UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



x☑		~~ANNUAL REPORT PURSUANT TO SECTION~~Annual report pursuant to Section 13 ORor 15(d) ~~OF THE SECURITIES EXCHANGE ACT OF~~of the Securities Exchange Act of 1934

For the fiscal year ended October 31, 2019


		~~For the fiscal year ended October 31, 2017~~
		or
o☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ofOF 1934
		~~For the transition period from~~to

For the transition period from to

Commission file number ~~1-9186~~001-09186

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)~~ (215) 938-8000

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (par value $.01)	TOL	New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 5.625% Senior Notes due 2024	TOL/24	New York Stock Exchange

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. Yesxþ 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 oNoxþ

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. Yesxþ 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). Yesx☑ 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. o

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



Large accelerated filerþ	☑			Accelerated filero	☐
Non-accelerated filero	☐	(Do not check if a smaller reporting company)			Smaller reporting companyo	☐
			Emerging growth companyo	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

As of April 30, ~~2017,~~2019, the aggregate market value of our Common Stock held by non-affiliates (all persons other than executive officers and directors of Registrant) of the Registrant was approximately ~~$5,458,097,000.~~$5,115,920,000.

As of December ~~15, 2017,~~19, 2019, there were approximately ~~153,173,000~~138,696,000 shares of our Common Stock outstanding.

Documents Incorporated by Reference: Portions of the proxy statement of Toll Brothers, Inc. with respect to the ~~2018~~2020 Annual Meeting of Stockholders, scheduled to be held on March ~~13, 2018,~~10, 2020, are incorporated by reference into Part III of this report.

TABLE OF CONTENTS



		Page
PART I
	ITEM 1. BUSINESS	1
	ITEM 1A. RISK FACTORS	1211
	ITEM 1B. UNRESOLVED STAFF COMMENTS	18
	ITEM 2. PROPERTIES	1819
	ITEM 3. LEGAL PROCEEDINGS	1819
	ITEM 4. MINE SAFETY DISCLOSURES	1819
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1920
	ITEM 6. SELECTED FINANCIAL DATA	22
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5246
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	5246
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5246
	ITEM 9A. CONTROLS AND PROCEDURES	5246
	ITEM 9B. OTHER INFORMATION	5347
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	5348
	ITEM 11. EXECUTIVE COMPENSATION	5449
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	5449
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE	5449
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	5449
PART IV
	ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	5549
SIGNATURES		6357

The following exhibits have been filed electronically with this Form 10-K:
	EXHIBIT ~~4.1~~4.41
	EXHIBIT ~~4.24~~4.42
	EXHIBIT ~~4.25~~4.43
	EXHIBIT ~~4.55~~10.28
	EXHIBIT ~~4.56~~10.29
	EXHIBIT ~~10.7~~10.30
	EXHIBIT 1210.31
	EXHIBIT 21
	EXHIBIT 23
	EXHIBIT 31.1
	EXHIBIT 31.2
	EXHIBIT 32.1
	EXHIBIT 32.2
	~~EX-101 INSTANCE DOCUMENT~~ EXHIBIT101
	~~EX-101 SCHEMA DOCUMENT~~ EXHIBIT 101.INS
	~~EX-101 CALCULATION LINKBASE DOCUMENT~~
	~~EX-101 LABEL LINKBASE DOCUMENT~~
	~~EX-101 PRESENTATION LINKBASE DOCUMENT~~
	~~EX-101 DEFINITION LINKBASE DOCUMENT~~ EXHIBIT 104

PART I

ITEM 1. BUSINESS

Toll Brothers, Inc., a corporation incorporated in Delaware 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 year refer to our fiscal years ended or ending October 31.

General

We design, build, market, sell, and arrange financing for ~~detached and attached homes in~~an array of luxury residential ~~communities.~~single-family detached, attached home, master planned resort-style golf, and urban low-, mid-, and high-rise communities, principally on land we develop and improve, as we continue to pursue our strategy of broadening our product lines, price points and geographic footprint. We cater to luxury first-time, move-up, empty-nester, active-adult, affordable luxury and second-home buyers in the United States (“Traditional Home Building Product”)., as well as urban and suburban renters. We also design, build, market, and sell ~~homes in~~ urban ~~infill markets~~low-, mid-, and high-rise condominiums through Toll Brothers City Living^® (“City Living”). At October 31, ~~2017,~~2019, we were operating in ~~20 states.~~23 states, as well as in the District of Columbia.

In the five years ended October 31, ~~2017,~~2019, we delivered ~~28,355~~35,146 homes from ~~676~~724 communities, including ~~7,151~~8,107 homes from ~~407~~426 communities in fiscal ~~2017.~~2019. At October 31, ~~2017,~~2019, we had ~~628~~715 communities containing approximately ~~48,300~~59,200 home sites that we owned or controlled through options.

Backlog consists of homes under contract but not yet delivered to our home ~~buyers (“backlog”).~~buyers. We had a backlog of ~~$5.06~~$5.26 billion ~~(5,851~~(6,266 homes) at October 31, ~~2017;~~2019; we expect to deliver approximately ~~97%~~93% of these homes in fiscal ~~2018.~~2020.

We operate our own ~~land development,~~ architectural, engineering, mortgage, title, land development, golf course development, and landscaping subsidiaries. We also operate our own security company, TBI Smart Home Solutions, which provides homeowners with home automation and ~~home control solutions,~~technology options. In addition, we operate our own lumber distribution, house component assembly, and manufacturing operations. ~~We also develop, own, and operate golf courses and country clubs, which generally are associated with several of our master planned communities.~~

We are developing several land parcels for master planned communities in which we intend to build homes on a portion of the lots and sell the remaining lots to other builders. Two of these master planned communities are being developed 100% by us, and the remaining communities are being developed through joint ventures with other builders or financial partners.

In addition to our residential for-sale business, we also develop and operate for-rent apartments primarily through joint ventures. These projects ~~which~~ are located in multiple metropolitan areas throughout the ~~metro Boston to metro Washington, D.C. corridor; Los Angeles, San Francisco, San Diego~~country and ~~Fremont, California; Atlanta, Georgia; Dallas, Texas; and Phoenix, Arizona~~ are being operated or developed, (or we expect will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus ~~Living, and Toll Brothers Realty Trust.~~Living.^® At October 31, ~~2017,~~2019, we or joint ventures in which we have an interest controlled 4356 land parcels as for-rent apartment projects containing approximately ~~14,450~~18,300 units.

~~Through~~Primarily through several joint ventures, our wholly-owned subsidiary, Gibraltar Capital and Asset Management, LLC (“Gibraltar”), provides builders and developers with land banking and venture capital, owns certain foreclosed real estate, and is a participant in an entity that owns and controls a portfolio of loans and real estate.

See “Investments in Unconsolidated Entities” below for more information relating to ~~these~~our joint ventures.

~~Business Trends~~Acquisitions

As part of our strategy to expand our geographic footprint and ~~Outlook~~

The current housing market continues to strengthen and grow. We believe that improving demand for homes, low interest rates, the limited supply of resale and new homes, and the financial strength of the affluent buyers that we target are driving our growth. Our buyers are further benefiting from a positive employment picture, strong consumer confidence, a robust stock market, and increasing equity in their existing homes. In fiscal 2017, the value and number of signed contracts increased 20.9% and 21.7%, respectively, as compared to fiscal 2016; and increased 37.8% and 38.3%, respectively, as compared to fiscal 2015.

~~In fiscal 2017, we signed 8,175 contracts with an aggregate value of $6.83 billion, compared to 6,719 contracts with an aggregate value of $5.65 billion~~product offerings, in fiscal 2016, and 5,910 contracts with an aggregate value of $4.96 billion in fiscal 2015. We believe that, as the national economy continues to improve and as the millennial generation comes of age, pent-up demand for homes will continue to be released.

~~We believe~~2019, we are benefiting from the appeal and national recognition of our brand and a lack of large scale competition in the affordable end of the luxury new home market. Our home designs and our customization program differentiate us within our segment of the luxury home market. The breadth of products we offer enables us to appeal to a wide range of demographic groups, including affluent move-up, empty-nester and millennial buyers, which we believe is also fueling demand for our homes. We continue to believe that many of our communities are in desirable locations that are difficult to replace and that many of these communities have substantial embedded value that may be realized in the future as the housing recovery strengthens.

The supply of new and existing homes continues to trail the growth in population and households. We believe that, in certain markets, the new home market continues to have significant pent-up demand. We are producing strong results even with industry-wide home production levels still well below historical norms. We expect that this increase in demand will drive production of new homes to address the existing deficit in housing supply compared to projected household growth.

For information and analysis 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 Consolidated Financial Statements and Notes thereto in Item 15(a)1 of this Form 10-K.

At October 31, 2017, we had 628 communities containing approximately 48,300 home sites that we owned or controlled through options; we owned approximately 31,300 of these home sites and controlled approximately 17,000 additional home sites through options. Of the 48,300 home sites, approximately 17,200 were substantially improved. Of the 628 communities, 396 were residential communities under development (“operating communities”) containing 23,846 home sites and 232 were future communities containing 24,465 home sites. In addition, at October 31, 2017, our Land Development Joint Ventures and Home Building Joint Ventures owned approximately 10,200 and approximately 400 home sites, respectively.

At October 31, 2017, we were offering homes for sale in 299 communities at base prices for our Traditional Home Building Product, generally ranging from approximately $184,000 to $2,800,000. For our City Living Product, we were offering homes for sale in six communities at base prices generally ranging from $413,000 to $5,240,000. In a few of our City Living communities being developed, we are offering homes at prices substantially higher than those indicated. During fiscal 2017, we delivered 7,151 homes at an average base price of approximately $689,000. On average, our home buyers added approximately 22.0%, or $152,000 per home, in customized options and lot premiums to the base price of the homes we delivered in fiscal 2017, as compared to 21.5% or $155,000 per home in fiscal 2016 and 20.7% or $134,000 per home in fiscal 2015.

In fiscal 2017, of the 7,151 homes delivered, 24% had a delivered price of less than $500,000; 36% had a delivered price of between $500,000 and $750,000; 18% had a delivered price of between $750,000 and $1,000,000; and 22% had a delivered price of over $1,000,000. Of the homes delivered in fiscal 2017, approximately 22% of our home buyers paid the full purchase price in cash; the remaining home buyers borrowed approximately 70% of the value of the home.

We had a backlog of $5.06 billion (5,851 homes) at October 31, 2017; $3.98 billion (4,685 homes) at October 31, 2016; and$3.50 billion (4,064 homes) at October 31, 2015. Of the 5,851 homes in backlog at October 31, 2017, approximately 97% are expected to be delivered by October 31, 2018.

Our business is subject to many risks, including risks associated with obtaining the necessary approvals on a property and completing the land improvements on it. We attempt, where possible, 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”); however, in recent years, we have had more success in negotiating land parcels for immediate purchase since many sellers were not in a position to wait or unwilling to take the financial risk of not completing the sale. These options enable us to obtain the necessary governmental approvals before we acquire title to the land. We also reduce certain risks by generally commencing construction of a detached home only after executing an agreement of sale and receiving a substantial down payment from the buyer and by using subcontractors to perform home construction and land development work on a fixed-price basis.

~~Acquisition -~~ ~~Coleman Real Estate Holdings, LLC~~

~~In October 2016, we entered into an agreement to acquire~~acquired substantially all of the assets and operations of ~~Coleman Real Estate Holdings,~~Sharp Residential, LLC (“~~Coleman”~~Sharp”)~~. In November 2016, we completed the acquisition of Coleman~~ and Sabal Homes LLC (“Sabal”), for approximately ~~$83.1~~$92.8 million and $69.6 million, respectively, in cash. Sharp operates in metropolitan Atlanta, Georgia; Sabal operates in the Charleston, Greenville, and Myrtle Beach, South Carolina markets. The assets acquired, based on our preliminary purchase price allocations, were primarily inventory, including approximately ~~1,750~~2,550 home sites owned or controlled through land purchase agreements. ~~As part of the acquisition,~~In connection with these acquisitions, we assumed contracts to deliver ~~128~~204 homes with an aggregate value of ~~$38.8~~$96.1 million. The average price of ~~the~~those undelivered homes ~~at the date of acquisition~~ was approximately ~~$303,000.~~$471,100 as of the applicable acquisition date. As a result of ~~this acquisition,~~these acquisitions, our selling community count increased by ~~15 communities at the acquisition date.~~22 communities.

Our Communities and Homes

Our traditional home building communities are generally located in affluent suburban areas near major highways providing access to major cities and are generally located on land we have either acquired and developed or acquired fully approved and, in some cases, improved. ~~We also~~Our City Living communities currently operate in ~~the affluent urban markets of~~ Hoboken and Jersey City, New Jersey; New York

City, New York; Philadelphia, Pennsylvania; ~~and~~ the suburbs of Washington, D.C.; Los Angeles, California; and Seattle, Washington.

At October 31, ~~2017,~~2019, we were operating in the following major suburban and urban residential markets:

Boston, Massachusetts, metropolitan area

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

Westchester and Dutchess ~~county,~~Counties, New York

Boroughs of Manhattan and Brooklyn in New York City

Central and northern New Jersey

Philadelphia, Pennsylvania, metropolitan area

Lehigh Valley area of Pennsylvania

Virginia and Maryland suburbs of Washington, D.C.

Raleigh and Charlotte, North Carolina, metropolitan areas

Charleston, Greenville, and Myrtle Beach, South Carolina

Atlanta, Georgia, metropolitan area

Southeast and southwest coasts and the Jacksonville, Orlando, and ~~Orlando~~Tampa areas of Florida

Detroit, Michigan, metropolitan area

Chicago, Illinois, ~~metropolitan area~~

~~Minneapolis/St. Paul, Minnesota,~~ metropolitan area

Dallas, Houston, and Austin, Texas, metropolitan areas

Denver, Colorado, metropolitan area and Fort Collins, Colorado

Phoenix, Arizona, metropolitan area

Las Vegas and Reno, Nevada, metropolitan areas

Boise, Idaho, metropolitan area

Salt Lake City, Utah, metropolitan area

San Diego and Palm Springs, California, areas

Los Angeles, California, metropolitan area

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

Seattle, Washington, metropolitan area, and

Portland, Oregon, metropolitan area.

We develop individual stand-alone communities as well as multi-product, 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.

Each of our 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 feasible, and curving street layouts to allow relatively few homes to be seen from any vantage point. Our communities have attractive entrances with distinctive signage and landscaping. We believe that our added attention to ~~community~~ detail 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 clubhouses, playing fields, swimming pools, and tennis courts.

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 fiscal year, we introduced 279 new models for our Traditional Home Building Product (170 detached models and 109 attached models).~~

In our Traditional Home Building Product communities, a wide selection of options is available to home buyers for additional charges. The number and complexity of options in our Traditional Home Building Product 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. We also offer numerous interior fit-out options such as flooring, wall tile, plumbing fixtures, lighting and home-automation and security technologies.

We market our high-quality 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 builder of homes for this market enhances our competitive position with respect to the sale of our smaller, more moderately priced homes.

We continue to pursue growth initiatives ~~to expand~~by expanding our ~~brand~~geographic footprint and by broadening our ~~residential~~ product lines and price points to appeal to buyers across the demographic spectrum. In addition to our traditional “move-up” home buyer, we are focusing on the ~~50+ year-old~~ “empty-nester” market, ~~as well as~~ the millennial ~~generation.~~generation, and the affordable luxury buyer.

We 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 buyers. We have integrated certain of these designs and features in some of our other home types and communities. As of October 31, ~~2017,~~2019, we were selling from 4639 active-adult communities, ~~some of~~in which at least one ~~member~~home occupant must be ~~55+~~at least 55 years of age. We expect to open additional active-adult communities during the next few years. Of the value and number of net contracts signed in fiscal 2017, approximately 14% and 20%, respectively, were in active-adult communities; in fiscal 2016, approximately 14% and 20%, respectively, were in such communities; and in fiscal 2015, approximately 11% and 16%, respectively were in active-adult communities.

~~With~~As the millennial generation ~~now entering their thirties and forming families,~~enters its prime family formation years, we ~~are starting~~continue to ~~benefit from their desire for home ownership. We are currently focusing~~focus on this group with our core suburban homes, affordable luxury offerings, urban condominiums and luxury rental apartment products.

We have developed and are developing, on our own or through joint ventures with third parties, a number of high-density, high-, mid- and low-rise urban luxury communities to serve a growing market of affluent move-up families, empty-nesters, and young professionals seeking to live in or close to major cities. These communities are currently marketed under our City Living brand. These communities, which we are currently developing or planning to develop on our own or through joint ventures, are located in Los Angeles, California; Bethesda, Maryland; Hoboken and Jersey City, New Jersey; the boroughs of Manhattan and Brooklyn, New York; Philadelphia, Pennsylvania; and ~~Philadelphia, Pennsylvania.~~Seattle, Washington.

A ~~great~~ majority of our City Living communities are high-rise projects and take an extended period of time to construct. We generally start selling homes in these communities after construction has commenced and, by the time construction has been completed, we typically have a significant number of homes in backlog. Once construction has been completed, the homes in backlog in these communities are generally delivered ~~very~~ quickly.

We believe that the demographics ofsupporting the luxury first-time, move-up, empty-nester, active-adult, affordable luxury and second-home upscale markets will provide us with an opportunity for growth in the future, and that our financial strength and portfolio of approved home sites in the metro Boston to metro Washington, D.C. corridor and in our California markets, in which land is scarce and approvals are more difficult to obtain, give us a competitive advantage.future. We continue to believe that many of our communities are in desirable locations that are difficult to replace and that many of these communities have substantial embedded value that may be realized in the ~~future as the housing recovery strengthens.~~

According to the U.S. Census Bureau (“Census Bureau”), the number of households earning $100,000 or more (in constant 2016 dollars) at September 2017 stood at 35.0 million, or approximately 27.7% of all U.S. households. This group has grown at three times the rate of increase of all U.S. households since 1980. According to Harvard University’s 2017 report, “The State of the Nation’s Housing,” demographic forces are likely to drive the addition of approximately 1.36 million new households per year from 2015 to 2025.

Housing starts, which encompass the units needed for household formations, second homes, and the replacement of obsolete or demolished units, have not kept pace with this projected household growth or the aging of existing homes. According to the Census Bureau’s October 2017 New Residential Sales Report, new home inventory stands at a supply of just 5.0 months, based on current sales paces. If demand and pace increase significantly, the supply of 5.0 months will quickly be drawn down. During the period 1970 through 2007, total housing starts in the United States averaged approximately 1.6 million per year, while during the period 2008 through 2016, total housing starts averaged approximately 0.85 million per year according to the Census Bureau. Additionally, the median age of housing stock in the United States has increased from 25 years to 39 years over the last three decades, thus expanding the market for replacement homes.

future.

At October 31, ~~2017,~~2019, we were selling homes from ~~305~~333 communities, compared to ~~310~~315 communities at October 31, ~~2016,~~2018, and ~~288~~305 communities at October 31, ~~2015.~~2017.

The following table summarizes certain information with respect to our operating communities at October 31, ~~2017:~~2019:


	Total number of operating communities	Number of selling communities	Homes approved	Homes closed	Homes under contract but not closed	Home sites available	Total number of operating communities	Number of selling communities	Homes approved	Homes closed	Homes under contract but not closed	Home sites available
Traditional Home Building:
North	77	51	10,262	5,469	1,217	3,576	59	50	9,227	5,747	1,076	2,404
Mid-Atlantic	79	64	11,752	6,643	1,143	3,966	71	56	10,183	6,233	1,159	2,791
South	85	73	8,729	3,666	1,055	4,008	106	93	10,848	5,206	1,339	4,303
West	97	73	8,919	3,761	1,397	3,761	102	94	11,408	3,949	1,738	5,721
California	51	38	5,112	1,800	887	2,425	40	36	5,040	2,170	842	2,028
Traditional Home Building	389	299	44,774	21,339	5,699	17,736	378	329	46,706	23,305	6,154	17,247
City Living	7	6	737	326	152	259	5	4	948	589	112	247
Total	396	305	45,511	21,665	5,851	17,995	383	333	47,654	23,894	6,266	17,494

At October 31, ~~2017,~~2019, significant site improvements had not yet commenced on approximately ~~6,600~~7,000 of the ~~17,995~~17,494 available home sites. Of the ~~17,995~~17,494 available home sites, ~~2,141~~approximately 1,700 were not yet owned by us but were controlled through options.

Of our ~~396~~383 operating communities at October 31, ~~2017,~~2019, a total of ~~305~~333 communities were offering homes for sale; 8748 communities were sold out but not all homes had been completed and delivered; and ~~four~~two communities had been temporarily shut down and are expected to reopen in fiscal ~~2018.~~2020. Of the ~~305~~333 communities in which homes were being offered for sale at October 31, ~~2017,~~2019, a total of ~~237~~270 were detached home communities and 6863 were attached home communities.

At October 31, ~~2017,~~2019, we had ~~752~~1,120 homes (exclusive of model homes) under construction or completed but not under contract in our traditional communities, of which ~~457~~745 were in detached home communities and ~~295~~375 were in attached home communities. At October 31, ~~2017,~~2019, we had ~~259~~364 homes (exclusive of model homes) under construction or completed but not under contract in ~~six~~four City Living communities that were wholly owned.

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, ~~2017~~2019 was as follows:

Traditional Home Building Product
Detached homes
Move-up $ 184,000
to $ 720,000
Executive 329,000
to 1,390,000
Estate 330,000
to 2,800,000
Active-adult 254,000
to 813,000
Attached homes
Flats $ 245,000
to $ 935,000
Townhomes/Carriage homes 220,000
to 990,000
Active-adult 262,000
to 597,000
City Living Product $ 413,000
to $ 5,240,000

~~A few City Living communities that we are developing are offering homes at prices substantially in excess of those listed above.~~



Traditional Home Building Product
Detached homes
Move-up	$	230,000	to	$	792,000
Executive	335,000		to	1,543,000
Estate	320,000		to	3,010,000
Active-adult	317,000		to	723,000
Attached homes
Flats	$	262,000	to	$	1,683,000
Townhomes/Carriage homes	292,000		to	1,480,000
Active-adult	274,000		to	840,000
City Living Product	$	413,000	to	$	7,175,000

In fiscal ~~2017,~~2019, of the ~~7,151~~8,107 homes delivered, ~~24%~~21% had a delivered price of less than $500,000; ~~36%~~35% had a delivered price of between $500,000 and $750,000; ~~18%~~20% had a delivered price of between $750,000 and $1,000,000; 18% had a delivered price of between $1,000,000 and ~~22%~~$2,000,000; and 6% had a delivered price of over ~~$1,000,000.~~$2,000,000. Of the homes delivered in fiscal ~~2017,~~2019, approximately 22% of our home buyers paid the full purchase price in cash; the remaining home buyers borrowed approximately ~~70%~~68% of the value of the home.

The table below provides the average value of options purchased by our home buyers, including lot premiums, and the value of the options as a percent of the base selling price of the homes purchased in fiscal ~~2017, 2016,~~2019, 2018, and ~~2015:~~2017:


	2017				2016				2015				2019				2018				2017
	Option value (in thousands)		Percent of base selling price		Option value (in thousands)		Percent of base selling price		Option value (in thousands)		Percent of base selling price		Option value (in thousands)		Percent of base selling price		Option value (in thousands)		Percent of base selling price		Option value (in thousands)		Percent of base selling price
Overall	$	152	22.0	%	$	155	21.5	%	$	134	20.7	%	$	178	24.4	%	$	165	22.8	%	$	152	22.0	%
Traditional Home Building Product
Detached	$	178	24.9	%	$	181	23.9	%	$	158	23.6	%	$	203	26.6	%	$	189	24.8	%	$	178	24.9	%
Attached	$	77	16.7	%	$	74	15.9	%	$	69	15.8	%	$	99	18.8	%	$	94	19.6	%	$	77	16.7	%
City Living Product	$	32	2.2	%	$	50	1.8	%	$	47	3.3	%	$	31	2.5	%	$	25	1.3	%	$	32	2.2	%

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)

This discussion and analysis is based on, should be read together with, and is qualified in its entirety by, the Consolidated Financial Statements and Notes thereto in Item 15(a)1 of this Form 10-K, beginning at page F-1. It also should be read in conjunction with the disclosure under “Forward-Looking Statements” in Part I of this Form 10-K.

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 year refer to our fiscal years ended or ending October 31.

Unless otherwise stated in this report, 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 canceled during the relevant period, which includes contracts that were signed during the relevant period and in prior periods. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”). Backlog conversion represents the percentage of homes delivered in the period from backlog at the beginning of the period (“backlog conversion”).

This discussion and analysis does not address certain items in respect of fiscal 2017 in reliance on amendments to disclosure requirements adopted by the SEC in 2019. A discussion and analysis of fiscal 2017 may be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, filed with the SEC on December 20, 2018.

OVERVIEW

Our Business

In the five years ended October 31, ~~2017,~~2019, we delivered ~~28,355~~35,146 homes from ~~676~~724 communities, including ~~7,151~~8,107 homes from ~~407~~426 communities in fiscal ~~2017.~~

~~In November 2016,~~2019. At October 31, 2019, we ~~acquired substantially all of the assets and operations of Coleman Real Estate Holdings, LLC (“Coleman”). See “Acquisition” below for more information.~~had 715 communities containing approximately 59,200 home sites that we owned or controlled through options.

In addition to our residential for-sale business, we also develop and operate for-rent apartments through joint ventures. See the section entitled “Toll Brothers Apartment Living/Toll Brothers Campus ~~Living/Toll Brothers Realty Trust”~~Living” below.

We operate our own ~~land development,~~ architectural, engineering, mortgage, title, land development, golf course development, and landscaping subsidiaries. We also operate our own security ~~monitoring,~~company, TBI Smart Home Solutions, which provides homeowners with home automation and a full range of technology options. In addition, we operate our own lumber distribution, house component assembly, and manufacturing operations. In addition, in certain markets, we develop land for sale to other builders, often through joint venture structures with other builders or with financial partners. We also develop, own, and operate golf courses and country clubs, which generally are associated with several of our master planned communities.

We have investments in various unconsolidated entities. We have investments in joint ventures (i) to develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) to develop for-sale homes (“Home Building Joint Ventures”); (iii) to develop luxury for-rent residential apartments, commercial space and a hotel (“Rental Property Joint Ventures”); and (iv) to invest in distressed loans and real estate and provide financing and land banking for residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).

Financial Highlights

In fiscal ~~2017,~~2019, we recognized ~~$5.82~~$7.08 billion of home sales revenues and net income of $590.0 million, as compared to $7.14 billion of revenues and net income of ~~$535.5 million, as compared to $5.17 billion of revenues and net income of $382.1~~$748.2 million in fiscal ~~2016.~~2018.

In fiscal ~~2017~~2019 and ~~2016,~~2018, the value of net contracts signed was ~~$6.83~~$6.71 billion ~~(8,175~~(8,075 homes) and ~~$5.65~~$7.60 billion ~~(6,719~~(8,519 homes), respectively. The value of our backlog at October 31, ~~2017~~2019 was ~~$5.06~~$5.26 billion ~~(5,851~~(6,266 homes), as compared to our backlog at October 31, ~~2016~~2018 of ~~$3.98~~$5.52 billion ~~(4,685~~(6,105 homes).

At October 31, ~~2017,~~2019, we had ~~$712.8 million~~$1.29 billion of cash and cash equivalents ~~on hand~~ and approximately ~~$1.15~~$1.73 billion available for borrowing under our ~~$1.295~~$1.905 billion revolving credit facility (the ~~“Credit~~“Revolving Credit Facility”) that matures in ~~May 2021.~~November 2024. At October 31, ~~2017,~~2019, we had no outstanding borrowings under the Revolving Credit Facility and had outstanding letters of credit of approximately ~~$140.1~~$177.9 million.

In ~~February~~fiscal 2017, our Board of Directors approved the initiation of quarterly cash dividends to shareholders. During fiscal ~~2017,~~2019 and 2018, we paid ~~a quarterly~~aggregate cash ~~dividend~~dividends of ~~$0.08~~$0.44 and $0.41 per share, ~~on each of April 28, 2017, July 28, 2017 and October 27, 2017.~~respectively, to our shareholders. In

December ~~2016,~~2019, we declared a quarterly cash dividend of ~~$0.08~~$0.11 which will be paid on January ~~26, 2018~~24, 2020 to shareholders of record on the close of business on January ~~12, 2018.~~10, 2020.

At October 31, ~~2017,~~2019, our total equity and our debt to total capitalization ratio were ~~$4.54~~$5.12 billion and ~~0.42~~0.44 to ~~1:00,~~1.00, respectively.

~~Acquisition~~Acquisitions

~~In October 2016,~~As part of our strategy to expand our geographic footprint and product offerings, in fiscal 2019, we ~~entered into an agreement to acquire~~acquired substantially all of the assets and operations of ~~Coleman. In November 2016, we completed the acquisition of Coleman~~Sharp Residential, LLC (“Sharp”) and Sabal Homes LLC (“Sabal”), for approximately ~~$83.1~~$92.8 million and $69.6 million, respectively, in cash. Sharp operates in metropolitan Atlanta, Georgia; Sabal operates in the Charleston, Greenville, and Myrtle Beach, South Carolina markets. The assets acquired, ~~were~~based on our preliminary purchase price allocations, was primarily inventory, including approximately ~~1,750~~2,550 home sites owned or controlled through land purchase agreements. ~~As part of the acquisition,~~In connection with these acquisitions, we assumed contracts to deliver ~~128~~204 homes with an aggregate value of ~~$38.8~~$96.1 million. The average price of ~~the~~ undelivered homes at the ~~date~~dates of ~~acquisition~~acquisitions was approximately ~~$303,000. Our~~$471,100. As a result of these acquisitions, our selling community count increased by ~~15 communities at the acquisition date.~~22 communities.

Our Business Environment and Current Outlook

~~The current~~

Over the past several years, sales prices for both new and resale homes have generally increased, which has reduced housing ~~market continues to strengthen~~affordability in many markets, including in California, where we have a significant presence. In addition, late in fiscal 2018 and ~~grow. We believe that solid and improving~~in the first half of fiscal 2019, interest rates on mortgage loans increased. These conditions resulted in a moderation in demand for our homes ~~low~~late in fiscal 2018 into fiscal 2019, as well as margin compression on contracts signed during this period. Late in the spring of 2019, market conditions improved as interest rates on mortgage loans decreased and as home builders increased sales incentives to improve sales pace. Buyer demand for our homes steadily improved throughout the ~~limited supply of resale~~year, and, ~~new homes, and~~in the ~~financial strength of~~three months ended October 31, 2019, the affluent buyers that we target are driving our growth. Our buyers are further benefiting from a solid employment picture, strong consumer confidence, a robust stock market, and increasing equity in their existing homes. In fiscal 2017, the value and number of contracts we signed ~~contracts~~had increased ~~20.9%~~18% in units and ~~21.7%, respectively, as~~12% in dollars compared to the three months ended October 31, 2018. For full year fiscal ~~2016;~~2019, we signed 8,075 contracts for the sale of Traditional Home Building Product and ~~increased 37.8% and 38.3%, respectively, as~~City Living units with an aggregate value of $6.71 billion, compared to ~~fiscal 2015.~~

~~In fiscal 2017, we signed 8,175~~8,519 contracts with an aggregate value of ~~$6.83 billion, compared to 6,719 contracts with an aggregate value of $5.65~~$7.60 billion in fiscal ~~2016,~~2018.

As we enter fiscal 2020, we continue to see solid economic fundamentals underlying the housing market, as consumer confidence has been healthy, household formations have been strong, and ~~5,910 contracts with an aggregate value of $4.96 billion in fiscal 2015. We believe that, as the national economy~~there continues to ~~improve and as~~be a limited supply of homes across most of our markets. As the ~~millennial generation comes~~nation's leading builder of ~~age, pent-up demand for~~luxury homes, ~~will~~we remain committed to meeting the demands of our discerning customers, who continue to ~~be released.~~

~~We believe~~pursue distinctive, high-quality homes in desirable locations. At the same time, we are ~~also benefiting from the appeal~~strategically focused on broadening our portfolio through targeted expansion in high-potential markets and ~~national recognition of~~product-line diversification that includes increasing our ~~brand and~~presence in more affordable luxury communities. With a lack of large scale competition in the affordable end of the luxury new home market. Our home designs and our customization program differentiate us within our segment of the luxury home market. The breadth of productssupportive economy as a backdrop, we offer enables us to appeal to a wide range of demographic groups, including affluent move-up, empty-nester and millennial buyers, which we believe is also fueling demand for our homes. We continue to believe that many of our communities are in desirable locations that are difficult to replace and that many of these communities have substantial embedded value that may be realized in the future as the housing recovery strengthens.

The supply of new and existing homes continues to trail the growth in population and households. We believe that in certain markets, the new home market continues to have significant pent-up demand. We are producing strong results even with industry-wide home production levels still well below historical norms. We believe that, as the national economy continuesexpect this strategy to improve revenue growth and capital efficiency as ~~the millennial generation comes of age, pent-up demand for homes will continue~~we increase community count and seek to ~~be released. We expect that this increase in demand will drive production of new homes to address the existing deficit in housing supply compared to projected household growth.~~

~~According to the U.S. Census Bureau (“Census Bureau”), the number of households earning $100,000 or~~deliver more (in constant 2016 dollars) at September 2017 stood at 35.0 million, or approximately 27.7% of all U.S. households. This group has grown at three times the rate of increase of all U.S. households since 1980. According to Harvard University’s 2017 report, “The State of the Nation’s Housing,” demographic forces are likely to drive the addition of approximately 1.36 million new households per year from 2015 to 2025.

~~Housing starts, which encompass the~~ units ~~needed for household formations, second homes, and the replacement of obsolete or demolished units, have not kept pace~~ with this projected household growth. According to the Census Bureau’s October 2017 New Residential Sales Report, new home inventory stands at a supply of just 5.0 months, based on current sales paces. If demand and pace increase significantly, the supply of 5.0 months could quickly be drawn down. During the period 1970 through 2007, total housing starts in the United States averaged approximately 1.6 million per year, while during the period 2008 through 2016, total housing starts averaged approximately 0.85 million per year according to the Census Bureau. Additionally, the median age of housing stock in the United States has increased from 25 years to 39 years over the last three decades, thus expanding the market for replacement homes.

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 as the housing recovery strengthens.

more rapid cycle times.

Tax Reform

InOn December 22, 2017, ~~Congress passed a federal tax reform bill. If signed~~the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, ~~by the President, this bill will change~~which changed many longstanding foreign and domestic corporate and individual tax rules, as well as rules pertaining to the ~~taxation~~deductibility of employee compensation and benefits. ~~The legislation includes significant~~These changes ~~impacting domestic~~include: (i) reducing the corporate ~~taxpayers. We are currently evaluating~~income tax rate from 35% to 21% for tax years beginning after December 31, 2017; (ii) eliminating the ~~impact such changes would have on our consolidated financial statements~~corporate alternative minimum tax; (iii) changing rules related to uses and ~~disclosures but preliminarily believe, if signed, it will significantly decrease our effective~~limitations of net operating loss carryforwards created in tax ~~rate.~~

~~Defective Floor Joists~~

In July 2017, one of our lumber suppliers publicly announced a floor joist recall. We believe that these floor joists were present in approximately 350 homes that had been built or were under construction in our North and West geographic segments. Of the approximately 350 affected homes, eight of them had already been delivered to home buyers at the time the joist recall was announced. After the joist recall was announced, 34 home buyers canceled their contracts and 17 home buyers transferred their contracts to another home site. At Octoberyears beginning after December 31, ~~2017, there were approximately 270 affected homes in backlog. The supplier has committed to us that it will absorb the costs associated with the remediation~~2017; (iv) repeal of the ~~defective floor joists. This work has been completed~~domestic production activities deduction for tax years beginning after December 31, 2017; and (v) establishing new limits on the federal tax deductions individual taxpayers may take as a result of mortgage loan interest payments, and state and local tax payments, including real estate taxes.

As required under accounting rules, we remeasured our net deferred tax liability for the tax law change, which resulted in ~~most~~an income tax benefit of ~~the affected homes. We expect to deliver the remaining homes~~$35.5 million in fiscal 2018. ~~We do not believe the resolution~~See Note 8, “Income Taxes” in Notes to Condensed Consolidated Financial Statements in Item 15(a)1 of this ~~issue will be material to our results~~Form 10-K for additional information regarding the impact of ~~operations, liquidity, or our financial condition.~~the Tax Act.

Competitive Landscape

The home building 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 based on price, location, design, quality, service, and reputation. We believe our financial stability, relative to many others in our industry, isprovides us with a ~~favorable~~ competitive ~~factor as more home buyers focus on builder solvency.~~

In addition, there are fewer and more selective lenders serving our industry as compared to prior years and we believe that these lenders gravitate to the home building companies that offer them the greatest security, the strongest balance sheets, and the broadest array of potential business opportunities.advantage.

Land Acquisition and Development

Our business is subject to many risks because of the extended 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. In certain cases, we attempt to reduce some of these risks and improve our capital efficiency by utilizing one or more of the following methods: controlling land for future development through options, ~~(also referred to herein as “land purchase contracts” or “option and purchase agreements”),~~ which enable us to obtain necessary governmental approvals 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.

During fiscal ~~2017~~2019 and ~~2016,~~2018, we acquired control of approximately ~~6,600~~13,900 and 13,400 home sites, ~~(net~~respectively, net of options terminated and home sites ~~sold) and, approximately 10,700 home sites (net of options terminated and home sites sold), respectively.~~sold. At October 31, ~~2017,~~2019, we controlled approximately ~~48,300~~59,200 home sites, as compared to approximately ~~48,800~~53,400 home sites at October 31, ~~2016,~~2018, and approximately ~~44,300~~48,300 home sites at October 31, ~~2015.~~2017. In addition, at October 31, ~~2017,~~2019, we expect to purchase approximately ~~3,100~~2,500 additional home sites from several land development joint ventures in which we have an interest, at prices not yet determined.

Of the approximately ~~48,300~~59,200 total home sites that we owned or controlled through options at October 31, ~~2017,~~2019, we owned approximately ~~31,300~~36,600 and controlled approximately ~~17,000~~22,600 through options. Of the ~~48,300~~59,200 home sites, approximately ~~17,200~~16,800 were substantially improved.

In addition, at October 31, ~~2017,~~2019, our Land Development Joint Ventures owned approximately ~~10,200~~10,100 home sites (including ~~347~~130 home sites included in the ~~17,000~~22,600 controlled through options), and our Home Building Joint Ventures owned approximately ~~400~~100 home sites.

At October 31, ~~2017,~~2019, we were selling from ~~305~~333 communities, compared to ~~310~~315 communities at October 31, ~~2016,~~2018, and ~~288~~305 communities at October 31, ~~2015.~~

2017.

Customer Mortgage Financing

We maintain relationships with a widely-diversified group of mortgage financial institutions, many of which are among the largest 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~~these customers with financing.

We believe that our home buyers generally are, and should continue to be, well-positioned to secure mortgages due to their typically lower loan-to-value ratios and attractivecredit profiles, as compared to the average home buyer.

Toll Brothers Apartment Living/Toll Brothers Campus ~~Living/Toll Brothers Realty Trust~~Living

In addition to our residential for-sale business, we also develop and operate for-rent apartments through joint ventures. At October 31, ~~2017,~~2019, we or joint ventures in which we have an interest controlled 4356 land parcels as for-rent apartment projects containing approximately ~~14,450~~18,300 units. These projects, which are located in multiple metropolitan areas throughout the ~~metro Boston to metro Washington, D.C. corridor; Atlanta, Georgia; Dallas, Texas; and Fremont, California~~country, are being operated, are being developed or will be developed with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus ~~Living~~Living.

In fiscal 2019, one of our Rental Property Joint Ventures, located in located in Phoenixville, Pennsylvania, sold its assets to an unrelated party for $77.8 million. From our investment in this joint venture, we received cash of $7.4 million and ~~Toll Brothers Realty Trust.~~recognized a gain from this sale of $3.8 million in fiscal 2019. In fiscal 2018, three of our Rental Property Joint Ventures sold their assets to unrelated parties for $477.5 million. These joint ventures had owned, developed, and operated multifamily rental properties located in suburban Washington, D.C. and Westborough, Massachusetts, and a student housing community in College Park, Maryland. From our investment in these joint ventures, we received cash of $79.1 million and recognized gains from these sales of $67.2 million in fiscal 2018. The gains recognized from these sales are included in “Income from unconsolidated entities” in our Consolidated Statement of Operations and Comprehensive Income included in Item 15(a)1 of this Form 10-K.

At October 31, ~~2017,~~2019, we had approximately ~~3,200~~2,000 units in for-rent apartment projects that were occupied or ready for

occupancy, ~~750~~1,700 units in the lease-up stage, ~~2,000~~8,400 units in the design phase or under ~~active~~ development, and ~~8,500~~6,200 units in the planning stage. Of the ~~14,450~~18,300 units at October 31, ~~2017, 5,200~~2019, 7,700 were owned by joint ventures in which we have an interest; approximately ~~2,550~~4,400 were owned by us; ~~6,500~~and 6,200 were under contract to be purchased by ~~us; and 200 were under a letter of intent.~~us.

CONTRACTS AND BACKLOG

The aggregate value of net sales contracts signed ~~increased 20.9%~~decreased 11.7% in fiscal ~~2017,~~2019, as compared to fiscal ~~2016, and 14.0% in fiscal 2016, as compared to fiscal 2015.~~2018. The value of net sales contracts signed was ~~$6.83~~$6.71 billion ~~(8,175~~(8,075 homes) in fiscal ~~2017, $5.65~~2019 and $7.60 billion ~~(6,719~~(8,519 homes) in fiscal ~~2016, and $4.96 billion (5,910 homes) in fiscal 2015.~~2018. The ~~increase~~decrease in the aggregate value of net contracts signed in fiscal ~~2017,~~2019, as compared to fiscal ~~2016, and fiscal 2016, as compared to fiscal 2015~~2018, was due to ~~increases~~decreases in the number of net contracts signed and average value of each contract signed of 5% and 7%, respectively. The decrease in the number of net contracts signed in ~~each period. The~~fiscal 2019, as compared to fiscal 2018, was primarily due to decreased demand and a lack of inventory in certain locations in fiscal 2019, as compared to fiscal 2018, offset, in part, by an increase in the average number of selling communities and contracts signed in the metropolitan Atlanta, Georgia market and several markets in South Carolina in fiscal 2019 from the Sharp and Sabal acquisitions. The decrease in average price of net contracts signed in ~~each period~~fiscal 2019, as compared to fiscal 2018, was ~~primarily~~principally due to ~~the continued recovery~~a shift in the ~~U.S. housing market.~~number of contracts signed to less expensive areas and/or products resulting in part from our strategy to broaden of our geographic footprint, product types and price points in fiscal 2019.

The value of our backlog at October 31, 2019, 2018, and 2017 ~~2016,~~was $5.26 billion (6,266 homes), $5.52 billion (6,105 homes), and ~~2015 was~~ $5.06 billion (5,851 homes), ~~$3.98 billion (4,685 homes), and $3.50 billion (4,064 homes),~~ respectively. Approximately ~~97%~~93% of the homes in backlog at October 31, ~~2017~~2019 are expected to be delivered by October 31, ~~2018.~~2020. The ~~27.0% increase~~4.8% decrease in the value of homes in backlog at October 31, ~~2017,~~2019, as compared to October 31, ~~2016,~~2018, was ~~primarily~~ due to ~~a 20.9% increase in the~~home deliveries with an aggregate value of ~~net contracts signed~~$7.08 billion in fiscal ~~2017, as compared to fiscal 2016, and a 13.7% higher backlog at the beginning of fiscal 2017, as compared to the beginning of fiscal 2016,~~2019, offset, in part, by our signing net contracts with a ~~12.5% increase in the aggregate~~ value of ~~our deliveries~~$6.71 billion in fiscal ~~2017, as compared to the aggregate value of deliveries in fiscal 2016.~~

The 13.7% increase in the value of homes in backlog at October 31, 2016, as compared to October 31, 2015, was primarily due to a 14.0% increase in the value of net contracts signed in fiscal 2016, as compared to fiscal 2015, and a 28.8% higher backlog at the beginning of fiscal 2016, as compared to the beginning of fiscal 2015, offset, in part, by a 23.9% increase in the aggregate value of our deliveries in fiscal 2016, as compared to the aggregate value of deliveries in fiscal 2015.2019.

For more information regarding revenues, net contracts signed, and backlog by geographic segment, see “Segments” in this 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 capitalized interest is allocated to the community’s inventory until it reopens, 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 in that 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. Our master planned communities, consisting of several smaller communities, may take up to 10 years or more to complete. 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 when we believe the values are not recoverable.

Operating Communities: When the profitability of an operating 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 home sales 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 (i) 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; (ii) the expected sales prices and sales incentives to be offered in a community; (iii) costs expended to date and expected to be incurred in the future, including, but not limited to, land and land development costs, home construction, interest, and overhead costs; (iv) 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 (v) 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 operating 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 operating 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 may 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 (i) as to land under contract to be purchased, whether the contract will likely be terminated or renegotiated, and (ii) 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 home sales 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 and such amounts could be material.

We provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, ~~2017, 2016,~~2019, 2018, and ~~2015,~~2017, as shown in the table below (amounts in thousands):


	2017		2016		2015		2019		2018		2017
Land controlled for future communities	$	1,949	$	3,142	$	809	$	11,285	$	2,820	$	1,949
Land owned for future communities	3,050		2,300		12,600		—		2,185		3,050
Operating communities	9,795		8,365		22,300		31,075		30,151		9,795
	$	14,794	$	13,807	$	35,709	$	42,360	$	35,156	$	14,794

The table below provides, for the periods indicated, the number of operating communities that we reviewed 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 thousands):


		Impaired operating communities						Impaired operating communities
Three months ended:	Number of communities tested	Number of communities	Fair value of communities, net of impairment charges		Impairment charges recognized		Number of communities tested	Number of communities	Fair value of communities, net of impairment charges		Impairment charges recognized
Fiscal 2019:
January 31							49	5	$	37,282	$	5,785
April 30							64	6	$	36,159	17,495
July 31							69	3	$	5,436	1,100
October 31							71	7	$	18,910	6,695
											$	31,075
Fiscal 2018:
January 31							64	5	$	13,318	$	3,736
April 30							65	4	$	21,811	13,325
July 31							55	5	$	43,063	9,065
October 31							43	6	$	24,692	4,025
											$	30,151
Fiscal 2017:
January 31	57	2	$	8,372	$	4,000	57	2	$	8,372	$	4,000
April 30	46	6	$	25,092	2,935		46	6	$	25,092	2,935
July 31	53	4	$	5,965	1,360		53	4	$	5,965	1,360
October 31	51	1	$	6,982	1,500		51	1	$	6,982	1,500
					$	9,795					$	9,795
Fiscal 2016:
January 31	43	2	$	1,713	$	600
April 30	41	2	$	10,103	6,100
July 31	51	2	$	11,714	1,250
October 31	59	2	$	1,126	415
					$	8,365
Fiscal 2015:
January 31	58	4	$	24,968	$	900
April 30	52	1	$	16,235	11,100
July 31	40	3	$	13,527	6,000
October 31	44	3	$	8,726	4,300
					$	22,300

Income Taxes — Valuation Allowance

~~Significant judgment is applied in assessing~~We assess the ~~realizability of~~need for valuation allowances for deferred tax ~~assets. In accordance with GAAP,~~assets in each period based on whether it is more-likely-than-not that some portion of the deferred tax asset would not be realized. If, based on the available evidence, it is more-likely-than-not that such asset will not be realized, 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.~~asset. 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 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. Forming a conclusion that a valuation allowance is not needed is difficult when there is significant negative evidence such as cumulative losses in recent years. This assessment considers, among other matters, the nature, consistency, and magnitude of current and cumulative income and ~~losses,~~losses; forecasts of future ~~profitability,~~profitability; the duration of statutory carryback or carryforward ~~periods,~~periods; our experience with operating loss and tax credit carryforwards being used before ~~expiration, and~~expiration; tax planning ~~alternatives.~~

~~Our assessment of~~alternatives; and outlooks for 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.U.S. housing industry and broader economy. Changes in existing

tax laws or rates could also 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.

results. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, ~~(carryforward period assumptions),~~ actual results could differ from the estimates used in our ~~analysis. Our assumptions require significant judgment because the residential home building industry is cyclical and is highly sensitive to changes in economic conditions. If~~assessment that could have a material impact on our consolidated results of operations are less than projected and there is insufficient objectively verifiable positive evidence to support the more-likely-than-not realization of our deferred tax assets, a valuation allowance would be required to reduce or ~~eliminate our deferred tax assets.~~financial position.

Our deferred tax assets consist principally of the ~~recognition~~timing of ~~losses primarily driven by~~deductibility of accrued expenses, inventory impairments, inventory valuation differences, state tax net operating loss carryforwards, and ~~impairments of investments in unconsolidated entities.~~stock-based compensation expense. In accordance with

GAAP, we assess whether a valuation allowance should be established based on our determination of whether it was more likely than not that some portion or all of the deferred tax assets would not be realized. At October 31, 2019 and 2018, we determined that it was more-likely-than-not that our deferred tax assets would be realized. Accordingly, at October 31, 2019 and 2018, we did not have valuation allowances recorded against our federal or state deferred tax assets. During fiscal 2017, we reversed the remaining $32.2 million of state deferred tax valuation allowances.

We file tax returns in the various states in which we do business. Each state has its own statutes regarding the use of tax loss carryforwards. Some of the states in which we do business do not allow for the carryforward of losses, while others allow for carryforwards for five years to 20 years.

For state tax purposes, we establish valuation allowances for deferred tax assets in certain jurisdictions where it is more-likely-than-not that the deferred tax asset would not be realized. Due to past and projected losses in certain jurisdictions where we did not have carryback potential and/or could not sufficiently forecast future taxable income, we recognized a net cumulative valuation allowance against out state deferred tax assets at October 31, 2016. During fiscal 2016, and 2015, we recognized new valuation allowances of $1.0 million, and $3.7 million, respectively. We did not recognize any new valuation allowances in fiscal 2017. During fiscal 2017 and 2015, due to improved operating results, we reversed $32.2 million and $16.3 million of state deferred tax asset valuation allowances, respectively. No state deferred tax asset valuation allowances were reversed in fiscal 2016.

Revenue and Cost Recognition

Home sales revenues and cost recognition:Revenues and cost of revenues from home sales are ~~recorded~~recognized at the time each home is delivered and title and possession are transferred to the buyer. For the majority of our home closings, our performance obligation to deliver a home is satisfied in less than one year from the date a binding sale agreement is signed.

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. For our master planned communities, the estimated land, common area development, and related costs, 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: Forfeited customer deposits are recognized in ~~“Other income-net”~~“Home sales revenues” in our Consolidated Statements of Operations and Comprehensive 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~~may offer our home buyers sales ~~incentives from time to time.~~incentives. 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~~sales revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds.

On November 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC 606”), which supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific guidance. See Note 1, “Significant Accounting Policies” in Notes to Consolidated Financial Statements in Item 15(a)1 of this Form 10-K for additional information regarding the impact of the adoption of ASC 606.

Warranty and Self-Insurance

Warranty: We provide all of our home buyers with a limited warranty as to workmanship and mechanical equipment. We also provide many of our home buyers with a limited 10-year warranty as to structural integrity. We accrue for expected warranty costs at the time each home is closed and title and possession are transferred to the home buyer. Warranty costs are accrued based upon historical experience. Adjustments to our warranty liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs. Over the past several years, we have had a significant number of warranty claims related primarily to homes built in Pennsylvania and Delaware. See Note 7 – “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding these warranty charges.

Self-Insurance: We maintain, and require the majority of our subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our home building activities, subject to certain self-insured retentions, deductibles and other coverage limits (“self-insured liability”). We also provide general liability insurance for our subcontractors in Arizona, California, Colorado, Nevada, Washington, and certain areas of Texas, where eligible subcontractors

are enrolled as insureds under our general liability insurance policies in each community in which they perform work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary.

We record expenses and liabilities based on the estimated costs required to cover our self-insured liability and the estimated costs of potential claims and claim adjustment expenses ~~that are above our coverage limits or~~ that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported (“IBNR”).

We engage a third-party actuary that uses our historical claim and expense data, input from our internal legal and risk management groups, as well as industry data, to estimate our liabilities related to unpaid claims, IBNR associated with the risks that we are assuming for our self-insured liability and other required costs to administer current and expected claims. These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a home buyer and when a structural warranty or construction defect claim is made, and the ultimate resolution of the claim. Though state regulations vary, construction defect claims are reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated liability relates to IBNR. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.

The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices and legal or regulatory actions and/or interpretations, among other factors. Key assumptions used in these estimates include claim frequencies, severities and settlement patterns, which can occur over an extended period of time. In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Due to the degree of judgment required, and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

We also operate through a number of joint ventures. We earn construction and management fee income from many of these joint ventures. Our investments in these entities are generally accounted for using the equity method of accounting. We are a party to several joint ventures with unrelated parties to develop and sell land that is owned by the joint ventures. We recognize our proportionate share of the earnings from the sale of home sites to other builders, including our joint venture partners. We do not recognize earnings from the home sites we purchase from these ventures at the time of our purchase; instead, our cost basis in the home sites is reduced by our share of the earnings realized by the joint venture from those home sites.

At October 31, ~~2017,~~2019, we had investments in these entities of ~~$481.8~~$366.3 million, and were committed to invest or advance up to an additional ~~$52.5~~$38.8 million to these entities if they require additional funding. At October 31, ~~2017,~~2019, we had agreed to terms for the acquisition of ~~347~~130 home sites from ~~two~~one Land Development Joint Ventures for an estimated aggregate purchase price of ~~$248.8~~$10.8 million. In addition, we expect to purchase approximately ~~3,100~~2,500 additional home sites over a number of years from several of these joint ~~ventures in which we have interests;~~ventures; the purchase price of these home sites will be determined at a future date.

These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest. real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity.

In some instances, the guarantees provided in connection with loans to an unconsolidated entity are joint and several. In these situations, we generally have a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guarantee; however, if the joint venture partner does not have adequate financial resources to meet its obligations under the reimbursement agreement, we may be liable for more than our proportionate share.

We believe that as of October 31, ~~2017,~~2019, in the event we become legally obligated to perform under a guarantee of the obligation of an unconsolidated entity due to a triggering event, the collateral should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the entity. At October 31, ~~2017,~~2019, we had guaranteed the debt of certain unconsolidated entities with loan commitments aggregating ~~$1.2~~$1.53 billion, of which, if the

full amount of the debt obligations were borrowed, we estimate ~~$291.9~~$299.1 million to be our maximum exposure related to repayment and carry cost guarantees. At October 31, ~~2017,~~2019, the unconsolidated entities had borrowed an aggregate of ~~$747.7 million,~~$1.14 billion, of which we estimate ~~$228.9~~$239.6 million to be our maximum exposure related to repayment and carry cost guarantees. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners.

For more information regarding these joint ventures, see Note 4, “Investments in Unconsolidated Entities” in the Notes to Consolidated Financial Statements in Item 15(a)1 of this Form 10-K.

The trends, uncertainties or other factors that ~~negatively~~ impact our business and the industry in general also impact the unconsolidated entities in which we have investments. We review each of our investments on a quarterly basis for indicators of impairment. A series of operating losses of an investee, the inability to recover our invested capital, or other factors may indicate that a loss in value of our investment in the unconsolidated entity has occurred. If a loss exists, we further review to determine if the loss is other than temporary, in which case we write down the investment to its fair value. The evaluation of our investment in unconsolidated entities 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, market conditions and anticipated cash receipts, in order to determine projected future distributions. Each of the unconsolidated entities evaluates its inventory in a similar manner. In addition, for our unconsolidated entities that own, develop, and manage for-rent residential apartments, we review rental trends, expected future expenses, and expected future cash flows to determine estimated fair values of the properties. See “Critical Accounting Policies - Inventory” contained in this MD&A for more detailed disclosure on our evaluation of inventory. If a valuation adjustment is recorded by an unconsolidated entity related to its assets, our proportionate share is reflected in income from unconsolidated entities with a corresponding decrease to our investment in unconsolidated entities. Based upon our evaluation of the fair value of our investments in unconsolidated entities, we recognized ~~an impairment charge~~charges in connection with one Land Development Joint Venture of $1.0 million in fiscal 2019; two Land Development Joint Ventures of $6.0 million in fiscal 2018; and $2.0 million in fiscal ~~2017. We determined that no impairments of our investments occurred in fiscal 2016 or 2015.~~2017 at one Land Development Joint Venture.

RESULTS OF OPERATIONS

The following table compares certain items in our Consolidated Statements of Operations and Comprehensive Income and other supplemental information for fiscal ~~2017, 2016,~~2019 and ~~2015~~2018 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by operating segment, see “Segments” in this MD&A.


	Years ended October 31,													Years ended October 31,
	2017			2016			% Change 2017 vs. 2016		2015			% Change 2016 vs. 2015		2019			2018			% Change
Revenues	5,815.1			5,169.5			12	%	4,171.2			24	%
Cost of revenues	4,562.3			4,144.1			10	%	3,269.3			27	%
Revenues:(1)
Home sales														$	7,080.4		$	7,143.3		(1	)%
Land sales														143.6			—
														7,224.0			7,143.3			1	%
Cost of revenues:(1)
Home sales														5,678.9			5,673.0			—	%
Land sales														129.7			—
														5,808.6			5,673.0			2	%
Selling, general and administrative	607.8			535.4			14	%	455.1			18	%	734.5			684.0			7	%
	5,170.1			4,679.4			10	%	3,724.4			26	%
Income from operations	644.9			490.1			32	%	446.9			10	%	680.8			786.2			(13	)%
Other:
Income from unconsolidated entities	116.1			40.7			185	%	21.1			93	%	24.9			85.2			(71	)%
Other income - net	53.3			58.2			(8	)%	67.6			(14	)%	81.5			62.5			30	%
Income before income taxes	814.3			589.0			38	%	535.6			10	%	787.2			933.9			(16	)%
Income tax provision	278.8			206.9			35	%	172.4			20	%	197.2			185.8			6	%
Net income	535.5			382.1			40	%	363.2			5	%	$	590.0		$	748.2		(21	)%

Supplemental information:
Cost of revenues as a percentage of revenues	78.5		%	80.2		%			78.4		%
SG&A as a percentage of revenues	10.5		%	10.4		%			10.9		%
Home sales cost of revenues as a percentage of home sales revenues														80.2		%	79.4		%
Land sales cost of revenues as a percentage of land sales revenues (1)														90.3		%
SG&A as a percentage of home sales revenues														10.4		%	9.6		%
Effective tax rate	34.2		%	35.1		%			32.2		%			25.1		%	19.9		%

Deliveries – units	7,151			6,098			17	%	5,525			10	%	8,107			8,265			(2	)%
Deliveries – average selling price*	$	813.2		$	847.7		(4	)%	$	755.0		12	%
Deliveries – average selling price (2)														$	873.4		$	864.3		1	%

Net contracts signed – value	$	6,828.3		$	5,649.6		21	%	$	4,955.6		14	%	$	6,710.9		$	7,604.3		(12	)%
Net contracts signed – units	8,175			6,719			22	%	5,910			14	%	8,075			8,519			(5	)%
Net contracts signed – average selling price*	$	835.3		$	840.8		(1	)%	$	838.5		—	%
Net contracts signed – average selling price (2)														$	831.1		$	892.6		(7	)%

	At October 31,													At October 31,
	2017			2016			% Change 2017 vs. 2016		2015			% Change 2016 vs. 2015		2019			2018			% Change
Backlog – value	$	5,061.5		$	3,984.1		27	%	$	3,504.0		14	%	$	5,257.1		$	5,522.5		(5	)%
Backlog – units	5,851			4,685			25	%	4,064			15	%	6,266			6,105			3	%
Backlog – average selling price*	$	865.1		$	850.4		2	%	$	862.2		(1	)%
Backlog – average selling price (2)														$	839.0		$	904.6		(7	)%

* $ amounts in thousands.

(1)

On November 1, 2018, we adopted ASC 606. Upon adoption, land sale activity is presented as part of income from operations where previously it was included in "Other income - net." In fiscal 2018, we recognized land sales revenues and land sales cost of revenues of $134.3 million and $128.0 million, respectively. Further, retained customer deposits, which totaled $13.2 million in fiscal 2019, are included in “Home sales revenue” where previously they were included in “Other income – net.” In fiscal 2018, retained customer deposits were $8.9 million. Prior periods are not restated.


(2)	$ amounts in thousands.

Note: Amounts may not add due to rounding.

FISCAL ~~2017~~2019 COMPARED TO FISCAL ~~2016~~2018

HOME SALES REVENUES AND HOME SALES COST OF REVENUES

The ~~increase~~decrease in home sales revenues in fiscal ~~2017,~~2019, as compared to fiscal ~~2016,~~2018, was ~~mainly~~ attributable to a ~~17.3% increase~~2% decrease in the number of homes delivered, ~~primarily due to a higher backlog at October 31, 2016, as compared to October 31, 2015,~~ offset, in part, by a ~~4.1% decrease~~1% increase in the average price of the homes delivered. The decrease in the number of homes delivered was primarily due to a moderation in demand, particularly in California, which we experienced beginning in the fourth quarter of fiscal 2018 through the third quarter of fiscal 2019. This decrease was partially offset by contracts we signed in the metropolitan Atlanta, Georgia market and several markets in South Carolina in fiscal 2019 from the Sharp and Sabal acquisitions and an increase in the number of selling communities, primarily in our South and West regions, in fiscal 2019, as compared to fiscal 2018. The increase in the average delivered home price was mainly due to price increases in homes delivered in California and the ~~impact~~West region and a shift in the number of ~~lower priced~~homes delivered to more expensive areas and/or products ~~delivered from communities acquired~~ in ~~our purchase of Coleman~~California, New Jersey, Virginia, and the West region in ~~November 2016 and~~fiscal 2019, as compared to fiscal 2018. These increases were partially offset by a shift in the number of homes delivered to less expensive areas ~~and/or products~~ in ~~the~~City Living in fiscal ~~2017 period,~~2019, as compared to fiscal 2018 and a decrease in the number of homes delivered in California where home prices were higher, in fiscal ~~2016 period.~~2019, as compared to fiscal 2018.

~~Cost~~Home sales cost of revenues, as a percentage of homes sales revenues, in fiscal ~~2017~~2019 was ~~78.5%~~80.2%, as compared to ~~80.2%~~79.4% in fiscal ~~2016.~~2018. The ~~decrease~~increase in fiscal ~~2017, as compared to fiscal 2016,~~2019 was primarily due to higher land, land development, material and labor costs; a shift in the ~~recognition~~mix of our home sales revenues to lower margin products/areas; the recovery of approximately $9.7 million from litigation settlements in fiscal ~~2016 of $125.6 million (2.4% of revenues) of warranty charges primarily related to homes built in Pennsylvania and Delaware;~~2018; a ~~$6.0~~$7.0 million benefit in fiscal ~~2017~~2018 from the reversal of an accrual ~~for offsite improvements at a completed community~~related to an indemnification obligation related to the Shapell acquisition that ~~was no longer required; state reimbursements of $4.7 million~~expired; and higher inventory impairment charges in fiscal ~~2017 for previously expensed environmental clean-up costs; and lower interest~~

~~expense in the fiscal 2017 period,~~2019, as compared to ~~the~~ fiscal ~~2016 period.~~2018. These ~~decreases~~increases were offset, in part, by a ~~shift~~state reimbursement of previously expensed environmental clean-up costs received in fiscal 2019; a benefit in fiscal 2019 from the ~~number~~reversal of accruals for certain Home Owners Associations (“HOA”) turnovers that were no longer required; price increases in homes delivered in California and the West region; and lower interest expense in fiscal 2019 compared to lower-margin buildings in our City Living segment; the impact of purchase accounting for the homes sold from communities acquired in our purchase of Coleman; higher material and labor costs; and a higher number of closings from lower-margin communities in our Traditional Home Building segment. See Note 7 – “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding these warranty charges.fiscal 2018.

Interest cost in fiscal ~~2017~~2019 was ~~$172.8~~$185.0 million or ~~3.0%~~2.6% of home sales revenues, as compared to ~~$160.3~~$190.7 million or ~~3.1%~~2.7% of home sales revenues in fiscal ~~2016.~~2018. We recognized inventory impairments and write-offs of ~~$14.8~~$42.4 million or ~~0.3%~~0.6% of home sales revenues and ~~$13.8~~$35.2 million or ~~0.3%~~0.5% of home sales revenues in fiscal ~~2017~~2019 and fiscal ~~2016,~~2018, respectively.

LAND SALES REVENUES AND LAND SALES COST OF REVENUES

Our revenues from land sales generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master planned communities; and (3) bulk land sales to third parties of land we have decided no longer meets our development criteria. In fiscal 2019, we recognized a gain of $9.3 million from the sale of land to two newly formed Rental Property Joint Ventures in which we have interests of 25%.

Prior to the adoption of ASC 606, land sales activity was reported within “Other income – net” in our Condensed Consolidated Statements of Operations and Comprehensive Income. In fiscal 2018, we recognized land sales revenues and land sales cost of revenues of $134.3 million and $128.0 million, respectively.

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

SG&A spending increased by ~~$72.4~~$50.5 million in fiscal ~~2017, as~~2019 compared to fiscal ~~2016.~~2018. As a percentage of home sales revenues, SG&A ~~increased to 10.5%~~was 10.4% and 9.6% in fiscal ~~2017 from 10.4% in fiscal 2016.~~2019 and 2018, respectively. The dollar increase in SG&A was due primarily to increased compensation costs due to a higher number of ~~employees;~~employees and normal compensation increases, increased sales and marketing ~~costs;~~costs, and ~~increased spending on our upgrading~~costs related to the implementation of ~~computer software.~~new enterprise information technology systems. The higher sales and marketing costs were the result of the increased ~~spending on advertising, higher model operating costs due to the increase in the average~~ number of selling communities, increased spending on advertising, and ~~the increased number of homes delivered.~~higher design studio operating costs. The increased number of employees was due primarily to the ~~overall~~ increase in ~~our business in fiscal 2017, as compared to fiscal 2016. The increase in SG&A as a percentage~~the number of ~~revenues in the fiscal 2017 period was due to SG&A spending increasing by 13.5% while revenues increased 12.5% from the fiscal 2016 period.~~current and future selling communities.

INCOME FROM UNCONSOLIDATED ENTITIES

We recognize our proportionate share of the earnings and losses from the various unconsolidated entities in which we have an investment. Many of our unconsolidated entities are land development projects, high-rise/mid-rise condominium construction projects, or for-rent apartments projects, which do not generate revenues and earnings for a number of years during the development of the property. Once development is complete for land development projects and high-rise/mid-rise condominium construction projects, these unconsolidated entities will generally, over a relatively short period of time, generate revenues and earnings until all of the assets of the entity are sold. Further, once for-rent apartments projects are complete and stabilized, we may monetize a portion of these projects through a recapitalization or a sale of all or a portion of our ownership

interest in the joint venture, resulting in ~~income.~~an income producing event. Because ~~there is not a steady flow~~ of ~~revenues and earnings from~~the long development periods associated with these entities, the earnings recognized from these entities ~~will~~may vary significantly from quarter to quarter and year to year.

The ~~increase~~decrease in income from unconsolidated entities from $85.2 million in fiscal ~~2017, as compared~~2018 to $24.9 million in fiscal ~~2016,~~2019, was due mainly to higher income recognized in fiscal 2017, as compared to fiscal 2016, from an increase in homes delivered at condominium projects and the sale of portions of our ownership interests in a number of our joint ventures. We recognized $111.8 million of income from our Home Building, Rental Property, and Land Development Joint Ventures in fiscal 2017, as compared to $38.4 million of income in fiscal 2016. The increase in our income realized from these joint ventures was primarily attributable to $72.1 million of income realized from two of our Home Building Joint Ventures located in New York City, as compared to $12.9 million from these Home Building Joint Ventures in fiscal 2016, and $26.7$67.2 million of gains recognized in fiscal ~~2017 on the sale of 50% of our ownership interests in two~~2018 from asset sales by three of our Rental Property Joint Ventures located in ~~Jersey City, New Jersey~~College Park, Maryland, Herndon, Virginia, and Westborough, Massachusetts, and an increase in losses in several Rental Property Join Ventures related to the ~~suburbs~~commencement of ~~Philadelphia, Pennsylvania;~~operations and lease up activities in fiscal 2019, as compared to fiscal 2018. These decreases were offset, in part, by a ~~decrease~~$3.8 million gain recognized in ~~the number of lots delivered at~~fiscal 2019 from an asset sale by one of our ~~Land Development~~Rental Property Joint Ventures located in Phoenixville, Pennsylvania; higher earnings from two of our Home Building Joint Ventures; and a $3.0 million decrease in impairment charges recognized in fiscal ~~2017~~2019 as compared to fiscal ~~2016 and a $4.9 million gain, in fiscal 2016, from the sale of our ownership interests in one of our joint ventures located in New Jersey.~~2018.

OTHER INCOME - NET

The table below provides the components of “Other Income – net” for the years ended October 31, ~~2017~~2019 and ~~2016~~2018 (amounts in thousands):


	2017		2016		2019		2018
Income from ancillary businesses	$	16,276	$	17,473	$	53,568	$	25,692
Gibraltar	2,658		6,646
Management fee income from home building unconsolidated entities, net	12,902		10,270		9,948		11,740
Income from land sales	8,621		13,327		—		6,331
Retained customer deposits					—		8,937
Other	12,852		10,502		17,986		9,760
Total other income – net	$	53,309	$	58,218	$	81,502	$	62,460

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 ~~21, 2017~~26, 2019.



	TOLL BROTHERS, INC.
	By:	/s/ Douglas C. Yearley, 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 21, 2017~~
~~Robert I. Toll~~

~~/s/~~ Douglas C. Yearley, Jr.	Chairman of the Board and Chief Executive ~~Officer and Director~~	December ~~21, 2017~~26, 2019
Douglas C. Yearley, Jr.	~~(Principal~~Officer (Principal Executive Officer)

~~/s/ Richard T. Hartman~~	~~Chief Operating Officer and~~	~~December 21, 2017~~
~~Richard T. Hartman~~	~~President~~

/s/ Martin P. Connor	Senior Vice President and Chief Financial Officer	December ~~21, 2017~~26, 2019
Martin P. Connor	(Principal Financial Officer)

/s/ ~~Joseph R. Sicree~~ Michael J. Grubb	Senior Vice President and Chief Accounting	December ~~21, 2017~~26, 2019
~~Joseph R. Sicree~~Michael J. Grubb	Officer (Principal Accounting Officer)

/s/ Edward G. Boehne	Director	December ~~21, 2017~~26, 2019
Edward G. Boehne

/s/ Richard J. Braemer	Director	December ~~21, 2017~~26, 2019
Richard J. Braemer

/s/ Christine N. Garvey	Director	December ~~21, 2017~~26, 2019
Christine N. Garvey

/s/ Karen H. Grimes	Director	December 26, 2019
Karen H. Grimes

/s/ Carl B. Marbach	Director	December ~~21, 2017~~26, 2019
Carl B. Marbach

/s/ John A. McLean	Director	December ~~21, 2017~~26, 2019
John A. McLean

/s/ Stephen A. Novick	Director	December ~~21, 2017~~26, 2019
Stephen A. Novick



Signature	Title	Date

/s/ Wendell E. Pritchett	Director	December 26, 2019
Wendell E. Pritchett

/s/ Paul E. Shapiro	Director	December ~~21, 2017~~26, 2019
Paul E. Shapiro

/s/ Robert I. Toll	Director	December 26, 2019
Robert I. Toll

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 (2013 Framework). 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, ~~2017.~~2019.

During fiscal 2019, we completed the acquisitions of each of Sharp Residential, LLC (“Sharp”) and Sabal Homes LLC (“Sabal”). In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we have excluded each of Sharp and Sabal from the Company’s assessment of the effectiveness of internal control over financial reporting as of October 31, 2019. These companies represented less than 2% of the Company’s total assets as of October 31, 2019 and less than 1% of the Company’s revenues for the fiscal year ended October 31, 2019.

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.

Report of Independent Registered Public Accounting Firm

~~The~~To the Shareholders and the Board of Directors ~~and Stockholders~~ of Toll Brothers, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Toll Brothers, Inc.’s internal control over financial reporting as of October 31, ~~2017,~~2019, based on criteria established in Internal ~~Control—Integrated~~Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Toll Brothers, Inc.’s (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2019, based on the COSO criteria.

As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Sharp Residential, LLC or Sabal Homes, LLC, which are included in the 2019 consolidated financial statements of the Company and constitute less than 2% of total assets as of October 31, 2019 and less than 1% of revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Sharp Residential, LLC or Sabal Homes, LLC.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2019 consolidated financial statements of the Company and our report dated December 26, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. 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.

Definition and Limitations of Internal Control Over Financial Reporting

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,~~

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

December 26, 2019

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Toll Brothers, Inc. ~~maintained, in all material respects, effective internal control over financial reporting as of October 31, 2017, based~~

Opinion on the ~~COSO criteria~~.Financial Statements

We ~~also~~ have audited ~~in accordance with~~ the ~~standards of the Public Company Accounting Oversight Board (United States), the~~accompanying consolidated balance sheets of Toll Brothers, Inc. (the Company) as of October 31, ~~2017~~2019 and ~~2016, and~~2018, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for each of the three years in the period ended October 31, ~~2017 and our report dated December 21, 2017 expressed an unqualified opinion thereon.~~

~~/s/ Ernst & Young LLP~~

~~Philadelphia, Pennsylvania~~

~~December 21, 2017~~

~~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. as of October 31, 2017 and 2016,~~2019, and the related ~~consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of~~notes (collectively referred to as the ~~three years in the period ended October 31, 2017. These~~“consolidated 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)~~statements”). 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 consolidated financial statements ~~referred to above~~ present fairly, in all material respects, the ~~consolidated~~ financial position of ~~Toll Brothers, Inc.~~the Company at October 31, ~~2017~~2019 and ~~2016,~~2018, and the ~~consolidated~~ results of its operations and its cash flows for each of the three years in the period ended October 31, ~~2017,~~2019, 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) (PCAOB), ~~Toll Brothers Inc.’s~~the Company's internal control over financial reporting as of October 31, ~~2017,~~2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December ~~21, 2017~~26, 2019 expressed an unqualified opinion thereon.

Adoption of ASU No. 2014-09

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue recognition, inventory and cost of revenues in 2019 due to the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and related Subtopic ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.



		Water Intrusion Reserves

Description of the Matter		As described in Note 7of the consolidated financial statements, the Company accrues for the estimated repair costs to be incurred for known and unknown water intrusion claims from owners of certain homes built in Pennsylvania and Delaware. At October 31, 2019, the Company had an accrued liability for water intrusion claims of $124.6 million, representing its best estimate of the expected costs related to known and future water intrusion claims. The Company calculated the estimated liability for water intrusion claims using assumptions that are subject to significant uncertainty, including the number of homes that require repairs, outcomes of litigation or arbitrations, the extent of repairs required, the repair procedures employed, and the expected costs of those repairs or costs incurred to otherwise settle the homeowner’s claim. Due to the degree of judgment required in making these assumptions and the inherent uncertainty of certain outcomes, it is reasonably possible that the actual costs will differ from the amount accrued. If it is reasonably



		possible that such additional costs may be incurred and the effect on the financial statements is material, the Company discloses an estimate of the amount or range of additional costs or a statement that such an estimate cannot be made within the notes to the financial statements. Auditing the Company’s accounting for water intrusion claims, and the related disclosures, was especially challenging as evaluating the likelihood and amount of cost was highly subjective and required significant judgment. In particular, management’s estimates were sensitive to assumptions about the number of claims and the costs to settle the claims, which are projected to be resolved over an extended period of time, and the amount accrued by the Company was sensitive to relatively small changes in those assumptions.



How We Addressed the Matter in Our Audit		We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the accrual calculation, including controls over the significant assumptions and the data inputs utilized in the calculations, as well as the financial statement disclosures. For example, we tested controls over management’s review of the accrual calculation, including its review of the significant assumptions and the data inputs utilized in the calculations. We also tested controls over management’s review of the disclosure in the notes to the consolidated financial statements for compliance with generally accepted accounting principles. To test the estimated liability and related financial statement disclosures for water intrusion claims, we performed audit procedures that included, among others, testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to historical water intrusion claims data, historical data about additional homes delivered by the Company that could potentially be subject to water intrusion claims, and historical costs incurred to either repair homes or otherwise settle water intrusion claims from homeowners. We also reviewed contractual agreements and evaluated management’s conclusions about the Company’s legal and contractual obligations with respect to water intrusion claims. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the accrual for water intrusion claims that would result from changes in the assumptions. We recalculated the Company’s liability for water intrusion claims using management’s data and evaluated the disclosure of the liability in the Company’s consolidated financial statements.



		Insurance Receivable

Description of the Matter		As described in Note 7 of the consolidated financial statements, the Company recorded a receivable for expected recoveries from insurance carriers. At October 31, 2019, the Company recorded an estimated insurance receivable of $97.9million, inclusive of amounts that are subject to dispute with the Company’s insurance carriers. Auditing management’s accounting for the existence of insurance receivable was especially challenging due to the complexity and variability of the underlying claims. Evaluating the likelihood and amount of recoveries from insurance carriers was highly subjective and required significant judgment. In particular, as stated in Note 7.of the consolidated financial statements, management’s estimates were sensitive to assumptions about the amount of losses that the Company will incur on warranty related repairs by policy year and management’s conclusions about the legal merits that support the pending and future insurance claims.



How We Addressed the Matter in Our Audit		We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the expected recoveries from insurance carriers and the recorded receivable, including controls over the significant assumptions and the data inputs used to calculate the expected recoverable amount, as well as the financial statement disclosures. For example, we tested controls over management’s review of the insurance policies and related coverage, the legal merits of the claims made and the expected amounts to be covered under those insurance policies. To test the expected recoveries from insurance carriers, we performed audit procedures that included, among others, reading and understanding the Company’s insurance policies, testing the claims submitted under the Company’s insurance policies to verify the completeness, occurrence and measurement of the loss, and, when applicable, vouching cash receipts from the insurance carrier for previously submitted claims. We also tested the Company’s calculation of the losses the Company expects to incur on warranty related repairs by policy year. We reviewed communications between the Company and its insurance carriers and evaluated management’s conclusions about the legal merits of the insurance claims with respect to the recorded receivable by performing procedures that included, among others, reviewing correspondence from external counsel regarding the legal merits of the Company’s insurance claims.



		Inventory Impairment

Description of the Matter		As described in Note 1 of the consolidated financial statements, the Company states its inventory at cost unless an impairment exists, in which case the inventory is written down to fair value. For the year ended October 31, 2019, the Company recorded inventory impairment charges of $31.1 million. The Company regularly evaluates whether there are any impairment indicators for inventory present at the community level. If impairment indicators are present, the Company reviews the carrying value of each community’s inventory by comparing the estimated future undiscounted cash flow to the carrying value. For inventory for which the carrying value exceeds the future undiscounted cash flows, the Company writes down the carrying value of the inventory to its estimated fair value primarily based on a discounted cash flow model. Auditing management’s accounting for inventory impairment, its tests for recoverability and, when applicable, its measurement of impairment losses, was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in these evaluations. In particular, management’s assumptions and estimates included future sales prices, the pace of future sales, and the applicable discount rates, which were sensitive to expectations about future demand, operations and economic factors. Additionally, the fair value of certain communities was highly sensitive to relatively small changes in one or more of those assumptions.



How We Addressed the Matter in Our Audit		We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s inventory impairment review process. For example, we tested controls over management’s review of the significant assumptions and data inputs utilized in the calculation of future undiscounted and discounted cash flows. To test the Company’s estimated future cash flows used to test for the recoverability of a community and, if applicable, the measurement of an impairment loss, we performed audit procedures that included, among others, testing the significant assumptions discussed above and the underlying data used by the Company in its impairment analyses, evaluating the methodologies applied by management, and recalculating the total undiscounted and discounted cash flows in each analysis. In certain cases, we involved our internal real estate valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical sales data, sales trends, and observable market-specific data. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of inventory that would result from changes in the assumptions.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1983.

Philadelphia, Pennsylvania

December ~~21, 2017~~

26, 2019

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)


	October 31,						October 31,
	2017			2016			2019			2018
ASSETS
Cash and cash equivalents	$	712,829		$	633,715		$	1,286,014		$	1,182,195
Restricted cash and investments	2,482			31,291
Inventory	7,281,453			7,353,967			7,873,048			7,598,219
Property, construction, and office equipment, net	189,547			169,576			273,412			193,281
Receivables, prepaid expenses, and other assets	542,217			582,758
Mortgage loans held for sale	132,922			248,601
Receivables, prepaid expenses, and other assets (1)							715,441			550,778
Mortgage loans held for sale, at fair value							218,777			170,731
Customer deposits held in escrow	102,017			53,057			74,403			117,573
Investments in unconsolidated entities	481,758			496,411			366,252			431,813
Deferred tax assets, net of valuation allowances				167,413
Income taxes receivable							20,791			—
	$	9,445,225		$	9,736,789		$	10,828,138		$	10,244,590
LIABILITIES AND EQUITY
Liabilities
Loans payable	$	637,416		$	871,079		$	1,111,449		$	686,801
Senior notes	2,462,463			2,694,372			2,659,898			2,861,375
Mortgage company loan facility	120,145			210,000			150,000			150,000
Customer deposits	396,026			309,099			385,596			410,864
Accounts payable	275,223			281,955			348,599			362,098
Accrued expenses	959,353			1,072,300			950,932			973,581
Income taxes payable	57,509			62,782			102,971			30,959
Total liabilities	4,908,135			5,501,587			5,709,445			5,475,678
Equity
Stockholders’ equity
Preferred stock, none issued	—			—			—			—
Common stock, 177,937 shares issued at October 31, 2017 and 2016, respectively	1,779			1,779
Common stock, 152,937 and 177,937 shares issued at October 31, 2019 and 2018, respectively							1,529			1,779
Additional paid-in capital	720,115			728,464			726,879			727,053
Retained earnings	4,474,064			3,977,297			4,774,422			5,161,551
Treasury stock, at cost — 20,732 and 16,154 shares at October 31, 2017 and 2016, respectively	(662,854		)	(474,912		)
Accumulated other comprehensive loss	(1,910		)	(3,336		)
Treasury stock, at cost — 11,999 and 31,774 shares at October 31, 2019 and 2018, respectively							(425,183		)	(1,130,878		)
Accumulated other comprehensive (loss) income							(5,831		)	694
Total stockholders’ equity	4,531,194			4,229,292			5,071,816			4,760,199
Noncontrolling interest	5,896			5,910			46,877			8,713
Total equity	4,537,090			4,235,202			5,118,693			4,768,912
	$	9,445,225		$	9,736,789		$	10,828,138		$	10,244,590


(1)	As of October 31, 2019 and 2018, receivables, prepaid expenses, and other assets include $145.8 million and $19.7 million, respectively, of assets related to consolidated variable interest entities ("VIEs"). See Note 4, “Investments in Unconsolidated Entities” for additional information regarding VIEs.

See accompanying notes.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share data)


	Year ended October 31,							Year ended October 31,
	2017		2016			2015		2019			2018		2017
Revenues	$	5,815,058	$	5,169,508		$	4,171,248
Cost of revenues	4,562,303		4,144,065			3,269,270
Revenues:
Home sales								$	7,080,379		$	7,143,258	$	5,815,058
Land sales								143,587			—		—
								7,223,966			7,143,258		5,815,058

Cost of revenues:
Home sales								5,678,914			5,673,007		4,562,303
Land sales								129,704			—		—
								5,808,618			5,673,007		4,562,303
Selling, general and administrative	607,819		535,382			455,108		734,548			684,035		605,572
	5,170,122		4,679,447			3,724,378
Income from operations	644,936		490,061			446,870		680,800			786,216		647,183
Other:
Income from unconsolidated entities	116,066		40,748			21,119		24,868			85,240		116,066
Other income – net	53,309		58,218			67,573		81,502			62,460		51,062
Income before income taxes	814,311		589,027			535,562		787,170			933,916		814,311
Income tax provision	278,816		206,932			172,395		197,163			185,765		278,816
Net income	$	535,495	$	382,095		$	363,167	$	590,007		$	748,151	$	535,495

Other comprehensive income (loss), net of tax	1,426		(827		)	329
Other comprehensive (loss) income, net of tax								(6,525		)	2,926		1,426
Total comprehensive income	$	536,921	$	381,268		$	363,496	$	583,482		$	751,077	$	536,921

Per share:
Basic earnings	$	3.30	$	2.27		$	2.06	$	4.07		$	4.92	$	3.30
Diluted earnings	$	3.17	$	2.18		$	1.97	$	4.03		$	4.85	$	3.17

Weighted-average number of shares:
Basic	162,222		168,261			176,425		145,008			151,984		162,222
Diluted	169,487		175,973			184,703		146,501			154,201		169,487

See accompanying notes.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands)


	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accum- ulated Other Compre- hensive Loss		Stock-holders’ Equity		Non-controlling Interest		Total Equity		Common Stock				Addi- tional Paid-in Capital		Retained Earnings		Treasury Stock		Accum- ulated Other Compre- hensive Loss		Stock-holders’ Equity		Non-controlling Interest		Total Equity
	Shares	$	$		$		$		$		$		$		$		Shares		$		$		$		$		$		$		$		$
Balance, November 1, 2014	177,930	1,779	712,162		3,232,035		(88,762	)	(2,838	)	3,854,376		6,321		3,860,697
Net income					363,167						363,167				363,167
Purchase of treasury stock							(56,888	)			(56,888	)			(56,888	)
Exercise of stock options and stock based compensation issuances	1		(6,956	)			44,782				37,826				37,826
Employee stock purchase plan issuances			16				828				844				844
Stock-based compensation			22,903								22,903				22,903
Other comprehensive income									329		329				329
Loss attributable to non-controlling interest											—		(14	)	(14	)
Distribution											—		(785	)	(785	)
Balance, October 31, 2015	177,931	1,779	728,125		3,595,202		(100,040	)	(2,509	)	4,222,557		5,522		4,228,079
Net income					382,095						382,095				382,095
Purchase of treasury stock							(392,772	)			(392,772	)			(392,772	)
Exercise of stock options and stock based compensation issuances	6		(26,294	)			16,770				(9,524	)			(9,524	)
Employee stock purchase plan issuances			(46	)			1,130				1,084				1,084
Stock-based compensation			26,679								26,679				26,679
Other comprehensive loss									(827	)	(827	)			(827	)
Loss attributable to non-controlling interest											—		(16	)	(16	)
Capital contribution											—		404		404
Balance, October 31, 2016	177,937	1,779	728,464		3,977,297		(474,912	)	(3,336	)	4,229,292		5,910		4,235,202
Balance, November 1, 2016																	177,937		1,779		728,464		3,977,297		(474,912	)	(3,336	)	4,229,292		5,910		4,235,202
Net income					535,495						535,495				535,495								535,495						535,495				535,495
Purchase of treasury stock							(290,881	)			(290,881	)			(290,881	)									(290,881	)			(290,881	)			(290,881	)
Exercise of stock options and stock based compensation issuances			(36,896	)			101,799				64,903				64,903						(36,896	)			101,799				64,903				64,903
Employee stock purchase plan issuances			81				1,140				1,221				1,221						81				1,140				1,221				1,221
Stock-based compensation			28,466								28,466				28,466						28,466								28,466				28,466
Dividends declared					(38,728	)					(38,728	)			(38,728	)							(38,728	)					(38,728	)			(38,728	)
Other comprehensive income									1,426		1,426				1,426												1,426		1,426				1,426
Loss attributable to non-controlling interest											—		(14	)	(14	)													—		(14	)	(14	)
Balance, October 31, 2017	177,937	1,779	720,115		4,474,064		(662,854	)	(1,910	)	4,531,194		5,896		4,537,090		177,937		1,779		720,115		4,474,064		(662,854	)	(1,910	)	4,531,194		5,896		4,537,090
Cumulative effect adjustment upon adoption of ASU 2016-09 and ASU 2018-02																					372		1,413				(322	)	1,463				1,463
Net income																							748,151						748,151				748,151
Purchase of treasury stock																									(503,159	)			(503,159	)			(503,159	)
Exercise of stock options and stock based compensation issuances																					(21,789	)			33,969				12,180				12,180
Employee stock purchase plan issuances																					43				1,166				1,209				1,209
Stock-based compensation																					28,312								28,312				28,312
Dividends declared																							(62,077	)					(62,077	)			(62,077	)
Other comprehensive income																											2,926		2,926				2,926
Loss attributable to non-controlling interest																													—		(15	)	(15	)
Capital contribution																													—		2,832		2,832
Balance, October 31, 2018																	177,937		1,779		727,053		5,161,551		(1,130,878	)	694		4,760,199		8,713		4,768,912
Cumulative effect adjustment upon adoption of ASC 606, net of tax																							(17,987	)					(17,987	)			(17,987	)
Net income																							590,007						590,007				590,007
Purchase of treasury stock																									(233,523	)			(233,523	)			(233,523	)
Exercise of stock options and stock based compensation issuances																					(26,368	)			42,392				16,024				16,024
Employee stock purchase plan issuances																					14				1,309				1,323				1,323
Stock-based compensation																					26,180								26,180				26,180
Cancellation of treasury stock																	(25,000	)	(250	)			(895,267	)	895,517				—				—
Dividends declared																							(63,882	)					(63,882	)			(63,882	)
Other comprehensive loss																											(6,525	)	(6,525	)			(6,525	)
Loss attributable to non-controlling interest																													—		(19	)	(19	)
Capital contributions																													—		38,183		38,183
Balance, October 31, 2019																	152,937		1,529		726,879		4,774,422		(425,183	)	(5,831	)	5,071,816		46,877		5,118,693

See accompanying notes.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)


	Year ended October 31,									Year ended October 31,
	2017			2016			2015			2019			2018			2017
Cash flow provided by operating activities:
Net income	$	535,495		$	382,095		$	363,167		$	590,007		$	748,151		$	535,495
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,361			23,121			23,557			72,149			25,259			25,361
Stock-based compensation	28,466			26,679			22,903			26,180			28,312			28,466
Excess tax benefits from stock-based compensation	(5,328		)	(2,114		)	(1,628		)
Income from unconsolidated entities	(116,066		)	(40,748		)	(21,119		)	(24,868		)	(85,240		)	(116,066		)
Distributions of earnings from unconsolidated entities	134,291			15,287			19,459			31,799			86,099			134,291
Income from foreclosed real estate and distressed loans	(4,937		)	(8,390		)	(13,269		)	(947		)	(1,551		)	(4,937		)
Deferred tax provision	217,864			19,252			62,084
Deferred tax provision (benefit)										102,764			(21,930		)	217,864
Change in deferred tax valuation allowances	(32,154		)	1,018			(12,642		)							(32,154		)
Inventory impairments and write-offs	14,794			13,807			35,709			42,360			35,156			14,794
Gain on sales of golf club properties and an office building										(36,277		)
Other	1,395			(1,739		)	(316		)	(1,042		)	3,111			1,395
Changes in operating assets and liabilities
Decrease (increase) in inventory	129,666			(391,178		)	(351,983		)
(Increase) decrease in inventory										(40,236		)	(143,598		)	129,666
Origination of mortgage loans	(1,217,274		)	(1,275,047		)	(1,029,112		)	(1,611,496		)	(1,449,494		)	(1,217,274		)
Sale of mortgage loans	1,332,207			1,150,156			1,007,671			1,565,944			1,410,627			1,332,207
Decrease (increase) in restricted cash and investments	10,639			(14,496		)	1,547
Decrease (increase) in receivables, prepaid expenses, and other assets	31,766			(307,351		)	(55,553		)
Increase in customer deposits	37,967			27,838			46,478
Increase in receivables, prepaid expenses, and other assets										(185,261		)	(99,604		)	(60,944		)
Increase in income taxes receivable										(20,791		)
Increase (decrease) in customer deposits – net										14,041			(718		)	37,967
(Decrease) increase in accounts payable and accrued expenses	(140,463		)	524,553			28,729			(64,518		)	57,927			(140,463		)
(Decrease) increase in income taxes payable	(23,970		)	6,028			(65,500		)
Decrease in income taxes payable										(22,147		)	(4,296		)	(23,970		)
Net cash provided by operating activities	959,719			148,771			60,182			437,661			588,211			861,698
Cash flow (used in) provided by investing activities:
Purchase of property and equipment — net	(28,872		)	(28,426		)	(9,447		)
Purchase of property, construction, and office equipment – net										(86,971		)	(28,232		)	(28,872		)
Sale and redemption of marketable securities and restricted investments — net	18,049			10,000			2,000									18,049
Investments in unconsolidated entities	(122,334		)	(69,655		)	(123,940		)	(56,560		)	(27,491		)	(122,334		)
Return of investments in unconsolidated entities	195,505			47,806			39,766			147,927			133,190			195,505
Investment in foreclosed real estate and distressed loans	(710		)	(1,133		)	(2,624		)	(731		)	(966		)	(710		)
Return of investments in foreclosed real estate and distressed loans	13,765			49,619			37,625			3,147			4,765			13,765
Net increase in cash from purchase of joint venture interest							3,848
Acquisition of a business	(83,088		)
Proceeds from sales of golf club properties and an office building										79,647
Acquisitions of businesses										(162,373		)				(83,088		)
Net cash (used in) provided by investing activities	(7,685		)	8,211			(52,772		)	(75,914		)	81,266			(7,685		)
Cash flow used in financing activities:
Proceeds from issuance of senior notes	455,483						350,000			400,000			400,000			455,483
Proceeds from loans payable	1,621,043			2,443,496			1,954,432			2,699,028			2,630,835			1,621,043
Debt issuance costs	(4,449		)	(4,903		)	(3,175		)	(6,180		)	(3,531		)	(4,449		)
Principal payments of loans payable	(1,999,357		)	(2,497,585		)	(1,659,458		)	(2,471,616		)	(2,690,164		)	(1,999,357		)
Redemption of senior notes	(687,500		)				(300,000		)	(600,000		)				(687,500		)
Proceeds from stock-based benefit plans	66,000			6,986			39,514
Excess tax benefits from stock-based compensation	5,328			2,114			1,628
Proceeds from stock-based benefit plans, net										17,369			13,392			66,000
Purchase of treasury stock	(290,881		)	(392,772		)	(56,888		)	(233,523		)	(503,159		)	(290,881		)
Dividends paid	(38,587		)							(63,641		)	(61,704		)	(38,587		)
Receipts related to noncontrolling interest, net				404			(785		)	49			30
Net cash (used in) provided by financing activities	(872,920		)	(442,260		)	325,268
Net increase (decrease) in cash and cash equivalents	79,114			(285,278		)	332,678
Cash and cash equivalents, beginning of period	633,715			918,993			586,315
Cash and cash equivalents, end of period	$	712,829		$	633,715		$	918,993
Net cash used in financing activities										(258,514		)	(214,301		)	(878,248		)
Net increase (decrease) in cash, cash equivalents, and restricted cash										103,233			455,176			(24,235		)
Cash, cash equivalents, and restricted cash, beginning of period										1,216,410			761,234			785,469
Cash, cash equivalents, and restricted cash, end of period										$	1,319,643		$	1,216,410		$	761,234

See accompanying notes.

Notes to Consolidated Financial Statements

1. Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company,” “we,” “us,” or “our”), 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 we have effective control of the entity, in which case we would consolidate the entity.

References herein to fiscal year refer to our fiscal years ended or ending October 31.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) 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.

~~Restricted Cash~~ Our cash balances exceed federally insurable limits. We monitor the cash balances in our operating accounts and ~~Investments~~

~~Restricted~~adjust the cash ~~and investments primarily represents~~balances as appropriate; however, these cash ~~deposits collateralizing certain deductibles under insurance policies, outstanding letters~~balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of ~~credit under our bank revolving credit facility, and~~access to cash ~~deposited into a voluntary employee benefit association to fund certain employee benefits.~~in its operating accounts.

Inventory

Inventory is stated at cost unless an impairment exists, in which case it is written down to fair value in accordance with the Financial Accounting Standards Board (“FASB”) 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 capitalized interest is allocated to a community’s inventory until it reopens. While the community remains closed, carrying costs such as real estate taxes are expensed as incurred.

We capitalize certain interest costs to qualified inventory during the development and construction period of our communities in accordance with ASC 835-20, “Capitalization of Interest” (“ASC 835-20”). Capitalized interest is charged to home sales cost of sales revenues when the related inventory is delivered. Interest incurred on home building indebtedness in excess of qualified inventory, as defined in ASC 835-20, is charged to the Consolidated Statements of Operations and Comprehensive Income in the period incurred.

Once a parcel of land has been approved for development and we open one of our typical communities, it may take ~~four~~4 or more 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. Our master planned communities, consisting of several smaller communities, may take up to 10 years or more to complete. Because our inventory is considered a long-lived asset under GAAP, we are required, under ASC 360, to regularly review the carrying value of each community and write down the value of those communities for which we believe the values are not recoverable.

Operating Communities: When the profitability of an operating 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 home sales 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 (i) 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; (ii) the expected sales prices and sales incentives to be offered in a community; (iii) costs expended to date and expected to be incurred in the future, including, but not limited to, land and land development, home construction, interest, and overhead costs; (iv) 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 (v) 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 operating communities, whether owned or under contract, 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 operating communities described above, as well as an evaluation of the regulatory environment applicable to the land 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 may 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 (i) as to land under contract to be purchased, whether the contract will likely be terminated or renegotiated, and (ii) as to land owned, 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 home sales cost of revenues in the period in which the need for the write-off is determined.

Variable Interest Entities

We are required to consolidate variable interest entities (“VIEs”) in which we have a controlling financial interest in accordance with ASC 810, “Consolidation” (“ASC 810”). A controlling financial interest will have both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Our variable interest in VIEs may be in the form of equity ownership, contracts to purchase assets, management services and development agreements between us and a VIE, loans provided by us to a VIE or other member, and/or guarantees provided by members to banks and other parties.

We have a significant number of land purchase contracts and ~~several~~ investments in unconsolidated entities which we evaluate in accordance with ASC 810. We analyze our land purchase contracts and the unconsolidated entities in which we have an investment to determine whether the land sellers and unconsolidated entities are VIEs and, if so, whether we are the primary beneficiary. We examine specific criteria and use our judgment when determining if we are the primary beneficiary of a VIE. Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other member(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality between us and the other member(s), and contracts to purchase assets from VIEs. The determination whether an entity is a VIE and, if so, whether we are the primary beneficiary may require significant judgment.

Property, Construction, and Office Equipment

Property, construction, and office equipment are recorded at cost and are stated net of accumulated depreciation of ~~$126.1~~$252.5 million and ~~$114.5~~$145.0 million at October 31, ~~2017~~2019 and ~~2016,~~2018, respectively. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. In fiscal ~~2017, 2016,~~2019, 2018, and ~~2015,~~2017, we recognized ~~$18.7~~$67.6 million, ~~$15.5~~$21.0 million, and ~~$15.7~~$18.7 million of depreciation expense, respectively.

Mortgage Loans Held for Sale

Residential mortgage loans held for sale are measured at fair value in accordance with the provisions of ASC 825, “Financial Instruments” (“ASC 825”). We believe the use of ASC 825 improves consistency of mortgage loan valuations between the date the borrower locks in the interest rate on the pending mortgage loan and the date of the mortgage loan sale. At the end of the reporting period, we determine the fair value of our mortgage loans held for sale and the forward loan commitments we have entered into as a hedge against the interest rate risk of our mortgage loans using the market approach to determine fair value. The evaluation is based on the current market pricing of mortgage loans with similar terms and values as of the reporting date, and such pricing is applied to the mortgage loan portfolio. We recognize the difference between the fair value and the unpaid principal balance of mortgage loans held for sale as a gain or loss. In addition, we recognize the fair value of our forward loan

commitments as a gain or loss. Interest income on mortgage loans held for sale is calculated based upon the stated interest rate of each loan. In addition, the recognition of net origination costs and fees associated with residential mortgage loans originated are expensed as incurred. These gains and losses, interest income, and origination costs and fees are recognized in “Other income - net” in the Consolidated Statements of Operations and Comprehensive Income.

Investments in Unconsolidated Entities

In accordance with ASC 323, “Investments—Equity Method and Joint Ventures,” we review each of our investments on a quarterly basis for indicators of impairment. A series of operating losses of an investee, the inability to recover our invested capital, or other factors may indicate that a loss in value of our investment in the unconsolidated entity has occurred. If a loss exists, we further review the investment to determine if the loss is other than temporary, in which case we write down the investment to its fair value. The evaluation of our investment in unconsolidated entities 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, market conditions, and anticipated cash receipts, in order to determine projected future ~~distributions.~~distributions from the unconsolidated entity. In addition, for rental properties, we review rental trends, expected future expenses, and expected cash flows to determine estimated fair values of the properties.

Our unconsolidated entities that develop land or develop for-sale homes and condominiums evaluate their inventory in a similar manner as we do. See “Inventory” above for more detailed disclosure on our evaluation of inventory. For our unconsolidated entities that own, develop, and manage for-rent residential apartments, we review rental trends, expected future expenses, and expected future cash flows to determine estimated fair values of the properties. If a valuation adjustment is recorded by an unconsolidated entity related to its assets, our proportionate share is reflected in income from unconsolidated entities with a corresponding decrease to our investment in unconsolidated entities.

We are a party to several joint ventures with unrelated parties to develop and sell land that is owned by the joint ventures. We recognize our proportionate share of the earnings from the sale of home sites to other builders, including our joint venture partners. We do not recognize earnings from the home sites we purchase from these ventures at the time of purchase; instead, our cost basis in those home sites is reduced by our share of the earnings realized by the joint venture from sales of those home sites to us.

We are also a party to several other joint ventures. We recognize our proportionate share of the earnings and losses of our unconsolidated entities.

Fair Value Disclosures

We use ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), to measure the fair value of certain assets and liabilities. ASC 820 provides a framework for measuring fair value in accordance with GAAP, establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and requires certain disclosures about fair value measurements.

The fair value hierarchy is summarized below:



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.

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. When treasury stock is canceled, any excess purchase price over par value is charged directly to retained earnings.

Revenue and Cost Recognition

As discussed under “Recent Accounting Pronouncements” below, on November 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC 606”). As a result of this adoption, we updated our revenue recognition policies effective November 1, 2018, as follows:

Home sales revenues:Revenues and cost of revenues from home sales are ~~recorded~~recognized at the time each home is delivered and title and possession are transferred to the buyer. For the majority of our home closings, our performance obligation to deliver a home is satisfied in less than one year from the date a binding sale agreement is signed. In certain states where we build, we are not able to complete certain outdoor features prior to the closing of the home. Effective November 1, 2018, to the extent these separate performance obligations are not complete upon the home closing, we defer a portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations. As of October 31, 2019, the home sales revenues and related costs we deferred related to these obligations were immaterial. Our contract liabilities, consisting of deposits received from customers for sold but undelivered homes, totaled $385.6 million and $410.9 million at October 31, 2019 and October 31, 2018, respectively. Of the outstanding customer deposits held as of October 31, 2018, we recognized $367.8 million in home sales revenues during the fiscal year ended October 31, 2019.

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 land, land development, and related 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.

Land sales revenues: Our revenues from land sales generally consist of: (1) lot sales to third-party builders within our master planned communities; (2) land sales to joint ventures in which we retain an interest; and (3) bulk land sales to third parties of land we have decided no longer meets our development criteria. In general, our performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration from the counterparty. Effective November 1, 2018, in land sale transactions that contain repurchase options, revenues and related costs are not recognized until the repurchase option expires. In addition, when we sell land to a joint venture in which we retain an interest, we do not recognize revenue or gains on the sale to the extent of our retained interest in such joint venture.

Forfeited Customer Deposits: ~~Forfeited~~ Effective November 1, 2018, forfeited customer deposits are recognized in ~~“Other income – net”~~“Home sales revenues” in our Consolidated Statements of Operations and Comprehensive 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.

Advertising Costs

We expense advertising costs as incurred. Advertising costs were ~~$26.1~~$38.5 million, ~~$23.1~~$28.5 million, and ~~$18.2~~$26.1 million for the years ended October 31, ~~2017, 2016,~~2019, 2018, and ~~2015,~~2017, respectively.

Warranty and Self-Insurance

Warranty: We provide all of our home buyers with a limited warranty as to workmanship and mechanical equipment. We also provide many of our home buyers with a limited 10-year warranty as to structural integrity. We accrue for expected warranty costs at the time each home is closed and title and possession are transferred to the home buyer. Warranty costs are accrued based upon historical experience. Adjustments to our warranty liabilities related to homes delivered in prior ~~years~~periods are recorded in the period in which a change in our estimate occurs. Over the past several years, we have had a significant number of warranty claims related primarily to homes built in Pennsylvania and Delaware. See Note 7 – “Accrued Expenses” for additional information regarding these warranty charges.

retentions, deductibles and other coverage limits (“self-insured liability”). We also provide general liability insurance for our subcontractors in Arizona, California, Colorado, Nevada, Washington, and certain areas of Texas, where eligible subcontractors

are enrolled as insureds under our general liability insurance policies in each community in which they perform work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our ~~self-insurance through our captive insurance subsidiary.~~self-insured liability.

We record expenses and liabilities based on the estimated costs required to cover our self-insured liability and the estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported (“IBNR”).

We engage a third-party actuary that uses our historical claim and expense data, input from our internal legal and risk management groups, as well as industry data, to estimate our liabilities related to unpaid claims, IBNR associated with the risks that we are assuming for our self-insured liability, and other required costs to administer current and expected claims. These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a home buyer and when a structural warranty or construction defect claim may be made, and the ultimate resolution of the claim. Though state regulations vary, construction defect claims may be reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated liability relates to IBNR. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.

The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors. Key assumptions used in these estimates include claim frequencies, severities, and settlement patterns, which can occur over an extended period of time. In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Due to the degree of judgment required, and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.

Stock-Based Compensation

We account for our stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). We use a lattice model for the valuation ~~for~~of our stock option grants. 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. Stock-based compensation expense is generally included in “Selling, general and administrative” expense in our Consolidated Statements of Operations and Comprehensive Income.

Legal Expenses

Transactional legal expenses for land acquisition and entitlement, and financing are capitalized and expensed over their appropriate life. We expense legal fees related to litigation, warranty and insurance claims when incurred.

Income Taxes

We account 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 reported for income tax purposes. In accordance with the provisions of ASC 740, we assess the realizability of our 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.

Federal and state income taxes are calculated on reported pre-tax earnings 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 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 and evaluating tax positions. We establish reserves for income taxes when, despite the belief that our tax positions are fully supportable, we believe that our positions may be challenged and disallowed by various tax authorities. The consolidated tax provisions 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 in the period in which such determination is made.

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. Our inability 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 we have taken.

If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that our filing position is supportable, the benefit of that tax position is not recognized in the Consolidated Statements of Operations and Comprehensive Income and we are 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. Differences between amounts taken in a tax return and amounts recognized in the financial statements are considered unrecognized tax benefits. We believe that we have a reasonable basis for each of our filing positions and intend to defend those positions if challenged by the IRS or other taxing jurisdiction. If the IRS or other taxing authorities do not disagree with our position, and after the statute of limitations expires, we will recognize the unrecognized tax benefit in the period that the uncertainty of the tax position is eliminated.

Income Taxes — Valuation Allowance

~~Significant judgment is applied in assessing~~We assess the ~~realizability of~~need for valuation allowances for deferred tax ~~assets. In accordance with GAAP, a valuation allowance~~assets in each period based on whether it is ~~established against a~~more-likely-than-not that some portion of the deferred tax asset ~~if,~~would not be realized. If, based on the available evidence, it is more-likely-than-not that such asset will not be ~~realized.~~realized, a valuation allowance is established against a deferred tax asset. 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 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. Forming a conclusion that a valuation allowance is not needed is difficult when there is significant negative evidence such as cumulative losses in recent years. This assessment considers, among other matters, the nature, consistency, 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~~alternatives: and outlooks for 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.U.S. housing industry and broader economy. Changes in existing tax laws or rates could also 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.

Segment Reporting

We operate in ~~two~~2 segments: traditional home building and urban infill. We build and sell homes for detached and attached homes in luxury residential communities located in affluent suburban markets and cater to move-up, empty-nester, active-adult, and second-home buyers in the United States (“Traditional Home Building”). We also build and sell homes in urban infill markets through Toll Brothers City Living^® (“City Living”).

We have determined that our Traditional Home Building operations operate in ~~five~~5 geographic segments: North, Mid-Atlantic, South, West, and California.

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, and Virginia

South: Florida, Georgia, North Carolina, South Carolina and Texas

West: Arizona, Colorado, Idaho, Nevada, Oregon, Utah and Washington

California: California

In fiscal 2018, we acquired land and commenced development activities in the Salt Lake City, Utah and Portland, Oregon markets. We opened communities in these markets in fiscal 2019. In addition, as a result of two acquisitions, we commenced operations in Georgia and South Carolina in fiscal 2019. In fiscal 2018, we discontinued the sale of homes in Minnesota. Our operations in Minnesota were immaterial to the North geographic segment.

Related Party Transactions

See Note 4, “Investments in Unconsolidated Entities - Rental Property Joint Ventures” for information regarding Toll Brothers Realty Trust.

~~Reclassification~~

~~Certain prior period amounts have been reclassified to conform to the fiscal 2017 presentation.~~

Recent Accounting Pronouncements

In ~~January 2017,~~May 2014, the FASB ~~issued~~created ASC 606 with the issuance ASU No. 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. ASC 606 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. ASC 606 supersedes the revenue recognition requirements in Accounting Standards ~~Update~~Codification (“~~ASU”~~ASC”) ~~No. 2017-01, “Business Combinations (Topic 805): Clarifying~~Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASC 606 also supersedes some cost guidance included in ASC Subtopic 605-35, “Revenue Recognition—Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the ~~Definition~~consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the previous guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of a Business” (“ASU 2017-01”), which provides a more robust framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. We adopted ASU 2017-01 onvariable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August ~~1, 2017, and the adoption did not have a material effect on our consolidated financial statements or disclosures.~~

~~In April~~ 2015, the FASB issued ASU ~~No. 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customers’ Accounting for Fees Paid in a Cloud Computing Arrangement”~~2015-14 “Revenue from Contracts with Customers” (“ASU 2015-05”). ASU 2015-05 provides guidance for a customer to determine whether a cloud computing arrangement contains a software license or should be accounted for as a service contract. We adopted ASU 2015-05 on November 1, 2016, and we elected to adopt the standard prospectively. The adoption did not have a material effect on our consolidated financial statements or disclosures.

~~In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”~~2015-14”), which ~~eliminates~~delayed the deferral granted to investment companies from applying the variable interest entities (“VIEs”) guidance and made targeted amendments to the current consolidation guidance. The new guidance applies to all entities involved with limited partnerships or similar entities and requires re-evaluationeffective date of ~~these entities under the revised guidance which may change previous consolidation conclusions. We adopted~~ASC 606 by one year. ASC 606, as amended by ASU ~~2015-02 on November 1, 2016, and the adoption did not have a material effect on our consolidated financial statements or disclosures.~~

In March 2017, the FASB issued ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). ASU 2017-07 requires an employer to report the service cost component of pension and other postretirement benefit costs in the same line item as other compensation costs arising from services rendered by the pertinent employees while the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. ASU 2017-07 is2015-14, became effective for our fiscal year beginning November 1, ~~2018; however, early adoption is permitted. We expect~~2018, and we adopted the new standard under the modified retrospective transition method applied to ~~adopt ASU 2017-07 on~~contracts that were not completed as of November 1, ~~2017~~2018. We elected to apply the practical expedient which allows us to immediately expense incremental costs of obtaining a contract that would otherwise have been recognized in one year or less. We recognized the cumulative effect, net of tax, of applying ASC 606 as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and docontinues to be reported under the previous accounting standards. The adoption of ASC 606 did not ~~expect the adoption to~~ have a material impact on our Consolidated Balance Sheet or Consolidated Statement of Operations or Comprehensive Income, and there have been no significant changes to our internal controls, processes, or systems as a result of implementing this new standard. However, the adoption of ASC 606 resulted in the following changes:

Prior to adoption of ASC 606, we capitalized certain costs related to our marketing efforts, including sales offices and model home upgrades and furnishings within “Inventory” on our Consolidated Balance Sheets and amortized such costs through “Selling, general, and administrative” on our Consolidated Statements of Operations and Comprehensive Income. As of November 1, 2018, we reclassified $104.8 million to “Property, construction, and office equipment, net” on our Consolidated Balance Sheets, primarily related to sales offices and model home improvement costs. The amortization of such costs will remain unchanged and will continue to be included in “Selling, general, and administrative” on our Consolidated Statements of Operations and Comprehensive Income. Additionally, we recorded a net cumulative effect adjustment to retained earnings of approximately $13.2 million for certain other marketing costs that no longer qualify for capitalization under the new guidance, and such costs will be expensed as incurred in the future.

Prior to adoption of ASC 606, we recorded our land sale revenues, net of their related expenses, within “Other income – net” on our Consolidated Statements of Operations and Comprehensive Income. As of November 1, 2018, we are presenting this activity in income from operations and breaking out the components of land sales revenues and land sales cost of revenues on our Consolidated Statements of Operations and Comprehensive Income. In addition, due to the existence of certain repurchase options in existing agreements to sell lots to third party builders in our master planned communities, both for wholly owned projects as well as projects in which we are a joint venture partner, we recorded a net cumulative effect adjustment to retained earnings of approximately $4.6 million to account for previously settled lots for which the related repurchase option had not yet expired. Because the amount of the deferred earning is not material to our consolidated financial statements, we have elected to recognize the revenue and ~~disclosures.~~related expenses for such lots in future periods when such repurchase options expire rather than account for them as leases under ASC 840, “Leases.”

Prior to adoption of ASC 606, retained customer deposits were classified in “Other income – net” on our Consolidated Statements of Operations and Comprehensive Income. As of November 1, 2018, retained customer deposits, which totaled $13.2 million for our fiscal year ending October 31, 2019, are included in “Home sales revenue” on our Consolidated Statements of Operations and Comprehensive Income. Prior period balances for retained customer deposits have not been reclassified and are not material to our consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (“ASU 2017-05”). ASU 2017-05 is meant to clarify the scope of the original guidance within Subtopic

610-20 that was issued in connection with ~~ASU 2014-09, as defined below,~~ASC 606, which provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. ASU 2017-05 also added guidance for partial sales of nonfinancial assets. ASU 2017-05 isbecame effective for our fiscal year beginning November 1, 2018 and we ~~are required to adopt~~adopted ASU 2017-05 concurrent with ~~the~~our adoption of ~~ASU 2014-09. We are currently evaluating the impact that the~~ASC 606. The adoption of ASU 2017-05 ~~may~~did not have a material effect on our consolidated financial statements and disclosures.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”), which provides guidance on the classification of restricted cash in the statement of cash flows. ASU 2016-18 isbecame effective for our fiscal year beginning November 1, ~~2018. Early adoption is permitted. We do~~2018 and resulted in a change in the presentation to our Consolidated Statement of Cash Flows but did not ~~expect the adoption of ASU 2016-18 to~~ have a material effect on our other consolidated financial statements or disclosures. As a result of the adoption of ASU No. 2016-18, net cash provided by operations on the Consolidated Statement of Cash Flows for the years ended October 31, 2018 and ~~disclosures.~~

2017, decreased by $14.2 million and $103.4 million, respectively.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which is intended to reduce diversity in practice in how certain transactions are classified and ~~will make~~makes eight targeted changes to how cash receipts and cash payments are presented in the statement of cash flows. ASU 2016-15 isbecame effective for our fiscal year beginning November 1, ~~2018. Early adoption is permitted. We do~~2018 and did not ~~expect the adoption of ASU 2016-15 to~~ have a material effect on our consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. In July 2018, the FASB issued ASU No. 2018-11, “Leases: Targeted Improvements” (“ASU 2018-11”), which provides an entity with the option to apply the transition provisions of the new standard at its adoption date instead of at its earliest comparative period presented. ASU 2018-11 also provides an entity with a practical expedient that permits lessors to not separate nonlease components from the associated lease component if certain conditions are met. ASU 2016-02, as amended by ASU 2018-11, is effective for our fiscal year beginning November 1, 2019, at which time we will adopt the new standard using a modified retrospective approach. We expect to elect the package of transition practical expedients, which allows us to carry forward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. In addition, we expect to elect the practical expedient that allows lessees the option to account for lease and non-lease components together as a single component for all classes of underlying assets. Upon adoption, we currently estimate the increase to our balance sheet will be approximately 1% of assets and approximately 2% of liabilities. While the recognition of such lease assets and liabilities will impact our Consolidated Balance Sheet and require additional disclosure, we do not expect that the new standard will have a material impact on our other consolidated financial statements. We also do not expect significant changes to our business processes, systems, or internal controls as a result of implementing the standard.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses. ASU 2016-13 is effective for our fiscal year beginning November 1, 2020, with early adoption permitted as of November 1, 2019. We ~~do not expect the adoption of ASU 2016-13 to have a material effect on our consolidated financial statements and disclosures.~~

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes and forfeitures, statutory tax withholding requirements and classification on the statement of cash flows. ASU 2016-09 is effective for our fiscal year beginning November 1, 2017. We expect that the adoption of ASU 2016-09 will have a favorable impact in fiscal 2018 on net income and earnings per share presented on our consolidated financial statements due to the recognition of excess tax benefits from stock-based benefit plans. The magnitude of the impact will depend on our stock price and the timing and amount of stock option exercises. In addition, we have elected to record forfeitures based on actual results, which we do not expect will have a material effect on our consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU 2016-02 is effective for our fiscal year beginning November 1, 2019, and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU ~~2016-02~~2016-13 may have ~~on our consolidated financial statements and disclosures.~~

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers” (“ASU 2015-14”), which delays the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended by ASU 2015-14, is effective for our fiscal year beginning November 1, 2018, and, at that time, we expect to adopt the new standard under the modified retrospective approach. We do not believe the adoption of ASU 2014-09 will have a material impact on the amount or timing of our home building revenues. We are continuing to evaluate the impact the adoption of ASU 2014-09 may have on other aspects of our business and on our consolidated financial statements and disclosures.

2. ~~Acquisition~~Acquisitions

In ~~October~~fiscal 2019, we acquired substantially all of the assets and operations of Sharp Residential, LLC (“Sharp”) and Sabal Homes LLC (“Sabal”), for approximately $162.4 million in cash. Sharp operates in metropolitan Atlanta, Georgia; Sabal operates in the Charleston, Greenville, and Myrtle Beach, South Carolina markets. The assets acquired, based on our preliminary purchase price allocations, were primarily inventory, including approximately 2,550 home sites owned or controlled through land purchase agreements. In connection with these acquisitions, we assumed contracts to deliver 204 homes with an aggregate value of $96.1 million. The average price of undelivered homes at the dates of acquisitions was approximately $471,100. As a result of these acquisitions, our selling community count increased by 22 communities.

In November 2016, we ~~entered into an agreement to acquire substantially~~acquired all of the assets and operations of Coleman Real Estate Holdings, LLC (“Coleman”)~~. In November 2016, we completed the acquisition of Coleman~~ for approximately $83.1 million in cash. The assets acquired were primarily inventory, including approximately 1,750 home sites owned or controlled through land purchase agreements. As part of the acquisition, we assumed contracts to deliver 128 homes with an aggregate value of $38.8 million. The average price of the undelivered homes at the date of acquisition was approximately $303,000. As a result of this acquisition, our selling community count increased by 15 communities at the acquisition date.

The acquisitions discussed above were accounted for as a business combination and were not material to our results of operations or financial condition.

3. Inventory

Inventory at October 31, ~~2017~~2019 and ~~2016~~2018 consisted of the following (amounts in thousands):



	2019		2018
Land controlled for future communities	$	182,929	$	139,985
Land owned for future communities	868,202		916,616
Operating communities	6,821,917		6,541,618
	$	7,873,048	$	7,598,219

2017 2016
Land controlled for future communities $ 87,158
$ 71,729
Land owned for future communities 1,142,870
1,884,146
Operating communities 6,051,425
5,398,092
$ 7,281,453
$ 7,353,967

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 12 months of the end of the fiscal year being reported on, and communities preparing to open for sale. The carrying 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.

Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on have been classified as land owned for future communities. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).

Information regarding the classification, number, and carrying value of these temporarily closed communities at October 31, ~~2017, 2016,~~2019, 2018, and ~~2015,~~2017, is provided in the table below ($ amounts in thousands):



	2019		2018		2017
Land owned for future communities:
Number of communities	16		17		14
Carrying value (in thousands)	$	120,857	$	124,426	$	110,732
Operating communities:
Number of communities	1		1		6
Carrying value (in thousands)	$	2,871	$	2,622	$	26,749

2017 2016 2015
Land owned for future communities:
Number of communities 14
18
15
Carrying value (in thousands) $ 110,732
$ 123,936
$ 119,138
Operating communities:
Number of communities 6
3
11
Carrying value (in thousands) $ 26,749
$ 8,523
$ 63,668

We provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, ~~2017~~2019, ~~2016~~2018, and ~~2015~~2017, as shown in the table below (amounts in thousands):



Charge:	2019		2018		2017
Land controlled for future communities	$	11,285	$	2,820	$	1,949
Land owned for future communities	—		2,185		3,050
Operating communities	31,075		30,151		9,795
	$	42,360	$	35,156	$	14,794

Charge: 2017 2016 2015
Land controlled for future communities $ 1,949
$ 3,142
$ 809
Land owned for future communities 3,050
2,300
12,600
Operating communities 9,795
8,365
22,300
$ 14,794
$ 13,807
$ 35,709

See Note 12, “Fair Value Disclosures,” for information regarding 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 the fair value of those communities, net of impairment charges.

See Note 15, “Commitments and Contingencies,” for information regarding land purchase commitments.

At October 31, ~~2017,~~2019, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEs and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our ~~risk~~maximum exposure to loss is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At October 31, ~~2017,~~2019, we determined that ~~104~~127 land purchase contracts, with an aggregate purchase price of ~~$1.43~~$2.00 billion, on which we had made aggregate deposits totaling ~~$65.6~~$149.2 million, were VIEs, ~~and~~but that we were not the primary beneficiary of any VIE related to ~~our~~such land purchase contracts. At October 31, ~~2016,~~2018, we determined that 78110 land purchase contracts, with an aggregate purchase price of ~~$987.3 million,~~$1.88 billion, on which we had made aggregate deposits totaling ~~$44.1~~$120.5 million, were VIEs, ~~and~~but that we were not the primary beneficiary of any VIE related to ~~our~~such land purchase contracts.

Interest incurred, capitalized, and expensed in each of the three fiscal years ended October 31, ~~2017, 2016,~~2019, 2018, and ~~2015,~~2017, was as follows (amounts in thousands):



	2019			2018			2017
Interest capitalized, beginning of year	$	319,364		$	352,049		$	369,419
Interest incurred	178,035			165,977			175,944
Interest expensed to home sales cost of revenues	(185,045		)	(190,734		)	(172,832		)
Interest expensed to land sales cost of revenues	(1,787		)
Interest expensed in other income				(3,760		)	(4,823		)
Interest reclassified to property, construction and office equipment							(485		)
Interest capitalized on investments in unconsolidated entities	(4,571		)	(7,220		)	(8,824		)
Previously capitalized interest transferred to investments in unconsolidated entities							(8,708		)
Previously capitalized interest on investments in unconsolidated entities transferred to inventory	5,327			3,052			2,358
Interest capitalized, end of year	$	311,323		$	319,364		$	352,049

2017 2016 2015
Interest capitalized, beginning of year $ 369,419
$ 373,128
$ 356,180
Interest incurred 175,944
164,001
155,170
Interest expensed to cost of revenues (172,832 ) (160,337 ) (142,947 )
Write-off against other income (4,823 ) (1,143 ) (3,843 )
Interest reclassified to property, construction, and office equipment (485 ) (1,111 )
Interest capitalized on investments in unconsolidated entities (8,824 ) (5,818 ) (7,467 )
Previously capitalized interest transferred to investments in unconsolidated entities (8,708 )

Previously capitalized interest on investments in unconsolidated entities transferred to inventory 2,358
699
16,035
Interest capitalized, end of year $ 352,049
$ 369,419
$ 373,128

During fiscal 2017, we reclassified ~~$9.0~~9.0 million of inventory related to two golf courses to property, construction, and office equipment and such amount was net of $3.5 ~~million transferred to accrued liabilities related to deferred golf membership fees.~~

During fiscal 2016, we reclassified $17.1 million of inventory related to two golf course facilities and a parking garage to property, construction, and office equipment and such amount was net of $2.1 million transferred to accrued liabilities related to deferred golf membership fees. The amounts were 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.

During fiscal 2015, we transferred $132.3 million from investment in unconsolidated entities to inventory. The transfer related to the transfer of title of condominium units built by a Home Building Joint Venture to us.

4. Investments in Unconsolidated Entities

We have investments in various unconsolidated entities. These entities, which are structured as joint ventures (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); (iii) develop luxury for-rent residential apartments, commercial space, and a hotel (“Rental Property Joint Ventures”), which includes our investment in Toll Brothers Realty Trust (the “Trust”); and (iv) invest in distressed loans and real estate and provide financing and land banking to residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”). In fiscal ~~2017, 2016~~2019, 2018 and ~~2015,~~2017, we recognized income from the unconsolidated entities in which we had an investment of ~~$116.1~~$24.9 million, ~~$40.7~~$85.2 million, and ~~$21.1~~$116.1 million, respectively.

The table below provides information as of October 31, ~~2017,~~2019, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):



	Land Development Joint Ventures		Home Building Joint Ventures		Rental Property Joint Ventures		Gibraltar Joint Ventures		Total
Number of unconsolidated entities	8		4		20		9		41
Investment in unconsolidated entities	$	110,306	$	60,512	$	174,292	$	21,142	$	366,252
Number of unconsolidated entities with funding commitments by the Company	2		1		2		1		6
Company’s remaining funding commitment to unconsolidated entities	$	28,586	$	1,400	$	539	$	8,271	$	38,796

Land
Development
Joint Ventures Home Building
Joint Ventures Rental Property
Joint Ventures
Gibraltar
Joint Ventures
Total
Number of unconsolidated entities 7 4 14 5 30
Investment in unconsolidated entities $ 236,062
$ 102,191
$ 127,439
$ 16,066
$ 481,758
Number of unconsolidated entities with funding commitments by the Company 5 1 1 1
8
Company’s remaining funding commitment to unconsolidated entities $ 33,689
$ 8,300
$ 882
$ 9,621
$ 52,492

Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at October 31, ~~2017,~~2019, regarding the debt financing obtained by category ($ amounts in thousands):



	Land Development Joint Ventures		Home Building Joint Ventures		Rental Property Joint Ventures		Total
Number of joint ventures with debt financing	3		2		18		23
Aggregate loan commitments	$	100,859	$	133,453	$	1,393,838	$	1,628,150
Amounts borrowed under commitments	$	88,252	$	133,453	$	1,017,788	$	1,239,493

Land
Development
Joint Ventures Home Building
Joint Ventures Rental Property
Joint Ventures Total
Number of joint ventures with debt financing 4 3 12 19
Aggregate loan commitments $ 239,200
$ 382,600
$ 1,059,100
$ 1,680,900
Amounts borrowed under commitments $ 223,000
$ 173,300
$ 803,300
$ 1,199,600

More specific and/or recent information regarding our investments in ~~advances to,~~ and future commitments to these entities is provided below.

Land Development Joint Ventures

In fiscal ~~2017,~~2019, our Land Development Joint Ventures sold approximately ~~1,132~~934 lots and recognized revenues of ~~$288.4 million.~~$261.7 million . We acquired ~~364~~293 of these lots for ~~$166.5~~$137.1 million. Our share of the joint venture income from the lots we acquired ~~of $13.5 million~~ was ~~deferred by reducing our basis in those lots acquired. The Company~~insignificant. We recognized ~~impairment charges~~a charge in connection with one Land Development Joint Venture of ~~$2.0~~$1.0 million in fiscal ~~2017.~~2019.

In fiscal ~~2016,~~2018, our Land Development Joint Ventures sold approximately ~~776~~986 lots and recognized revenues of ~~$142.0~~$351.4 million. We acquired ~~207~~259 of these lots for ~~$64.2~~$153.2 million. Our share of the income from the lots we acquired of ~~$9.3~~$1.7 million was deferred by reducing our basis in those lots acquired. ~~There were no impairment~~We recognized charges ~~recognized~~in connection with two Land Development Joint Ventures of $6.0 million in fiscal ~~2016.~~2018.

In the fourth quarter of fiscal ~~2015,~~2019, we entered into a joint venture with an unrelated party to purchase and develop a parcel of land located in ~~Irvine, California.~~Houston, Texas. The joint venture expects to develop approximately ~~840~~263 home sites on this land in multiple phases. We have a 50% interest in this joint venture. The joint venture intends to sell approximately 50% of the value of the home sites to each of the members of the joint venture. ~~In fiscal 2017, we purchased the first 94 lots from this joint venture for $84.5 million.~~ At October 31, ~~2017,~~2019, we had an investment of ~~$139.1~~$5.9 million in this joint ~~venture and were committed to make additional contributions to this~~venture. The joint venture ~~of up~~expects to ~~$3.4 million. To finance~~secure third-party financing at a portion of the land purchase, the joint venture entered into a $320.0 million purchase money mortgage with the seller. In the first quarter of fiscal 2017, the joint venture entered into a $200.0 million loan facility and each member made a capital contribution of $80.0 million. Proceeds from borrowings under the loan facility in addition to the capital contributions made by the members were used to repay the purchase money mortgage. At October 31, 2017, the joint venture had $153.2 million of outstanding borrowings under the loan. later date.

Home Building Joint Ventures

Our Home Building Joint Ventures are delivering homes in New York City and Jupiter, Florida. In fiscal ~~2017~~2019 and ~~2016,~~2018, our Home Building Joint Ventures delivered ~~197~~186 homes with a sales value of ~~$475.3~~$374.6 million, and ~~115~~100 homes with a sales value of ~~$164.9~~$148.0 million, respectively.

In the fourth quarter of fiscal 2017, we entered into a joint venture with an unrelated party to complete the development of a high-rise luxury condominium project in New York City. Before the formation of this joint venture, we acquired the property and incurred approximately $143.8 million of land and land development costs. The joint venture, in which we have a 25% interest, purchased the property from us at our cost, a portion of which was financed by a $144.0 million construction loan obtained by the joint venture. From the sale and financing, we received proceeds of $115.9 million. At October 31, 2017, we had an investment of $26.9 million in this joint venture and the joint venture had $52.7 million of outstanding borrowings under the construction loan.

Subsequent event

In ~~the first quarter~~November 2019, one of fiscal 2015, we entered into a joint venture with an unrelated party to complete the development of a high-rise luxury condominium project in New York City on property that we owned. We contributed $15.9 million as our initial contribution for a 25% interest in this joint venture. We sold the property to the joint venture for $78.5 million, and we were reimbursed for development and construction costs incurred by us prior to the sale. The gain of $9.3 million that we realized on the sale in fiscal 2015 was deferred and was being recognized in our results of operations as units were delivered to the ultimate home buyer. The joint venture commenced settlement of units in fiscal 2016. We recognized $4.7 million and $1.5 million of previously deferred gains in fiscal 2017 and 2016, respectively. In the fourth quarter of fiscal 2017, we purchased our partner’s 75% interest in this joint venture for $36.8 million. Accordingly, the remaining unrecognized deferred gain of $3.0 million was used to adjust our basis in the inventory acquired from the purchase.

In the first quarter of fiscal 2017, we entered into a joint venture with an unrelated party to complete the development of a high-rise luxury condominium project in New York City. Before the formation of this joint venture, we acquired the property and incurred approximately $176.0 million of land and land development costs. The joint venture, in which we have a 20% interest, purchased the property from us at our cost, a portion of which was financed by aHome Building Joint Ventures refinanced its existing $236.5 million construction loan ~~obtained by the joint venture. From the sale~~with a $76.6 million post-construction loan that matures November 2021. We and ~~financing, we received proceeds~~an affiliate of ~~$148.0 million, of which $106.1 million was held in escrow by~~ our captive title company at October 31, 2016 and was included in “Receivables, prepaid expenses, and other assets” on our Consolidated Balance Sheet at October 31, 2016. The amount held in escrow was released to us in December 2016. At October 31, 2017, we had an investment of $30.3 million in this joint venture and the joint venture had $118.4 million of outstanding borrowingspartner provided certain guarantees under the ~~construction loan.~~loan agreement. We estimate that our maximum exposure under these guarantees, if the full amount of the loan commitment was borrowed, would be $76.6 million without taking into account any recoveries from the underlying collateral or any reimbursement from our partner.

Rental Property Joint Ventures

As of October 31, ~~2017,~~2019, our Rental Property Joint Ventures owned 1325 for-rent apartment projects and a hotel, which are located in multiple metropolitan areas throughout the ~~metro Boston to metro Washington, D.C. corridor.~~country. At October 31, ~~2017, our~~2019, these joint ventures had approximately ~~3,200~~2,000 units that were occupied or ready for occupancy, ~~750~~1,700 units in the lease-up stage, and ~~2,000~~4,100 units in the design phase or under ~~active~~ development. In addition, we either own or have under contract, orapproximately 10,900 units, of which 800 units are under ~~a letter of intent approximately 8,500 units. We~~active development; we intend to develop these units in joint ventures with unrelated parties in the future.

In ~~the fourth quarter of~~ fiscal ~~2017,~~2019, we entered into a5 separate joint ~~venture~~ventures with an unrelated ~~party~~parties to develop ~~a 232-unit~~ luxury for-rent residential apartment ~~project~~projects located in ~~Princeton Junction,~~Harrison, New ~~Jersey.~~York, Frisco, Texas, Atlanta, Georgia, Orange, California, and Dallas, Texas. Prior to the formation of ~~this~~these joint ~~venture,~~ventures, we acquired the ~~property, through a 100%-owned entity,~~properties and incurred ~~$13.6~~approximately $145.1 million of land and land development costs. Our ~~partner~~partners acquired interests in these entities ranging from 63.5% to 75% for an aggregate amount of $110.0 million and we recognized a ~~75% interest~~gain on land sales of $9.3 million in ~~this entity~~fiscal 2019. At October 31, 2019, we had an aggregate investment of $48.8 million in these joint ventures. Concurrent with their formation, these joint ventures entered into construction loan agreements for ~~$10.2~~an aggregate amount of $340.1 million. ~~The gain~~At October 31, 2019, the joint ventures had $39.3 million outstanding borrowings under these construction loan facilities.

In addition, in fiscal 2019, we entered into 4 separate joint ventures with unrelated parties to develop luxury for-rent residential apartment projects and student housing communities located in Boston, Massachusetts, San Diego, California, Tempe, Arizona and Miami, Florida. We contributed an aggregate of ~~$3.0~~$79.6 million ~~that we realized on the sale was deferred due~~for our initial ownership interests in these joint ventures, which ranged from 50% to 98%. Due to our ~~continuing involvement~~controlling financial interest, our power to direct the activities that most significantly impact each joint venture’s performance, and/or our obligation to absorb expected losses or receive benefits from these joint ventures, we consolidated these joint ventures at October 31, 2019. The carrying value of these joint ventures’ assets totaling $125.0 million are reflected in “Receivables, prepaid expenses, and other assets” in our Consolidated Balance Sheet as of October 31, 2019. Our partners’ interests aggregating $37.9 million in the joint ~~venture through~~ventures are reflected as a component of “Noncontrolling interest” in our ~~retained ownership interest and guarantees we provided on the joint venture’s debt. At~~Consolidated Balance Sheet as of October 31, ~~2017,~~2019. These joint ventures intend to obtain additional equity investors and secure third-party financing at a later date. At such time, it is expected that these entities would no longer be consolidated.

In the second quarter of fiscal 2019, we ~~had an investment~~entered into a joint venture with unrelated parties to develop, build, and operate single-family rental communities. As of ~~$4.5~~October 31, 2019, we have committed to invest up to $60.0 million in this joint ~~venture. In the fourth quarter~~venture, of ~~fiscal 2017, the joint venture entered into a $41.7~~which $1.0 million ~~construction loan agreement with a bank to finance the development of this project. At October 31, 2017, there were no outstanding borrowings under the construction loan.~~has been invested.

In ~~the third quarter of~~ fiscal ~~2017,~~2019, one of our Rental Property Joint Ventures, ~~amended~~in which we had a 25% interest, sold its ~~existing $70.0 million construction loan agreement~~assets to ~~finance construction of multifamily residential apartments in northern New Jersey.~~an unrelated party for $77.8 million. The terms of the amendment extended the maturity date and revised certain guarantees provided for under the loan, including the repayment guaranty for which our obligation increased from 25% to 100%. At October 31, 2017, this joint venture had ~~$61.3 million of borrowings under the facility.~~

~~In the second quarter of fiscal 2017, we sold one-half of our 50% interest~~owned, developed, and operated a multifamily residential community in ~~one of our Rental Property Joint Ventures to an unrelated party.~~Phoenixville, Pennsylvania. In connection with the sale, ~~we, along with our partner, recapitalized~~ the joint venture ~~and refinanced the existing $112.2~~repaid its entire $47.0 million ~~construction loan with a $133.0 million, 10-year fixed rate~~ loan. ~~As a result of these transactions, we~~We received cash of ~~$42.9~~$7.4 million and recognized a gain of ~~$20.5~~$3.8 million, ~~in fiscal 2017,~~ which is included in “Income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income. ~~At October 31, 2017, we had a 25% interest and an $7.4 million investment in this joint venture.~~

In the first quarter of fiscal 2017, we sold one-half of our 50% interest in another one of our Rental Property Joint Ventures to an unrelated party. In connection with the sale, we, along with our partner, recapitalized the joint venture and refinanced the existing $54.1 million construction loan with a $56.0 million, 10-year fixed rate loan. As a result of these transactions, we received cash of $12.0 million and recognized a gain of $6.2 million in the three months ended January 31, 2017 and in the year ended October 31, 2017, which is included in “Income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income. At October 31, 2017, we had a 25% interest and a $3.1 million investment in this joint venture.

In the second quarter of fiscal 2016, we entered into a joint venture with an unrelated party to develop a 525-unit luxury for-rent residential apartment building near Union Station in Washington, D.C. Prior to the formation of this joint venture, we acquired the land, through a 100%-owned entity, and incurred $35.1 million of land and land development costs. Our partner

acquired a 50% interest in this entity for $20.2 million and we subsequently received cash of $18.7 million to align the capital accounts of each of the partners of the joint venture. In the third quarter of fiscal 2016, as a result of the sale of 50% of our interest to our partner, we recognized a gain of $3.0 million. Due to our continued involvement in the joint venture through our ownership interest, we deferred an additional $3.0 million of the gain on the sale. At October 31, 2017, we had an investment of $30.1 million in this joint venture. In November 2016, the joint venture entered into a $130.6 million construction loan agreement. At October 31, 2017, there were $17.7 million of outstanding borrowings under the construction loan agreement.

In the fourth quarter of fiscal 2016, we entered into a joint venture with an unrelated party to develop a 390-unit luxury for-rent residential apartment project in a suburb of Boston, Massachusetts, on land that we were under contract to purchase. We have a 25% interest in this joint venture. In the fourth quarter of fiscal 2016, the joint venture entered into a $91.0 million construction loan agreement with a bank to finance the development of this project. At October 31, 2017, there were $11.1 million of outstanding borrowings under the construction loan agreement. At October 31, 2017, we had an investment of $11.5 million in this joint venture.

We have an investment in a joint venture in which we have a 50% interest that developed a luxury hotel in conjunction with a high-rise luxury condominium project in New York City ~~being~~ developed by a related Home Building Joint Venture. The hotel commenced operations in February 2017. At October 31, ~~2017,~~2019, we had an investment of ~~$35.9~~$21.0 million in this joint venture. In ~~December 2016, this~~the fourth quarter of fiscal 2019, the joint venture ~~entered into an~~refinanced its existing $80.0 million, three-year term loan ~~agreement.~~with a three-year, $120.0 million term loan, of which $110.0 million was advanced to the joint venture at closing. The proceeds from the ~~term loan, along~~refinancing were distributed to the members.

In fiscal 2018, we entered into 4 joint ventures with ~~proceeds~~unrelated parties to develop luxury for-rent residential apartment projects located in suburban Atlanta, Georgia; Belmont, Massachusetts; and Washington, D.C. Prior to the formation of these joint ventures, we acquired the properties and incurred approximately $140.0 million of land and land development costs. Our partners acquired interests in these entities ranging from ~~the closing~~50% to 75% for an aggregate amount of ~~condominium units at the Home Building Joint Venture, were used to repay an existing construction loan.~~$80.3 million. At October 31, ~~2017, this~~2019, we had an investment of $65.6 million in these joint ~~venture~~ventures. In fiscal 2018, several of these joint ventures entered into construction loan agreements for an aggregate amount of $166.1 million to finance the development of these projects. At October 31, 2019, the joint ventures had ~~$80.0~~$156.1 million of outstanding borrowings under the ~~term loan.~~construction loan facilities.

In addition, in fiscal 2018 we entered into a joint venture with an unrelated party to develop a luxury for-rent residential apartment project in a suburb of Boston, Massachusetts. We contributed cash of $15.9 million for our initial 85% ownership interest in this joint venture. Due to our controlling financial interest, our power to direct the activities that most significantly impact the joint venture’s performance, and our obligation to absorb expected losses or receive benefits from the joint venture, we consolidated this joint venture at October 31, 2019. The carrying value of the joint venture’s assets totaling $20.8 million are reflected in “Receivables, prepaid expenses, and other assets” in our Consolidated Balance Sheet at October 31, 2019. Our partner’s 15% interest of $3.1 million in the joint venture is reflected as a component of “Noncontrolling interest” in our Consolidated Balance Sheet as of October 31, 2019. The joint venture expects to admit an additional investor and secure third-party financing at a later date.

In fiscal 2018, 3 of our Rental Property Joint Ventures sold their assets to unrelated parties for $477.5 million. These joint ventures had owned, developed, and operated multifamily rental properties located in suburban Washington, D.C. and Westborough, Massachusetts, and a student housing community in College Park, Maryland. In connection with these sales, the joint ventures’ aggregate outstanding loan balance of $239.6 million was repaid. From our investment in these joint ventures, we received cash of $79.1 million and recognized gains from these sales of $67.2 million in fiscal 2018, which is included in “Income from unconsolidated entities” in our Consolidated Statement of Operations and Comprehensive Income.

In fiscal 2017, we sold one-half of our 50% interest in 2 of our Rental Property Joint Ventures to an unrelated party. In connection with these sales, we, along with our partners, recapitalized the joint ventures and refinanced the existing $166.3 million in construction loans with 10-year fixed rate loans totaling $189.0 million. As a result of these transactions, we received cash of $54.9 million and recognized gains of $26.7 million in fiscal 2017, which is included in “Income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income. At October 31, 2019, we had a 25% interest in each of these joint ventures.

In 1998, we formed the Trust to invest in commercial real estate opportunities. The Trust is effectively owned one-third by us; one-third by current and former members of our senior management; and one-third by an unrelated party. As of October 31, ~~2017,~~2019, our investment in the Trust was ~~zero~~0 as cumulative distributions received from the Trust have been in excess of the carrying amount of our net investment. We provide development, finance, and management services to the Trust and recognized fees under the terms of various agreements in the amounts of $1.0 million, $2.0 million, ~~$1.6 million,~~ and ~~$2.2~~$2.0 million in fiscal ~~2017, 2016~~2019, 2018 and ~~2015,~~2017, respectively. In fiscal ~~2016~~2019 and ~~2015,~~2018, we received distributions of ~~$2.0~~$3.9 million and ~~$6.1~~$27.7 million, respectively, from the Trust, of which ~~$2.0 million and $3.5 million~~the full amount was recognized as income and included in “Income from unconsolidated entities” in our fiscal ~~2016~~2019 and ~~2015~~2018 Consolidated Statements of Operations and Comprehensive ~~Income, respectively. No~~Income. NaN distributions were received from the Trust in fiscal 2017.

Subsequent ~~event~~events

In November ~~2017,~~2019, we entered into a joint venture with an unrelated party to develop a for-rent residential apartment project in Dallas, Texas. Prior to the formation of this joint venture, we acquired the property and incurred approximately $19.0 million of land and land development costs. Our partner acquired a 50% interest in this entity for approximately $9.2 million, of which $7.7 million was distributed to us. Our initial investment is $11.9 million. Concurrent with its formation, the joint venture

entered into a $42.0 million construction loan agreement to finance the development of this project. We and an affiliate of our partner provided certain guarantees under the construction loan agreement. We estimate that our maximum exposure under these guarantees, if the full amount of the loan commitment was borrowed, would be $42.0 million without taking into account any recoveries from the underlying collateral or any reimbursement from our partner.

In December 2019, we sold all of our ownership ~~interests~~interest in one of our Rental Property Joint Ventures to ~~an unrelated party~~our partner for ~~$219.0 million.~~cash of $16.8 million, net of closing costs. The joint venture had owned, developed, and operated ~~a student housing community~~multifamily residential apartments in ~~College Park, Maryland.~~northern New Jersey. In connection with the sale, the joint venture’s existing ~~$110.0~~$76.0 million loan was ~~repaid.~~assumed by our partner. We ~~received cash of $39.3 million and~~ expect to recognize a gain of approximately ~~$30.1~~$10.0 million in the first quarter of fiscal ~~2018~~2019 from the sale.

In December 2019, we entered into a joint venture with an unrelated party to develop a for-rent student housing community in State College, Pennsylvania. Prior to the formation of this joint venture, we acquired the property and incurred approximately $32.0 million of land and land development costs. Our partner acquired a 70% interest in this entity for approximately $22.2 million, of which $17.9 million was distributed to us. Our initial investment is $12.9 million. Concurrent with its formation, the joint venture entered into a $79.5 million construction loan agreement to finance the development of this project. We and an affiliate of our partner provided certain guarantees under the construction loan agreement. We estimate that our maximum exposure under these guarantees, if the full amount of the loan commitment was borrowed, would be $79.5 million without taking into account any recoveries from the underlying collateral or any reimbursement from our partner.

Gibraltar Joint Ventures

~~In the second quarter of fiscal 2016 and third quarter of fiscal 2017, we,~~We, through our wholly owned subsidiary, Gibraltar Capital and Asset Management, LLC (“Gibraltar”), have entered into ~~three~~8 ventures with an institutional investor to provide builders and developers with land banking and venture ~~capital. We have a 25% interest~~capital, 2 of which were formed in ~~these ventures.~~fiscal 2019. These ventures will finance builders’ and developers’ acquisition and development of land and home sites and pursue other complementary investment strategies. We are also a member in a separate venture with the same institutional investor, which purchased, from Gibraltar, certain foreclosed real estate owned and distressed loans in fiscal 2016. Our ownership interest in these ventures is approximately 25%. We may invest up to $100.0 million in these ventures. As of October 31, ~~2017,~~2019, we had an investment of ~~$8.5~~$20.5 million in these ventures.

In addition, in the second quarter of fiscal 2016, we entered into a separate venture with the same institutional investor to purchase, from Gibraltar, certain foreclosed real estate owned and distressed loans for $24.1 million. We have a 24% interest in this venture. In fiscal 2016, we recognized a gain of $1.3 million from the sale of these assets to the venture. At October 31, 2017, we had a $4.0 million investment in this venture and are committed to invest an additional $9.6 million, if necessary.

Guarantees

The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we and our partners have guaranteed debt of certain unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as ~~interest.~~interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender

harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity.

In some instances, the guarantees provided in connection with loans to an unconsolidated entity are joint and several. In these situations, we generally have a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed upon share of the guarantee; however, if the joint venture partner does not have adequate financial resources to meet its obligations under the reimbursement agreement, we may be liable for more than our proportionate share.

We believe that, as of October 31, ~~2017,~~2019, in the event we become legally obligated to perform under a guarantee of an obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the venture. At October 31, ~~2017,~~2019, certain unconsolidated entities have loan commitments aggregating ~~to $1.2~~$1.53 billion, of which, if the full amount of the debt obligations were borrowed, we estimate ~~$291.9~~$299.1 million to be our maximum exposure related solely to repayment and carry cost guarantees. At October 31, ~~2017,~~2019, the unconsolidated entities had borrowed an aggregate of ~~$747.7 million,~~$1.14 billion, of which we estimate ~~$228.9~~$239.6 million to be our maximum exposure related solely to repayment and carry cost guarantees. The terms of these guarantees generally range from 102 months to ~~37 months.~~9.7 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners.

As of October 31, ~~2017,~~2019, the estimated aggregate fair value of the guarantees provided by us related to debt and other obligations of certain unconsolidated entities was approximately ~~$4.9~~$5.6 million. We have not made payments under any of the guarantees, nor have we been called upon to do so.

Variable Interest Entities

At October 31, ~~2017~~2019 and ~~2016,~~2018, we determined that ~~eight~~18 and ~~three,~~11, respectively, of our joint ventures were VIEs under the guidance within ASC 810. ~~However,~~For 13 and 10 of these VIEs as of October 31, 2019 and 2018, respectively, we ~~have~~ concluded that we were not the primary beneficiary of these VIEs because the power to direct the activities of such VIEs that most significantly impact their performance was either shared by us and such VIEs’ other partners or such activities were controlled by our partner. For VIEs where the power to direct significant activities is shared, business plans, budgets, and other major decisions are required to be unanimously approved by all members. Management and other fees earned by us are nominal and believed to be at market rates, and there is no significant economic disproportionality between us and other members. The information presented below regarding the investments, commitments, and guarantees in unconsolidated entities deemed to be VIEs is also included in the information provided above.

As of October 31, 2019, we have consolidated 5 Rental Property Joint Ventures. We had one consolidated Rental Property Joint Venture as of October 31, 2018. The carrying value of these joint ventures’ assets totaled $145.8 million and $19.7 million as reflected in “Receivables, prepaid expenses, and other assets” in our Consolidated Balance Sheet as of October 31, 2019 and 2018, respectively. Our partners’ interests aggregating $41.0 million and $2.8 million in the joint ventures are reflected as a component of “Noncontrolling interest” in our Consolidated Balance Sheet as of October 31, 2019 and 2018, respectively. These joint ventures were determined to be VIEs due to their current inability to finance their activities without additional subordinated financial support as well as our partners’ inability to participate in the significant decisions of the joint venture and their lack of substantive kick-out rights. We further concluded that we are the primary beneficiary of these VIEs due to our controlling financial interest in such ventures as we have the power to direct the activities that most significantly impact the joint ventures’ performance and the obligation to absorb expected losses or receive benefits from the joint ventures. The assets of these VIEs can only be used to settle the obligations of the VIEs. In addition, in certain of the joint ventures, in the event additional contributions are required to be funded to the joint ventures prior to the admission of any additional investor at a future date, we will fund 100% of such contributions, including our partner’s pro rata share, which we expect would be funded through an interest-bearing loan.

At October 31, ~~2017~~2019 and ~~2016,~~2018, our investments in our unconsolidated entities deemed to be VIEs, which are included in “Investments in unconsolidated entities” in our Consolidated Balance Sheets, totaled ~~$35.9~~$37.0 million and ~~$16.4~~$33.8 million, respectively. At October 31, ~~2017,~~2019, the maximum exposure of loss to our investments in these entities was limited to our investments in the unconsolidated VIEs, except with regard to $76.0 million of loan guarantees and $8.3 million of additional commitments to fund the VIEs. Of our potential exposure for these loan guarantees, $76.0 million is related to repayment and carry cost guarantees, of which $76.0 million was borrowed at October 31, 2019. At October 31, 2018, the maximum exposure of loss to our investments in these entities was limited to our investments in the unconsolidated VIEs, except with regard to $70.0 million of loan guarantees and ~~$10.5~~$10.8 million of additional commitments to fund the VIEs. Of our potential exposure for these loan guarantees, $70.0 million is related to repayment and carry cost guarantees, of which ~~$61.3~~$70.0 million was borrowed at October 31, 2017. At October 31, 2016, the maximum exposure of loss to our investments in these entities was limited to our investments in the unconsolidated VIEs, except with regard to $70.0 million of loan guarantees and $1.4 million of additional commitments to fund the VIEs. Of our potential exposure for these loan guarantees, $14.3 million is related to repayment and carry cost guarantees, of which $8.8 million was borrowed at October 31, 2016.2018.

Joint Venture Condensed Financial Information

The Condensed Balance Sheets, as of the dates indicated, and the Condensed Statements of Operations and Comprehensive Income, for the periods indicated, for the unconsolidated entities in which we have an investment, aggregated by type of business, are included below (in thousands).

Condensed Balance Sheets:


	October 31, 2017										October 31, 2019
	Land Develop- ment Joint Ventures		Home Building Joint Ventures		Rental Property Joint Ventures		Gibraltar Joint Ventures		Total		Land Develop- ment Joint Ventures		Home Building Joint Ventures		Rental Property Joint Ventures		Gibraltar Joint Ventures		Total
Cash and cash equivalents	$	77,667	$	38,600	$	24,367	$	13,194	$	153,828	$	23,669	$	38,115	$	20,647	$	3,388	$	85,819
Inventory	629,159		503,131				15,919		1,148,209		247,866		313,991				17,369		579,226
Loan receivables, net							22,495		22,495								56,545		56,545
Rental properties					970,497				970,497						1,021,848				1,021,848
Rental properties under development					190,541				190,541						535,197				535,197
Real estate owned							53,902		53,902								12,267		12,267
Other assets	96,725		31,794		26,637		1,462		156,618		96,602		78,916		36,879		364		212,761
Total assets	$	803,551	$	573,525	$	1,212,042	$	106,972	$	2,696,090	$	368,137	$	431,022	$	1,614,571	$	89,933	$	2,503,663
Debt	$	223,035	$	173,285	$	803,263	$	—	$	1,199,583
Debt, net of deferred financing costs											$	88,050	$	132,606	$	1,006,201			$	1,226,857
Other liabilities	37,832		51,017		40,610		5,833		135,292		49,302		33,959		84,735		7,831		175,827
Members’ equity	542,684		349,223		368,169		72,209		1,332,285		230,785		264,457		523,635		81,686		1,100,563
Noncontrolling interest							28,930		28,930								416		416
Total liabilities and equity	$	803,551	$	573,525	$	1,212,042	$	106,972	$	2,696,090	$	368,137	$	431,022	$	1,614,571	$	89,933	$	2,503,663
Company’s net investment in unconsolidated entities (1)	$	236,062	$	102,191	$	127,439	$	16,066	$	481,758	$	110,306	$	60,512	$	174,292	$	21,142	$	366,252


Fiscal year	Total Toll Brothers, Inc. settlements (a)	TBI Mortgage Company financed settlements* (b)	Gross capture rate (b/a)	Amount financed (in millions)		Total Toll Brothers, Inc. settlements (a)	TBI Mortgage Company financed settlements* (b)	Gross capture rate (b/a)	Amount financed (in millions)
2019						8,107	3,259	40.2%	$	1,572.1
2018						8,265	2,918	35.3%	$	1,411.6
2017	7,151	2,407	33.7%	$	1,168.4	7,151	2,407	33.7%	$	1,168.4
2016	6,098	2,523	41.4%	$	1,240.9	6,098	2,523	41.4%	$	1,240.9
2015	5,525	2,103	38.1%	$	1,001.2	5,525	2,103	38.1%	$	1,001.2
2014	5,397	1,866	34.6%	$	801.5
2013	4,184	1,803	43.1%	$	717.3



	Three months ended
	October 31		July 31		April 30		January 31
2017
High	$	46.04	$	40.95	$	37.09	$	32.98
Low	$	37.00	$	36.03	$	31.17	$	27.06
2016
High	$	32.25	$	29.96	$	30.17	$	38.15
Low	$	27.00	$	25.30	$	23.75	$	26.57



Period	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of a publicly announced plan or program (b)	Maximum number of shares that may yet be purchased under the plan or program (b)
	(in thousands)			(in thousands)	(in thousands)
August 1 to August 31, 2017	2,931	$	38.12	2,931	10,416
September 1 to September 30, 2017	2,269	$	38.95	2,269	8,147
October 1 to October 31, 2017	2	$	42.35	2	8,145
Total	5,202	$	38.48	5,202



Period	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of a publicly announced plan or program (b)	Maximum number of shares that may yet be purchased under the plan or program (b)
	(in thousands)			(in thousands)	(in thousands)
August 1, 2019 to August 31, 2019	1,735	$	35.61	1,735	14,070
September 1, 2019 to September 30, 2019	114	$	36.25	114	13,956
October 1, 2019 to October 31, 2019	3	$	39.82	3	13,953
Total	1,852			1,852


October 31:	2012	2013	2014	2015	2016	2017	2014	2015	2016	2017	2018	2019
Toll Brothers, Inc.	100.00	99.61	96.79	108.79	83.13	140.32	100.00	112.58	85.88	144.98	107.12	128.07
S&P 500^®	100.00	127.18	149.14	156.89	163.97	202.72	100.00	105.20	109.94	135.93	145.91	166.81
S&P Homebuilding	100.00	96.32	113.09	130.92	123.52	184.95	100.00	115.76	109.22	163.54	131.42	192.42


	Number of communities	Number of home sites	Number of communities	Number of home sites
Traditional Home Building:
North	40	4,465	41	3,769
Mid-Atlantic	58	4,668	51	3,992
South	23	2,447	89	8,976
West	74	9,016	102	12,628
California	28	2,945	41	5,154
Traditional Home Building	223	23,541	324	34,519
City Living	9	924	8	951
Total	232	24,465	332	35,470


*	Amounts under “TBI Mortgage Company financed settlements” exclude brokered and referred loans, which amounted to approximately 4.0%, 5.0%, 3.6%, 4.2%, and 6.2%, ~~4.4%, and 5.1%~~ of our home closings in fiscal 2019, 2018, 2017, 2016, ~~2015, 2014,~~ and ~~2013,~~2015, respectively.


Year ended October 31:	2017		2016		2015		2014		2013		2019		2018		2017		2016		2015
Revenues	$	5,815,058	$	5,169,508	$	4,171,248	$	3,911,602	$	2,674,299
Home Sales Revenues											$	7,080,379	$	7,143,258	$	5,815,058	$	5,169,508	$	4,171,248
Income before income taxes	$	814,311	$	589,027	$	535,562	$	504,582	$	267,697	$	787,170	$	933,916	$	814,311	$	589,027	$	535,562
Net income	$	535,495	$	382,095	$	363,167	$	340,032	$	170,606	$	590,007	$	748,151	$	535,495	$	382,095	$	363,167
Earnings per share:
Basic	$	3.30	$	2.27	$	2.06	$	1.91	$	1.01	$	4.07	$	4.92	$	3.30	$	2.27	$	2.06
Diluted	$	3.17	$	2.18	$	1.97	$	1.84	$	0.97	$	4.03	$	4.85	$	3.17	$	2.18	$	1.97
Weighted average number of shares outstanding:
Basic	162,222		168,261		176,425		177,578		169,288		145,008		151,984		162,222		168,261		176,425
Diluted	169,487		175,973		184,703		185,875		177,963		146,501		154,201		169,487		175,973		184,703
Cash dividends declared per share	$	0.24	$	—	$	—	$	—	$	—	$	0.44	$	0.41	$	0.24	$	—	$	—


At October 31:	2017		2016		2015		2014		2013		2019		2018		2017		2016		2015
Cash, cash equivalents, and marketable securities	$	712,829	$	633,715	$	928,994	$	598,341	$	825,480	$	1,286,014	$	1,182,195	$	712,829	$	633,715	$	928,994
Inventory	$	7,281,453	$	7,353,967	$	6,997,516	$	6,490,321	$	4,650,412	$	7,873,048	$	7,598,219	$	7,281,453	$	7,353,967	$	6,997,516
Total assets	$	9,445,225	$	9,736,789	$	9,206,515	$	8,398,457	$	6,811,782	$	10,828,138	$	10,244,590	$	9,445,225	$	9,736,789	$	9,206,515
Debt:
Loans payable	$	637,416	$	871,079	$	1,000,439	$	652,619	$	107,222	$	1,111,449	$	686,801	$	637,416	$	871,079	$	1,000,439
Senior debt	2,462,463		2,694,372		2,689,801		2,638,241		2,305,765		2,659,898		2,861,375		2,462,463		2,694,372		2,689,801
Mortgage company loan facility	120,145		210,000		100,000		90,281		75,000		150,000		150,000		120,145		210,000		100,000
Total debt	$	3,220,024	$	3,775,451	$	3,790,240	$	3,381,141	$	2,487,987	$	3,921,347	$	3,698,176	$	3,220,024	$	3,775,451	$	3,790,240
Equity	$	4,537,090	$	4,235,202	$	4,228,079	$	3,860,697	$	3,339,164	$	5,118,693	$	4,768,912	$	4,537,090	$	4,235,202	$	4,228,079


	2018		2019 – 2020		2021 – 2022		Thereafter		Total		2020		2021 – 2022		2023 – 2024		Thereafter		Total
Senior notes (a)	$	126.1	$	822.8	$	598.0	$	1,629.8	$	3,176.7	$	127.8	$	658.1	$	818.2	$	1,770.2	$	3,374.3
Loans payable (a)	78.9		63.7		516.9		64.2		723.7		121.3		144.2		99.7		940.7		1,305.9
Mortgage company loan facility ~~(a)~~(b)	124.0								124.0		152.8								152.8
Operating lease obligations	12.1		14.8		5.6		0.5		33.0		15.4		22.7		14.5		218.2		270.8
Purchase obligations ~~(b)~~(c)	1,230.7		893.6		220.7		438.8		2,783.8		1,541.9		1,010.2		263.5		92.5		2,908.1
Retirement plans ~~(c)~~(d)	9.5		11.7		13.2		56.7		91.1		13.4		13.4		14.7		62.6		104.1
	$	1,581.3	$	1,806.6	$	1,354.4	$	2,190.0	$	6,932.3	$	1,972.6	$	1,848.6	$	1,210.6	$	3,084.2	$	8,116.0


(a)	Amounts include estimated annual interest payments until maturity of the debt. Of the amounts indicated, ~~$2.5~~$2.66 billion of the senior notes, ~~$637.4 million~~$1.11 billion of loans payable, ~~$120.1~~$150.0 million of the mortgage company loan facility, and ~~$36.0~~$31.3 million of accrued interest were recorded on our October 31, ~~2017~~2019 Consolidated Balance Sheet.


(b)	In December 2019, we amended the mortgage company warehousing agreement to, among other things, extend the maturity date to December 4, 2020.


(c)	Amounts represent our expected acquisition of land under 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, $14.6 million was recorded on our October 31, 2019 Consolidated Balance Sheet.


~~(c)~~(d)	Amounts represent our obligations under our deferred compensation plan, supplemental executive retirement plans and our 401(k) salary deferral savings plans. Of the total amount indicated, ~~$67.4~~$82.7 million was recorded on our October 31, ~~2017~~2019 Consolidated Balance Sheet.


	Fiscal 2017 Compared to Fiscal 2016																Fiscal 2019 Compared to Fiscal 2018
	Revenues ($ in millions)						Units Delivered				Average Delivered Price ($ in thousands)						Revenues ($ in millions)							Units Delivered				Average Delivered Price ($ in thousands)
	2017		2016		% Change		2017	2016	% Change		2017		2016		% Change		2019			2018		% Change		2019	2018	% Change		2019		2018		% Change
Traditional Home Building:
North	$	775.5	$	814.5	(5	)%	1,139	1,172	(3	)%	$	680.9	$	695.0	(2	)%	$	923.3		$	975.7	(5	)%	1,325	1,453	(9	)%	$	696.8	$	671.5	4	%
Mid-Atlantic	1,030.3		895.7		15	%	1,681	1,432	17	%	612.9		625.5		(2	)%	1,112.8			1,141.1		(2	)%	1,708	1,800	(5	)%	651.5		633.9		3	%
South	924.0		849.6		9	%	1,247	1,093	14	%	741.0		777.3		(5	)%	1,244.6			1,045.4		19	%	1,725	1,391	24	%	721.5		751.5		(4	)%
West	1,151.7		903.7		27	%	1,783	1,304	37	%	645.9		693.0		(7	)%	1,418.0			1,451.4		(2	)%	1,965	2,130	(8	)%	721.6		681.4		6	%
California	1,550.5		1,448.5		7	%	1,041	1,006	3	%	1,489.4		1,439.9		3	%	2,129.5			2,208.7		(4	)%	1,180	1,322	(11	)%	1,804.7		1,670.7		8	%
Traditional Home Building	5,432.0		4,912.0		11	%	6,891	6,007	15	%	788.3		817.7		(4	)%	6,828.2			6,822.3		—	%	7,903	8,096	(2	)%	864.0		842.7		3	%
City Living	383.1		257.5		49	%	260	91	186	%	1,473.5		2,829.7		(48	)%	253.2			321.0		(21	)%	204	169	21	%	1,241.2		1,899.4		(35	)%
Total	$	5,815.1	$	5,169.5	12	%	7,151	6,098	17	%	$	813.2	$	847.7	(4	)%
Other																	(1.0		)
Total homes sales revenue																	7,080.4			$	7,143.3	(1	)%	8,107	8,265	(2	)%	$	873.4	$	864.3	1	%
Land sales revenue																	143.6
Total revenue																	$	7,224.0		$	7,143.3


At October 31:	2017		2016		2015		2014		2013		2019		2018		2017		2016		2015
Backlog:
Number of homes	5,851		4,685		4,064		3,679		3,679		6,266		6,105		5,851		4,685		4,064
Value (in thousands)	$	5,061,517	$	3,984,065	$	3,504,004	$	2,719,673	$	2,629,466	$	5,257,091	$	5,522,523	$	5,061,517	$	3,984,065	$	3,504,004
Number of selling communities	305		310		288		263		232		333		315		305		310		288
Home sites:
Owned	31,341		34,137		35,872		36,243		33,967		36,567		32,503		31,341		34,137		35,872
Controlled	16,970		14,700		8,381		10,924		14,661		22,663		20,919		16,970		14,700		8,381
Total	48,311		48,837		44,253		47,167		48,628		59,230		53,422		48,311		48,837		44,253


	Fiscal 2017 Compared to Fiscal 2016																Fiscal 2019 Compared to Fiscal 2018
	Net Contract Value ($ in millions)						Net Contracted Units				Average Contracted Price ($ in thousands)						Net Contract Value ($ in millions)						Net Contracted Units				Average Contracted Price ($ in thousands)
	2017		2016		% Change		2017	2016	% Change		2017		2016		% Change		2019		2018		% Change		2019	2018	% Change		2019		2018		% Change
Traditional Home Building:
North	$	898.9	$	888.0	1	%	1,379	1,259	10	%	$	651.8	$	705.3	(8	)%	$	910.1	$	928.1	(2	)%	1,303	1,334	(2	)%	$	698.5	$	695.7	—	%
Mid-Atlantic	1,161.9		986.8		18	%	1,838	1,607	14	%	632.2		614.1		3	%	1,137.8		1,158.3		(2	)%	1,725	1,799	(4	)%	659.6		643.9		2	%
South	1,003.5		916.8		9	%	1,342	1,229	9	%	747.8		746.0		—	%	1,177.3		1,132.7		4	%	1,705	1,502	14	%	690.5		754.1		(8	)%
West	1,318.3		1,096.7		20	%	2,032	1,508	35	%	648.8		727.3		(11	)%	1,705.7		1,510.5		13	%	2,303	2,133	8	%	740.6		708.2		5	%
California	2,177.9		1,418.5		54	%	1,395	930	50	%	1,561.2		1,525.3		2	%	1,555.3		2,596.9		(40	)%	889	1,568	(43	)%	1,749.5		1,656.2		6	%
Traditional Home Building	6,560.5		5,306.8		24	%	7,986	6,533	22	%	821.5		812.3		1	%	6,486.2		7,326.5		(11	)%	7,925	8,336	(5	)%	818.4		878.9		(7	)%
City Living	267.8		342.8		(22	)%	189	186	2	%	1,416.9		1,843.0		(23	)%	224.7		277.8		(19	)%	150	183	(18	)%	1,498.3		1,518.0		(1	)%
Total	$	6,828.3	$	5,649.6	21	%	8,175	6,719	22	%	$	835.3	$	840.8	(1	)%	$	6,710.9	$	7,604.3	(12	)%	8,075	8,519	(5	)%	$	831.1	$	892.6	(7	)%



	Fiscal 2016 Compared to Fiscal 2015
	Revenues ($ in millions)						Units Delivered				Average Delivered Price ($ in thousands)
	2016		2015		% Change		2016	2015	% Change		2016		2015		% Change
Traditional Home Building:
North	$	814.5	$	702.2	16	%	1,172	1,126	4	%	$	695.0	$	623.6	11	%
Mid-Atlantic	895.7		845.3		6	%	1,432	1,342	7	%	625.5		629.9		(1	)%
South	849.6		892.3		(5	)%	1,093	1,175	(7	)%	777.3		759.4		2	%
West	903.7		665.3		36	%	1,304	994	31	%	693.0		669.3		4	%
California	1,448.5		750.0		93	%	1,006	669	50	%	1,439.9		1,121.1		28	%
Traditional Home Building	4,912.0		3,855.1		27	%	6,007	5,306	13	%	817.7		726.6		13	%
City Living	257.5		316.1		(19	)%	91	219	(58	)%	2,829.7		1,443.4		96	%
Total	$	5,169.5	$	4,171.2	24	%	6,098	5,525	10	%	$	847.7	$	755.0	12	%


	October 31, 2017 Compared to October 31, 2016																October 31, 2019 Compared to October 31, 2018
	Backlog Value ($ in millions)						Backlog Units				Average Backlog Price ($ in thousands)						Backlog Value ($ in millions)						Backlog Units				Average Backlog Price ($ in thousands)
	2017		2016		% Change		2017	2016	% Change		2017		2016		% Change		2019		2018		% Change		2019	2018	% Change		2019		2018		% Change
Traditional Home Building:
North	$	816.1	$	692.8	18	%	1,217	977	25	%	$	670.6	$	709.1	(5	)%	$	757.1	$	768.5	(1	)%	1,076	1,098	(2	)%	$	703.6	$	699.9	1	%
Mid-Atlantic	741.6		610.0		22	%	1,143	986	16	%	648.8		618.7		5	%	785.1		758.8		3	%	1,159	1,142	1	%	677.4		664.4		2	%
South	815.9		736.4		11	%	1,055	960	10	%	773.4		767.1		1	%	930.0		903.2		3	%	1,339	1,166	15	%	694.6		774.6		(10	)%
West	972.0		766.5		27	%	1,397	1,020	37	%	695.7		751.5		(7	)%	1,321.2		1,031.1		28	%	1,738	1,400	24	%	760.2		736.5		3	%
California	1,495.1		867.7		72	%	887	533	66	%	1,685.6		1,627.9		4	%	1,314.1		1,883.3		(30	)%	842	1,133	(26	)%	1,560.7		1,662.2		(6	)%
Traditional Home Building	4,840.7		3,673.4		32	%	5,699	4,476	27	%	849.4		820.7		3	%	5,107.5		5,344.9		(4	)%	6,154	5,939	4	%	829.9		900.0		(8	)%
City Living	220.8		310.7		(29	)%	152	209	(27	)%	1,452.7		1,486.5		(2	)%	149.6		177.6		(16	)%	112	166	(33	)%	1,335.6		1,069.7		25	%
Total	$	5,061.5	$	3,984.1	27	%	5,851	4,685	25	%	$	865.1	$	850.4	2	%	$	5,257.1	$	5,522.5	(5	)%	6,266	6,105	3	%	$	839.0	$	904.6	(7	)%



	October 31, 2016 Compared to October 31, 2015
	Backlog Value ($ in millions)						Backlog Units				Average Backlog Price ($ in thousands)
	2016		2015		% Change		2016	2015	% Change		2016		2015		% Change
Traditional Home Building:
North	$	692.8	$	619.2	12	%	977	890	10	%	$	709.1	$	695.8	2	%
Mid-Atlantic	610.0		518.9		18	%	986	811	22	%	618.7		639.9		(3	)%
South	736.4		669.2		10	%	960	824	17	%	767.1		812.1		(6	)%
West	766.5		573.5		34	%	1,020	816	25	%	751.5		702.8		7	%
California	867.7		897.8		(3	)%	533	609	(12	)%	1,627.9		1,474.2		10	%
Traditional Home Building	3,673.4		3,278.6		12	%	4,476	3,950	13	%	820.7		830.0		(1	)%
City Living	310.7		225.4		38	%	209	114	83	%	1,486.5		1,977.2		(25	)%
Total	$	3,984.1	$	3,504.0	14	%	4,685	4,064	15	%	$	850.4	$	862.2	(1	)%


	Year ended October 31,						Year ended October 31,
	2017 Units	2016 Units	2017 $		2016 $		2019 Units	2018 Units	2019 $		2018 $
Deliveries and revenues	123	32	$	407.1	$	90.5
Deliveries and home sales revenues							147	14	$	330.8	$	65.7
Net contracts signed	69	25	$	123.2	$	90.7	39	102	$	128.1	$	245.6


	Fixed-rate debt				Variable-rate debt (a)				Fixed-rate debt				Variable-rate debt (a)
Fiscal year of maturity	Amount			Weighted- average interest rate (%)	Amount			Weighted- average interest rate (%)	Amount			Weighted- average interest rate (%)	Amount			Weighted- average interest rate (%)
2018	$	61,216		4.05%	$	120,145		3.24%
2019	377,038			3.99%	150			1.11%
2020	255,148			6.71%	150			1.11%	$	84,096		4.33%	$	150,000		3.68%
2021	1,453			5.89%	500,150			2.64%	52,713			3.89%	150			1.26%
2022	421,370			5.87%	150			1.11%	437,668			5.85%	150			1.26%
2023									421,461			4.42%	150			1.26%
2024									290,595			5.41%	150			1.26%
Thereafter	1,478,957			4.88%	13,210			1.19%	1,684,410			4.52%	812,910			3.06%
Bond discounts, premiums, and deferred issuance costs, net	(7,413		)		(1,700		)		(9,978		)		(3,128		)
Total	$	2,587,769		5.07%	$	632,255		2.72%	$	2,960,965		4.77%	$	960,382		3.16%
Fair value at October 31, 2017	$	2,751,409			$	633,955
Fair value at October 31, 2019									$	3,121,573			$	963,510


(a)	Based upon the amount of variable-rate debt outstanding at October 31, ~~2017,~~2019, and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately ~~$6.3~~$9.6 million per year.



Name	Age	Positions
~~Robert I. Toll~~	76	~~Executive Chairman of the Board and Director~~
Douglas C. Yearley, Jr.	5759	Chairman of the Board, President and Chief Executive Officer ~~and Director~~
~~Richard T. Hartman~~James W. Boyd	6063	Executive Vice President and ~~Chief~~Co-Chief Operating Officer
Robert Parahus	56	Executive Vice President and Co-Chief Operating Officer
Martin P. Connor	5355	Senior Vice President and Chief Financial Officer



	Page
1. Financial Statements

Management’s Annual Report on Internal Control Over Financial Reporting	F-1

Reports of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets	~~F-4~~

~~Consolidated Statements of Operations~~ ~~and Comprehensive Income~~	~~F-5~~

~~Consolidated Statements of Changes in Equity~~	F-6

Consolidated Statements of ~~Cash Flows~~Operations and Comprehensive Income	F-7

Consolidated Statements of Changes in Equity	F-8

Consolidated Statements of Cash Flows	F-9

Notes to Consolidated Financial Statements	~~F-8~~F-10



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.



~~Exhibit Number~~		~~Description~~

3.9		Amendment to the By-laws of the Registrant, dated as of September 20, 2016, 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 20, 2016.

4.1		Specimen Stock Certificate.**Certificate is hereby incorporated by reference to Exhibit 4.1 of the Registratant’s Form 10-K for the year ended October 31, 2017.

4.2		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.

~~4.3~~		~~[Reserved].~~

~~4.4~~		~~[Reserved].~~

~~4.5~~		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.

~~4.6~~		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.

~~4.7~~		First Supplemental Indenture dated as of October 27, 2011, to the Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended January 31, 2012.

~~4.8~~		Second Supplemental Indenture dated as of November 1, 2011, to the Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.4 of the Registrant’s Form 10-Q for the quarter ended January 31, 2012.

~~4.9~~		Third Supplemental Indenture dated as of April 27, 2012, to the Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2012.

~~4.10~~		Fourth Supplemental Indenture dated as of April 30, 2013, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2013.

~~4.11~~		Fifth Supplemental Indenture dated as of April 30, 2014, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2014.

~~4.12~~		Sixth Supplemental Indenture dated as of July 31, 2014, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2014.

~~4.13~~		Seventh Supplemental Indenture dated as of October 31, 2014, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.40 of the Registrant’s Form 10-K for the year ended October 31, 2014.

~~4.14~~		Eighth Supplemental Indenture dated as of January 30, 2015, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2015.



~~Exhibit Number~~		~~Description~~
~~4.15~~		Ninth Supplemental Indenture dated as of April 30, 2015, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2015.

~~4.16~~		Tenth Supplemental Indenture dated as of October 30, 2015, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2015.

~~4.17~~		Eleventh Supplemental Indenture dated as of January 29, 2016, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2016.

~~4.18~~		Twelfth Supplemental Indenture dated as of April 29, 2016, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2016.

~~4.19~~		Thirteenth Supplemental Indenture dated as of October 31, 2016, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor, is hereby incorporated by reference to Exhibit 4.19 of the Registrant’s Form 10-K for the year ended October 31, 2016.

~~4.20~~		Fourteenth Supplemental Indenture dated as of October 31, 2016, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.20 of the Registrant’s Form 10-K for the year ended October 31, 2016.

~~4.21~~		Fifteenth Supplemental Indenture dated as of January 31, 2017, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2017.

~~4.22~~		Sixteenth Supplemental Indenture dated as of April 28, 2017, to Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, 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, 2017.

~~4.23~~		Seventeenth Supplemental Indenture dated as of July 31, 2017, to the Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2017.

~~4.24~~		Eighteenth Supplemental Indenture dated as of October 31, 2017, to the Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee.**

~~4.25~~		Nineteenth Supplemental Indenture dated as of October 31, 2017, to the Indenture dated as of April 20, 2009 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee.**

~~4.26~~		Indenture, dated as of February 7, 2012, 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 February 7, 2012.

~~4.27~~4.3		Authorizing Resolutions, dated as of January 31, 2012, relating to the $300,000,000 principal amount of 5.875% Senior Notes due 2022 of Toll Brothers Finance Corp. guaranteed on a ~~Senior Basis~~senior basis by the Registrant and certain of its subsidiaries, is hereby incorporated by reference Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2012.



~~Exhibit Number~~		~~Description~~
~~4.28~~4.4		Form of Global Note for Toll Brothers Finance Corp.’s 5.875% Senior Notes due 2022 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 February 7, 2012.

~~4.29~~4.5		Authorizing Resolutions, dated as of April 3, 2013, relating to the $300,000,000 principal amount of 4.375% Senior Notes due 2023 of Toll Brothers Finance Corp. guaranteed on a ~~Senior Basis~~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 10, 2013.

~~4.30~~4.6		Authorizing Resolutions, dated as of May 8, 2013, relating to the $100,000,000 principal amount of 4.375% Senior Notes due 2023 of Toll Brothers Finance Corp. guaranteed on a ~~Senior Basis~~senior basis by Toll Brothers, Inc. and certain of its subsidiaries 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 May 13, 2013.

~~4.31~~4.7		Form of Global Note for Toll Brothers Finance Corp.’s 4.375% Senior Notes due 2023 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 10, 2013.

~~4.32~~4.8		Authorizing Resolutions, dated as of November 21, 2013, relating to the $350,000,000 principal amount of 4.000% Senior Notes due 2018 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 November 21, 2013.

~~4.33~~		Form of Global Note for Toll Brothers Finance Corp.’s 4.000% Senior Notes due 2018 is hereby incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2013.

~~4.34~~		Authorizing Resolutions, dated as of November 21, 2013, relating to the $250,000,000 principal amount of 5.625% Senior Notes due 2024 of Toll Brothers Finance Corp. guaranteed on a ~~Senior Basis~~senior basis by the Registrant and certain of its subsidiaries, 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 November 21, 2013.

~~4.35~~

Exhibit Number		Description
4.9		Form of Global Note for Toll Brothers Finance Corp.’s 5.625% Senior Notes due 2024 is hereby incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2013.

~~4.36~~4.10		Authorizing Resolutions, dated as of October 30, 2015, relating to the $350,000,000 principal amount of 4.875% Senior Notes due 2025 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 October 30, 2015.

4.11		Form of Global Note for Toll Brothers Finance Corp.’s 4.875% Senior Notes due 2025 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 October 30, 2015.

4.12		Authorizing Resolutions, dated as of March 10, 2017, relating to the $300,000,000 principal amount of 4.875% Senior Notes due 2027 of Toll Brothers Finance Corp. guaranteed on a ~~Senior Basis~~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 March 10, 2017.

~~4.37~~4.13		Form of Global Note for Toll Brothers Finance Corp.’s 4.875% Senior Notes due 2027 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 March 10, 2017.

~~4.38~~4.14		Authorizing Resolutions, dated as of June 12, 2017, relating to the $150,000,000 principal amount of 4.875% Senior Notes due 2027 of Toll Brothers Finance Corp. guaranteed on a ~~Senior Basis~~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 June 12, 2017.

~~4.39~~4.15		Form of Global Note for Toll Brothers Finance Corp.’s 4.875% Senior Notes due 2027 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 June 12, 2017

~~4.40~~4.16		Authorizing Resolution, dated as of January 22, 2018, relating to the $400,000,000 aggregate principal amount of 4.350% Senior Notes due 2028 of Toll Brothers Finance Corp., guaranteed on a senior basis by Toll Brothers, Inc. 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 January 22, 2018.

4.17		Form of Global Note for the Issuer’s 4.350% Senior Notes due 2028 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 January 22, 2018.

4.18		Authorizing Resolution, dated as of September 12, 2019, relating to the $400,000,000 aggregate principal amount of 3.800% Senior Notes due 2029 of Toll Brothers Finance Corp., guaranteed on a senior basis by Toll Brothers, Inc. 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 September 12, 2019.

4.19		Form of Global Note for the Issuer’s 3.800% Senior Notes due 2029 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 September 12, 2019.

4.20		First Supplemental Indenture dated as of April 27, 2012, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2012.

~~4.41~~4.21		Second Supplemental Indenture dated as of April 30, 2013, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.4 of the Registrant’s Form 10-Q for the quarter ended April 30, 2013.



~~Exhibit Number~~		~~Description~~
~~4.42~~4.22		Third Supplemental Indenture dated as of April 30, 2014, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2014.



Exhibit Number		Description

~~4.43~~4.23		Fourth Supplemental Indenture dated as of July 31, 2014, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2014.

~~4.44~~4.24		Fifth Supplemental Indenture dated as of October 31, 2014, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.55 of the Registrant’s Form 10-K for the year ended October 31, 2014.

~~4.45~~4.25		Sixth Supplemental Indenture dated as of January 30, 2015, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended January 31, 2015.

~~4.46~~4.26		Seventh Supplemental Indenture dated as of April 30, 2015, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2015.

~~4.47~~4.27		Eighth Supplemental Indenture dated as of October 30, 2015, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.34 of the Registrant’s Form 10-K for the year ended October 31, 2015.

~~4.48~~4.28		Ninth Supplemental Indenture dated as of January 29, 2016, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2016.

~~4.49~~4.29		Tenth Supplemental Indenture dated as of April 29, 2016, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2016.

~~4.50~~4.30		Eleventh Supplemental Indenture dated as of October 31, 2016, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.41 of the Registrant’s Form 10-K for the year ended October 31, 2016.

~~4.51~~4.31		Twelfth Supplemental Indenture dated as of October 31, 2016, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.42 of the Registrant’s Form 10-K for the year ended October 31, 2016.

~~4.52~~4.32		Thirteenth Supplemental Indenture dated as of January 31, 2017, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2017.

~~4.53~~4.33		Fourteenth Supplemental Indenture dated as of April 28, 2017, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2017.

~~4.54~~4.34		Fifteenth Supplemental Indenture dated as of July 31, 2017, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, 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, 2017.



~~Exhibit Number~~		~~Description~~
~~4.55~~4.35		Sixteenth Supplemental Indenture dated as of October 31, 2017, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee.**Trustee, is hereby incorporated by reference to Exhibit 4.55 of the Registrant’s Form 10-K for the year ended October 31, 2017.

~~4.56~~

Exhibit Number		Description
4.36		Seventeenth Supplemental Indenture dated as of October 31, 2017, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.56 of the Registrant’s Form 10-K for the year ended October 31, 2017.

4.37		Eighteenth Supplemental Indenture dated as of April 13, 2018, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2018.

4.38		Nineteenth Supplemental Indenture dated as of April 30, 2018, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.4 of the Registrant’s Form 10-Q for the quarter ended April 30, 2018.

4.39		Twentieth Supplemental Indenture dated as of October 31, 2018, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.62 of the Registrant’s Form 10-K for the year ended October 31, 2018.

4.40		Twenty-First Supplemental Indenture dated as of January 31, 2019, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.2 on the Registrant’s Form 10-Q fro the quarter ended January 31, 2019.

4.41		Twenty-Second Supplemental Indenture dated as of October 30, 2019, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee.**

4.42		Twenty-third Supplemental Indenture dated as of October 30, 2019, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee.**

4.43		Description of Certain of Registrant’s Securities**

10.1		Amended and Restated Credit Agreement, dated ~~May 19, 2016,~~as of October 31,2019, among the First Huntingdon Finance Corp., Toll Brothers, Inc., and the ~~Lenders~~lenders party thereto and Citibank, N.A., as Administrative Agent, 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 24, 2016.~~November 1, 2019.

10.2		Credit Agreement by and among First Huntingdon Finance Corp., Toll Brothers, Inc., the lenders party thereto and SunTrust Bank, as Administrative Agent dated February 3, 2014, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 5, 2014

10.3		Amendment No. 1, dated as of May 19, 2016, to the Credit Agreement, dated as of February 3, 2014, among First Huntingdon Finance Corp., Toll Brothers, Inc., the Lenders party thereto and SunTrust Bank, as Administrative Agent, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 24, 2016.

10.4		Amendment No. 2, dated August 2, 2016, to Credit Agreement dated as of February 3, 2014, as amended, by and among First Huntingdon Finance Corp., Toll Brothers, Inc., the designated guarantors party thereto, the lenders party thereto and SunTrust Bank, as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on August 4, 2016.

10.5		~~[Reserved].~~ Amendment No. 3, dated November 1, 2018, to Credit Agreement dated as of February 3, 2014, as amended, by and among First Huntingdon Finance Corp., Toll Brothers, Inc., the designated guarantors party thereto, the lenders party thereto and SunTrust Bank, as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 2, 2018.



Exhibit Number		Description
10.6		Amendment No. 4, dated as of October 31, 2019, to the Credit Agreement, dated as of February 3, 2014,as amended, by and First Huntingdon Finance Corp., Toll Brothers, Inc., the designated guarantors party thereto, the lenders party thereto and SunTrust Bank, as Administrative Agent, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 1, 2019.

10.610.7		Toll Brothers, Inc. Employee Stock Purchase Plan (2017) is hereby incorporated by reference to Annex A to the Registrant’s Definitive Proxy Statement on Schedule 14A for its 2017 Annual Meeting of Stockholders filed with the SEC on January 31, 2017.

10.710.8		Amendment No. 1, dated as of December 13, 2017, to the Toll Brothers, Inc. Employee Stock Purchase Plan (2017). is hereby incorporated by reference to Exhibit 10.7 of the Registrant’s Form 10-K for the year ended October 31, 2017.

10.810.9		Amendment No. 2, dated as of June 19, 2018, to the Toll Brothers, Inc. Employee Stock Purchase Plan (2017) is hereby incorporated by reference to Exhibit 10.8 of the Registrant’s Form 10-K for the year ended October 31, 2018.

10.10*		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 its Registration Statement on Form S-8 (No. 333-143367) filed with the Securities and Exchange Commission on October 29, 2008.

10.910.11		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.

10.1010.12		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.

10.1110.13		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.

10.12*		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.

10.13*		Form of Performance Based Restricted Stock Unit Award pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007) is incorporated by reference to Exhibit 10.33 of the Registrant’s Form 10-K for the period ended October 31, 2011.



~~Exhibit Number~~		~~Description~~
10.14*		Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) is hereby incorporated by reference to Annex A to the Registrant’s definitive proxy statement on Schedule 14A for its 2014 Annual Meeting of Stockholders filed with the SEC on February 3, 2014.

10.15*		Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) is incorporated by reference to Exhibit 10.16 of the Registrant’s Form 10-K for the period ended October 31, 2014.

10.16*		Form of Restricted Stock Unit Agreement (Performance Based) pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) is incorporated by reference to Exhibit 10.17 of the Registrant’s Form 10-K for the period ended October 31, 2014.

10.17*		Form of Non-Qualified Stock Option Grant, is hereby incorporated by reference to Exhibit 10.18 of the Registrant’s Form 10-K for the year ended October 31, 2016.

10.18*		Form of Restricted Stock Unit Agreement (Performance Based), is hereby incorporated by reference to Exhibit 10.19 of the Registrant’s Form 10-K for the year ended October 31, 2016.

10.19*		Form of Restricted Stock Unit Agreement (Total Shareholder Return Performance Based), is hereby incorporated by reference to Exhibit 10.20 of the Registrant’s Form 10-K for the year ended October 31, 2016.

10.20*		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 its Registration Statement on Form S-8 (No. 333-144230) filed with the Securities and Exchange Commission on October 29, 2008.

10.21*		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.



Exhibit Number		Description
10.22*		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.

10.23*		Form of Restricted Stock Unit Award Agreement pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) is incorporated by reference to Exhibit 10.21 of the Registrant’s Form 10-K for the period ended October 31, 2014.

10.24*		Toll Brothers, Inc. Stock Incentive Plan for Non-Executive Directors (2016) is hereby incorporated by reference to Annex A to the Registrant’s definitive proxy statement on Schedule 14A for its 2016 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on February 2, 2016.

10.25*		Form of Non-Qualified Stock Option Grant (Non-Executive Directors), is hereby incorporated by reference to Exhibit 10.26 of the Registrant’s Form 10-K for the year ended October 31, 2016.

10.26*		Form of Restricted Stock Unit Agreement (Non-Executive Directors), is hereby incorporated by reference to Exhibit 10.27 of the Registrant’s Form 10-K for the year ended October 31, 2016.

10.27*		Toll Brothers, Inc. 2019 Omnibus Incentive Plan, 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 March 14, 2019.

10.28*		Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan.**

10.29*		Form of Restricted Stock Unit Agreement pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan.**

10.30*		Form of Restricted Stock Unit Agreement (Performance Based) pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan.**

10.31*		Form of Restricted Stock Unit Agreement (Total Shareholder Return Performance Based), pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan.**

10.32*		Toll Brothers, Inc. Senior Officer Bonus Plan is hereby incorporated by reference to Annex A to the Registrant’s definitive proxy statement on Schedule 14A for its 2015 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on January 30, 2015.

10.2810.33		Toll Brothers, Inc. Supplemental Executive Retirement Plan, as amended ~~and restated~~ effective as of ~~March 12, 2014,~~ October 29, 2019, is hereby incorporated by reference to Exhibit ~~10.3~~10.1 to the Registrant’s Current Report on Form 10-Q ~~for~~filed with the ~~quarter ended April~~Securities and Exchange Commission on October 30, ~~2014.~~2019.

10.2910.34		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.

10.3010.35		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 incorporated by reference to Exhibit 10.40 of the Registrant’s Form 10-K for the period ended October 31, 2010.