regulation Section 1.409A-1(h)).

The Company shall, without payment from Grantee (or the person to whom ownership rights may have passed by will or the laws of descent and distribution) for the Shares, other than any required withholding taxes, as provided in Section 9, below, (i) deliver to Grantee (or such other person) a certificate for the Shares being delivered or (ii) if consented to by Grantee (or such other person), deliver electronically to an account designated by Grantee (or such other person) the Shares being delivered, in either case without any legend or restrictions, except for such restrictions as may be imposed by the Committee, in its sole judgment, consistent with the terms of the Plan. The Company may condition delivery of the Shares upon the prior receipt from Grantee (or such other person) of any undertakings which it may determine are required to assure that the Shares being delivered are being issued in compliance with federal and state securities laws. The right to any fractional Shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a Share on the date the Share would otherwise have been delivered, as determined by the Committee. Notwithstanding anything to the contrary herein, in the event of a Change of Control, the Grantee shall receive, at the time that delivery of the Shares is provided for hereunder, the Shares and/or such other property or other consideration as is appropriate so that the Grantee receives, as of such date of delivery, whatever the Grantee would have received had the Grantee held the Shares at the time of the Change of Control

6. Dividends. Grantee shall not be entitled to any cash, securities or property that would have been paid or distributed as dividends with respect to the Shares subject to this RSU Agreement prior to the date the Shares are delivered to Grantee; provided, however, that the Company shall keep a hypothetical account in which any such items shall be recorded, and shall pay to Grantee the amount of such dividends in kind on the same date that the Shares to which such payments or distributions relate are delivered to Grantee (or forfeited).

7. Non-Transferability of this RSU. Grantee shall not be permitted to sell, transfer, pledge, assign or otherwise dispose of this RSU at any time. Notwithstanding the foregoing, in the event of Grantee’s death, this RSU may be transferred by will or by the laws of descent and distribution.

8. Rights of Grantee. Grantee shall have none of the rights of a shareholder at any time prior to the delivery of the Shares subject to this RSU Agreement, except as expressly set forth in the Plan or herein.

9. Withholding Taxes. Grantee shall be responsible to pay to the Company the amount of withholding taxes as determined by the Company on the date the Shares are delivered. At the Grantee’s option, Grantee shall have the right to relinquish to the Company a portion of the Shares having a fair market value, based on the closing price of the Common Stock on the NYSE on such delivery date, equal to the amount the Grantee would otherwise be required to pay to the Company on such delivery date by reason of applicable withholding taxes, in lieu of paying that amount to the Company in cash. Grantee authorizes the Company to withhold in accordance with applicable law from any compensation payable to him or her any taxes required to be withheld for federal, state or local law in connection with this RSU.

10. Notices. Any notice to the Company under this Agreement shall be made in care of the Committee to the office of the General Counsel, at the Company’s main offices. All notices under this Agreement shall be deemed to have been given when hand delivered or mailed, first class postage prepaid, and shall be irrevocable once given.

11. Securities Laws. The Committee may from time to time impose any conditions on the Shares as it deems necessary or advisable to ensure that Shares are issued and resold in compliance with the Securities Act of 1933, as amended.

12. Grant of RSU Not to Affect Service. The grant of this RSU shall not confer upon Grantee any right to continue as an employee of the Company or to serve in any other capacity for the Company or any Affiliate.

13. Amendment to RSU Agreement; Acceleration. Notwithstanding anything contained herein to the contrary, the Committee shall have the authority to amend or modify the terms and conditions set forth in this RSU Agreement if the Committee determines, at its discretion, that any such amendment or modification is necessary or appropriate; provided, however, that the terms of this RSU Agreement may not be changed in a manner that is unfavorable to Grantee without Grantee’s consent.

14. Miscellaneous.

(a) The address for Grantee to which notice, demands and other communications to be given or delivered under or by reason of the provisions hereof shall be Grantee’s address as reflected in the Company’s personnel records.

(b) Grantee acknowledges receipt of a copy of the Plan prospectus, included in which is a summary of the terms of the Plan. The summary contained therein is qualified in its entirety by reference to the terms of the Plan, copies of which are available with the Company’s public filings with the United States Securities and Exchange Commission at www.sec.gov, or by oral or written request directed to the Company. Grantee represents that he is familiar with the terms and provisions of the Plan, and hereby accepts this RSU, subject to all of the terms and provisions thereof. Grantee agrees to hereby accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

(c) This RSU Agreement may be executed in one or more counterparts and shall become effective when one or more counterparts taken together bears the signature of all the parties listed below.

(d) The validity, performance, construction and effect of this RSU shall be governed by the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of law.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

IN WITNESS WHEREOF, this RSU Agreement has been executed as of the 20^th day of December, 2010.

TOLL BROTHERS, INC.			GRANTEE:
By:	/s/ Douglas C. Yearley, Jr.		/s/ Martin P. Connor
	Name:	Douglas C. Yearley, Jr.	Martin P. Connor
	Title:	Chief Executive Officer

EX-10.44

EXHIBIT 10.44

TOLL BROTHERS, INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN FOR EMPLOYEES (2007)
RESTRICTED STOCK UNIT AWARD

This Restricted Stock Unit Agreement (the “RSU” or “RSU Agreement”) documents the grant of Restricted Stock Units by Toll Brothers, Inc. (the “Company”) pursuant to the terms of the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) (the “Plan”). This RSU consists of a grant of a right to receive a number of shares of Common Stock at the date specified herein. This RSU relates to 200,000 shares of Common Stock (the “Shares”), and is granted on this 20th day of December, 2010 (the “Date of Grant”) to Robert I. Toll (the “Grantee”), and is subject to all applicable terms and conditions set forth in the Plan.

1. Definitions. All capitalized terms contained in this RSU Agreement shall have the meaning set forth in the Plan unless otherwise defined herein or as may be required by the context.

2. Performance-Based Vesting. Grantee’s rights under this RSU shall, except to the extent greater vesting is provided for under the terms of the Plan or as set forth in this RSU, become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU only if, and at such time as, the average closing price of the Common Stock on the New York Stock Exchange (“NYSE”), measured over any twenty (20) consecutive trading days ending on or prior to December 20, 2015, increases 30% or more over the closing price of the Common Stock on the NYSE on the Date of Grant; provided that in no event shall Grantee’s rights under this RSU become vested if Grantee does not continue to be employed by, or be a member of the Board of, the Company until December 20, 2013.

3. Vesting Upon Death or Disability. Notwithstanding any of the provisions in Section 2, Grantee’s rights under this RSU shall become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU in the event the Grantee’s service as an employee or as a member of the Board of the Company terminates by reason of the Grantee’s death, or by reason of the Grantee’s “disability” (as hereinafter defined).

For purposes of this RSU Agreement, the term “disability” shall mean any condition that would qualify as a “disability” as that term is defined in the Plan, or any other condition that the Committee determines to be a medically determinable physical or mental impairment which can be expected (a) to prevent the Grantee from being able to perform his usual duties (or another job deemed appropriate by the Committee taking into account the Grantee’s education, prior experience and past earnings) and (b) to last for one year or longer.

4. Vesting Upon Change of Control. Notwithstanding any of the provisions of Section 2, Grantee’s rights under this RSU shall become fully vested and Grantee shall be entitled to receipt of the Shares represented by this RSU in the event there is a Change of Control while Grantee is employed by, or a member of the Board of, the Company.

5. Delivery of Shares. The Shares shall be delivered to Grantee (or the person to whom ownership rights may have passed by will or the laws of descent and distribution), on or as soon as practicable after the first to occur of the following:

(a) The date the performance-based vesting conditions set forth in Section 2 are satisfied;

(b) The occurrence of a Change of Control; provided, however, that the event that constitutes a Change of Control also constitutes a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company that permits a payment of deferred compensation pursuant to Section 409A of the Internal Revenue Code; or

(c) The date of Grantee’s termination of employment with, or as a member of the Board of, the Company due to death or disability; provided, however, that delivery of the Shares by reason of Grantee’s termination of employment shall be delayed until the six (6) month anniversary of the date of Grantee’s termination of employment if and to the extent necessary to comply with Code Section 409A(a)(B)(i), and the determination of whether or not there has been a termination of Grantee’s employment with the Company shall be made by the Committee consistent with the definition of “separation from service” (as that phrase is used for purposes of Code Section 409A, and as set forth in Treasury Regulation Section 1.409A-1(h)).

The Company shall, without payment from Grantee (or the person to whom ownership rights may have passed by will or the laws of descent and distribution) for the Shares, other than any required withholding taxes, as provided in Section 9, below, (i) deliver to Grantee (or such other person) a certificate for the Shares being delivered or (ii) if consented to by Grantee (or such other person), deliver electronically to an account designated by Grantee (or such other person) the Shares being delivered, in either case without any legend or restrictions, except for such restrictions as may be imposed by the Committee, in its sole judgment, consistent with the terms of the Plan. The Company may condition delivery of the Shares upon the prior receipt from Grantee (or such other person) of any undertakings which it may determine are required to assure that the Shares being delivered are being issued in compliance with federal and state securities laws. The right to any fractional Shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a Share on the date the Share would otherwise have been delivered, as determined by the Committee. Notwithstanding anything to the contrary herein, in the event of a Change of Control, the Grantee shall receive, at the time that delivery of the Shares is provided for hereunder, the Shares and/or such other property or other consideration as is appropriate so that the Grantee receives, as of such date of delivery, whatever the Grantee would have received had the Grantee held the Shares at the time of the Change of Control

6. Dividends. Grantee shall not be entitled to any cash, securities or property that would have been paid or distributed as dividends with respect to the Shares subject to this RSU Agreement prior to the date the Shares are delivered to Grantee; provided, however, that the Company shall keep a hypothetical account in which any such items shall be recorded, and shall pay to Grantee the amount of such dividends in kind on the same date that the Shares to which such payments or distributions relate are delivered to Grantee (or forfeited).

7. Non-Transferability of this RSU. Grantee shall not be permitted to sell, transfer, pledge, assign or otherwise dispose of this RSU at any time. Notwithstanding the foregoing, in the event of Grantee’s death, this RSU may be transferred by will or by the laws of descent and distribution.

8. Rights of Grantee. Grantee shall have none of the rights of a shareholder at any time prior to the delivery of the Shares subject to this RSU Agreement, except as expressly set forth in the Plan or herein.

9. Withholding Taxes. Grantee shall be responsible to pay to the Company the amount of withholding taxes as determined by the Company on the date the Shares are delivered. At the Grantee’s option, Grantee shall have the right to relinquish to the Company a portion of the Shares having a fair market value, based on the closing price of the Common Stock on the NYSE on such delivery date, equal to the amount the Grantee would otherwise be required to pay to the Company on such delivery date by reason of applicable withholding taxes, in lieu of paying that amount to the Company in cash. Grantee authorizes the Company to withhold in accordance with applicable law from any compensation payable to him or her any taxes required to be withheld for federal, state or local law in connection with this RSU.

10. Notices. Any notice to the Company under this Agreement shall be made in care of the Committee to the office of the General Counsel, at the Company’s main offices. All notices under this Agreement shall be deemed to have been given when hand delivered or mailed, first class postage prepaid, and shall be irrevocable once given.

11. Securities Laws. The Committee may from time to time impose any conditions on the Shares as it deems necessary or advisable to ensure that Shares are issued and resold in compliance with the Securities Act of 1933, as amended.

12. Grant of RSU Not to Affect Service. The grant of this RSU shall not confer upon Grantee any right to continue as an employee of the Company or to serve in any other capacity for the Company or any Affiliate.

13. Amendment to RSU Agreement; Acceleration. Notwithstanding anything contained herein to the contrary, the Committee shall have the authority to amend or modify the terms and conditions set forth in this RSU Agreement if the Committee determines, at its discretion, that any such amendment or modification is necessary or appropriate; provided, however, that the terms of this RSU Agreement may not be changed in a manner that is unfavorable to Grantee without Grantee’s consent.

14. Miscellaneous.

(a) The address for Grantee to which notice, demands and other communications to be given or delivered under or by reason of the provisions hereof shall be Grantee’s address as reflected in the Company’s personnel records.

(b) Grantee acknowledges receipt of a copy of the Plan prospectus, included in which is a summary of the terms of the Plan. The summary contained therein is qualified in its entirety by reference to the terms of the Plan, copies of which are available with the Company’s public filings with the United States Securities and Exchange Commission at www.sec.gov, or by oral or written request directed to the Company. Grantee represents that he is familiar with the terms and provisions of the Plan, and hereby accepts this RSU, subject to all of the terms and provisions thereof. Grantee agrees to hereby accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

(c) This RSU Agreement may be executed in one or more counterparts and shall become effective when one or more counterparts taken together bears the signature of all the parties listed below.

(d) The validity, performance, construction and effect of this RSU shall be governed by the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of law.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

IN WITNESS WHEREOF, this RSU Agreement has been executed as of the 20^th day of December, 2010.

TOLL BROTHERS, INC.			GRANTEE:
By:	/s/ Douglas C. Yearley, Jr.		/s/ Robert I. Toll
	Name:	Douglas C. Yearley, Jr.	Robert I. Toll
	Title:	Chief Executive Officer

EX-12

Exhibit 12

Year ended October 31,	2006		2007		2008			2009			2010
(Loss) earnings:
(Loss) income before income taxes	$	1,126,616	$	70,680	$	(466,787	)	$	(452,164	)	$	(117,187	)
Interest expense		122,473		102,652		89,300			96,726			106,997
Rent expense		4,377		4,252		4,070			3,425			2,890
Amortization		1,096		1,102		1,380			1,239			1,374
	$	1,254,562	$	178,686	$	(372,037	)	$	(350,774	)	$	(5,926	)
Fixed charges:
Homebuilding
Interest incurred	$	141,266	$	136,758	$	116,340		$	118,026		$	114,975
Rent expense		4,377		4,252		4,070			3,425			2,890
Amortization		1,096		1,102		1,380			1,239			1,374
	$	146,739	$	142,112	$	121,790			122,690		$	119,239
Ratio		8.55		1.26			(a)			(a)			(a)

(a) For the twelve-month periods ended October 31, 2010, 2009 and 2008, our earnings were not sufficient to cover fixed charges by approximately $125.2 million, $473.5 million and $493.8 million, respectively.

EX-21

Exhibit 21

Subsidiaries of the Registrant
as of
October 31, 2010
(100% owned unless otherwise indicated)

A. Corporations

1. 110-112 Third Ave. Realty Corp., a New York corporation.

2. Amwell Chase, Inc., a Delaware corporation.

3. ESE Consultants, Inc., a Delaware corporation.

4. ESE Consultants, Inc., a Texas corporation.

5. ESE of North Carolina, PC, a North Carolina professional corporation.

6. Fairway Valley, Inc., a Delaware corporation.

7. First Brandywine Finance Corp., a Delaware corporation.

8. First Brandywine Investment Corp. II, a Delaware corporation.

9. First Brandywine Investment Corp. IV, a Delaware corporation.

10. First Huntingdon Finance Corp., a Delaware corporation.

11. Franklin Farms G.P., Inc., a Delaware corporation.

12. Frenchman’s Reserve Country Club, Inc., a Florida non-profit corporation.

13. Hampton Hall Club, Inc., a South Carolina non-profit corporation.

14. Hampton Pointe Club, Inc., a South Carolina non-profit corporation.

15. HQZ Acquisitions, Inc., a Michigan corporation.

16. Jupiter Country Club, Inc., a Florida non-profit corporation.

17. MA Limited Land Corporation, a Delaware corporation.

18. Mountain View Country Club, Inc., a California non-profit corporation.

19. Philmont Insurance Company, a Vermont corporation.

20. SH Homes Corporation, a Michigan corporation.

21. SI Investment Corporation, a Michigan corporation.

22. The Silverman Building Companies, Inc., a Michigan corporation.

23. TBI Mortgage Company, a Delaware corporation.

24. TB Proprietary Corp., a Delaware corporation.

25. Tenby Hunt, Inc., a Delaware corporation.

26. TIS Logistics, Inc., a Pennsylvania corporation.

27. Toll Architecture, Inc., a Delaware corporation.

28. Toll Architecture I, P.A., a Delaware professional corporation.

29. Toll AZ GP Corp., a Delaware corporation.

30. Toll Bros. of Arizona, Inc., an Arizona corporation.

31. Toll Bros. of North Carolina, Inc., a North Carolina corporation.

32. Toll Bros. of North Carolina II, Inc., a North Carolina corporation.

33. Toll Bros. of North Carolina III, Inc., a North Carolina corporation.

34. Toll Bros., Inc., a Delaware corporation.

35. Toll Bros., Inc., a Pennsylvania corporation.

36. Toll Bros., Inc., a Texas corporation.

37. Toll Brothers AZ Construction Company, an Arizona corporation.

38. Toll Brothers Canada USA, Inc., a Delaware corporation.

39. Toll Brothers Finance Corp., a Delaware corporation.

40. Toll Brothers International Holdings, Inc., a Delaware corporation.

41. Toll Brothers Real Estate, Inc., a Pennsylvania corporation.

42. Toll Buckeye Corp., a Delaware corporation.

43. Toll CA GP Corp., a California corporation.

44. Toll Centennial Corp., a Delaware corporation.

45. Toll CO GP Corp., a Colorado corporation.

46. Toll Corp., a Delaware corporation.

47. Toll Development Company, Inc., a Michigan corporation.

48. Toll Diamond Corp., a Delaware corporation.

49. Toll FL GP Corp., a Florida corporation.

50. Toll FL GP II Corp., a Florida corporation.

51. Toll GA GP Corp., a Georgia corporation.

52. Toll Golden Corp., a Delaware corporation.

53. Toll Granite Corp., a Delaware corporation.

54. Toll Holdings, Inc., a Delaware corporation.

55. Toll IL GP Corp., an Illinois corporation.

56. Toll Land Corp. No. 6, a Pennsylvania corporation.

57. Toll Land Corp. No. 10, a Delaware corporation.

58. Toll Land Corp. No. 20, a Delaware corporation.

59. Toll Land Corp. No. 43, a Delaware corporation.

60. Toll Land Corp. No. 50, a Delaware corporation.

61. Toll Manhattan I, Inc., a New York corporation.

62. Toll MD Builder Corp., a Maryland corporation.

63. Toll Mid-Atlantic LP Company, Inc., a Delaware corporation.

64. Toll Mid-Atlantic Note Company, Inc., a Delaware corporation.

65. Toll Midwest LP Company, Inc, a Delaware corporation.

66. Toll Midwest Note Company, Inc., a Delaware corporation.

67. Toll MI GP Corp., a Michigan corporation.

68. Toll MN GP Corp., a Minnesota corporation.

69. Toll NC GP Corp., a North Carolina corporation.

70. Toll NH GP Corp., a New Hampshire corporation.

71. Toll NJX-I Corp., a Delaware corporation.

72. Toll Northeast LP Company, Inc., a Delaware corporation.

73. Toll Northeast Note Company, Inc., a Delaware corporation.

74. Toll Northeast Services, Inc., a Delaware corporation.

75. Toll NV GP Corp., a Nevada corporation.

76. Toll OH GP Corp., an Ohio corporation.

77. Toll PA Builder Corp., a Pennsylvania corporation.

78. Toll PA GP Corp., a Pennsylvania corporation.

79. Toll PA II GP Corp., a Pennsylvania corporation.

80. Toll PA III GP Corp., a Pennsylvania corporation.

81. Toll Palmetto Corp., a Delaware corporation.

82. Toll Peppertree, Inc., a New York corporation.

83. Toll Philmont Corporation, a Delaware corporation.

84. Toll Realty Holdings Corp. I, a Delaware corporation.

85. Toll Realty Holdings Corp. II, a Delaware corporation.

86. Toll RI GP Corp., a Rhode Island corporation.

87. Toll SC GP Corp., a South Carolina corporation.

88. Toll Southeast LP Company, Inc., a Delaware corporation.

89. Toll Southeast Note Company, Inc., a Delaware corporation.

90. Toll Southwest LP Company, Inc., a Delaware corporation.

91. Toll Southwest Note Company, Inc., a Delaware corporation.

92. Toll SW Holding I Corp., a Nevada corporation.

93. Toll TN GP Corp., a Tennessee corporation.

94. Toll TX GP Corp., a Delaware corporation.

95. Toll VA GP Corp., a Delaware corporation.

96. Toll VA Member Two, Inc., a Delaware corporation.

97. Toll WestCoast LP Company, Inc., a Delaware corporation.

98. Toll WestCoast Note Company, Inc., a Delaware corporation.

99. Toll WV GP Corp., a West Virginia corporation.

100. Toll YL, Inc., a California corporation.

101. Warren Chase, Inc., a Delaware corporation.

102. Westminster Abstract Company, a Pennsylvania corporation.

103. Westminster Insurance Agency, Inc., a Pennsylvania corporation.

104. Westminster Security Company, a New Jersey corporation.

105. Westminster Title Company, Inc., a California corporation.

B. Partnerships

1. 51 N. 8^th Street LP, a New York limited partnership.

2. Ashford Land Company, L.P., a Delaware limited partnership.

3. Advanced Broadband, L.P., a Delaware limited partnership.

4. Audubon Ridge, L.P., a Pennsylvania limited partnership.

5. Belmont Land, L.P., a Virginia limited partnership.

6. Binks Estates Limited Partnership, a Florida limited partnership.

7. The Bird Estate Limited Partnership, a Massachusetts limited partnership.

8. Blue Bell Country Club, L.P., a Pennsylvania limited partnership.

9. Broad Run Associates, L.P., a Pennsylvania limited partnership.

10. Buckingham Woods, L.P., a Pennsylvania limited partnership.

11. CC Estates Limited Partnership, a Massachusetts limited partnership.

12. Cold Spring Hunt, L.P., a Pennsylvania limited partnership.

13. Coleman-Toll Limited Partnership, a Nevada limited partnership.

14. Dolington Land LP, a Pennsylvania limited partnership. — owned 66.67% by one of Registrant’s subsidiaries

15. Dominion Country Club, L.P., a Virginia limited partnership.

16. Eagle Farm Limited Partnership, a Massachusetts limited partnership.

17. The Estates at Brooke Manor Limited Partnership, a Maryland limited partnership.

18. Estates at Princeton Junction, L.P., a New Jersey limited partnership.

19. Estates at Rivers Edge, L.P., a Pennsylvania limited partnership.

20. The Estates at Summit Chase, L.P., a California limited partnership.

21. Fairfax Investment, L.P., a Virginia limited partnership.

22. Fairfax Station Hunt, L.P., a Virginia limited partnership.

23. Farmwell Hunt, L.P., a Virginia limited partnership.

24. First Brandywine Partners, L.P., a Delaware partnership.

25. Gibraltar Road LP, a Pennsylvania limited partnership.

26. Great Falls Hunt, L.P., a Virginia limited partnership.

27. Greens at Waynesborough, L.P., a Pennsylvania limited partnership.

28. Greenwich Chase, L.P., a New Jersey limited partnership.

29. Hoboken Land LP, a New Jersey limited partnership.

30. Hockessin Chase, L.P., a Delaware limited partnership.

31. Huckins Farm Limited Partnership, a Massachusetts limited partnership

32. Kensington Woods Limited Partnership, a Massachusetts limited partnership.

33. Laurel Creek, L.P., a New Jersey limited partnership.

34. Loudoun Valley Associates, L.P., a Virginia limited partnership.

35. NC Country Club Estates Limited Partnership, a North Carolina limited partnership.

36. Rose Hollow Crossing Associates, a Pennsylvania limited partnership.

37. Silverman-Toll Limited Partnership, a Michigan limited partnership

38. Somers Chase, L.P., a New York limited partnership.

39. Sorrento at Dublin Ranch I LP, a California limited partnership.

40. Sorrento at Dublin Ranch III LP, a California limited partnership.

41. South Riding Amberlea LP, a Virginia limited partnership.

42. South Riding, L.P., a Virginia limited partnership.

43. South Riding Partners Amberlea LP, a Virginia limited partnership.

44. South Riding Partners, L.P., a Virginia limited partnership.

45. Southport Landing Limited Partnership, a Connecticut limited partnership.

46. Springton Pointe, L.P., a Pennsylvania limited partnership.

47. Stone Mill Estates, L.P. a Pennsylvania limited partnership.

48. Swedesford Chase, L.P., a Pennsylvania limited partnership.

49. TBI Finance Co. II, a New Jersey general partnership.

50. TBI/Naples Limited Partnership, a Florida limited partnership.

51. TBI/Palm Beach Limited Partnership, a Florida limited partnership.

52. Toll at Brier Creek Limited Partnership, a North Carolina limited partnership.

53. Toll at Honey Creek Limited Partnership, a Michigan limited partnership.

54. Toll at Westlake, L.P., a New Jersey limited partnership.

55. Toll at Whippoorwill, L.P., a New York limited partnership.

56. Toll Brooklyn L.P., a New York limited partnership.

57. Toll Bros. of Tennessee, L.P., a Tennessee limited partnership.

58. Toll Brothers AZ Limited Partnership, an Arizona limited partnership.

59. Toll Brothers Finance Co., a New Jersey general partnership.

60. Toll CA, L.P., a California limited partnership.

61. Toll CA II, L.P., a California limited partnership.

62. Toll CA III, L.P., a California limited partnership.

63. Toll CA IV, L.P., a California limited partnership.

64. Toll CA V, L.P., a California limited partnership.

65. Toll CA VI, L.P., a California limited partnership.

66. Toll CA VII, L.P., a California limited partnership.

67. Toll CA VIII, L.P., a California limited partnership.

68. Toll CA IX, L.P., a California limited partnership.

69. Toll CA X, L.P., a California limited partnership.

70. Toll CA XI, L.P., a California limited partnership.

71. Toll CA XII, L.P., a California limited partnership.

72. Toll CA XIX, L.P., a California limited partnership.

73. Toll CO, L.P., a Colorado limited partnership.

74. Toll CT Limited Partnership, a Connecticut limited partnership.

75. Toll CT II Limited Partnership, a Connecticut limited partnership.

76. Toll CT III Limited Partnership, a Connecticut limited partnership.

77. Toll DE LP, a Delaware limited partnership.

78. Toll DE II LP, a Delaware limited partnership.

79. Toll Dolington LP, a Pennsylvania limited partnership.

80. Toll East Naples Limited Partnership, a Florida limited partnership.

81. Toll Estero Limited Partnership, a Florida limited partnership.

82. Toll FL Limited Partnership, a Florida limited partnership.

83. Toll FL II Limited Partnership, a Florida limited partnership.

84. Toll FL III Limited Partnership, a Florida limited partnership.

85. Toll FL IV Limited Partnership, a Florida limited partnership.

86. Toll FL V Limited Partnership, a Florida limited partnership.

87. Toll FL VI Limited Partnership, a Florida limited partnership.

88. Toll FL VII Limited Partnership, a Florida limited partnership.

89. Toll FL VIII Limited Partnership, a Florida limited partnership.

90. Toll FL IX Limited Partnership, a Florida limited partnership.

91. Toll FL X Limited Partnership, a Florida limited partnership.

92. Toll FL XI Limited Partnership, a Florida limited partnership.

93. Toll Ft. Myers Limited Partnership, a Florida limited partnership.

94. Toll GA LP, a Georgia limited partnership.

95. Toll Gibraltar LP, a Pennsylvania limited partnership.

96. Toll Grove LP, a New Jersey limited partnership.

97. Toll Hudson LP, a New Jersey limited partnership.

98. Toll IL HWCC, L.P., an Illinois limited partnership.

99. Toll IL, L.P., an Illinois limited partnership.

100. Toll IL II, L.P., an Illinois limited partnership.

101. Toll IL III, L.P., an Illinois limited partnership.

102. Toll IL IV, L.P., an Illinois limited partnership.

103. Toll IL WSB, L.P., an Illinois limited partnership.

104. Toll Jacksonville Limited Partnership, a Florida limited partnership.

105. Toll Land Limited Partnership, a Connecticut limited partnership.

106. Toll Land IV Limited Partnership, a New Jersey limited partnership.

107. Toll Land V Limited Partnership, a New York limited partnership.

108. Toll Land VI Limited Partnership, a New York limited partnership.

109. Toll Land VII Limited Partnership, a New York limited partnership.

110. Toll Land IX Limited Partnership, a Virginia limited partnership.

111. Toll Land X Limited Partnership, a Virginia limited partnership.

112. Toll Land XI Limited Partnership, a New Jersey limited partnership.

113. Toll Land XIV Limited Partnership, a New York limited partnership.

114. Toll Land XV Limited Partnership, a Virginia limited partnership.

115. Toll Land XVI Limited Partnership, a New Jersey limited partnership.

116. Toll Land XVIII Limited Partnership, a Connecticut limited partnership.

117. Toll Land XIX Limited Partnership, a California limited partnership.

118. Toll Land XX Limited Partnership, a California limited partnership.

119. Toll Land XXI Limited Partnership, a Virginia limited partnership.

120. Toll Land XXII Limited Partnership, a California limited partnership.

121. Toll Land XXIII Limited Partnership, a California limited partnership.

122. Toll Land XXV Limited Partnership, a New Jersey limited partnership.

123. Toll Land XXVI Limited Partnership, an Ohio limited partnership.

124. Toll Livingston at Naples Limited Partnership, a Florida limited partnership.

125. Toll MA Land Limited Partnership, a Massachusetts limited partnership.

126. Toll MD Builder I, L.P., a Maryland limited partnership.

127. Toll MD Limited Partnership, a Maryland limited partnership.

128. Toll MD II Limited Partnership, a Maryland limited partnership.

129. Toll MD III Limited Partnership, a Maryland limited partnership.

130. Toll MD IV Limited Partnership, a Maryland limited partnership.

131. Toll MD V Limited Partnership, a Maryland limited partnership.

132. Toll MD VI Limited Partnership, a Maryland limited partnership.

133. Toll MD VII Limited Partnership, a Maryland limited partnership.

134. Toll MD VIII Limited Partnership, a Maryland limited partnership.

135. Toll MD IX Limited Partnership, a Maryland limited partnership.

136. Toll MD X Limited Partnership, a Maryland limited partnership.

137. Toll MD XI Limited Partnership, a Maryland limited partnership.

138. Toll MI Limited Partnership, a Michigan limited partnership.

139. Toll MI II Limited Partnership, a Michigan limited partnership.

140. Toll MI III Limited Partnership, a Michigan limited partnership.

141. Toll MI IV Limited Partnership, a Michigan limited partnership.

142. Toll MI V Limited Partnership, a Michigan limited partnership.

143. Toll MN, L.P., a Minnesota limited partnership.

144. Toll MN II, L.P., a Minnesota limited partnership.

145. Toll Naples Limited Partnership, a Florida limited partnership.

146. Toll Naval Associates, a Pennsylvania general partnership.

147. Toll NC, L.P., a North Carolina limited partnership.

148. Toll NC II LP, a North Carolina limited partnership.

149. Toll NC III LP, a North Carolina limited partnership.

150. Toll NH Limited Partnership, a New Hampshire limited partnership.

151. Toll NJ Builder I, L.P., a New Jersey limited partnership.

152. Toll NJ, L.P., a New Jersey limited partnership.

153. Toll NJ II, L.P., a New Jersey limited partnership.

154. Toll NJ III, L.P., a New Jersey limited partnership.

155. Toll NJ IV, L.P., a New Jersey limited partnership.

156. Toll NJ V, L.P., a New Jersey limited partnership.

157. Toll NJ VI, L.P., a New Jersey limited partnership.

158. Toll NJ VII, L.P., a New Jersey limited partnership.

159. Toll NJ VIII, L.P., a New Jersey limited partnership.

160. Toll NJ IX, L.P., a New Jersey limited partnership.

161. Toll NJ XI, L.P., a New Jersey limited partnership.

162. Toll Northville Limited Partnership, a Michigan limited partnership.

163. Toll NV Limited Partnership, a Nevada limited partnership.

164. Toll NY L.P., a New York limited partnership.

165. Toll NY II L.P., a New York limited partnership.

166. Toll NY III L.P., a New York limited partnership.

167. Toll NY IV L.P., a New York limited partnership.

168. Toll Orlando Limited Partnership, a Florida limited partnership.

169. Toll PA, L.P., a Pennsylvania limited partnership.

170. Toll PA II, L.P., a Pennsylvania limited partnership.

171. Toll PA III, L.P., a Pennsylvania limited partnership.

172. Toll PA IV, L.P., a Pennsylvania limited partnership.

173. Toll PA V, L.P., a Pennsylvania limited partnership.

174. Toll PA VI, L.P., a Pennsylvania limited partnership.

175. Toll PA VIII, L.P., a Pennsylvania limited partnership.

176. Toll PA IX, L.P., a Pennsylvania limited partnership.

177. Toll PA X, L.P., a Pennsylvania limited partnership.

178. Toll PA XI, L.P., a Pennsylvania limited partnership.

179. Toll PA XII, L.P., a Pennsylvania limited partnership.

180. Toll PA XIII, L.P., a Pennsylvania limited partnership.

181. Toll PA XIV, L.P., a Pennsylvania limited partnership.

182. Toll PA XV, L.P., a Pennsylvania limited partnership.

183. Toll Plaza, LP, a Pennsylvania limited partnership.

184. Toll Realty Holdings LP, a Delaware limited partnership.

185. Toll RI, L.P., a Rhode Island limited partnership.

186. Toll RI II, L.P., a Rhode Island limited partnership.

187. Toll SC, L.P., a South Carolina limited partnership.

188. Toll SC II, L.P., a South Carolina limited partnership.

189. Toll SC III, L.P., a South Carolina limited partnership.

190. Toll SC IV, L.P., a South Carolina limited partnership.

191. Toll Stonebrae LP, a California limited partnership.

192. Toll VA, L.P., a Virginia limited partnership.

193. Toll VA II, L.P., a Virginia limited partnership.

194. Toll VA III, L.P., a Virginia limited partnership.

195. Toll VA IV, L.P., a Virginia limited partnership.

196. Toll VA V, L.P., a Virginia limited partnership.

197. Toll VA VI, L.P., a Virginia limited partnership.

198. Toll VA VII, L.P., a Virginia limited partnership.

199. Toll WV, L.P., a West Virginia limited partnership.

200. Toll YL, L.P., a California limited partnership.

201. Toll YL II, L.P., a California limited partnership.

202. Toll-Dublin, L.P., a California limited partnership.

203. Village Partners, L.P., a Pennsylvania limited partnership.

204. Waldon Preserve Limited Partnership, a Michigan limited partnership.

205. West Amwell Limited Partnership, a New Jersey limited partnership.

206. Wilson Concord, L.P., a Tennessee limited partnership.

C. Limited Liability Companies

1. 5-01 — 5-17 48^th Avenue LLC, a New York limited liability company.

2. 5-01 — 5-17 48^th Avenue II LLC, a New York limited liability company.

3. 5-01 — 5-17 48^th Avenue GC LLC, a New York limited liability company.

4. 5-01 — 5-17 48^th Avenue GC II LLC, a New York limited liability company.

5. 51 N. 8^th Street I LLC, a New York limited liability company.

6. 51 N. 8^th Street GC LLC, a New York limited liability company.

7. 51 N. 8^th Street GC II LLC, a New York limited liability company.

8. 110-112 Third Ave. GC LLC, a New York limited liability company.

9. 110-112 Third Ave. GC II LLC, a New York limited liability company.

10. 126-142 Morgan Street Urban Renewal LLC, a New Jersey limited liability company.

11. 134 Bay Street LLC, a Delaware limited liability company.

12. 700 Grove Street Urban Renewal, LLC, a New Jersey limited liability company.

13. 1450 Washington LLC, a New Jersey limited liability company.

14. 1500 Garden St. LLC, a New Jersey limited liability company.

15. 2301 Fallston Road LLC, a Maryland limited liability company.

16. Arbor Hills Development LLC, a Michigan limited liability company.

17. Arthur’s Woods, LLC, a Maryland limited liability company.

18. Arundel Preserve #6, LLC, a Maryland limited liability company.

19. Arundel Preserve #10a, LLC, a Maryland limited liability company.

20. Belmont Country Club I LLC, a Virginia limited liability company.

21. Belmont Country Club II LLC, a Virginia limited liability company.

22. Belmont Investments I LLC, a Virginia limited liability company.

23. Belmont Investments II LLC, a Virginia limited liability company.

24. Block 255 LLC, a New Jersey limited liability company.

25. Brier Creek Country Club I LLC, a North Carolina limited liability company.

26. Brier Creek Country Club II LLC, a North Carolina limited liability company.

27. C.B.A.Z. Construction Company LLC, an Arizona limited liability company.

28. C.B.A.Z. Holding Company LLC, a Delaware limited liability company.

29. Component Systems I LLC, a Delaware limited liability company.

30. Component Systems II LLC, a Delaware limited liability company.

31. Coto de Caza Investments I LLC, a California limited liability company.

32. Coto de Caza Investments II LLC, a California limited liability company.

33. CWG Construction Company LLC, a New Jersey limited liability company.

34. CWG Management LLC, a New Jersey limited liability company.

35. Dominion Valley Country Club I LLC, a Virginia limited liability company.

36. Dominion Valley Country Club II LLC, a Virginia limited liability company.

37. First Brandywine LLC I, a Delaware limited liability company.

38. First Brandywine LLC II, a Delaware limited liability company.

39. First Brandywine LLC III, a Delaware limited liability company.

40. First Brandywine LLC IV, a Delaware limited liability company.

41. Frenchman’s Reserve Realty, LLC, a Florida limited liability company.

42. Gibraltar AB Investments LLC, a Delaware limited liability company.

43. Gibraltar Asset Management Services LLC, a Delaware limited liability company.

44. Gibraltar Capital and Asset Management LLC, a Delaware limited liability company.

45. Golf I Country Club Estates at Moorpark LLC, a California limited liability company.

46. Golf II Country Club Estates at Moorpark LLC, a California limited liability company.

47. Goshen Road Land Company LLC, a Pennsylvania limited liability company.

48. Hampton Hall Investments LLC, a South Carolina limited liability company.

49. Hasentree Country Club I LLC, a North Carolina limited liability company.

50. Hasentree Country Club II LLC, a North Carolina limited liability company.

51. Hatboro Road Associates LLC, a Pennsylvania limited liability company.

52. Hawthorn Woods Country Club II LLC, an Illinois limited liability company.

53. Heritage Manor Development, LLC, a Massachusetts limited liability company.

54. HH Investments I LLC, a Massachusetts limited liability company.

55. HH Investments II LLC, a Massachusetts limited liability company.

56. Hoboken Cove LLC, a New Jersey limited liability company.

57. Hoboken Land I LLC, a Delaware limited liability company.

58. HW Investments I LLC, an Illinois limited liability company.

59. HW Investments II LLC, an Illinois limited liability company.

60. Jacksonville TBI Realty, LLC, a Florida limited liability company.

61. Lighthouse Point Land Company, LLC, a Florida limited liability company.

62. Liseter Land Company LLC, a Pennsylvania limited liability company.

63. Liseter, LLC, a Delaware limited liability company.

64. Longmeadow Properties LLC, a Maryland limited liability company.

65. Long Meadows TBI, LLC, a Maryland limited liability company.

66. Manalapan Hunt Investments I LLC, a New Jersey limited liability company.

67. Manalapan Hunt Investments II LLC, a New Jersey limited liability company.

68. Martinsburg Ventures, L.L.C., a Virginia limited liability company.

69. Millbrook Investments I LLC, a New Jersey limited liability company.

70. Millbrook Investments II LLC, a New Jersey limited liability company.

71. Mizner Realty, L.L.C., a Florida limited liability company.

72. Morgan Street JV LLC, a Delaware limited liability company.

73. Mountain View Country Club I LLC, a California limited liability company.

74. Mountain View Country Club II LLC, a California limited liability company.

75. Naples TBI Realty, LLC, a Florida limited liability company.

76. Northville Lake Village Apartments Limited Liability Company, a Michigan limited liability company.

77. Nosan & Silverman Homes L.L.C., a Michigan limited liability company.

78. Orlando TBI Realty LLC, a Florida limited liability company.

79. Paramount Village LLC, a California limited liability company.

80. Phillips Drive LLC, a Maryland limited liability company.

81. Preston Parker LLC, a Delaware limited liability company.

82. Prince William Land I LLC, a Virginia limited liability company.

83. Prince William Land II LLC, a Virginia limited liability company.

84. PT Maxwell Holdings, LLC, a New Jersey limited liability company.

85. P.T. Maxwell, L.L.C., a New Jersey limited liability company.

86. Regency at Denville, LLC, a New Jersey limited liability company.

87. Regency at Dominion Valley LLC, a Virginia limited liability company.

88. Regency at Long Valley I LLC, a New Jersey limited liability company.

89. Regency at Long Valley II LLC, a New Jersey limited liability company.

90. Regency at Mansfield I LLC, a New Jersey limited liability company.

91. Regency at Mansfield II LLC, a New Jersey limited liability company.

92. Regency at Washington I LLC, a New Jersey limited liability company.

93. Regency at Washington II LLC, a New Jersey limited liability company.

94. The Regency Golf Club I LLC, a Virginia limited liability company.

95. The Regency Golf Club II LLC, a Virginia limited liability company.

96. Ridge at Alta Vista Investments I LLC, a Texas limited liability company.

97. Ridge at Alta Vista Investments II LLC, a Texas limited liability company.

98. The Ridges at Belmont Country Club I LLC, a Virginia limited liability company.

99. The Ridges at Belmont Country Club II LLC, a Virginia limited liability company.

100. South Riding Realty LLC, a Virginia limited liability company.

101. SR Amberlea LLC, a Virginia limited liability company.

102. SRH Investments I, LLC, a California limited liability company.

103. SRH Investments II, LLC, a California limited liability company.

104. SRLP II LLC, a Virginia limited liability company.

105. STBI-Warrenton, LLC, a Delaware limited liability company.

106. Stony Kill, LLC, a New York limited liability company.

107. Tampa TBI Realty LLC, a Florida limited liability company.

108. TB Kent Partners LLC, a Delaware limited liability company.

109. TL Oil & Gas LLC, a Texas limited liability company.

110. Toll Austin TX LLC, a Texas limited liability company.

111. Toll BBC LLC, a Texas limited liability company.

112. Toll BBC II LLC, a Texas limited liability company.

113. Toll BCCC, LLC, an Illinois limited liability company.

114. Toll Brothers Realty Michigan LLC, a Michigan limited liability company.

115. Toll Brothers Realty Michigan II LLC, a Michigan limited liability company.

116. Toll Cedar Hunt LLC, a Virginia limited liability company.

117. Toll CO I LLC, a Colorado limited liability company.

118. Toll Corners LLC, a Delaware limited liability company.

119. Toll Dallas TX LLC, a Texas limited liability company.

120. Toll Damonte LLC, a Nevada limited liability company.

121. Toll DE X II, LLC, a Delaware limited liability company.

122. Toll-Dublin, LLC, a California limited liability company.

123. Toll E. 33^rd Street LLC, a Delaware limited liability company.

124. Toll EB, LLC, a Delaware limited liability company.

125. Toll Equipment, L.L.C., a Delaware limited liability company.

126. Toll FL I, LLC, a Florida limited liability company.

127. Toll FL II LLC, a Florida limited liability company.

128. Toll FL III LLC, a Florida limited liability company.

129. Toll FL IV LLC, a Florida limited liability company.

130. Toll FL V LLC, a Florida limited liability company.

131. Toll Franklin LLC, a New York limited liability company.

132. Toll Gibraltar I LLC, a Pennsylvania limited liability company.

133. Toll Gibraltar II LLC, a Pennsylvania limited liability company.

134. Toll Glastonbury LLC, a Connecticut limited liability company.

135. Toll Henderson LLC, a Nevada limited liability company.

136. Toll Hoboken LLC, a Delaware limited liability company.

137. Toll Houston TX LLC, a Texas limited liability company.

138. Toll IN LLC, an Indiana limited liability company.

139. Toll Jupiter LLC, a Florida limited liability company.

140. Toll Landscape, L.L.C., a Delaware limited liability company.

141. Toll Landscape II, L.L.C., a Delaware limited liability company.

142. Toll Lexington LLC, a New York limited liability company.

143. Toll Lexington GC LLC, a New York limited liability company.

144. Toll Maxwell LLC, a New Jersey limited liability company.

145. Toll MD I, L.L.C., a Maryland limited liability company.

146. Toll MD II LLC, a Maryland limited liability company.

147. Toll MD Realty LLC, a Maryland limited liability company.

148. Toll Morgan Street LLC, a Delaware limited liability company.

149. Toll NC I LLC, a North Carolina limited liability company.

150. Toll NC Note LLC, a North Carolina limited liability company.

151. Toll NC Note II LLC, a North Carolina limited liability company.

152. Toll NJ I, L.L.C., a New Jersey limited liability company.

153. Toll NJ II, L.L.C., a New Jersey limited liability company.

154. Toll NJ III, LLC, a New Jersey limited liability company.

155. Toll North LV LLC, a Nevada limited liability company.

156. Toll North Reno LLC, a Nevada limited liability company.

157. Toll Nursery, L.L.C., a Delaware limited liability company.

158. Toll NV Holdings LLC, a Nevada limited liability company.

159. Toll Parkland GSC LLC, a Florida limited liability company.

160. Toll Parkland LLC, a Florida limited liability company.

161. Toll Plaza, LLC, a Pennsylvania limited liability company.

162. Toll Realty L.L.C., a Florida limited liability company.

163. Toll San Antonio TX LLC, a Texas limited liability company.

164. Toll South LV LLC, a Nevada limited liability company.

165. Toll South Reno LLC, a Nevada limited liability company.

166. Toll Stratford LLC, a Virginia limited liability company.

167. Toll SW Holding LLC, a Nevada limited liability company.

168. Toll Technology Investments, L.L.C., a Delaware limited liability company.

169. Toll Turf Management, L.L.C., a Delaware limited liability company.

170. Toll TX Note LLC, a Texas limited liability company.

171. Toll VA L.L.C., a Delaware limited liability company.

172. Toll VA III L.L.C., a Virginia limited liability company.

173. Toll Van Wyck, LLC, a New York limited liability company.

174. Toll Vanderbilt I LLC, a Rhode Island limited liability company.

175. Toll Vanderbilt II LLC, a Rhode Island limited liability company.

176. Vanderbilt Capital LLC, a Rhode Island limited liability company.

177. Virginia Construction Co. I, LLC, a Virginia limited liability company.

178. Virginia Construction Co. II, LLC, a Virginia limited liability company.

179. Westminster Security Systems LLC, a Pennsylvania limited liability company.

180. Whitehall Management Services, LLC, a Pennsylvania limited liability company.

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

1. Registration Statement (Form S-8 No. 33-60285) pertaining to the Key Executives and Non-Employee Directors Stock Option Plan (1993) of Toll Brothers, Inc., as amended,

2. Registration Statements (Form S-8 No. 33-60289 and No. 333-69274) pertaining to the Stock Option and Incentive Stock Plan (1995), of Toll Brothers, Inc.,

3. Registration Statements (Form S-8 No. 333-57645 and No. 333-113721) pertaining to the Stock Incentive Plan (1998) of Toll Brothers, Inc.,

4. Registration Statement (Form S-8 No. 333-143367) pertaining to the Stock Incentive Plan for Employees (2007) of Toll Brothers, Inc., as amended,

5. Registration Statement (Form S-8 No. 333-144230) pertaining to the Stock Incentive Plan for Non-Employee Directors (2007) of Toll Brothers, Inc., as amended,

6. Registration Statement (Form S-8 No. 333-148362) pertaining to the Employee Stock Purchase Plan of Toll Brothers, Inc, and,

7. Registration Statement (Form S-3 No. 333-154807) of Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp., Toll Brothers Finance Corp., Toll Finance Corp. and the additional registrants named therein, and in the related Prospectus;

of our report dated December 22, 2010, with respect to the consolidated financial statements of Toll Brothers, Inc. and subsidiaries, and our report dated December 22, 2010 with respect to the effectiveness of internal control over financial reporting of Toll Brothers, Inc. included in this Annual Report (Form 10-K) for the year ended October 31, 2010.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
December 22, 2010

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Douglas C. Yearley Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K of Toll Brothers, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signed:	/s/ Douglas C. Yearley, Jr.
	Name:	Douglas C. Yearley, Jr.
	Title:	Chief Executive Officer

Date: December 22, 2010

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Martin P. Connor, certify that:

1. I have reviewed this Annual Report on Form 10-K of Toll Brothers, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signed:	/s/ Martin P. Connor
	Name:	Martin P. Connor
	Title:	Chief Financial Officer

Date: December 22, 2010

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Toll Brothers, Inc. (the “Company”) for the twelve months ended October 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas C. Yearley Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Douglas C. Yearley Jr.
	Name:	Douglas C. Yearley Jr.
	Title:	Chief Executive Officer

Date: December 22, 2010

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Toll Brothers, Inc. (the “Company”) for the twelve months ended October 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martin P. Connor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Martin P. Connor
	Name:	Martin P. Connor
	Title:	Chief Financial Officer

Date: December 22, 2010