XML 96 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
Credit Facility, Loans Payable, Senior Notes, Senior Subordinated Notes and Mortgage Company Warehouse Loan
 12 Months Ended
Oct. 31, 2011
Credit Facility, Loans Payable, Senior Notes, Senior Subordinated Notes and Mortgage Company Warehouse Loan [Abstract]  
Credit Facility, Loans Payable, Senior Notes, Senior Subordinated Notes and Mortgage Company Warehouse Loan
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.
At October 31, 2011, the Company had no outstanding borrowings under the New Credit Facility but had outstanding letters of credit of approximately $100.3 million. At October 31, 2011, interest would have been payable on borrowings under the New Credit Facility at 2.75% (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 $1.87 billion at October 31, 2011. At October 31, 2011, the Company’s leverage ratio was approximately 0.18 to 1.00 and its tangible net worth was approximately $2.55 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 $680 million at October 31, 2011. The Company is obligated to pay an undrawn commitment fee of 0.50% (subject to adjustment based upon the Company’s debt rating and leverage ratios) based on the average daily unused amount of the facility.
Loans Payable
The Company’s loans payable represent purchase money mortgages on properties the Company has acquired that the seller has financed and various revenue bonds that were issued by government entities on behalf of the Company to finance community infrastructure and the Company’s manufacturing facilities. Information regarding the Company’s loans payable at October 31, 2011 and 2010 is included in the table below ($ amounts in thousands).
                 
    2011     2010  
Aggregate loans payable at October 31
  $ 106,556     $ 94,491  
Weighted-average interest rate
    3.99 %     3.75 %
Interest rate range
    0.16%-7.87 %     0.50% - 8.00 %
Loans secured by assets
               
Carrying value of loans secured by assets
  $ 105,092     $ 93,029  
Carrying value of assets securing loans
  $ 283,169     $ 257,563
Senior Notes
At October 31, 2011 and 2010, the Company’s senior notes consisted of the following (amounts in thousands):
                 
    2011     2010  
6.875% Senior Notes due November 15, 2012
  $ 139,776     $ 194,865  
5.95% Senior Notes due September 15, 2013
    141,635       141,635  
4.95% Senior Notes due March 15, 2014
    267,960       267,960  
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
    (8,399 )     (10,350 )
 
           
 
  $ 1,490,972     $ 1,544,110  
 
           
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.
The Company has repurchased, and may from time to time in the future repurchase, its senior notes in the open market or otherwise. The table below provides for the periods indicated, the amount of senior notes the Company has redeemed and the amount of expenses related to the retirement of the notes (amounts in thousands).
                         
    2011     2010     2009  
Fiscal year:
                       
6.875% Senior notes due 2012
  $ 55,089             $ 105,135  
5.95% Senior notes due 2013
          $ 13,500       94,985  
4.95% Senior notes due 2014
            32,040          
 
                 
 
  $ 55,089     $ 45,540     $ 200,120  
 
                 
Expenses related to retirement of debt
  $ 3,827     $ 744     $ 11,626  
 
                 
Expenses related to the retirement of notes includes, if any, premium paid, write-off of unamortized debt issuance costs and other debt redemption costs.
Senior Subordinated Notes
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.
The table below provides for the periods indicated, the amount of senior subordinated notes the Company has redeemed and the amount of expenses related to the retirement of the notes (amounts in thousands).
                 
    2010     2009  
Fiscal year:
               
8.25% Senior Subordinated Notes due December 2011
  $ 47,872     $ 102,128  
8 1/4% Senior Subordinated Notes due February 2011
            193,000  
 
           
Total
  $ 47,872     $ 295,128  
 
           
Expenses related to retirement of debt
  $ 34     $ 2,067  
 
           
Mortgage Company Loan Facilities
TBI Mortgage Company (“TBI Mortgage”), the Company’s wholly-owned mortgage subsidiary, has a Master Repurchase Agreement (the “Repurchase Agreement”) with Comerica Bank. 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, as amended, provides for loan purchases up to $50 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 $75 million for a short period of time. The Repurchase Agreement, as amended, expires on July 25, 2012 and bears interest at LIBOR plus 1.25%, with a minimum rate of 3.50%. Borrowings under this facility are included in the fiscal 2012 maturities.
At October 31, 2011 and 2010, there were $57.4 million and $72.4 million, respectively, outstanding under the Repurchase Agreement, which are included in liabilities in the accompanying Consolidated Balance Sheets. At October 31, 2011 and 2010, amounts outstanding under the Repurchase Agreement are collateralized by $63.2 million and $93.6 million, respectively, of mortgage loans held for sale, which are included in assets in the Company’s balance sheets. As of October 31, 2011, 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, 2011, the annual aggregate maturities of the Company’s loans and notes during each of the next five fiscal years are as follows (amounts in thousands):
         
    Amount  
2012
  $ 92,827  
2013
    294,742  
2014
    271,969  
2015
    301,872  
2016
    1,955