UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ☑QUARTERLY REPORT PURSUANT TO SECTIONQuarterly report pursuant to Section 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934
For the quarterly period ended JanuaryJuly 31, 20182023
or
o☐TRANSITION REPORT PURSUANT TO SECTIONTransition report pursuant to Section 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934
For the transition period from to
Commission file number 001-09186
TOLL BROTHERS, INC.Toll Brothers, Inc.
(Exact name of registrant as specified in its charter)
Delaware
23-2416878
(State or other jurisdiction of

incorporation or organization)
23-2416878
(I.R.S. Employer

Identification No.)
250 Gibraltar Road, Horsham, 1140 Virginia Drive
Fort WashingtonPennsylvania
19034
(Address of principal executive offices)
19044
(Zip Code)
(215) 938-8000
(Registrant’s telephone number, including area code)
Not applicableSecurities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTOLNew York Stock Exchange
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
Large accelerated filerþ
☑
Accelerated filero
☐Non-accelerated filer☐
Non-accelerated filer o (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 þ☑
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
At March 5, 2018,August 29, 2023, there were approximately 151,822,000107,479,000 shares of Common Stock, $0.01 par value $0.01 per share, outstanding.




TOLL BROTHERS, INC.
TABLE OF CONTENTS
Page No.
1
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
2
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
3
Condensed Consolidated Statements of Changes in Equity (Unaudited)
4
Condensed Consolidated Statements of Cash Flows (Unaudited)
46
Notes to Condensed Consolidated Financial Statements (Unaudited)
57
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2925
Item 3. Quantitative and Qualitative Disclosures About Market Risk
4443
Item 4. Controls and Procedures
44
PART II. Other Information
Item 1. Legal Proceedings
45
Item 1A. Risk Factors
45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
45
Item 6. Exhibits
46
47







STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.amended (the “Exchange Act”). One can identify these statements by the fact that they do not relate to matters of a strictly historical or factual nature and generally discuss or relate to future events. These statements contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should,” “likely”, “will” and other words or phrases of similar meaning. Such statements may include, but are not limited to, information related to:and statements regarding: expectations regarding interest rates and inflation; the markets in which we operate or may operate; our strategic objectives and priorities; our land acquisition, land development and capital allocation plans and priorities; housing market conditions; demand for our homes; anticipated operating results;results and guidance; home deliveries; financial resources and condition; changes in revenues; changesrevenues, in profitability; changesprofitability and in margins; changes in accounting treatment; cost of revenues;revenues, including expected labor and material costs; availability of labor and materials; selling, general, and administrative expenses; interest expense; inventory write-downs; home warranty and construction defect claims; unrecognized tax benefits; anticipated tax refunds; sales paces and prices; effects of home buyer cancellations; growth and expansion; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; theour ability to acquire or dispose of land and pursue real estate opportunities; theour ability to gain approvals andto develop land, open new communities; thecommunities and deliver homes; our ability to market, construct and sell homes and properties; the ability torate at which we deliver homes from backlog; theour ability to secure materials and subcontractors; theour ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; and the outcome of legal proceedings, investigations, and claims.
From time to time, forward-looking statements also are included in other reports on Forms 10-K, 10-Q, and 8-K; in press releases; in presentations; on our website; and in other materials released to the public. Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Therefore, we caution you not to place undue reliance on our forward-looking statements. The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
•the effect of general economic conditions, including employment rates, housing starts, interest and mortgage rates, home affordability, inflation, consumer sentiment, availability of financing for home mortgages and strength of the U.S. dollar;
•market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;
•the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such land;
•access to adequate capital on acceptable terms;
•geographic concentration of our operations;
•levels of competition;
•the price and availability of lumber, other raw materials, and home components;
•the impact of labor shortages, including on our subcontractors, supply chain and municipalities;
•the effect of U.S. trade policies, including the imposition of tariffs and duties on home building products and retaliatory measures taken by other countries;
•the effects of weather and the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, unavailability of insurance, and shortages and price increases in labor or materials associated with such natural disasters;
•risks arising from acts of war, terrorism or outbreaks of contagious diseases, such as COVID-19;
•federal and state tax policies;
•transportation costs;
•the effect of land use, environmental and other governmental laws and regulations;
•legal proceedings or disputes and the adequacy of reserves;
•risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, indebtedness, financial condition, losses and future prospects;
•the effect of potential loss of key management personnel;
•changes in accounting principles; and
•risks related to unauthorized access to our computer systems, theft of our and our homebuyers’ confidential information or other forms of cyber-attack.
Many of the factors mentioned above, elsewhere in this report or in other reports or public statements made by us such as market conditions, government regulation, and the competitive environment, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.
Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
For a more detailedfurther discussion of these factors that we believe could cause our actual results to differ materially from expected and historical results, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K filed with the SEC and in this report.
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.






1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
July 31,
2023		October 31,
2022
 (unaudited) 
ASSETS
Cash and cash equivalents$1,033,369 $1,346,754 
Inventory (1)
9,203,524 8,733,326 
Property, construction, and office equipment – net294,418 287,827 
Receivables, prepaid expenses, and other assets739,566 747,228 
Mortgage loans held for sale – at fair value80,417 185,150 
Customer deposits held in escrow102,017 136,115 
Investments in unconsolidated entities (1)
900,363 852,314 
 $12,353,674 $12,288,714 
LIABILITIES AND EQUITY
Liabilities
Loans payable$1,163,116 $1,185,275 
Senior notes1,595,956 1,995,271 
Mortgage company loan facility70,517 148,863 
Customer deposits620,106 680,588 
Accounts payable572,118 619,411 
Accrued expenses1,457,506 1,345,987 
Income taxes payable163,872 291,479 
Total liabilities5,643,191 6,266,874 
Equity
Stockholders’ equity
Preferred stock, none issued— — 
Common stock, 127,937 shares issued at July 31, 2023 and October 31, 20221,279 1,279 
Additional paid-in capital695,757 716,786 
Retained earnings7,024,286 6,166,732 
Treasury stock, at cost — 19,888 and 18,312 shares at July 31, 2023 and October 31, 2022, respectively(1,067,405)(916,327)
Accumulated other comprehensive income ("AOCI")39,476 37,618 
Total stockholders’ equity6,693,393 6,006,088 
Noncontrolling interest17,090 15,752 
Total equity6,710,483 6,021,840 
 $12,353,674 $12,288,714 
(1)    As of July 31, 2023 and October 31, 2022, inventory and investments in unconsolidated entities include $89.7 million and $81.3 million, respectively, of assets related to consolidated variable interest entities (“VIEs”). See Note 4, “Investments in Unconsolidated Entities” for additional information regarding VIEs.
 January 31,
2018		 October 31,
2017
 (unaudited)  
ASSETS   
Cash and cash equivalents$508,277
 $712,829
Restricted cash and investments2,459
 2,482
Inventory7,713,796
 7,281,453
Property, construction, and office equipment, net186,159
 189,547
Receivables, prepaid expenses, and other assets559,990
 542,217
Mortgage loans held for sale70,488
 132,922
Customer deposits held in escrow119,418
 102,017
Investments in unconsolidated entities449,748
 481,758
Deferred tax assets, net of valuation allowances7,564
 

 $9,617,899
 $9,445,225
LIABILITIES AND EQUITY   
Liabilities   
Loans payable$631,791
 $637,416
Senior notes2,859,689
 2,462,463
Mortgage company loan facility38,344
 120,145
Customer deposits421,565
 396,026
Accounts payable287,392
 275,223
Accrued expenses914,228
 959,353
Income taxes payable—
 57,509
Total liabilities5,153,009
 4,908,135
Equity   
Stockholders’ equity   
Preferred stock, none issued—
 —
Common stock, 177,937 shares issued at January 31, 2018 and October 31, 20171,779
 1,779
Additional paid-in capital709,800
 720,115
Retained earnings4,595,233
 4,474,064
Treasury stock, at cost — 24,335 and 20,732 shares at January 31, 2018 and October 31, 2017, respectively(845,668) (662,854)
Accumulated other comprehensive loss(2,150) (1,910)
Total stockholders’ equity4,458,994
 4,531,194
Noncontrolling interest5,896
 5,896
Total equity4,464,890
 4,537,090
 $9,617,899
 $9,445,225






See accompanying notes.

2

TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended July 31,Nine months ended July 31,
 2023202220232022
Revenues:
Home sales$2,674,602 $2,256,337 $6,914,122 $6,130,218 
Land sales and other13,040 238,465 60,668 433,206 
2,687,642 2,494,802 6,974,790 6,563,424 
Cost of revenues:
Home sales1,931,949 1,670,703 5,065,750 4,619,495 
Land sales and other11,578 229,561 74,863 422,159 
1,943,527 1,900,264 5,140,613 5,041,654 
Selling, general and administrative229,004 232,865 668,038 703,372 
Income from operations515,111 361,673 1,166,139 818,398 
Other:
Income from unconsolidated entities30,548 2,984 20,813 27,954 
Other income – net7,358 1,294 50,453 16,230 
Income before income taxes553,017 365,951 1,237,405 862,582 
Income tax provision138,228 92,484 310,870 216,618 
Net income$414,789 $273,467 $926,535 $645,964 
Other comprehensive income (loss) – net of tax5,601 (2,680)1,858 15,630 
Total comprehensive income$420,390 $270,787 $928,393 $661,594 
Per share:
Basic earnings$3.77 $2.37 $8.36 $5.47 
Diluted earnings$3.73 $2.35 $8.28 $5.41 
Weighted-average number of shares:
Basic110,003 115,334 110,871 118,056 
Diluted111,123 116,326 111,881 119,369 

 Three months ended January 31,
 2018 2017
Revenues$1,175,468
 $920,730
    
Cost of revenues934,480
 733,002
Selling, general and administrative157,267
 137,095
 1,091,747
 870,097
Income from operations83,721
 50,633
Other:   
Income from unconsolidated entities38,880
 46,445
Other income – net8,997
 12,703
Income before income taxes131,598
 109,781
Income tax (benefit) provision(509) 39,365
Net income$132,107
 $70,416
    
Other comprehensive income, net of tax171
 169
Total comprehensive income$132,278
 $70,585
    
Per share:   
Basic earnings$0.85
 $0.43
Diluted earnings$0.83
 $0.42
Cash dividends declared$0.08
 
    
Weighted-average number of shares:   
Basic155,882
 162,588
Diluted158,897
 170,417







See accompanying notes.

3


TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)

For the three months ended July 31, 2023 and 2022:
Common
Stock		Addi-
tional
Paid-in
Capital		Retained
Earnings		Treasury
Stock		AOCINon-controlling InterestTotal
Equity
Balance, April 30, 2023$1,279 $697,583 $6,632,502 $(945,019)$33,875 $15,506 $6,435,726 
Net income414,789 414,789 
Purchase of treasury stock(147,283)(147,283)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(6,091)24,897 18,806 
Stock-based compensation4,265 4,265 
Dividends declared(23,005)(23,005)
Other comprehensive income5,601 5,601 
Loss attributable to non-controlling interest(200)(200)
Capital contributions – net1,784 1,784 
Balance, July 31, 2023$1,279 $695,757 $7,024,286 $(1,067,405)$39,476 $17,090 $6,710,483 
Balance, April 30, 2022$1,279 $714,651 $5,297,939 $(669,396)$19,419 $15,774 $5,379,666 
Net income273,467 273,467 
Purchase of treasury stock(91,607)(91,607)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(1,058)1,931 873 
Stock-based compensation2,238 2,238 
Dividends declared(22,910)(22,910)
Other comprehensive loss(2,680)(2,680)
Balance, July 31, 2022$1,279 $715,831 $5,548,496 $(759,072)$16,739 $15,774 $5,539,047 


















4

For the nine months ended July 31, 2023 and 2022:
Common
Stock		Addi-
tional
Paid-in
Capital		Retained
Earnings		Treasury
Stock		AOCINon-controlling InterestTotal
Equity
 $$$$$$$
Balance, October 31, 2022$1,279 $716,786 $6,166,732 $(916,327)$37,618 $15,752 $6,021,840 
Net income926,535 926,535 
Purchase of treasury stock(240,486)(240,486)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(42,319)89,408 47,089 
Stock-based compensation21,290 21,290 
Dividends declared(68,981)(68,981)
Other comprehensive income1,858 1,858 
Loss attributable to non-controlling interest(446)(446)
Capital contributions - net1,784 1,784 
Balance, July 31, 2023$1,279 $695,757 $7,024,286 $(1,067,405)$39,476 $17,090 $6,710,483 
Balance, October 31, 2021$1,279 $714,453 $4,969,839 $(391,656)$1,109 $45,431 $5,340,455 
Net income645,964 645,964 
Purchase of treasury stock(383,886)(383,886)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(17,880)16,470 (1,410)
Stock-based compensation19,258 19,258 
Dividends declared(67,307)(67,307)
Other comprehensive income15,630 15,630 
Income attributable to non-controlling interest86 86 
Capital distributions - net(29,743)(29,743)
Balance, July 31, 2022$1,279 $715,831 $5,548,496 $(759,072)$16,739 $15,774 $5,539,047 


See accompanying notes.
5
TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine months ended July 31,
 20232022
Cash flow provided by (used in) operating activities:
Net income$926,535 $645,964 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization54,249 53,267 
Stock-based compensation21,290 19,258 
Income from unconsolidated entities(20,813)(27,954)
Distributions of earnings from unconsolidated entities69,107 31,182 
Deferred tax provision5,764 10,659 
Impairment charges and write-offs40,137 17,473 
Other3,037 3,761 
Changes in operating assets and liabilities: 
Inventory(165,152)(1,288,029)
Origination of mortgage loans(1,137,893)(1,390,630)
Sale of mortgage loans1,248,621 1,513,603 
Receivables, prepaid expenses, and other assets(34,667)32,114 
Current income taxes – net(133,983)(30,361)
Customer deposits – net(26,384)96,425 
Accounts payable and accrued expenses(174,815)66,637 
Net cash provided by (used in) operating activities675,033 (246,631)
Cash flow used in investing activities:
Purchase of property, construction, and office equipment – net(54,100)(56,485)
Investments in unconsolidated entities(162,576)(176,592)
Return of investments in unconsolidated entities74,006 109,645 
Proceeds from the sale of assets9,041 28,309 
Other— 194 
Net cash used in investing activities(133,629)(94,929)
Cash flow used in financing activities:
Proceeds from loans payable2,413,016 2,950,869 
Debt issuance costs(5,324)— 
Principal payments of loans payable(2,603,645)(3,009,301)
Redemption of senior notes(400,000)(409,856)
Proceeds (payments) related to stock-based benefit plans – net47,091 (1,407)
Purchase of treasury stock(239,320)(383,886)
Dividends paid(69,070)(66,948)
Payments related to noncontrolling interest – net— (25,766)
Net cash used in financing activities(857,252)(946,295)
Net decrease in cash, cash equivalents, and restricted cash(315,848)(1,287,855)
Cash, cash equivalents, and restricted cash, beginning of period1,398,550 1,684,412 
Cash, cash equivalents, and restricted cash, end of period$1,082,702 $396,557 

 Three months ended January 31,
 2018 2017
Cash flow (used in) provided by operating activities:   
Net income$132,107
 $70,416
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
Depreciation and amortization6,171
 6,030
Stock-based compensation8,889
 9,329
Income from unconsolidated entities(38,880) (46,445)
Distributions of earnings from unconsolidated entities38,892
 48,581
Income from foreclosed real estate and distressed loans(448) (630)
Deferred tax (benefit) provision(30,575) 2,328
Change in deferred tax valuation allowances

 36
Inventory impairments and write-offs3,853
 4,661
Other1,006
 2,544
Changes in operating assets and liabilities   
Increase in inventory(416,764) (135,782)
Origination of mortgage loans(231,436) (232,721)
Sale of mortgage loans292,946
 393,393
Decrease in restricted cash and investments23
 797
(Increase) decrease in receivables, prepaid expenses, and other assets(16,594) 83,815
Increase in customer deposits8,138
 30,096
Decrease in accounts payable and accrued expenses(54,029) (170,123)
Decrease in income taxes payable(33,100) (42,157)
Net cash (used in) provided by operating activities(329,801) 24,168
Cash flow provided by (used in) investing activities:   
Purchase of property and equipment — net(1,694) (6,314)
Sale and redemption of marketable securities and restricted investments — net

 18,049
Investments in unconsolidated entities(4,422) (99,941)
Return of investments in unconsolidated entities36,253
 33,253
Investment in foreclosed real estate and distressed loans(92) (274)
Return of investments in foreclosed real estate and distressed loans1,505
 1,852
Acquisition of a business

 (85,183)
Net cash provided by (used in) investing activities31,550
 (138,558)
Cash flow provided by (used in) financing activities:   
Proceeds from issuance of senior notes400,000
 

Debt issuance costs for senior notes(3,410) 

Proceeds from loans payable589,819
 360,382
Principal payments of loans payable(687,740) (516,833)
Proceeds from stock-based benefit plans7,580
 25,831
Purchase of treasury stock(200,257) (15,236)
Dividends paid(12,293) 

Net cash provided by (used in) financing activities93,699
 (145,856)
Net decrease in cash and cash equivalents(204,552) (260,246)
Cash and cash equivalents, beginning of period712,829
 633,715
Cash and cash equivalents, end of period$508,277
 $373,469


See accompanying notes.

6

TOLL BROTHERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
Basis of Presentation
The accompanyingOur condensed consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company,” “we,” “us,” or “our”), a Delaware corporation, and its majority-ownedmajority 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.
The accompanyingOur unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The October 31, 20172022 balance sheet amounts and disclosures included herein have been derived from our October 31, 20172022 audited financial statements. Since the accompanying condensed consolidated financial statements do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements, we suggest that they should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 20172022 (“20172022 Form 10-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which are of a normal recurring nature,adjustments necessary to present fairly our financial position as of JanuaryJuly 31, 2018;2023; the results of our operations and changes in equity for the three-month and nine-month periods ended JanuaryJuly 31, 20182023 and 2017;2022; and our cash flows for the three-monthnine-month periods ended JanuaryJuly 31, 20182023 and 2017.2022. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.
ReclassificationUse of Estimates
The Condensed Consolidated Statementpreparation of Cash Flowsfinancial statements in accordance with GAAP requires estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates and assumptions may prove to be incorrect for a variety of reasons, whether as a result of the risks and uncertainties our business is subject to or for other reasons. In times of economic disruption when uncertainty regarding future economic conditions is heightened, our estimates and assumptions are subject to greater variability. Actual results could differ from the estimates and assumptions we make and such differences may be material.
Revenue Recognition
Home sales revenues: Revenues and cost of revenues from home sales are 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. 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 July 31, 2023, 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 $620.1 million and $680.6 million at July 31, 2023 and October 31, 2022, respectively. Of the outstanding customer deposits held as of October 31, 2022, we recognized $150.4 million and $425.5 million in home sales revenues during the three months and nine months ended JanuaryJuly 31, 2017 was restated2023, respectively. Of the outstanding customer deposits held as of October 31, 2021, we recognized $131.1 million and $374.8 million in home sales revenues during the three and nine months ended July 31, 2022, respectively.
Land sales and other revenues: Our revenues from land sales and other generally consist of: (1) land sales to reflect a reclassificationjoint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk sales to third parties of approximately $18.0 millionland we have decided no longer meets our development criteria; and (4) sales of commercial and retail properties generally located at our high-rise urban luxury condominium buildings. 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 flowconsideration from “Net cash (used in) provided by operating activities” to “Net cash provided by (used in) investing activities”the counterparty. For land sale transactions that contain repurchase options, revenues and related to restricted investment activity.costs are not recognized until the repurchase option expires. In addition, certain other prior period amounts have been reclassifiedwhen we sell land to conforma joint venture in which we retain an interest, we do not recognize revenue or gains on the sale to the fiscal 2018 presentation.extent of our retained interest in such joint venture.
Forfeited Customer Deposits: Forfeited customer deposits are recognized in “Home sales revenues” in our Condensed 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.
7
Sales Incentives: In order to promote sales of our homes, we may offer our home buyers sales incentives. These incentives vary by type of incentive and by amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sales revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds.
Recent Accounting Pronouncements
In February 2018,March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards UpdateASU 2020-04, “Reference Rate Reform (Topic 848),” as amended by ASU 2021-01 in January 2021 and ASU 2022-06 in December 2022 (“ASU”ASC 848”), directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the publication of certain London Interbank Offered Rate (“LIBOR”) No. 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassificationrates beginning December 31, 2021. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform by virtue of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”). ASU 2018-02 allows a reclassification from accumulated other comprehensive incomereferencing LIBOR or another reference rate expected to retained earnings for stranded tax effects resulting from the Tax Cutsbe discontinued. This guidance became effective on March 12, 2020 and Jobs Act enacted oncan be adopted no later than December 22, 2017 and also requires entities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income.31, 2024, with early adoption permitted. We elected to adopt ASU 2018-02 inapply the current period,hedge accounting expedients related to probability and the adoption did not have a material effectassessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance on our consolidated financial statements and disclosures.may apply other elections as applicable as additional changes in the market occur.

Reclassification
Certain prior period amounts have been reclassified to conform to the fiscal 2023 presentation.
2. Acquisition
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 post-retirement 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. We adopted ASU 2017-07 on November 1, 2017, and the adoption did not 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. We adopted ASU 2016-09 on November 1, 2017. Excess tax benefits or deficiencies for stock-based compensation are now reflected in our Condensed Consolidated Statements of Operations and Comprehensive Income as a component of income tax expense, whereas previously they were recognized in equity. We have also elected to account for forfeitures as they occur, rather than estimate expected forfeitures. As a result of adopting ASU 2016-09, the impact of recognizing excess tax benefits and deficiencies in our Condensed Consolidated Statements of Operations and Comprehensive Income resulted in a $4.0 million reduction in our income tax expense for our first quarter of fiscal 2018. The remaining aspects of adopting ASU 2016-09 did not have a material impact on our financial statements and disclosures.


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 scopeJune 2022, we acquired substantially all of the original guidance within Subtopic 610-20 that was issued in connection with ASU 2014-09, as defined below, 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 is effective for our fiscal year beginning November 1, 2018 and we are required to adopt ASU 2017-05 concurrent with the adoption of ASU 2014-09. We are currently evaluating the impact that the adoption of ASU 2017-05 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 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 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.
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 sheetoperations of a privately-held home builder with operations in San Antonio, Texas for the rightsapproximately $48.1 million in cash. The assets acquired, which consisted of 16 communities, were primarily inventory, including approximately 450 home sites owned or controlled through land purchase agreements. This acquisition was accounted for as an asset acquisition and obligations created by leased assets and provide additional disclosures. ASU 2016-02 is effective forwas not material to 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 adoptionresults of ASU 2016-02 may have on our consolidatedoperations or financial statements and disclosures.condition.
2.3. Inventory
Inventory at JanuaryJuly 31, 20182023 and October 31, 20172022 consisted of the following (amounts in thousands):
 January 31,
2018		 October 31,
2017
Land controlled for future communities$128,847
 $87,158
Land owned for future communities1,199,686
 1,142,870
Operating communities6,385,263
 6,051,425
 $7,713,796
 $7,281,453
July 31,
2023		October 31,
2022
Land controlled for future communities$193,051 $240,751 
Land owned for future communities920,366 808,851 
Operating communities8,090,107 7,683,724 
$9,203,524 $8,733,326 
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 period 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 offeringBacklog consists of homes for saleunder contract but are temporarily closed duenot yet delivered 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.our home buyers (“backlog”).


Information regarding the classification, number, and carrying value of these temporarily closed communities, as of the dates indicated, is provided in the table below:
 January 31,
2018		 October 31,
2017
Land owned for future communities:   
Number of communities17
 14
Carrying value (in thousands)$131,296
 $110,732
Operating communities:   
Number of communities1
 6
Carrying value (in thousands)$3,342
 $26,749
The amounts we have provided for inventory impairment charges and the expensing of costs that we believedbelieve not to be recoverable, for the periods indicated,and which are included in home sales cost of revenues, are shown in the table below (amounts in thousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Land controlled for future communities$895 $3,848 $9,343 $6,833 
Land owned for future communities369 2,400 694 3,840 
Operating communities2,100 — 12,400 — 
$3,364 $6,248 $22,437 $10,673 
We have also recognized $17.7 million of impairment charges on land held for sale included in land sales and other cost of revenues during the nine-month period ended July 31, 2023. No impairment charges were recognized in land sales and other
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 Three months ended January 31,
 2018 2017
Land controlled for future communities$117
 $661
Operating communities3,736
 4,000
 $3,853
 $4,661
cost of revenues during the three-month period ended July 31, 2023. We recognized $1.4 million and $6.6 million of similar charges during the three-month and nine-month periods ended July 31, 2022, respectively.
See Note 11, “Fair Value Disclosures,14, “Commitments and Contingencies,” 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 values of those communities, net of impairment charges.land purchase commitments.
At JanuaryJuly 31, 2018,2023, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEsvariable interest entities (“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 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 JanuaryJuly 31, 2018,2023, we determined that 107247 land purchase contracts, with an aggregate purchase price of $1.77$3.78 billion, on which we had made aggregate deposits totaling $88.3$413.3 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2017,2022, we determined that 104237 land purchase contracts, with an aggregate purchase price of $1.43$3.89 billion, on which we had made aggregate deposits totaling $65.6$417.6 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.
Interest incurred, capitalized, and expensed, for the periods indicated, waswere as follows (amounts in thousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Interest capitalized, beginning of period$211,760 $237,333 $209,468 $253,938 
Interest incurred32,624 34,676 107,341 97,569 
Interest expensed to home sales cost of revenues(37,004)(37,308)(99,642)(110,567)
Interest expensed to land sales and other cost of revenues(1,258)(1,221)(6,086)(4,848)
Interest capitalized on investments in unconsolidated entities(2,271)(1,759)(7,432)(4,566)
Previously capitalized interest transferred to investments in unconsolidated entities— — (244)— 
Previously capitalized interest on investments in unconsolidated entities transferred to inventory296 32 742 227 
Interest capitalized, end of period$204,147 $231,753 $204,147 $231,753 

 Three months ended January 31,
 2018 2017
Interest capitalized, beginning of period$352,049
 $369,419
Interest incurred38,687
 41,774
Interest expensed to cost of revenues(33,885) (27,928)
Interest expensed in other income(716) (42)
Interest capitalized on investments in unconsolidated entities(1,711) (2,394)
Previously capitalized interest transferred to investments in unconsolidated entities
 (4,030)
Previously capitalized interest on investments in unconsolidated entities transferred to inventory72
 81
Interest capitalized, end of period$354,496
 $376,880



3.4. Investments in Unconsolidated Entities
We have investments in various unconsolidated entities.entities and our ownership interest in these investments ranges from 5.0% to 50%. These entities which are structured as joint ventures and either: (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 and single family homes, commercial space, and a hotel (“Rental Property Joint Ventures”), which includes our investment in Toll Brothers Realty Trust (the “Trust”); andor (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”).

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The table below provides information as of JanuaryJuly 31, 2018,2023, 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 entities16343365
Investment in unconsolidated entities (1)
$346,404 $66,367 $479,083 $8,509 $900,363 
Number of unconsolidated entities with funding commitments by the Company9—231 33
Company’s remaining funding commitment to unconsolidated entities (2)
$209,064 $— $124,166 $12,148 $345,378 
(1)    Our total investment includes $101.1 million related to 11 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $202.9 million as of July 31, 2023. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 20% to 50%.
 Land
Development
Joint Ventures		 Home Building
Joint Ventures		 Rental Property
Joint Ventures		 Gibraltar
Joint Ventures		 Total
Number of unconsolidated entities7 4 13 5 29
Investment in unconsolidated entities$225,283
 $93,185
 $116,682
 $14,598
 $449,748
Number of unconsolidated entities with funding commitments by the Company5 1 1 1
 8
Company’s remaining funding commitment to unconsolidated entities$23,689
 $8,300
 $609
 $9,621
 $42,219
(2)    Our remaining funding commitment includes approximately $107.9 million related to our unconsolidated joint venture-related variable interests in VIEs.
The table below provides information as of October 31, 2022, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Gibraltar
Joint Ventures		Total
Number of unconsolidated entities15341463
Investment in unconsolidated entities (1)
$343,314 $49,385 $441,399 $18,216 $852,314 
Number of unconsolidated entities with funding commitments by the Company91181 29
Company’s remaining funding commitment to unconsolidated entities (2)
$180,812 $20,072 $90,900 $12,533 $304,317 
(1)    Our total investment includes $100.2 million related to 13 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $200.0 million as of October 31, 2022. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 20% to 50%.
(2)    Our remaining funding commitment includes approximately $105.0 million related to our unconsolidated joint venture-related variable interests in VIEs.
Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at JanuaryJuly 31, 2018,2023, regarding the debt financing obtained by category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Total
Number of joint ventures with debt financing1124053
Aggregate loan commitments$576,938 $219,650 $3,637,428 $4,434,016 
Amounts borrowed under loan commitments$394,033 $103,271 $2,100,888 $2,598,192 
 Land
Development
Joint Ventures		 Home Building
Joint Ventures		 Rental Property
Joint Ventures		 Total
Number of joint ventures with debt financing4 3 11 18
Aggregate loan commitments$200,988
 $382,031
 $948,335
 $1,531,354
Amounts borrowed under loan commitments$184,944
 $196,536
 $733,876
 $1,115,356
The table below provides information at October 31, 2022, regarding the debt financing obtained by category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Total
Number of joint ventures with debt financing1023547
Aggregate loan commitments$557,185 $219,650 $3,317,261 $4,094,096 
Amounts borrowed under loan commitments$444,306 $17,583 $1,774,567 $2,236,456 
More specific and/or recent information regarding our investments in, advances to, and future commitments to these entities is provided below.
Land Development
10
New Joint Ventures
DuringThe table below provides information on joint ventures entered into during the nine-months ended July 31, 2023 ($ amounts in thousands):
Land Development Joint VenturesHome Building Joint VenturesRental Property Joint Ventures
Number of unconsolidated joint ventures entered into during the period1— 3
Investment balance at July 31, 2023$12,808 $— $7,096 
Number of consolidated joint ventures entered into during the period— 1 1 
Carrying value of consolidated joint ventures’ assets at July 31, 2023$— $5,000 $10,604 
Noncontrolling interests in consolidated joint ventures at July 31, 2023$— $835 $2,651 
The table below provides information on joint ventures entered into during the nine-months ended July 31, 2022 ($ amounts in thousands):
Land Development Joint VenturesRental Property Joint VenturesGibraltar Joint Ventures
Number of unconsolidated joint ventures entered into during the period311 1 
Investment balance at July 31, 2022$44,500 $118,600 $2,400 
Results of Operations and Intra-entity Transactions
From time to time, certain of our land development and rental property joint ventures sell assets to unrelated parties or to our joint venture partners. In the three monthsand nine-month periods ended JanuaryJuly 31, 2018, our Land Development Joint Ventures sold 249 lots and recognized revenues2023, one of $40.2 million. We acquired 30 of these lots for $3.2 million. Our share of the joint venture income from the lots we acquired of $0.5 million was deferred by reducing our basis in those lots acquired. During the three months ended January 31, 2017, our Land Development Joint Ventures sold approximately 303 lots and recognized revenues of $56.3 million. We acquired 102 of these lots for $25.0 million. Our share of the income from the lots we acquired of $3.7 million was deferred by reducing our basis in those lots acquired.
Home Building Joint Ventures
Our Home Building Joint Ventures are delivering homes in New York City and Jupiter, Florida. During the three months ended January 31, 2018 and 2017, our Home Building Joint Ventures delivered 28 homes with a sales value of $32.6 million, and 87 homes with a sales value of $217.4 million, respectively.
Rental Property Joint Ventures
As of January 31, 2018, our Rental Property Joint Ventures owned 12 for-rent apartment projects and a hotel, which are located in the metro Boston to metro Washington, D.C. corridor. At January 31, 2018, our joint ventures had approximately 2,800 units that were occupied or ready for occupancy, 750 units in the lease-up stage,sold its assets and 1,250 units under active development. In addition, we either own, have under contract, or under a letter of intent approximately 9,350 units, of which 1,050 units are under active development. We intend to develop these units in joint ventures with unrelated parties in the future.
In the first quarter of fiscal 2018, we, and our partner, sold the assets in one of our Rental Property Joint Ventures to an unrelated party for $219.0 million. The joint venture had owned, developed, and operated a student housing community in


College Park, Maryland. In connection with the sale, the joint venture’s existing $110.0recognized $35.0 million loan was repaid. We received cash of $39.3 million and recognized a gain of $30.8 million in the three months ended January 31, 2018, which is included in “Income from unconsolidated entities” inon our Condensed Consolidated Statements of Operations and Comprehensive Income.
In the first quarternine-month period ended July 31, 2022, one of fiscal 2018, we entered into aour joint venture with an unrelated party to develop a 112-unit luxury for-rent residential apartment project in Belmont, Massachusetts. Prior to the formation of this joint venture, we acquired the property and incurred approximately $22.1 million of land and land development costs. Our partner acquired a 50% interest in this entity for $11.0 millionventures sold its assets and we subsequently received cash of $10.8recognized $21.0 million from our partner. At January 31, 2018, our partner had the right, if certain events not occur, to exit the venture and require us to repurchase their interest. Given this contingency, as of January 31, 2018, our investment, net of our partner’s contribution, was recorded in “Receivables, prepaid expenses, and other assets” on our Condensed Consolidated Balance Sheet. We expect this contingency to be satisfied in our second quarter of fiscal 2018. At January 31, 2018, our net investment in this property was $11.3 million. The joint venture expects to enter into a construction loan agreement in the second quarter of fiscal 2018 to provide up to $42.4 million of financing for the development of this property.
In the first quarter of fiscal 2017, we sold 50% of our interest in a 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, which is included in “Income from unconsolidated entities” inon our Condensed Consolidated Statements of Operations and Comprehensive Income. At January 31, 2018, we had a 25% interest and a $2.8 million investment in this joint venture.
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 January 31, 2018, our investment in the Trust was zero 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 amount of $0.6 million and $0.4 million in the three-month periods ended JanuaryJuly 31, 20182023 and 2017, respectively.
Gibraltar2022, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures,
We, through totaling $25.7 million and $2.4 million, respectively. In the nine-month periods ended July 31, 2023 and 2022, we purchased land from unconsolidated entities, principally related to our wholly owned subsidiary, Gibraltar Capitalacquisition of lots from our Land Development Joint Ventures, totaling $94.8 million and Asset Management, LLC (“Gibraltar”),$40.3 million, respectively. Our share of income from the lots we acquired was insignificant in each period. In the three-month period ended July 31, 2022, we sold land to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, totaling $159.7 million. No similar land sales to our Rental Property Joint Ventures occurred during the the three months ended July 31, 2023. In the nine-month periods ended July 31, 2023 and 2022, we sold land to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, totaling $8.2 million and $311.5 million, respectively. These amounts are a memberincluded in several ventures with an institutional investor to provide builders“Land sales and developers withother revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income and are generally sold at or near our land banking and venture capital. These ventures finance builders’ and developers’ acquisition and development of land and home sites and pursue other complementary investment strategies. We also are 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%. As of January 31, 2018, we had an investment of $14.6 million in these ventures.basis.
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 portions of the 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, 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.entity or its partners.
In some instances, thewe and our joint venture partner have provided joint and several guarantees provided in connection with loans to an unconsolidated entity are joint and several.entities. In these situations, we generally haveseek to implement 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, we are not always successful. In addition, if athe joint venture partner does not have adequate financial resources to meet its obligations under thesuch a reimbursement agreement, we may be liable for more than our proportionate share.
11
We believe that, as of JanuaryJuly 31, 2018,2023, 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 January 31, 2018,
Information with respect to certain of the Company’s unconsolidated entities haveentities’ outstanding debt obligations, loan commitments aggregating $1.08 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $269.6 million to beand our guarantees thereon are as follows ($ amounts in thousands):
July 31, 2023October 31, 2022
Loan commitments in the aggregate$3,180,600 $2,858,800 
Our maximum estimated exposure under repayment and carry cost guarantees if the full amount of the debt obligations were borrowed (1)
$642,200 $597,800 
Debt obligations borrowed in the aggregate$1,505,900 $1,110,900 
Our maximum estimated exposure under repayment and carry cost guarantees of the debt obligations borrowed$509,800 $390,500 
Estimated fair value of guarantees provided by us related to debt and other obligations$18,500 $16,900 
Terms of guarantees
1 month -
3.9 years
1 month -
3.7 years
(1)    At July 31, 2023 and October 31, 2022, our maximum estimated exposure related tounder repayment and carry cost guarantees. At January 31, 2018, theguarantees includes approximately $95.0 million related to our unconsolidated entities had borrowed an aggregate of $664.9 million, of which we estimate $217.7 million to be ourJoint Venture VIEs.

The maximum exposure related to repayment and carry cost guarantees. The terms of these


guarantees generally range from 7 months to 37 months. These maximum exposure estimates presented above do not take into account any recoveries from the underlying collateral or any reimbursement from our partners.
As of January 31, 2018, the estimated aggregate fair value of the guarantees provided by us In addition, they do not include any potential exposures related to debt and other obligations of certain unconsolidated entities was approximately $4.8 million.project completion guarantees or the indemnities noted above, which are not estimable. We have not made payments under any of the outstanding guarantees, nor have we been called upon to do so.
Variable Interest Entities
At January
We have both unconsolidated and consolidated joint venture-related variable interests in VIEs. Information regarding our involvement in unconsolidated joint-venture related variable interests in VIEs has been disclosed throughout information presented above.

The table below provides information as of July 31, 20182023 and October 31, 2017,2022, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands):
Balance Sheet ClassificationJuly 31,
2023		October 31,
2022
Number of Joint Venture VIEs that the Company is the primary beneficiary and consolidates7 5 
Carrying value of consolidated VIEs assetsInventory and investments in unconsolidated entities$89,700 $81,300 
Our partners’ interests in consolidated VIEsNoncontrolling interest$11,300 $9,700 
Our ownership interest in the above consolidated Joint Venture VIEs ranges from 75% to 98%.
As shown above, we determined that eight of our joint ventures were VIEs under the guidance of ASC 810, “Consolidation.” However, we have concluded that we were notare the primary beneficiary of certain 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. For other VIEs, we are not the primary beneficiary because the power to direct the activities of such VIEs that most significantly impact their performance was either shared by us and such VIEs’VIE’s 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.partners. 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 the 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.partners.
At January 31, 2018 and October 31, 2017, our investments in the unconsolidated entities deemed to be VIEs, which are included in “Investments in unconsolidated entities” in the accompanying Condensed Consolidated Balance Sheets, totaled $34.8 million and $35.9 million, respectively. At January 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 $10.2 million of additional commitments to the VIEs. Of our potential exposure for these loan guarantees, $70.0 million is related to repayment and carry cost guarantees, of which $64.5 million was borrowed at January 31, 2018. At October 31, 2017, 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 million of additional commitments to the VIEs. At October 31, 2017, $70.0 million of our potential exposure for these loan guarantees was related to repayment and carry cost guarantees, of which $61.3 million was borrowed at October 31, 2017.
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Joint Venture Condensed Combined Financial Information
The Condensed Combined Balance Sheets, as of the dates indicated, and the Condensed Combined Statements of Operations, for the periods indicated, for the unconsolidated entities in which we have an investment are included below (in thousands):
Condensed Combined Balance Sheets:
 July 31,
2023		October 31,
2022
Cash and cash equivalents$155,474 $254,884 
Inventory1,316,961 1,256,215 
Loans receivable – net17,024 48,217 
Rental properties2,045,502 1,702,690 
Rental properties under development1,571,296 1,413,607 
Other assets384,604 305,250 
Total assets$5,490,861 $4,980,863 
Debt – net of deferred financing costs$2,590,381 $2,248,754 
Other liabilities469,411 399,818 
Partners’ equity2,431,069 2,332,291 
Total liabilities and equity$5,490,861 $4,980,863 
Company’s net investment in unconsolidated entities (1)
$900,363 $852,314 
(1)    Our underlying equity in the net assets of the unconsolidated entities was less than our net investment in unconsolidated entities by $28.4 million and $18.5 million as of July 31, 2023 and October 31, 2022, respectively, and these differences are primarily a result of distributions from entities in excess of the carrying amount of our net investment; unrealized gains on our retained joint venture interests; interest capitalized on our investments; other than temporary impairments we have recognized; gains recognized from the sale of our ownership interests; and the estimated fair value of the guarantees provided to the joint ventures.
 January 31,
2018		 October 31,
2017
Cash and cash equivalents$104,880
 $153,828
Inventory1,067,806
 1,148,209
Loans receivable, net19,532
 22,495
Rental properties831,672
 970,497
Rental properties under development223,904
 190,541
Real estate owned54,621
 53,902
Other assets159,816
 156,618
Total assets$2,462,231
 $2,696,090
Debt$1,115,356
 $1,199,583
Other liabilities137,188
 135,292
Members’ equity1,183,605
 1,332,285
Noncontrolling interest26,082
 28,930
Total liabilities and equity$2,462,231
 $2,696,090
Company’s net investment in unconsolidated entities (1)$449,748
 $481,758
(1)Differences between our net investment in unconsolidated entities and our underlying equity in the net assets of the entities are primarily a result of the acquisition price of an investment in a Land Development Joint Venture in fiscal 2012 that was in excess of our pro rata share of the underlying equity; impairments related to our investments in unconsolidated entities; interest capitalized on our investments; the estimated fair value of the guarantees provided to the joint ventures; gains recognized from the sale of our ownership interests; and distributions from entities in excess of the carrying amount of our net investment.
Condensed Combined Statements of Operations:
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Revenues$186,669 $114,542 $429,647 $401,065 
Cost of revenues124,414 60,566 266,593 256,256 
Other expenses67,195 45,967 187,336 128,742 
Total expenses191,609 106,533 453,929 384,998 
Loss on disposition of loans and real estate owned— — — (113)
(Loss) income from operations(4,940)8,009 (24,282)15,954 
Other income (2)
79,857 3,919 76,251 44,156 
Income before income taxes74,917 11,928 51,969 60,110 
Income tax expense1,195 37 1,030 194 
Net income73,722 11,891 50,939 59,916 
Company’s income from unconsolidated entities (3)
$30,548 $2,984 $20,813 $27,954 
(2)    The three and nine months ended July 31, 2023 includes gains of $78.8 million related to the sale of assets by one of our Rental Property Joint Ventures. The nine months ended July 31, 2022 includes gains of $29.9 million related to the sale of assets by one of our Rental Property Joint Ventures.
(3)    Differences between our (loss) income from unconsolidated entities and the underlying net (loss) income of the entities are primarily a result of distributions from entities in excess of the carrying amount of our investment; promote earned on the gains recognized by joint ventures and those promoted cash flows being distributed; other than temporary impairments we have recognized; recoveries of previously incurred charges; unrealized gains on our retained joint venture interests; gains recognized from the sale of our investment to our joint venture partner; and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired.
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 Three months ended January 31,
 2018 2017
Revenues$193,620
 $295,702
Cost of revenues148,750
 165,706
Other expenses24,286
 21,134
Total expenses173,036
 186,840
Gain on disposition of loans and real estate owned14,671
 8,886
Income from operations35,255
 117,748
Other income79,363
 2,586
Income before income taxes114,618
 120,334
Income tax provision198
 3,827
Net income including earnings from noncontrolling interests114,420
 116,507
Less: income attributable to noncontrolling interest(6,082) (2,080)
Net income attributable to controlling interest$108,338
 $114,427
Company’s equity in earnings of unconsolidated entities (2)$38,880
 $46,445
(2)Differences between our equity in earnings of unconsolidated entities and the underlying net income of the entities are primarily a result of a basis difference of an acquired joint venture interest; distributions from entities in excess of the carrying amount of our net investment; recoveries of previously incurred charges; unrealized gains on our retained joint venture interests; and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired.


4.5. Receivables, Prepaid Expenses, and Other Assets
Receivables, prepaid expenses, and other assets at JanuaryJuly 31, 20182023 and October 31, 2017,2022, consisted of the following (amounts in thousands):
July 31, 2023October 31, 2022
Expected recoveries from insurance carriers and others$34,840 $41,527 
Improvement cost receivable54,582 60,812 
Escrow cash held by our wholly owned captive title company49,333 51,796 
Properties held for rental apartment and commercial development289,802 224,593 
Prepaid expenses34,005 44,307 
Right-of-use asset120,819 116,660 
Derivative assets39,632 71,929 
Other116,553 135,604 
 $739,566 $747,228 

 January 31, 2018 October 31, 2017
Expected recoveries from insurance carriers and others$152,609
 $153,774
Improvement cost receivable101,148
 99,311
Escrow cash held by our captive title company32,858
 45,923
Properties held for rental apartment development177,807
 146,288
Prepaid expenses21,875
 23,223
Other73,693
 73,698
 $559,990
 $542,217
See Note 6, “Accrued Expenses,” for additional information regarding the expected recoveries from insurance carriers and suppliers.
5.6. Loans Payable, Senior Notes, and Mortgage Company Loan Facility
Loans Payable
At JanuaryJuly 31, 20182023 and October 31, 2017,2022, loans payable consisted of the following (amounts in thousands):
 January 31,
2018		 October 31,
2017
Senior unsecured term loan$500,000
 $500,000
Loans payable – other133,395
 139,116
Deferred issuance costs(1,604) (1,700)
 $631,791
 $637,416
July 31,
2023		October 31,
2022
Senior unsecured term loan$650,000 $650,000 
Loans payable – other516,616 537,043 
Deferred issuance costs(3,500)(1,768)
$1,163,116 $1,185,275 
Senior Unsecured Term Loan
We haveare party to a $500.0$650.0 million five-year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks. TheOn February 14, 2023, we entered into an amendment to the Term Loan Facility as amended, matures in August 2021.to extend the maturity date of $487.5 million of outstanding term loans to February 14, 2028, with $60.9 million due on November 1, 2026 and the remaining $101.6 million due on November 1, 2025. In addition, this amendment replaced the LIBOR-based interest rate provisions applicable to borrowings under the Term Loan Facility with Secured Overnight Financing Rate (“SOFR”)-based interest rate provisions. At JanuaryJuly 31, 2018,2023, other than $101.6 million of term loans scheduled to mature on November 1, 2025 and the $60.9 million scheduled to mature on November 1, 2026, there were no payments required before the final maturity date on the Term Loan Facility. At July 31, 2023, the interest rate on borrowingsthe Term Loan Facility was 2.97%6.20% per annum. WeToll Brothers, Inc. and substantially all of ourits 100%-owned home building subsidiaries are guarantors under the Term Loan Facility. The Term Loan Facility contains substantially the same financial covenants as ourthe New Revolving Credit Facility as described below.
In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility. The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility through October 2025. The spread at July 31, 2023 was 1.15%. These interest rate swaps were designated as cash flow hedges.
Revolving Credit Facility
We haveOn February 14, 2023, we entered into a $1.295new five-year $1.905 billion senior unsecured five-year revolving credit facility (the “Credit“New Revolving Credit Facility”) with a syndicate of banks. The Credit Facilitybanks that is scheduled to expiremature on February 14, 2028. The New Revolving Credit Facility replaced our existing $1.905 billion revolving credit facility, which was terminated in May 2021. Weconnection with the execution of the new agreement. The New Revolving Credit Facility provides us with a committed borrowing capacity of $1.905 billion, which we have the ability to increase up to $3.00 billion with the consent of lenders. The terms of the New Revolving Credit Facility are substantially the same as the prior revolving credit facility, except that the LIBOR-based interest rate provisions have been replaced with SOFR-based provisions. Toll Brothers, Inc. and substantially all of ourits 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the New Revolving Credit Facility.
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Under the terms of the New Revolving Credit Facility, at JanuaryJuly 31, 2018,2023, our maximum leverage ratio, (asas defined, in the credit agreement) maywas not permitted to exceed 1.75 to 1.00, and we arewere required to maintain a minimum tangible net worth, (asas defined, in the credit agreement) of no less than approximately $2.49$4.10 billion. Under the terms of the New Revolving Credit Facility, at JanuaryJuly 31, 2018,2023, our leverage ratio was approximately 0.730.28 to 1.00, and our tangible net worth was approximately $4.42$6.64 billion. Based upon the limitations related to our repurchaseterms of common stock in the New Revolving Credit Facility, our ability to repurchase our common stock was limited to approximately $2.47$3.70 billion as of JanuaryJuly 31, 2018.2023. In addition, under the provisions of the New Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $2.54 billion as of July 31, 2023.
At JanuaryJuly 31, 2018,2023, we had no outstanding borrowings under the New Revolving Credit Facility and had approximately $143.5$121.0 million of outstanding letters of credit that were issued under the New Revolving Credit Facility. At JanuaryJuly 31, 2018,2023, the interest rate on outstanding borrowings under the New Revolving Credit Facility would have been 3.08%6.35% per annum. Subsequent to January 31, 2018, we borrowed $100.0 million under the Credit Facility.
Loans Payable – Other
“Loans payable – other” primarily representrepresents purchase money mortgages on properties we acquired that the seller had financed, project-level financing, and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure and our


manufacturing facilities. At JanuaryJuly 31, 2018,2023, the weighted-average interest rate on “Loans payable – other” was 4.14%4.98% per annum.
Senior Notes
At JanuaryJuly 31, 2018,2023, we had eightfour issues of senior notes outstanding with an aggregate principal amount of $2.87$1.60 billion.
In January 2018, the Company issuedour second quarter of fiscal 2023, we redeemed all $400.0 million principal amount of 4.350%4.375% Senior Notes due 2028. The Company received $396.4 millionApril 15, 2023, at par, plus accrued interest.
In our first quarter of net proceeds fromfiscal 2022, we redeemed the issuance of these senior notes. In March 2017, the Company issued $300.0remaining $409.9 million principal amount of 4.875%5.875% Senior Notes due 2027 (“4.875% Senior Notes”). The Company received $297.2 million of net proceeds from the issuance of these senior notes. In June 2017, we issued an additional $150.0 million principal amount of the previously established 4.875% Senior NotesFebruary 15, 2022, at a premium to par, value plus accrued interest. We received $156.4 million of net proceeds from the issuance of these additional notes.
Mortgage Company Loan Facility
In October 2017, TBIToll Brothers Mortgage® Company (“TBI Mortgage”TBMC”), our wholly owned mortgage subsidiary, entered intohas a mortgage warehousing agreement (the “Warehousing Agreement”) with a syndicate of banksbank, which has been amended from time to time, to finance the origination of mortgage loans by TBI Mortgage.TBMC. The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” In December 2017, theThe Warehousing Agreement was amended to provideprovides for loan purchases up to $75.0 million, subject to certain sublimits. Prior to this amendment, the Warehousing Agreement provided for loan purchases up to $100.0 million. In addition, the Warehousing Agreement as amended, provides for an accordion feature under which TBI MortgageTBMC may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $150.0 million for a short period of time. TheIn March 2023, the Warehousing Agreement aswas amended expires on December 7, 2018,to extend the expiration date to March 30, 2024 and borrowings thereunder bear interest at LIBORBSBY plus 1.90%1.75% per annum.annum (with a BSBY floor of 0.50%). At JanuaryJuly 31, 2018,2023, the interest rate on the Warehousing Agreement as amended, was 3.47%7.12% per annum.
15
6.
7. Accrued Expenses
Accrued expenses at JanuaryJuly 31, 20182023 and October 31, 20172022 consisted of the following (amounts in thousands):
July 31,
2023		October 31,
2022
Land, land development, and construction$549,121 $334,975 
Compensation and employee benefits175,906 223,609 
Escrow liability associated with our wholly owned captive title company43,923 44,115 
Self-insurance240,000 251,576 
Warranty145,451 164,409 
Lease liabilities145,016 139,664 
Deferred income50,771 50,973 
Interest31,044 31,988 
Commitments to unconsolidated entities29,545 26,905 
Other46,729 77,773 
$1,457,506 $1,345,987 
 January 31,
2018		 October 31,
2017
Land, land development, and construction$135,984
 $146,168
Compensation and employee benefits126,182
 149,145
Escrow liability32,307
 45,209
Self-insurance158,024
 149,303
Warranty311,450
 329,278
Deferred income41,149
 42,798
Interest36,300
 36,035
Commitments to unconsolidated entities8,217
 8,870
Other64,615
 52,547
 $914,228
 $959,353
As previously disclosed in Note 7, “Accrued Expenses”The table below provides, for the periods indicated, a reconciliation of the changes in our 2017 Form 10-K,warranty accrual (amounts in response to a significant number ofthousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Balance, beginning of period$149,395 $143,991 $164,409 $145,062 
Additions – homes closed during the period12,395 15,598 29,666 38,798 
Addition – liabilities assumed in a business acquisition— 150 — 150 
Change in accruals for homes closed in prior years – net3,995 3,315 6,018 6,987 
Charges incurred(20,334)(18,423)(54,642)(46,366)
Balance, end of period$145,451 $144,631 $145,451 $144,631 
Since fiscal 2014, we have received water intrusion claims received in fiscal 2014 and thereafter, from owners of stucco and non-stucco homes built since 2002 in communities located in Pennsylvania and Delaware (whichDelaware. Our recorded estimated repair costs to resolve these claims were approximately $42.6 million at July 31, 2023 and $46.9 million at October 31, 2022, and are included in our Mid-Atlantic region), we reviewedthe Warranty accrued expense above. We continue to perform review procedures to assess, among other things, the number of affected homes, built in these communities from 2002 through 2013 to determine whether repairs relatedare likely to these homes would likely be needed.required, and the extent of such repairs.
Our quarterly review process, conducted quarterly, includes an analysis of many factors to determine whether a claim is likely to be received and the estimated costs to resolve any such claim, including: the closing dates of the homes; the number of claims received; our inspection of homes; an estimate of the number of homes we expect to repair; the type and cost of repairs that have been performed in each community; the estimated costs to remediate pending and future claims; the expected recovery from our insurance carriers and suppliers; and the previously recorded amounts related to these claims. We also monitor legal developments relating to these types of claims and review the volume, and relative merits and adjudication of claims in litigation or arbitration.
Based on our Our review performed as of January 31, 2018, we determined that no adjustments to our previously recorded estimated costs were necessary. Our estimates are predicated on several assumptions for which there is uncertainty including assumptions about, but not limited to, theprocess includes a number of homes to be repaired, the extent of repairs needed, the cost of those repairs, outcomes of pending litigations or arbitrations, and expected recoveries from insurance carriers and suppliers.estimates that are based on assumptions with uncertain outcomes. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential for variability in the underlying assumptions,outcomes, it is reasonably possible that our actual costs and recoveries could differ from those recorded and such differences could be material, and therefore,material. In addition, due to such uncertainty, we are


unable to estimate the range of any such differences. As of January 31, 2018 and 2017, our recorded aggregate estimated repair costs to be incurred for known and unknown water intrusion claims was $324.4 million, which remains unchanged from the amounts recorded as of October 31, 2017 and 2016. As of January 31, 2018, we recorded an aggregate of $152.6 million of estimated recoveries from our insurance carriers and suppliers for these claims, which also remains unchanged from the amounts recorded as of October 31, 2017 and 2016.
Our recorded remaining estimated repair costs related to water intrusion were approximately $235.3 million as of January 31, 2018 and $251.8 million as of October 31, 2017. Our recorded remaining expected recoveries from insurance carriers and suppliers were approximately $111.7 million as of January 31, 2018 and $119.7 million as of October 31, 2017.
The table below provides, for the periods indicated, a reconciliation of the changes in our warranty accrual (amounts in thousands):
 Three months ended January 31,
 2018 2017
Balance, beginning of period$329,278
 $370,992
Additions – homes closed during the period6,225
 5,104
Addition – Coleman liabilities acquired

 1,111
Increase in accruals for homes closed in prior years1,943
 1,694
Reclassification from other accruals

 732
Charges incurred(25,996) (15,575)
Balance, end of period$311,450
 $364,058
7.8. Income Taxes
We recorded an income tax benefitprovisions of $0.5$138.2 million and $92.5 million for the three months ended JanuaryJuly 31, 2018 as compared to an income tax provision of $39.4 million in the three months ended January 31, 2017.2023 and 2022, respectively. The effective tax rate was (0.4)%25.0% for the three months ended JanuaryJuly 31, 2018,2023, compared to 35.9%25.3% for the three months ended JanuaryJuly 31, 2017.2022. We recorded income tax provisions of $310.9 million and $216.6 million for the nine months ended July 31, 2023 and 2022, respectively. The effective tax rate was 25.1% for the nine months ended July 31, 2023, compared to 25.1% for the nine months ended July 31, 2022. The income tax benefitprovisions for the three months ended January 31, 2018 reflects the impact of the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted into law on December 22, 2017, and an excess tax benefit related to stock-based compensation. With the adoption of ASU 2016-09, such excess tax benefits are now reflected as a component of income taxes. The income tax (benefit)/provision for bothall periods included athe provision for state income taxes, and interest accrued on anticipated tax assessments, andexcess tax benefits related to the utilization of domestic production activities deductionsstock-based compensation, federal energy efficient home credits and other permanent differences.
The Tax Act, among other changes, reduced the corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017. For companies with a fiscal year that does not end on December 31, the change in law requires the application of a blended tax rate for the year of the change. Our blended tax rate for our fiscal year ending October 31, 2018 will be 23.3%. Thereafter, the applicable statutory rate will be 21%. ASC 740, “Income Taxes” (“ASC 740”) requires all companies to reflect the effects of the new law in the period in which the law was enacted. Accordingly, we reduced the statutory tax rate applied to earnings for the three months ended January 31, 2018 from 35% to 23.3%. In addition, we remeasured our net deferred tax liability for the tax law change, which resulted in an income tax benefit of $31.2 million in the three months ended January 31, 2018. Since the Tax Act includes many broad and complex changes to the U.S. tax code, we continue to analyze the impact of the provisions of the Tax Act on our financial statements and disclosures.
16
In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting relating to the Tax Act under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements.
In connection with our initial analysis of the impact of the Tax Act, and in accordance with SAB 118, we recorded a provisional net tax benefit of $31.2 million related to the re-measurement of our net deferred tax liability based on the rates at which our deferred tax balances are expected to reverse in the future. However, we are still analyzing certain aspects of the Tax Act. The final impact of the Tax Act may differ significantly from this provisional amount, due to, among other things, changes in interpretations and assumptions made by us as a result of additional information and additional guidance that may be issued by the U.S. Department of the Treasury or any other relevant governing body. Any change to the provisional amount would be reflected as a discrete benefit or expense in the quarter that the adjustment is identified.


We currently operate in 20 states and are subject to various state tax jurisdictions.in the jurisdictions in which we operate. We estimate our state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction, and our ability to utilize certain tax-saving strategies. WeBased on our estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on our tax strategies, we estimate that our state income tax rate for the full fiscal year 2018 for state income taxes2023 will be approximately 6.9%5.7%. Our state income tax rate for the full fiscal year 20172022 was 6.5%5.6%.
At JanuaryJuly 31, 2018,2023, we had $17.0$5.8 million of gross unrecognized tax benefits, including interest and penalties. If these unrecognized tax benefits were to reverse in the future, they would have a beneficial impact on our effective tax rate at that time. During the next 12 months, it is reasonably possible that our unrecognized tax benefits will change, but we are not able to provide a range of such change. The possible changes would be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken, and the accrual of estimated interest and penalties.
8.9. Stock-Based Benefit Plans
We grant stock options and various types of restricted stock units to our employees and our nonemployeenon-employee directors. Additionally, we have an employee stock purchase plan that allows employees to purchase our stock at a discount.
Information regarding the amount of total stock-based compensation expense and tax benefit recognized by us, for the periods indicated, is as follows (amounts in thousands):
 Three months ended January 31,
 2018 2017
Total stock-based compensation expense recognized$8,889
 $9,329
Income tax benefit recognized$2,516
 $3,653
Three months ended July 31,Nine months ended July 31,
2023202220232022
Total stock-based compensation expense recognized$4,265 $2,238 $21,290 $19,258 
Income tax benefit recognized$1,076 $622 $5,380 $4,890 
At JanuaryJuly 31, 20182023 and October 31, 2017,2022, the aggregate unamortized value of outstandingunvested stock-based compensation awards was approximately $41.1$26.7 million and $24.2$15.5 million, respectively.
9. 10. Stockholders’ Equity
Stock Repurchase Program and Cash Dividend
Effective December 13,From time to time since fiscal 2017, our Board of Directors terminated our previous sharehas renewed its authorization to repurchase program and authorized, under a new repurchase program, the repurchase ofup to 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or otherwiseother financial arrangements or transactions. Most recently, on May 17, 2022, our Board of Directors renewed its authorization to repurchase 20 million shares of our common stock. Shares may be repurchased for general corporate purposes, including to obtain shares for the Company’s equity awardawards and other employee benefit plans. The Board of Directors did not fix any expiration date for this repurchase program.
The table below provides, for the periods indicated, information about our share repurchase programs:
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Number of shares purchased (in thousands)1,931 2,038 3,561 7,257 
Average price per share (1)
$76.26 $44.93 $67.53 $52.90 
Remaining authorization at July 31 (in thousands)11,016 18,319 11,016 18,319 
(1) Average price per share includes costs associated with the purchases. For the fiscal 2023 periods, it also includes the excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
 Three months ended January 31,
 2018 2017
Number of shares purchased (in thousands)4,427
 557
Average price per share$47.43
 $27.33
Remaining authorization at January 31 (in thousands)18,670
 15,281
Approximately 3.1 million shares purchased in the three months ended January 31, 2018 were acquired under the previous share repurchase program.
Subsequent to January 31, 2018, we repurchased approximately 1.8 million shares of our common stock at an average price of $45.44 per share.Cash Dividends
On February 21, 2017,March 9, 2023, our Board of Directors approved the initiation ofan increase in our quarterly cash dividendsdividend from $0.20 per share to shareholders.$0.21 per share, which was previously increased from $0.17 to $0.20 in March 2022. During the three monthsmonth periods ended JanuaryJuly 31, 2018,2023 and 2022, we declared and paid cash dividends of $0.08$0.21 and $0.20 per share.

share, respectively, to our shareholders. During the nine months ended July 31, 2023 and 2022, we declared and paid cash dividends of $0.62 and $0.57 per share, respectively, to our shareholders.

17
10.Accumulated Other Comprehensive Income (Loss)
The changes in each component of accumulated other comprehensive income (loss) (“AOCI”), for the periods indicated, were as follows (amounts in thousands):
Three months ended July 31,Nine months ended July 31,
2023202220232022
Employee Retirement Plans
Beginning balance$2,510 $(5,347)$2,475 $(6,024)
Losses reclassified from AOCI to net income (1)
23 452 70 1,355 
Less: Tax benefit (2)
(6)(115)(18)(341)
Net losses reclassified from AOCI to net income17 337 52 1,014 
Other comprehensive loss – net of tax17 337 52 1,014 
Ending balance$2,527 $(5,010)$2,527 $(5,010)
Derivative Instruments
Beginning balance$31,365 $24,766 $35,143 $7,133 
Gains (losses) on derivative instruments8,900 (4,082)5,191 19,281 
Less: Tax (expense) benefit(2,250)1,037 (1,302)(4,829)
Net gains (losses) on derivative instruments6,650 (3,045)3,889 14,452 
(Gains) losses reclassified from AOCI to net income (3)
(1,427)38 (2,789)220 
Less: Tax expense (benefit) (2)
361 (10)706 (56)
Net (gains) losses reclassified from AOCI to net income(1,066)28 (2,083)164 
Other comprehensive income (loss) – net of tax5,584 (3,017)1,806 14,616 
Ending balance$36,949 $21,749 $36,949 $21,749 
Total AOCI ending balance$39,476 $16,739 $39,476 $16,739 
(1) Reclassified to “Other income – net”
(2) Reclassified to “Income tax provision”
(3) Reclassified to “Cost of revenues – home sales”
11. Earnings per Share Information
The table below provides, for the periods indicated, information pertaining to the calculation of earnings per share, common stock equivalents, weighted-average number of antidilutive options, and shares issued (amounts in thousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Numerator:
Net income as reported$414,789 $273,467 $926,535 $645,964 
Denominator:
Basic weighted-average shares110,003 115,334 110,871 118,056 
Common stock equivalents (1)
1,120 992 1,010 1,313 
Diluted weighted-average shares111,123 116,326 111,881 119,369 
Other information:
Weighted-average number of antidilutive options and restricted stock units (2)
121 407 395 275 
Shares issued under stock incentive and employee stock purchase plans548 45 1,984 469 
(1)    Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method and shares expected to be issued upon the conversion of restricted stock units under our equity award programs.
(2)    Weighted-average number of antidilutive options and restricted stock units are based upon the average closing price of our common stock on the New York Stock Exchange for the period.
18
  Three months ended January 31,
  2018 2017
Numerator:    
Net income as reported $132,107
 $70,416
Plus interest and costs attributable to 0.5% Exchangeable Senior Notes, net of income tax benefit (a) 

 384
Numerator for diluted earnings per share $132,107
 $70,800
     
Denominator:    
Basic weighted-average shares 155,882
 162,588
Common stock equivalents (b) 3,015
 1,971
Shares attributable to 0.5% Exchangeable Senior Notes (a) 

 5,858
Diluted weighted-average shares 158,897
 170,417
     
Other information:    
Weighted-average number of antidilutive options and restricted stock units (c) 545
 5,204
Shares issued under stock incentive and employee stock purchase plans 823
 1,280
(a)On September 15, 2017, we redeemed these notes for cash.
(b)Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method and shares expected to be issued upon the conversion of restricted stock units under our equity award programs.
(c)Weighted-average number of antidilutive options and restricted stock units are based upon the average closing price of our common stock on the New York Stock Exchange for the period.
11.12. Fair Value Disclosures
Financial Instruments
The table below provides, as of the dates indicated, a summary of assets assets/(liabilities) related to our financial instruments, measured at fair value on a recurring basis (amounts in thousands):
    Fair value
Financial Instrument 
Fair value
hierarchy
 January 31,
2018		 October 31, 2017
Mortgage Loans Held for Sale Level 2 $70,488
 $132,922
Forward Loan Commitments — Mortgage Loans Held for Sale Level 2 $778
 $861
Interest Rate Lock Commitments (“IRLCs”) Level 2 $(3,889) $(1,293)
Forward Loan Commitments — IRLCs Level 2 $3,889
 $1,293
  Fair value
Financial InstrumentFair value
hierarchy		July 31,
2023		October 31, 2022
Residential Mortgage Loans Held for SaleLevel 2$80,417 $185,150 
Forward Loan Commitments — Residential Mortgage Loans Held for SaleLevel 2$648 $9,184 
Interest Rate Lock Commitments (“IRLCs”)Level 2$(1,742)$(17,734)
Forward Loan Commitments — IRLCsLevel 2$1,742 $17,734 
Interest Rate Swap ContractsLevel 2$37,242 $45,010 
At JanuaryJuly 31, 20182023 and October 31, 2017,2022, the carrying value of cash and cash equivalents, escrow cash held by our wholly owned captive title company, and restricted cash and investmentscustomer deposits held in escrow approximated fair value.
The fair values of the interest rate swap contracts are included in “Receivables, prepaid expenses and other assets” in our Condensed Consolidated Balance Sheets and are determined using widely accepted valuation techniques including discounted cash flow analysis based on the expected cash flows of each swap contract. Although the Company has determined that the significant inputs, such as interest yield curve and discount rate, used to value its interest rate swap contracts fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of July 31, 2023, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our interest rate swap contract positions and have determined that the credit valuation adjustments were not significant to the overall valuation of our interest rate swap contracts. As a result, we have determined that our interest rate swap contracts valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Mortgage Loans Held for 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 and commitments using the market approach to determine fair value.


The table below provides, as of the dates indicated, the aggregate unpaid principal and fair value of mortgage loans held for sale (amounts in thousands):
 
Aggregate unpaid
principal balance
 Fair value Excess
At January 31, 2018$70,350
 $70,488
 $138
At October 31, 2017$131,861
 $132,922
 $1,061
Aggregate unpaid
principal balance		Fair valueFair value
greater (less) than principal balance
At July 31, 2023$83,018 $80,417 $(2,601)
At October 31, 2022$193,746 $185,150 $(8,596)
Inventory
We recognize inventory impairment charges and land impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. The fair value of the aforementioned inventory was determined using Level 3 criteria. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. In determining the fair value related to land impairments, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. We record land impairments related to land parcels we plan to sell to third parties within land sales and other cost of revenues. See Note 1, “Significant Accounting Policies – Inventory,” in our 20172022 Form 10-K for additional information regarding our methodology for determining fair value. The table below summarizes, forImpairments on operating communities were insignificant during the three-month and nine-month periods indicated,ended July 31, 2023 and 2022 and, accordingly, we did not disclose the ranges of certain quantitative unobservable inputs utilized in determining the fair value of such impaired operating communities:communities.
19
Three months ended:
Selling price
per unit
($ in thousands)
Sales pace
per year
(in units)
Discount rate
Fiscal 2018:
January 31381 - 1,0297 - 1013.8% - 19.0%
Fiscal 2017:
January 31692 - 8804 - 1216.3%
April 30827 - 8566 - 1116.3%
July 31465 - 7543 - 1016.5% - 19.5%
October 31467 - 54012 - 3016.4%
The table below provides, for the periods indicated, the fair value of operating communities whose carrying value was adjusted and the amount of impairment charges recognized ($ amounts in thousands):
   Impaired operating communities
Three months ended:Number of
communities tested		 Number of
communities		 Fair value of
communities,
net of
impairment charges		 Impairment charges recognized
Fiscal 2018:       
January 3164 5 $13,318
 $3,736
       $3,736
Fiscal 2017:       
January 3157 2 $8,372
 $4,000
April 3046 6 $25,092
 2,935
July 3153 4 $5,965
 1,360
October 3151 1 $6,982
 1,500
       $9,795


Debt
The table below provides, as of the dates indicated, the book value, excluding any bond discounts, premiums, and deferred issuance costs, and estimated fair value of our debt (amounts in thousands):
 July 31, 2023October 31, 2022
 Fair value
hierarchy		Book valueEstimated
fair value		Book valueEstimated
fair value
Loans payable (1)
Level 2$1,166,616 $1,150,690 $1,187,043 $1,180,893 
Senior notes (2)
Level 11,600,000 1,523,222 2,000,000 1,822,255 
Mortgage company loan facility (3)
Level 270,517 70,517 148,863 148,863 
$2,837,133 $2,744,429 $3,335,906 $3,152,011 
(1)    The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.
(2)    The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.
(3)    We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.
   January 31, 2018 October 31, 2017
 Fair value
hierarchy		 Book value 
Estimated
fair value
 Book value 
Estimated
fair value
Loans payable (a)Level 2 $633,395
 $632,883
 $639,116
 $639,088
Senior notes (b)Level 1 2,869,876
 2,984,073
 2,469,876
 2,626,131
Mortgage company loan facility (c)Level 2 38,344
 38,344
 120,145
 120,145
   $3,541,615
 $3,655,300
 $3,229,137
 $3,385,364
(a)The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.
(b)The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.
(c)We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.
12.13. Other Income – Net
The table below provides the significant components of other income – net (amounts in thousands):
Three months ended July 31,Nine months ended July 31,
2023202220232022
Interest income$8,109 $375 $22,187 $1,970 
(Loss) income from ancillary businesses(1,451)1,865 (1,543)16,159 
Management fee income earned by home building operations839 931 2,901 3,306 
Gain on litigation settlements – net— — 27,683 — 
Other(139)(1,877)(775)(5,205)
Total other income – net$7,358 $1,294 $50,453 $16,230 
 Three months ended January 31,
 2018 2017
Interest income$2,080
 $941
Income from ancillary businesses2,583
 2,235
Management fee income from home building unconsolidated entities, net3,071
 4,289
Retained customer deposits1,084
 1,746
Income from land sales700
 3,559
Other(521) (67)
Total other income – net$8,997
 $12,703
Management fee income from home building unconsolidated entities presented above primarily represents fees earned by Toll Brothers City Living® (“City Living”) and home building operations. In addition, in the three-month periods ended January 31, 2018 and 2017, our apartment living operations earned fees from unconsolidated entities of $2.3 million and $1.6 million, respectively; fees earned by our apartment living operations are included in income from ancillary businesses.
Income (loss) from ancillary businesses includesis generated by our mortgage, title, landscaping, security monitoring,smart home technology, Gibraltar, apartment living, city living, and golf course and country club operations. The table below provides, for the periods indicated, revenues and expenses for our ancillary businesses (amounts in thousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
Revenues$36,057 $32,994 $97,238 $92,581 
Expenses$37,508 $31,129 $98,781 $76,422 
In the nine-month period ended July 31, 2022, our smart home technology business recognized a $9.0 million gain from a bulk sale of security monitoring accounts, which is included in income from ancillary businesses above.
 Three months ended January 31,
 2018 2017
Revenues$31,323
 $28,880
Expenses$28,740
 $26,645
The table below provides, for the periods indicated, revenues and expenses recognized from land sales (amountsIn addition, in thousands):
 Three months ended January 31,
 2018 2017
Revenues$6,968
 $144,714
Expenses(6,268) (144,273)
Deferred gain recognized
 3,118
Income from land sales$700
 $3,559
Land sale revenues for the three months ended JanuaryJuly 31, 2017 includes $143.32023 and 2022, our apartment living operations earned fees from unconsolidated entities of $6.7 million related to an in substance real estate sale transaction which resulted in a new Home Building Joint Venture in which we have a 20% interest. No gain or loss was


realized onand $7.0 million, respectively. In the sale. The deferred gains recognized in the fiscal 2017 period relates to the salenine-month periods ended July 31, 2023 and 2022, our apartment living operations earned fees from unconsolidated entities of a property in fiscal 2015 to a Home Building Joint Venture in which we had a 25% interest. Due to$19.3 million and $16.6 million, respectively. Fees earned by our continued involvement in this unconsolidated entity through our ownership interest and guarantees provided on the entity’s debt, we deferred the $9.3 million gain realized on the sale. We recognized the gain as units were sold to the ultimate home buyers which isapartment living operations are included in deferred gains recognized above. In the fourth quarter of fiscal 2017, we purchased the remaining inventoryincome (loss) from this Home Building Joint Venture. The remaining unamortized deferred gain was used to reduce the basis of the inventory acquired.ancillary businesses.
13.14. Commitments and Contingencies
Legal Proceedings
We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that adequate provision for resolution of all current claims and pending litigation has been made for probable losses. We believeand that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.
In April 2017, the SEC informed the Company that it was conducting an investigation and requested that we voluntarily produce documents and information relating to our estimated repair costs for stucco and other water intrusion claims in fiscal 2016. The Company has produced detailed information and documents in response to this request. Management cannot at this time predict the eventual scope or outcome of this matter. See Note 6, “Accrued Expenses” for additional information regarding these warranty charges.
20
Land Purchase CommitmentsContracts
Generally, our purchase agreements to acquire land parcels do not require us to purchase those land parcels, although we, in some cases, forfeit any deposit balance outstanding if and when we terminate a purchasean agreement. Information regarding our land purchase commitments,contracts, as of the dates indicated, is provided in the table below (amounts in thousands):
 January 31, 2018 October 31, 2017
Aggregate purchase commitments:   
Unrelated parties$2,297,386
 $1,986,276
Unconsolidated entities that the Company has investments in245,692
 248,801
Total$2,543,078
 $2,235,077
    
Deposits against aggregate purchase commitments$123,026
 $97,706
Credits to be received from unconsolidated entities129,869
 134,630
Additional cash required to acquire land2,290,183
 2,002,741
Total$2,543,078
 $2,235,077
Amount of additional cash required to acquire land included in accrued expenses$3,162
 $4,329
July 31, 2023October 31, 2022
Aggregate purchase price:
Unrelated parties$4,125,045 $4,279,660 
Unconsolidated entities that the Company has investments in28,693 42,057 
Total$4,153,738 $4,321,717 
Deposits against aggregate purchase price$452,504 $463,452 
Additional cash required to acquire land3,701,234 3,858,265 
Total$4,153,738 $4,321,717 
Amount of additional cash required to acquire land included in accrued expenses$272,728 $34,994 
In addition, we expect to purchase approximately 2,4008,300 additional home sites over a number of years from several joint ventures in which we have interests; the purchase prices of these home sites will be determined at a future date.
At JanuaryJuly 31, 2018,2023, we also had purchase commitmentscontracts to acquire land for apartment developments of approximately $207.3$263.5 million, of which we had outstanding deposits in the amount of $10.7$13.0 million. We intend to acquire and develop these projects in joint ventures with unrelated parties in the future.
We have additional land parcels under option that have been excluded from the aggregate purchase commitmentsprice since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.
Investments in Unconsolidated Entities
At JanuaryJuly 31, 2018,2023, we had investments in a number of unconsolidated entities, were committed to invest or advance additional funds, and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 3,4, “Investments in Unconsolidated Entities,” for more information regarding our commitments to these entities.
Surety Bonds and Letters of Credit
At JanuaryJuly 31, 2018,2023, we had outstanding surety bonds amounting to $690.1$856.1 million, primarily related to our obligations to governmental entities to construct improvements in our communities. We estimate that approximately $340.0$344.6 million of work


remains on these improvements. We have an additional $168.1$314.9 million of surety bonds outstanding that guarantee other obligations. We do not believe that it is probable that any outstanding bonds will be drawn upon.
At JanuaryJuly 31, 2018,2023, we had outstanding letters of credit of $143.5$121.0 million under our New Revolving Credit Facility. These letters of credit were issued to secure our various financial obligations, including insurance policy deductibles and other claims, land deposits, and security to complete improvements in communities in which we are operating. We do not believe that it is probable that any outstanding letters of credit will be drawn upon.
At July 31, 2023, we had provided financial guarantees of $25.7 million related to fronted letters of credit to secure obligations related to certain of our insurance policy deductibles and other claims.
Backlog
At JanuaryJuly 31, 2018,2023, we had agreements of sale outstanding to deliver 6,2507,295 homes with an aggregate sales value of $5.58$7.87 billion.
21
Mortgage Commitments
Our mortgage subsidiary provides mortgage financing for a portion of our home closings. For those home buyers to whom our mortgage subsidiary provides mortgages, we determine whether the home buyer qualifies for the mortgage based upon information provided by the home buyer and other sources. For those home buyers who qualify, our mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”) that is willing to honor the terms and conditions, including interest rate, committed to the home buyer. We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary.
Mortgage loans are sold to investors with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements. These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower. The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market.
Information regarding our mortgage commitments, as of the dates indicated, is provided in the table below (amounts in thousands):
July 31,
2023		October 31, 2022
Aggregate mortgage loan commitments:
IRLCs$382,426 $669,631 
Non-IRLCs2,021,548 2,429,063 
Total$2,403,974 $3,098,694 
Investor commitments to purchase:
IRLCs$382,426 $669,631 
Mortgage loans held for sale73,276 186,666 
Total$455,702 $856,297 
 January 31,
2018		 October 31, 2017
Aggregate mortgage loan commitments:   
IRLCs$459,971
 $350,740
Non-IRLCs1,308,126
 1,146,872
Total$1,768,097
 $1,497,612
Investor commitments to purchase:   
IRLCs$459,971
 $350,740
Mortgage loans receivable64,572
 125,710
Total$524,543
 $476,450
14.15. Information on Segments
We operate in two segments: traditional home building and urban infill. We build and sell detached and attached homes in luxury residential communitiesthe following five geographic segments, with current operations generally located in affluent suburban markets that cater to move-up, empty-nester, active-adult, age-qualified, and second-home buyers in the United States (“Traditional Home Building”). We also build and sell homes in urban infill markets through City Living.states listed below:
We have determined that our Traditional Home Building operations operate in five geographic segments: North, Mid-Atlantic, South, West, and California. Eastern Region:
•The states comprising each geographic segment are as follows:
North:North region: Connecticut, Delaware, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, and New York and Pennsylvania;
Mid-Atlantic:    Delaware,•The Mid-Atlantic region: Georgia, Maryland, Pennsylvania, and Virginia
South:    Florida, North Carolina, Tennessee and TexasVirginia;
West:•The South region: Florida, South Carolina and Texas;
Western Region:
•The Mountain region: Arizona, Colorado, Idaho, Nevada and WashingtonUtah;
California:•The Pacific region: California, Oregon and Washington.

Our geographic reporting segments are consistent with how our chief operating decision makers are assessing operating performance and allocating capital.

At October 31, 2022, we concluded that our high-rise urban luxury condominium operations (“City Living”) were no longer a reportable operating segment, primarily due to their insignificance as a result of the change in structure and shift in strategy. Amounts reported in prior periods have been restated to conform to the fiscal 2023 presentation. The realignment did not have any impact on our consolidated financial position, results of operations, earnings per share or cash flows for the periods presented.
Revenue
22
Revenues and income (loss) before income taxes for each of our segments, for the periods indicated, were as follows (amounts in thousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
(restated)(restated)
Revenues:
North$377,744 $481,509 $1,081,854 $1,235,550 
Mid-Atlantic288,480 253,973 787,184 765,100 
South632,572 352,674 1,544,804 922,544 
Mountain726,004 660,517 1,880,450 1,776,375 
Pacific648,447 506,597 1,619,085 1,433,041 
Total home building2,673,247 2,255,270 6,913,377 6,132,610 
Corporate and other1,355 1,067 745 (2,392)
2,674,602 2,256,337 6,914,122 6,130,218 
Land sales and other revenues13,040 238,465 60,668 433,206 
Total consolidated$2,687,642 $2,494,802 $6,974,790 $6,563,424 
Income (loss) before income taxes:
North$49,087 $81,440 $136,643 $177,824 
Mid-Atlantic71,132 39,841 158,482 117,126 
South126,861 56,293 268,028 121,844 
Mountain146,757 120,606 368,003 296,579 
Pacific183,371 120,125 419,872 299,923 
Total home building577,208 418,305 1,351,028 1,013,296 
Corporate and other(24,191)(52,354)(113,623)(150,714)
Total consolidated$553,017 $365,951 $1,237,405 $862,582 
 Three months ended January 31,
 2018 2017
Revenues:   
Traditional Home Building:   
North$134,280
 $145,638
Mid-Atlantic206,958
 184,051
South171,492
 142,196
West258,033
 211,133
California287,104
 219,776
Traditional Home Building1,057,867
 902,794
City Living117,601
 17,936
Total$1,175,468
 $920,730
    
Income (loss) before income taxes:   
Traditional Home Building:   
North$379
 $10,093
Mid-Atlantic13,900
 11,632
South12,148
 13,111
West30,604
 25,497
California60,857
 43,193
Traditional Home Building117,888
 103,526
City Living29,964
 43,102
Corporate and other(16,254) (36,847)
Total$131,598
 $109,781

“Corporate and other” is comprised principally of general corporate expenses such as the offices of our executive officers;offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including Gibraltar;our apartment rental development business and our high-rise urban luxury condominium business, and income from a number of our unconsolidated entities.Rental Property Joint Ventures and Gibraltar Joint Ventures.
Total assets for each of our segments, as of the dates indicated, are shown in the table below (amounts in thousands):
 January 31,
2018		 October 31,
2017
Traditional Home Building:   
North$1,098,536
 $1,074,969
Mid-Atlantic1,186,219
 1,121,013
South1,245,326
 1,184,956
West1,327,495
 1,275,298
California2,905,756
 2,630,041
Traditional Home Building7,763,332
 7,286,277
City Living583,962
 647,174
Corporate and other1,270,605
 1,511,774
Total$9,617,899
 $9,445,225
July 31,
2023		October 31,
2022
North$1,368,192 $1,464,995 
Mid-Atlantic1,291,556 1,049,043 
South2,387,503 2,137,568 
Mountain2,778,107 2,785,603 
Pacific2,236,004 2,174,065 
Total home building10,061,362 9,611,274 
Corporate and other2,292,312 2,677,440 
Total consolidated$12,353,674 $12,288,714 
“Corporate and other” is comprised principally of cash and cash equivalents, restricted cash, and investments, deferred tax assets, investments in our Rental Property Joint Ventures, expected recoveries from insurance carriers and suppliers, our Gibraltar investments and operations, manufacturing facilities, our apartment rental development and high-rise urban luxury condominium businesses, and our mortgage and title subsidiaries.

23

The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, for the periods indicated, which are included in home sales cost of revenues, were as follows (amounts in thousands):
 Three months ended July 31,Nine months ended July 31,
 2023202220232022
(restated)(restated)
North$158 $387 $590 $1,156 
Mid-Atlantic2,225 1,200 8,545 2,345 
South921 405 1,402 1,014 
Mountain42 1,421 5,659 1,865 
Pacific18 2,835 6,241 4,293 
Total consolidated$3,364 $6,248 $22,437 $10,673 
15.In the nine-month period ended July 31, 2023, we recognized $17.7 million of land impairment charges included in land sales and other cost of revenues, of which $2.7 million, $10.3 million, $2.2 million, and $2.5 million were in our North, Mid-Atlantic, Pacific and Corporate and other segments, respectively. No land impairment charges were recognized in land sales and other costs of revenues in the three-month period ended July 31, 2023. We recognized $1.4 million and $6.6 million of similar charges in our North segment during the three-month and nine-month periods ended July 31, 2022, respectively.
16. Supplemental Disclosure to Condensed Consolidated Statements of Cash Flows
The following are supplemental disclosures to the Condensed Consolidated Statements of Cash Flows, for the periods indicated (amounts in thousands):
Nine months ended July 31,
20232022
Cash flow information:
Income tax paid – net$427,153 $235,565 
Noncash activity:
Cost of inventory acquired through seller financing, municipal bonds, or included in accrued expenses - net$342,073 $213,500 
Transfer of other assets to investment in unconsolidated entities - net$4,435 $100,264 
Transfer of other assets to property, construction and office equipment - net$13,738 $8,571 
Unrealized (loss) gain on derivatives$(7,767)$18,798 
At July 31,
20232022
Cash, cash equivalents, and restricted cash
Cash and cash equivalents$1,033,369 $316,471 
Restricted cash included in receivables, prepaid expenses, and other assets49,333 80,086 
Total cash, cash equivalents, and restricted cash shown on the Condensed Consolidated Statements of Cash Flows$1,082,702 $396,557 

24
  Three months ended January 31,
  2018 2017
Cash flow information:    
Interest paid, net of amount capitalized $4,105
 

Interest capitalized, net of amount paid 
 $419
Income tax payments $64,922
 $80,070
Income tax refunds $309
 $911
Noncash activity:    
Cost of inventory acquired through seller financing or municipal bonds, net $19,909
 $18,011
Reduction in inventory for our share of earnings in land purchased from unconsolidated entities and allocation of basis difference $476
 $3,654
Accrued treasury share purchases $9,713
 

Deferred tax decrease related to stock-based compensation activity included in additional paid-in capital 

 $4,935
Transfer of inventory to investment in unconsolidated entities 

 $36,256
Acquisition of a Business:    
Fair value of assets purchased 

 $90,560
Liabilities assumed 

 $5,377
Cash paid 

 $85,183


16. Supplemental Guarantor Information
At January 31, 2018, our 100%-owned subsidiary, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), has issued the following outstanding Senior Notes (amounts in thousands):
  Original amount issued and amount outstanding
4.0% Senior Notes due December 31, 2018 $350,000
6.75% Senior Notes due November 1, 2019 $250,000
5.875% Senior Notes due February 15, 2022 $419,876
4.375% Senior Notes due April 15, 2023 $400,000
5.625% Senior Notes due January 15, 2024 $250,000
4.875% Senior Notes due November 15, 2025 $350,000
4.875% Senior Notes due March 15, 2027 $450,000
4.350% Senior Notes due February 15, 2028 $400,000
The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest are guaranteed jointly and severally on a senior basis by us and substantially all of our 100%-owned home building subsidiaries (the “Guarantor Subsidiaries”). The guarantees are full and unconditional. Our non-home building subsidiaries and several of our home building subsidiaries (together, the “Nonguarantor Subsidiaries”) do not guarantee these Senior Notes. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other than the financing of our other subsidiaries by lending the proceeds from the above-described debt issuances. The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the Credit Facility will guarantee the Senior Notes. The indentures further provide that any Guarantor Subsidiary may be released from its guarantee so long as (i) no default or event of default exists or would result from release of such guarantee; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (iv) such release would not have a material adverse effect on our and our subsidiaries’ home building business; and (v) the Guarantor Subsidiary is released from its guaranty under the Credit Facility. If there are no guarantors under the Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
As of October 31, 2017, one of our 100%-owned subsidiaries was released from its guarantee obligation on these Senior Notes. The Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2017 presented below has been retroactively restated to reflect this subsidiary as a Nonguarantor Subsidiary.
Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management has determined that such disclosures would not be material to investors.
Supplemental consolidating financial information of Toll Brothers, Inc., the Subsidiary Issuer, the Guarantor Subsidiaries, the Nonguarantor Subsidiaries, and the eliminations to arrive at Toll Brothers, Inc. on a consolidated basis is presented below ($ amounts in thousands).


Condensed Consolidating Balance Sheet at January 31, 2018:
 
Toll
Brothers,
Inc.
 
Subsidiary
Issuer
 
Guarantor
Subsidiaries
 
Nonguarantor
Subsidiaries
 Eliminations Consolidated
ASSETS           
Cash and cash equivalents—
 —
 344,828
 163,449
 —
 508,277
Restricted cash and investments
 
 1,500
 959
 
 2,459
Inventory
 
 7,487,983
 225,813
 
 7,713,796
Property, construction and office equipment, net
 
 162,349
 23,810
 
 186,159
Receivables, prepaid expenses and other assets1,064
 

 320,275
 327,295
 (88,644) 559,990
Mortgage loans held for sale
 
 
 70,488
 
 70,488
Customer deposits held in escrow
 
 111,782
 7,636
 
 119,418
Investments in unconsolidated entities
 
 53,953
 395,795
 
 449,748
Investments in and advances to consolidated entities4,460,274
 2,913,133
 91,740
 126,964
 (7,592,111) —
Deferred tax assets, net of valuation allowances7,564
 

 

 

 

 7,564
 4,468,902
 2,913,133
 8,574,410
 1,342,209
 (7,680,755) 9,617,899
LIABILITIES AND EQUITY           
Liabilities           
Loans payable
 
 631,791
 

 
 631,791
Senior notes
 2,859,689
 
 
 
 2,859,689
Mortgage company loan facility
 
 
 38,344
 
 38,344
Customer deposits
 
 404,880
 16,685
 
 421,565
Accounts payable
 
 284,423
 2,969
 
 287,392
Accrued expenses9,908
 35,603
 521,213
 444,437
 (96,933) 914,228
Advances from consolidated entities
 

 1,731,178
 607,425
 (2,338,603) —
Total liabilities9,908
 2,895,292
 3,573,485
 1,109,860
 (2,435,536) 5,153,009
Equity           
Stockholders’ equity           
Common stock1,779
 
 48
 3,006
 (3,054) 1,779
Additional paid-in capital709,800
 49,400
 

 93,734
 (143,134) 709,800
Retained earnings (deficit)4,595,233
 (31,559) 5,000,877
 129,713
 (5,099,031) 4,595,233
Treasury stock, at cost(845,668) 
 
 
 
 (845,668)
Accumulated other comprehensive loss(2,150) 
 

 
 

 (2,150)
Total stockholders’ equity4,458,994
 17,841
 5,000,925
 226,453
 (5,245,219) 4,458,994
Noncontrolling interest
 
 
 5,896
 
 5,896
Total equity4,458,994
 17,841
 5,000,925
 232,349
 (5,245,219) 4,464,890
 4,468,902
 2,913,133
 8,574,410
 1,342,209
 (7,680,755) 9,617,899


Condensed Consolidating Balance Sheet at October 31, 2017:
 
Toll
Brothers,
Inc.
 
Subsidiary
Issuer
 
Guarantor
Subsidiaries
 Nonguarantor
Subsidiaries		 Eliminations Consolidated
ASSETS           
Cash and cash equivalents—
 —
 533,204
 179,625
 —
 712,829
Restricted cash and investments
 
 1,500
 982
 
 2,482
Inventory
 
 7,017,331
 264,122
 
 7,281,453
Property, construction and office equipment, net
 
 165,464
 24,083
 
 189,547
Receivables, prepaid expenses and other assets

 

 319,592
 296,699
 (74,074) 542,217
Mortgage loans held for sale
 
 
 132,922
 
 132,922
Customer deposits held in escrow
 
 96,956
 5,061
 
 102,017
Investments in unconsolidated entities
 
 66,897
 414,861
 
 481,758
Investments in and advances to consolidated entities4,589,228
 2,514,649
 91,740
 126,799
 (7,322,416) —
 4,589,228
 2,514,649
 8,292,684
 1,445,154
 (7,396,490) 9,445,225
LIABILITIES AND EQUITY           
Liabilities           
Loans payable
 
 637,416
 

 
 637,416
Senior notes
 2,462,463
 
 
 
 2,462,463
Mortgage company loan facility
 
 
 120,145
 
 120,145
Customer deposits
 
 377,083
 18,943
 
 396,026
Accounts payable
 
 271,617
 3,606
 
 275,223
Accrued expenses141
 34,345
 563,577
 440,631
 (79,341) 959,353
Advances from consolidated entities
 

 1,584,957
 659,904
 (2,244,861) —
Income taxes payable57,893
 
 
 (384) 
 57,509
Total liabilities58,034
 2,496,808
 3,434,650
 1,242,845
 (2,324,202) 4,908,135
Equity           
Stockholders’ equity           
Common stock1,779
 
 48
 3,006
 (3,054) 1,779
Additional paid-in capital720,115
 49,400
 

 93,734
 (143,134) 720,115
Retained earnings (deficit)4,474,064
 (31,559) 4,857,986
 99,673
 (4,926,100) 4,474,064
Treasury stock, at cost(662,854) 
 
 
 
 (662,854)
Accumulated other comprehensive loss(1,910) 
 

 
 

 (1,910)
Total stockholders’ equity4,531,194
 17,841
 4,858,034
 196,413
 (5,072,288) 4,531,194
Noncontrolling interest
 
 
 5,896
 
 5,896
Total equity4,531,194
 17,841
 4,858,034
 202,309
 (5,072,288) 4,537,090
 4,589,228
 2,514,649
 8,292,684
 1,445,154
 (7,396,490) 9,445,225






Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the three months ended January 31, 2018:
 
Toll
Brothers,
Inc.
 
Subsidiary
Issuer
 
Guarantor
Subsidiaries
 Nonguarantor
Subsidiaries		 Eliminations Consolidated
Revenues
 
 1,115,354
 104,114
 (44,000) 1,175,468
Cost of revenues
 
 874,808
 77,487
 (17,815) 934,480
Selling, general and administrative18
 840
 162,079
 20,173
 (25,843) 157,267
 18
 840
 1,036,887
 97,660
 (43,658) 1,091,747
Income (loss) from operations(18) (840) 78,467
 6,454
 (342) 83,721
Other:           
Income from unconsolidated entities
 
 5,132
 33,748
 
 38,880
Other income – net

 

 5,885
 1,044
 2,068
 8,997
Intercompany interest income
 32,695
 

 1,023
 (33,718) —
Interest expense
 (31,855) (1,023) (368) 33,246
 —
Income from subsidiaries131,616
 
 41,901
 
 (173,517) —
Income before income taxes131,598
 —
 130,362
 41,901
 (172,263) 131,598
Income tax (benefit) provision(509) 
 (12,529) 11,861
 668
 (509)
Net income132,107
 —
 142,891
 30,040
 (172,931) 132,107
Other comprehensive income171
 

 

 

 

 171
Total comprehensive income132,278
 —
 142,891
 30,040
 (172,931) 132,278

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the three months ended January 31, 2017:
 
Toll
Brothers,
Inc.
 
Subsidiary
Issuer
 
Guarantor
Subsidiaries
 Nonguarantor
Subsidiaries		 Eliminations Consolidated
Revenues
 
 915,823
 45,696
 (40,789) 920,730
Cost of revenues
 
 724,257
 29,471
 (20,726) 733,002
Selling, general and administrative

 968
 143,881
 16,948
 (24,702) 137,095
 —
 968
 868,138
 46,419
 (45,428) 870,097
Income (loss) from operations—
 (968) 47,685
 (723) 4,639
 50,633
Other:           
Income from unconsolidated entities
 
 5,144
 41,301
 
 46,445
Other income – net
2,393
 

 7,251
 4,500
 (1,441) 12,703
Intercompany interest income
 36,496
 

 

 (36,496) —
Interest expense
 (37,895) 

 (663) 38,558
 —
Income from subsidiaries107,388
 
 42,048
 
 (149,436) —
Income (loss) before income taxes109,781
 (2,367) 102,128
 44,415
 (144,176) 109,781
Income tax provision (benefit)39,365
 (849) 36,621
 15,926
 (51,698) 39,365
Net income (loss)70,416
 (1,518) 65,507
 28,489
 (92,478) 70,416
Other comprehensive income169
 

 

 

 

 169
Total comprehensive income (loss)70,585
 (1,518) 65,507
 28,489
 (92,478) 70,585




Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2018:
 
Toll
Brothers,
Inc.
 
Subsidiary
Issuer
 
Guarantor
Subsidiaries
 Nonguarantor
Subsidiaries		 Eliminations Consolidated
Net cash (used in) provided by operating activities(67,018) 1,894
 (361,168) 99,370
 (2,879) (329,801)
Cash flow provided by (used in) investing activities:           
Purchase of property and equipment - net
 
 (741) (953) 
 (1,694)
Investment in unconsolidated entities
 
 (1,158) (3,264) 
 (4,422)
Return of investments in unconsolidated entities
 
 14,550
 21,703
 
 36,253
Investment in foreclosed real estate and distressed loans
 
 

 (92) 
 (92)
Return of investments in foreclosed real estate and distressed loans
 
 
 1,505
 
 1,505
Intercompany advances271,988
 (398,484) 
 

 126,496
 —
Net cash provided by (used in) investing activities271,988
 (398,484) 12,651
 18,899
 126,496
 31,550
Cash flow provided by (used in) financing activities:           
Net proceeds from issuance of senior notes
 400,000
 
 

 
 400,000
Debt issuance costs for senior notes
 (3,410) 
 

 
 (3,410)
Proceeds from loans payable
 
 350,000
 239,819
 
 589,819
Principal payments of loans payable
 
 (366,120) (321,620) 
 (687,740)
Proceeds from stock-based benefit plans7,580
 
 
 
 
 7,580
Purchase of treasury stock(200,257) 
 
 
 
 (200,257)
Dividends paid(12,293) 
 
 
 
 (12,293)
Intercompany advances

 
 176,261
 (52,644) (123,617) —
Net cash provided by (used in) financing activities(204,970) 396,590
 160,141
 (134,445) (123,617) 93,699
Net decrease in cash and cash equivalents—
 —
 (188,376) (16,176) —
 (204,552)
Cash and cash equivalents, beginning of period—
 —
 533,204
 179,625
 —
 712,829
Cash and cash equivalents, end of period—
 —
 344,828
 163,449
 —
 508,277


Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2017:
 
Toll
Brothers,
Inc.
 
Subsidiary
Issuer
 
Guarantor
Subsidiaries
 Nonguarantor
Subsidiaries		 Eliminations Consolidated
Net cash provided by (used in) operating activities(36,218) 6,311
 (266,885) 324,816
 (3,856) 24,168
Cash flow (used in) provided by investing activities:           
Purchase of property and equipment — net
 
 (6,393) 79
 
 (6,314)
Sale and redemption of marketable securities and restricted investments — net10,631
 
 

 7,418
 
 18,049
Investments in unconsolidated entities
 
 (267) (99,674) 
 (99,941)
Return of investments in unconsolidated entities
 
 9,950
 23,303
 
 33,253
Investment in foreclosed real estate and distressed loans
 
 

 (274) 
 (274)
Return of investments in foreclosed real estate and distressed loans
 
 

 1,852
 
 1,852
Acquisition of a business
 
 (85,183) 
 
 (85,183)
Investment paid - intercompany
 
 45,000
 
 (45,000) —
Intercompany advances14,992
 (6,311) 
 
 (8,681) —
Net cash (used in) provided by investing activities25,623
 (6,311) (36,893) (67,296) (53,681) (138,558)
Cash flow (used in) provided by financing activities:           
Proceeds from loans payable
 
 
 360,382
 
 360,382
Principal payments of loans payable
 
 (3,491) (513,342) 
 (516,833)
Proceeds from stock-based benefit plans25,831
 
 
 
 
 25,831
Purchase of treasury stock(15,236) 
 
 
 
 (15,236)
Investment received - intercompany

 
 
 45,000
 (45,000) —
Intercompany advances

 
 4,333
 (106,870) 102,537
 —
Net cash (used in) provided by financing activities10,595
 —
 842
 (214,830) 57,537
 (145,856)
Net (decrease) increase in cash and cash equivalents—
 —
 (302,936) 42,690
 —
 (260,246)
Cash and cash equivalents, beginning of period—
 —
 583,440
 50,275
 —
 633,715
Cash and cash equivalents, end of period—
 —
 280,504
 92,965
 —
 373,469





ITEM 2. 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 accompanying unaudited condensed consolidated financial statements and related notes, as well as our consolidated financial statements, notes thereto, and the related MD&A contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 20172022 (“20172022 Form 10-K”). It also should be read in conjunction with the disclosure under “Statement on Forward-Looking Information” and “Risk Factors” in this report.report and in our 2022 Form 10-K.
Unless otherwise stated in this report, net contracts signed represents a number or value equal to the gross number or value of contracts for the sale of homes signed during the relevant period, less the number or value of contracts canceled during the relevant period which includes contracts that were(irrespective of whether the contract was signed during the relevant period andor in a prior periods.period). 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.period (“backlog conversion”).
We operate in two segments: Traditional Home Building and City Living. We conduct our Traditional Home Building operations in five geographic areas around the United States: (1) the North, consisting of Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, and New York; (2) the Mid-Atlantic, consisting of Delaware, Maryland, Pennsylvania, and Virginia; (3) the South, consisting of Florida, North Carolina, and Texas; (4) the West, consisting of Arizona, Colorado, Idaho, Nevada, and Washington, and (5) California.
OVERVIEW
Our Business Environment and Current Outlook
In the three months ended July 31, 2023, home sales revenue increased 19% as compared to the three months ended July 31, 2022. In the quarter, we delivered 2,524 homes with an average delivered price of $1,059,700, as compared to 2,414 delivered homes at an average price of $934,700 in the third quarter of fiscal 2022. The increase in average delivered price and home sales revenues in the three months ended July 31, 2023 reflects the strong demand for our homes that existed through the first half of fiscal 2022, as many of the homes delivered in our third quarter of fiscal 2023 were contracted prior to the softening in demand that began in May 2022 and continued through the end of the 2022 calendar year.
Since January 2023, we have experienced an increase in demand as compared to the second half of the 2022 calendar year. In the three months ended July 31, 2023, we signed 2,245 net contracts with an aggregate value of $2.16 billion as compared to 1,266 net contracts with an aggregate value of $1.66 billion in the three months ended July 31, 2022. Net signed contracts increased 77% in units and 30% in dollars, respectively, on a year-over-year basis in the third quarter. Demand in the second half of calendar 2022 was negatively impacted by the steep increase in interest rates from January through November 2022, as well as uncertainty regarding the direction of the economy as a result of higher inflation, the rise in interest rates and other macro-economic conditions. During calendar year 2023, interest rates have been less volatile, allowing homebuyers time to absorb the higher rate environment. In addition, the new home market has benefited from very low levels of resale inventory on the market. As a result of these factors, demand for our homes since the start of calendar 2023 has significantly increased compared to the same period in 2022. Notwithstanding the year-over-year improvement in demand, it is difficult to predict the near-term direction of mortgage rates, which in recent weeks reached multi-decade highs, consumer confidence and the overall economy, and their potential impacts on demand for our homes. Over the long term, however, we believe that we will continue to benefit from strong housing market fundamentals, including demographic and migration trends and the overall shortage of homes for sale in the United States.
Our backlog at July 31, 2023 was 7,295 homes and $7.87 billion, down 32% in units and 30% in dollars as compared to our backlog at July 31, 2022. Although we have experienced modest improvements in build times (the time it takes from contract signing to delivery of the completed home) over the nine months ended July 31, 2023, build times remain extended due to the impacts of supply chain, labor and other disruptions that have impacted the construction industry in recent years.
25
Financial and Operational Highlights
In the three-month period ended JanuaryJuly 31, 2018,2023, we recognized $1.18$2.69 billion of revenues, consisting of $2.67 billion of home sales revenue and $13.0 million of land sales and other revenue, and net income of $132.1$414.8 million, as compared to $920.7$2.49 billion of revenues, consisting of $2.26 billion of home sales revenue and $238.5 million of revenuesland sales and other revenue, and net income of $70.4$273.5 million in the three-month period ended JanuaryJuly 31, 2017.2022.
In the three-month periods ended JanuaryJuly 31, 20182023 and 2017,2022, the value of net contracts signed was $1.69$2.16 billion (1,822(2,245 homes) and $1.24$1.66 billion (1,522(1,266 homes), respectively.
In the nine-month period ended July 31, 2023, we recognized $6.97 billion of revenues, consisting of $6.91 billion of home sales revenues and $60.7 million of land sales and other revenues, and net income of $926.5 million, as compared to $6.56 billion of revenues, consisting of $6.13 billion of home sales revenues and $433.2 million of land sales and other revenues, and net income of $646.0 million in the nine-month period ended July 31, 2022.
In the nine-month periods ended July 31, 2023 and 2022, the value of net contracts signed was $5.89 billion (6,039 homes) and $7.75 billion (7,069 homes), respectively.
The value of our backlog at JanuaryJuly 31, 20182023 was $5.58$7.87 billion (6,250(7,295 homes), as compared to our backlog at JanuaryJuly 31, 20172022 of $4.35$11.19 billion (5,145(10,725 homes). Our backlog at October 31, 20172022 was $5.06$8.87 billion (5,851(8,098 homes), as compared to backlog of $3.98$9.50 billion (4,685(10,302 homes) at October 31, 2016.2021.
At JanuaryJuly 31, 2018,2023, we had $508.3 million$1.03 billion of cash and cash equivalents on hand and approximately $1.15$1.78 billion available under our $1.295$1.905 billion revolving credit facility. On February 14, 2023, we entered into a new $1.905 billion senior unsecured revolving credit facility that is scheduled to terminate on February 14, 2028 (the “Credit“New Revolving Credit Facility”) that matures in May 2021., which replaced our existing $1.905 revolving credit facility. At JanuaryJuly 31, 2018,2023, we had no outstanding borrowings under the Credit Facility. We did haveand we had approximately $143.5$121.0 million of outstanding letters of credit under the New Revolving Credit Facility. In addition, also on February 14, 2023, we entered into an amendment to the Term Loan Facility to extend the maturity date of $487.5 million of outstanding term loans to February 14, 2028, with $60.9 million due on November 1, 2026 and the remaining $101.6 million due on November 1, 2025.
At JanuaryJuly 31, 2018,2023, we owned or controlled through options approximately 49,50070,200 home sites, as compared to approximately 48,30076,000 at October 31, 2017;2022; and approximately 48,80080,900 at October 31, 2016.2021. Of the approximately 49,50070,200 total home sites that we owned or controlled through options at JanuaryJuly 31, 2018,2023, we owned approximately 32,10035,200 and controlled approximately 17,40035,000 through options. Of the 32,10035,200 home sites owned, approximately 17,60017,400 were substantially improved. In addition, at Januaryas of July 31, 2018,2023, we expect to purchase approximately 2,4008,300 additional home sites over a number ofseveral years from severalcertain of the joint ventures in which we have interests, at prices not yetto be determined.
At JanuaryJuly 31, 2018,2023, we were selling from 295345 communities, compared to 305348 at October 31, 2017;2022; and 310332 at OctoberJuly 31, 2016.2022.
At JanuaryJuly 31, 2018,2023, our total stockholders’ equity and our debt to total capitalization ratio were $4.46$6.69 billion and 0.440.30 to 1.00, respectively.
Our Business Environment and Current Outlook
The current housing market continues to strengthen and grow. We believe that solid and improving demand for homes, the limited supply of resale and new homes, and the financial strength of our affluent buyers 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. We believe that gradually rising interest rates tied to a strengthening economy will not upset demand. In the three months ended January 31, 2018, the value and number of net signed contracts increased 36.0% and 19.7%, respectively, as compared to the three months ended January 31, 2017; and increased 55.5% and 45.8%, respectively, as compared to the three months ended January 31, 2016.
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We believe we are also 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 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 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 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.
Other
Tax Reform
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which changed many longstanding foreign and domestic corporate and individual tax rules, as well as rules pertaining to the taxation of employee compensation and benefits. These changes include: (i) reducing the corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017; (ii) eliminating the corporate alternative minimum tax (“AMT”); (iii) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (iv) repeal of the 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 on mortgage loan interest payments on indebtedness, and on state and local taxes, including real estate taxes.
As required under accounting rules, we remeasured our net deferred tax liability for the tax law change, which resulted in an income tax benefit of $31.2 million in the three months ended January 31, 2018. Since the Tax Act includes many broad and complex changes to the U.S. tax code, we continue to analyze the impact the provisions of the Tax Act may have on our financial statements. See Note 7, “Income Taxes” in Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional information regarding the impact of the Tax Act.
Defective I-Joists
In early July, one of our lumber suppliers publicly announced a floor joist recall. We believe that these floor joists were present in approximately 350 of our 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 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 January 31, 2018, there were approximately 150 affected homes in backlog and another 75 were not yet sold. The supplier has committed to us that it will absorb the costs associated with the remediation of the defective floor joists. This work has been completed for all affected homes. We began delivering these homes in the first quarter of fiscal 2018 and expect to deliver the remaining homes in backlog by the end of fiscal 2018. We do not believe the resolution of this issue will be material to our results of operations, liquidity, or financial condition.


RESULTS OF OPERATIONS – OVERVIEW
The following table compares certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income and other supplemental information for the three months and nine months ended JanuaryJuly 31, 20182023 and 20172022 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by segment, see “Segments” in this MD&A.
 Three months ended January 31,
 2018 2017 % Change
Revenues$1,175.5
 $920.7
 28 %
Cost of revenues934.5
 733.0
 27 %
Selling, general and administrative157.3
 137.1
 15 %
 1,091.7
 870.1
 25 %
Income from operations83.7
 50.6
 65 %
Other     
Income from unconsolidated entities38.9
 46.4
 (16)%
Other income – net9.0
 12.7
 (29)%
Income before income taxes131.6
 109.8
 20 %
Income tax (benefit) provision(0.5) 39.4
 (101)%
Net income$132.1
 $70.4
 88 %
      
Supplemental information:     
Cost of revenues as a percentage of revenues79.5 % 79.6% 
SG&A as a percentage of revenues13.4 % 14.9% 
Effective tax rate(0.4)% 35.9%  
      
Deliveries – units1,423
 1,190
 20 %
Deliveries – average delivered price *$826.0
 $773.7
 7 %
      
Net contracts signed – value$1,690.4
 $1,243.0
 36 %
Net contracts signed – units1,822
 1,522
 20 %
Net contracts signed – average selling price *$927.8
 $816.7
 14 %
      
 January 31, 2018 January 31, 2017 %
Change
Backlog – value$5,576.5
 $4,345.1
 28 %
Backlog – units6,250
 5,145
 21 %
Backlog – average selling price *$892.2
 $844.5
 6 %
* $ amounts in thousands.
 Three months ended July 31,Nine months ended July 31,
 20232022% Change20232022% Change
Revenues:
Home sales$2,674.6 $2,256.3 19 %$6,914.1 $6,130.2 13 %
Land sales and other13.0 238.5 60.7 433.2 
2,687.6 2,494.8 8 %6,974.8 6,563.4 6 %
Cost of revenues:
Home sales1,931.9 1,670.7 16 %5,065.8 4,619.510 %
Land sales and other11.6 229.6 74.9 422.2 
1,943.5 1,900.3 2 %5,140.6 5,041.7 2 %
Selling, general and administrative229.0 232.9 (2)%668.0 703.4 (5)%
Income from operations515.1 361.7 42 %1,166.1 818.4 42 %
Other    
Income from unconsolidated entities30.5 3.0 NM20.8 28.0 (26)%
Other income – net7.4 1.3 NM50.5 16.2 211 %
Income before income taxes553.0 366.0 51 %1,237.4 862.6 43 %
Income tax provision138.2 92.5 49 %310.9 216.6 44 %
Net income$414.8 $273.5 52 %$926.5 $646.0 43 %
Supplemental information:
Home sales cost of revenues as a percentage of home sales revenues72.2 %74.0 %73.3 %75.4 %
Land sales and other cost of revenues as a percentage of land sales and other revenues88.8 %96.3 %123.4 %97.4 %
SG&A as a percentage of home sale revenues8.6 %10.3 %9.7 %11.5 %
Effective tax rate25.0 %25.3 %25.1 %25.1 %
Deliveries – units2,524 2,414 5 %6,842 6,750 1 %
Deliveries – average delivered price (in ‘000s)$1,059.7 $934.7 13 %$1,010.5 $908.2 11 %
Net contracts signed – value$2,163.5 $1,664.2 30 %$5,893.1 $7,747.5 (24)%
Net contracts signed – units2,245 1,266 77 %6,039 7,069 (15)%
Net contracts signed – average contracted price (in ‘000s)$963.7 $1,314.5 (27)%$975.8 $1,096.0 (11)%
At July 31,At October 31,
20232022%
Change		20222021%
Change
Backlog – value$7,874.8 $11,185.3 (30)%$8,874.1 $9,499.1 (7)%
Backlog – units7,295 10,725 (32)%8,098 10,302 (21)%
Backlog – average contracted price (in ‘000s)$1,079.5 $1,042.9 4 %$1,095.8 $922.1 19 %
Note: Due to rounding, amounts may not add. “Net contracts signed – value” is net of all cancellations that occurred in the period. It includes the value of each binding agreement of sale that was signed in the period, plus the value of all options that were selected during the period, regardless of when the initial agreement of sale related to such options was signed.
NM: Not meaningful

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Home Sales Revenues and Home Sales Cost of Revenues
For the three months ended July 31, 2023 compared to the three months ended July 31, 2022
The increase in home sale revenues for the fiscal 2018 period,three months ended July 31, 2023, as compared to the fiscal 2017 period,three months ended July 31, 2022, was attributable to a 20%13% increase in the average price of homes delivered and a 5% increase in the number of homes delivered primarily due to a higher backlog at October 31, 2017, as compared to October 31, 2016 and a 7% increase in the average price of the homes delivered. The increase in the average delivered home price was primarilymainly due to an increase in the number of homes delivered in California and City Living where home prices are higher, and, in California,sales price increases as well as a shift in the number of homes delivered to more expensive areas and/or products, most notably in fiscal 2018 period,the Mid-Atlantic and Pacific regions. The increase in the number of homes delivered in the three months ended July 31, 2023 was primarily due to more deliveries of quick move-in (or “spec”) homes, coupled with a higher backlog conversion in the three months ended July 31, 2023 compared to the three months ended July 31, 2022, primarily as a result of improvement in build times. These factors are offset, in part, by a decrease in the number of homes in backlog at October 31, 2022, as compared to the fiscal 2017 period. These increases were partially offset by an increasenumber of homes in deliveries of lower priced attached and age-targeted products primarily in our North segment and an increase in deliveries in Idaho, where average delivered home prices are lower than the company average,backlog at October 31, 2021, most significantly in the fiscal 2018 period, as compared to the fiscal 2017 period.North and Mountain regions.
Cost of revenues, as a percentage of revenues,The decrease in the fiscal 2018 period was 79.5%, as compared to 79.6% in the fiscal 2017 period. The slight improvement inhome sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2018 period,three months ended July 31, 2023, as compared to the fiscal 2017 period,three months ended July 31, 2022, was mainlyprincipally due to an increasea shift in revenues generated in California and City Living, where costthe mix of revenues as a percent of revenues, are lower than the company average,to higher margin products/areas and lower interest expense. These decreases were, offset, in part, by higher material and labor costs and a higher number of closings in multifamily and active-adult communities, primarily in


our North segment where margins are lower than our company average,sales price increases outpacing cost increases for homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period.quarter. In the fiscal 2018 and fiscal 2017 periods,addition, interest expense as a percentage of home sales revenues was 2.9%lower in the fiscal 2023 period. In the three months ended July 31, 2023 and 3.0%2022, interest expense, as a percentage of home sales revenues, was 1.4% and 1.7%, respectively.
For the nine months ended July 31, 2023 compared to the nine months ended July 31, 2022
The increase in home sale revenues for the nine months ended July 31, 2023, as compared to the nine months ended July 31, 2022, was primarily attributable to an 11% increase in the average price of homes delivered. The increase in the average delivered home price was mainly due to sales price increases, as well as an increase in homes delivered in more expensive product types/geographic regions, most notably in the Mid-Atlantic and Pacific regions.
The decrease in home sales cost of revenues, as a percentage of home sales revenues, for the nine months ended July 31, 2023, as compared to the nine months ended July 31, 2022, was principally due to a shift in the mix of revenues to higher margin products/areas, sales price increases outpacing cost increases for homes delivered in the quarter, and lower interest expense as a percentage of home sales revenues, offset, in part, by higher inventory impairment charges in the fiscal 2023 period. In the nine months ended July 31, 2023 and 2022, interest expense, as a percentage of home sales revenues, was 1.4% and 1.8%, respectively.
Land Sales and Other Revenues and Land Sales and Other Cost of Revenues
Our revenues from land sales and other 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; (3) bulk sales to third parties of land we have decided no longer meets our development criteria; and (4) sales of commercial and retail properties generally located at our City Living buildings. Land sales to joint ventures in which we retain an interest are generally sold at our land basis and therefore little to no gross margin is earned on these sales. The increase in land sales and other cost of revenues as a percentage of land sales and other revenues was primarily due to $17.7 million of impairment charges recognized in the nine months ended July 31, 2023, in connection with planned land sales. There were no land sales and other impairment charges recognized in the three months ended July 31, 2023. This compares to $1.4 million and $6.6 million of land sales and other impairment charges recognized in the three months and nine months ended July 31, 2022, respectively.
Selling, General and Administrative Expenses (“SG&A”)
SG&A spending increaseddecreased by $20.2$3.9 million in the fiscal 2018three-month period ended July 31, 2023, as compared to the fiscal 2017 period.three-month period ended July 31, 2022. As a percentage of home sales revenues, SG&A was 13.4% and 14.9%8.6% in the fiscal 2018 period andthree months ended July 31, 2023, as compared to 10.3% in the fiscal 2017 period, respectively.three months ended July 31, 2022. The dollar increasedecrease in SG&A expenditures was due primarily to increased compensationlower headcount and reduced costs due to afrom the impact of other fixed cost control measures, offset, in part, by higher number of employees; increased salescommissions and marketing costs; and increased spending on our upgrading of computer software. The higher sales and marketing costs were the result of the increased spending on advertising, higher model operating costs, and the increased number of homes delivered. The increased number of employees was due primarily to the overall increase in our business in the fiscal 2018 period, as compared to the fiscal 2017 period.spend. The decrease in SG&A as a percentage of revenues was due to lower SG&A spending relative to the 19% increase in revenues.
SG&A spending decreased by $35.3 million in the fiscal 20182023 nine-month period, as compared to the fiscal 20172022 nine-month period. As a percentage of home sales revenues, SG&A was 9.7% in the fiscal 2023 period, as compared to 11.5% in the fiscal 2022 period. The dollar decrease in SG&A was primarily due to lower headcount, reduced commissions and marketing spend in the fiscal 2023 period, and the impact of other fixed cost control measures. The decrease in SG&A as a percentage of revenues was due to revenues increasing 13% year-over-year in the fiscal 2023 period, while SG&A spending increasing 15% while revenues increased 28% from the fiscal 2017 period.decreased 5%.
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Income from Unconsolidated Entities
We have investments in joint ventures to (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 and single family homes, commercial space, and a hotel (“Rental Property Joint Ventures”); 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”).
We recognize our proportionate share of the earnings and losses from the variousthese unconsolidated entities in which we have an investment.entities. Many of our unconsolidated entities are land development projects, high-rise/mid-rise condominium construction projects, or for-rent apartmentsapartment and for-rent single-family home projects, which do not generate revenues and earnings for a number of years during the development of the property.properties. 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 and for-rent single-family home 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, generally resulting in income.an income-producing event. Because there is not a steady flow of revenues and earnings fromthe long development periods associated with these entities, the earnings recognized from these entities may vary significantly from quarter to quarter and year to year.
The decrease inIn the three-month period ended July 31, 2023, we recognized income from unconsolidated entities for the fiscal 2018 period,of $30.5 million as compared to the fiscal 2017 period, was due mainly to lower income from two of our Home Building Joint Ventures located in New York City, where the fiscal 2017 period benefited from the commencement of deliveries$3.0 million in the fourth quarter of fiscal 2016 andprior year period. The increase was primarily due to a $6.2$35.0 million gain from the sale of 50% of our ownership interests in one of our Rental Property Joint Ventures located in the suburbs of Philadelphia, Pennsylvania, in the fiscal 2017 period. These decreases were partially offset by2023 period related to a $30.8 million gain recognized from theproperty sale by one of our Rental Property Joint Ventures, partially offset by losses by one of its student housing communityour Rental Property Joint Ventures that is currently in College Park, Maryland,the development phase, and lower earnings from a Land Development Joint Venture due to reduced lot sales.
In the nine-month period ended July 31, 2023, we recognized income from unconsolidated entities of $20.8 million, as compared to income of $28.0 million in the prior year period. The decrease was primarily due to a $21.0 million gain in the fiscal 20182022 period related to a property sale by one of our Rental Property Joint Ventures, higher losses by various Rental Property Joint Ventures that are currently in the development or lease-up phases, losses by two Home Building Joint Ventures that were formed during the three-months ended October 31, 2022, and lower earnings from a Land Development Joint Venture due to reduced lot sales in the fiscal 2023 period. These decreases are partially offset by a $35.0 million gain in the fiscal 2023 period related to a property sale by one of our Rental Property Joint Ventures.
Other Income – Net
The table below provides, for the periods indicated, the components of “Other income – net” (amounts in thousands):
Three months ended July 31,Nine months ended July 31,
2023202220232022
Interest income$8,109 $375 $22,187 $1,970 
(Loss) income from ancillary businesses(1,451)1,865 (1,543)16,159 
Management fee income earned by home building operations839 931 2,901 3,306 
Gain on litigation settlements – net— — 27,683 — 
Other(139)(1,877)(775)(5,205)
Total other income – net$7,358 $1,294 $50,453 $16,230 
 Three months ended January 31,
 2018 2017
Income from ancillary businesses$2,583
 $2,235
Management fee income from home building unconsolidated entities, net3,071
 4,289
Income from land sales700
 3,559
Other2,643
 2,620
Total other income – net$8,997
 $12,703
Management feeThe increase in interest income from home building unconsolidated entities presented above primarily represents fees earned by our City Living and home building operations. In addition, in the fiscal 2018three and 2017nine month periods our apartment living operations earned fees from unconsolidated entities of $2.3 million and $1.6 million, respectively; fees earned by our apartment living operations are included in income from ancillary businesses.ended July 31, 2023 was primarily due to higher interest rates.
The decrease in income from land salesancillary businesses in the fiscal 2018 period,three months ended July 31, 2023, as compared to the three months ended July 31, 2022, was mainly due to higher operating losses incurred in our apartment living operations.
The decrease in income from ancillary businesses in the nine months ended July 31, 2023 was mainly due to the fiscal 20172022 period benefiting from the bulk sale of security monitoring accounts by our smart home technologies business, which resulted in a gain of $9.0 million. In addition, the fiscal 2023 period had lower income from our mortgage operations due to lower volume and reduced spreads and higher operating losses incurred in our apartment living operations.
The decreases in management fee income earned by our home building operations in the three and nine month periods ended July 31, 2023 were primarily related to a decrease in fees from certain of our Land Development Joint Ventures.
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The gain on litigation settlements - net in nine months ended July 31, 2023 primarily relates to the settlement of an insurance claim. No similar gains occurred in the fiscal 2022 period.
The decreased loss in “other” in the nine month period ended July 31, 2023 was primarily due to $3.1a $1.6 million impairment charge recorded during the fiscal 2022 period in connection with a planned sale of previously deferred gains recognizeda manufacturing facility and higher expense in the fiscal 20172022 period related to the sale of a property in fiscal 2015 to a Home Building Joint Venture in which we had a 25% interest. Due to our continued involvement in this unconsolidated entity through our ownership interest and guarantees provided on the entity’s debt, we deferred the $9.3 million gain realized on the sale. We recognized the gain as units were sold to the ultimate home buyers. In the fourth quarter of fiscal 2017, we purchased the remaining inventory from this Home Building Joint Venture. The remaining unamortized deferred gain was used to reduce the basis of the inventory acquired.


defined benefit retirement plans.
Income Before Income Taxes
For the three-month period ended JanuaryJuly 31, 2018,2023, we reported income before income taxes of $131.6$553.0 million, as compared to $109.8$366.0 million in the three-month period ended JanuaryJuly 31, 2017.2022.
Income Tax (Benefit) Provision
We recognized anFor the nine-month period ended July 31, 2023, we reported income tax benefitbefore income taxes of $0.5$1,237.4 million, as compared to $862.6 million in the three-month period ended JanuaryJuly 31, 2018.2022.
Income Tax Provision
In the three-month periods ended July 31, 2023 and July 31, 2022, we recognized income tax provisions of $138.2 million and $92.5 million, respectively. Based upon the blended federal statutory rate of 23.3%21.0% for the fiscal 2018,2023 and 2022 periods, our federal tax provisionprovisions would have been $30.7 million.$116.1 million and $76.8 million, in the three-month periods ended July 31, 2023 and 2022, respectively. The difference between the tax benefitprovisions recognized and the tax provision based on the federal statutory rate was mainly due to the impact of the Tax Act,provision for state income taxes and permanent differences, offset, in part, by excess tax benefits related to stock-based compensation, and tax benefits related to the utilization of domestic production activities deductions. These benefits were partially offset by a provision for state income taxes and interest accrued on anticipated tax assessments. See Note 7, “Income Taxes” in Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional information regarding the impact of the Tax Act.compensation.
In the three-month period ended January 31, 2017, weWe recognized an income tax provisionprovisions of $39.4 million.$310.9 million and $216.6 million in the nine-month periods ended July 31, 2023 and July 31, 2022, respectively. Based upon the federal statutory rate of 35%,21.0% for the fiscal 2023 and 2022 periods, our federal tax provisionprovisions would have been $38.4 million.$259.9 million and $181.1 million, in the nine-month periods ended July 31, 2023 and July 31, 2022, respectively. The difference between the tax provisionprovisions recognized and the tax provision based on the federal statutory rate was mainly due primarily to the provision for state income taxes and interest accrued on anticipated tax assessments, partiallypermanent differences, offset, in part, by excess tax benefits related to the utilization of domestic production activities deductions and other permanent differences.stock-based compensation.
Contracts
In the three-month periods ended July 31, 2023 and 2022, the value of net contracts signed was $2.16 billion (2,245 homes) and $1.66 billion (1,266 homes), respectively. The aggregate value of net contracts signed increased $447.4$499.3 million, or 36%30.0%, in the three-month period ended JanuaryJuly 31, 2018,2023, as compared to the prior year period. In the three-month periodsperiod ended JanuaryJuly 31, 2018 and 2017, the value of net contracts signed was $1.69 billion (1,822 homes) and $1.24 billion (1,522 homes), respectively.
2022. The increase in the aggregate value of net contracts signed in the fiscal 2018 period, as comparedwas due to the fiscal 2017 period, was mainly the result of a 20%77.3% increase in the number of net contracts signed andoffset, in part, by a 14% increase26.7% decrease in the average value of each contract signed.signed contract. The increase in the number of net contracts signed wasreflects an increase in demand compared to the result of increased demand, offset, in part, by aprior year period. The decrease in the number of selling communities in the fiscal 2018 period, as comparedaverage value attributed to the fiscal 2017 period. The increase in average price of net contractseach signed in the fiscal 2018 period, as compared to the fiscal 2017 period, wascontract is principally due to a shift in the number of contracts signed to moreless expensive areas and/or products and an increase in sales incentives. In addition, the average value attributed to each contract signed includes the value of each binding agreement of sale that was signed in the fiscal 2018 period, as well as the value of all options selected during the period, regardless of when the initial agreement of sale related to such options was signed. During the three-month period ended July 31, 2022 we signed 1,266 net contracts, a 60% decline compared to the prior year period. During the three-month periods ended April 30, 2022 and January 31, 2022, we signed 2,874 and 2,929 net contracts, respectively. As a result of the steep drop in signed contracts during the three-month period ended July 31, 2022, the average value attributed to each signed contract in such period includes an unusually large value related to option selections for homes purchased in prior periods.
In the nine-month periods ended July 31, 2023 and 2022, the value of net contracts signed was $5.89 billion (6,039 homes) and $7.75 billion (7,069 homes), respectively. The aggregate value of net contracts signed decreased $1.85 billion, or 23.9%, in the nine-month period ended July 31, 2023, as compared to the fiscal 2017 period. Innine-month period ended July 31, 2022. The decrease in the fiscal 2018 period,aggregate value of net contracts signed was due to a 14.6% decrease in the number of net contracts signed in California, where average sales prices are higher, represented 21% of total net contracts, as compared to 15% in the fiscal 2017 period. This increase was partially offset by aand an 11.0% decrease in the average sales pricevalue attributed to each signed contract. The decrease in the number of net contracts signed in City Livingreflects the stronger demand environment that existed for most of the nine-month period ended July 31, 2022. The decrease in the fiscal 2018 period, as comparedaverage value attributed to the fiscal 2017 period, which waseach signed contract is principally due to a shift in the number of contracts signed to less expensive buildings in the fiscal 2018 period, as compared to the fiscal 2017 period.
Backlog
Theareas and/or products and an increase in the value of our backlog at January 31, 2018, as compared to the backlog at January 31, 2017, was primarily attributable to the 27% higher value of backlog at October 31, 2017, as compared to the backlog at October 31, 2016 and a 36% increase in the value of net contracts signed in the three-month period ended January 31, 2018, as compared to the fiscal 2017 period, offset, in part, by a 28% increase in the value of deliveries in the three-month period ended January 31, 2018.sales incentives.
Backlog
The value of our backlog at JanuaryJuly 31, 2018 increased 28%2023 decreased 29.6% to $5.58$7.87 billion (6,250(7,295 homes), as compared to the value of our backlog$11.19 billion (10,725 homes) at JanuaryJuly 31, 2017 of $4.35 billion (5,145 homes).2022. Our backlog at October 31, 20172022 and 20162021 was $5.06$8.87 billion (5,851(8,098 homes) and $3.98$9.50 billion (4,685(10,302 homes), respectively.
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For more information regarding results of operations by segment, see “Segments” in this MD&A.
CAPITAL RESOURCES AND LIQUIDITY
Funding for our business has been, and continues to be, provided principally by cash flow from operating activities before inventory additions, unsecured bank borrowings,credit arrangements with third parties, and the public capital markets.
Our cash flows from operations generally provide us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our short-term borrowings and long-term debt, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our Company. Our primary uses of cash include inventory additions in the form of land acquisitions and deposits to obtain control of land, land development, working capital to fund day-to-day operations, and investments in existing and future unconsolidated joint ventures. We may also use cash to fund capital expenditures such as investments in our information technology systems. From time to time we use some or all of the remaining available cash flow to repay debt, and to fund share repurchases and dividends on our common stock. We believe our sources of cash and liquidity will continue to be adequate to fund operations, finance our strategic operating initiatives, repay debt, fund our share repurchases and pay dividends for the foreseeable future.
At JanuaryJuly 31, 2018 and October 31, 2017,2023, we had $508.3 million and $712.8 million$1.03 billion of cash and cash equivalents respectively. Cash usedon hand and approximately $1.78 billion available for borrowing under our revolving credit facility. On February 14, 2023, we entered into the $1.905 billion New Revolving Credit Facility with a syndicate of banks that is scheduled to mature on February 14, 2028. The New Revolving Credit Facility replaced the prior $1.905 revolving credit facility, which was terminated in operating activities duringconnection with the three-month period ended January 31, 2018 was $329.8 million. Cash used in operating activities duringexecution of the fiscal 2018 period was primarily relatednew agreement. The New Revolving Credit Facility provides us with a committed borrowing capacity of $1.905 billion, which we have the ability to increase up to $3.0 billion with the consent of lenders. The terms of the New Revolving Credit Facility are substantially the same as the prior agreement, except that the LIBOR-based interest rate provisions have been replaced with SOFR-based provisions. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the New Revolving Credit Facility. Also on February 14, 2023, we entered into an amendment to the purchaseTerm Loan Facility to extend the maturity date of inventory; an increase$487.5 million of outstanding term loans to February 14, 2028, with $60.9 million due on November 1, 2026 and the remaining $101.6 million due on November 1, 2025.
Short-term Liquidity and Capital Resources
For at least the next twelve months, we expect our principal demand for funds will be for inventory additions in receivables, prepaidthe form of land acquisition, deposits to control land and land development, operating expenses, including our general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, community level debt repayment, common stock repurchases, and dividend payments. Demand for funds include interest and principal payments on current and future debt financing. We expect to meet our short-term liquidity requirements primarily through our cash and cash equivalents on hand and net cash flows provided by operations. Additional sources of funds include distributions from our unconsolidated joint ventures, borrowing capacity under our New Revolving Credit Facility, and borrowings from banks and other assets;lenders.
Toll Brothers Mortgage Company (“TBMC”) has a decrease in accounts payable and accrued expenses; andmortgage warehousing agreement with a decrease in income taxes payable; offset, in part, by net income adjustedlender (the “Warehousing Agreement”) that provides funds for stock-based compensation, inventory impairments, depreciation and amortization, and deferred taxes; and an increase in mortgage loans sold, netthe origination of mortgage loans originated.by TBMC. The agreement is scheduled to expire on March 30, 2024. While we intend to refinance the TBMC Warehousing Agreement prior to its maturity, there can be no assurances that it can be renewed or replaced on commercially reasonable terms upon its expiration. However, we believe we have adequate liquidity to meet TBMC’s anticipated financing needs.

We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations in a timely manner for the next twelve months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but we cannot be assured that such financing will be available on favorable terms, or at all.

Long-term Liquidity and Capital Resources
InBeyond the three-month period ended January 31, 2018, cash provided by investing activities was $31.6 million, which was primarily relatednext twelve months, our principal demands for funds will be for the payments of the principal amount of our long-term debt as it becomes due or matures, land purchases and inventory additions needed to $37.8 million of cash received as returns ongrow our business, long-term capital investments and investments in unconsolidated entities, foreclosed real estate,joint ventures, common stock repurchases, and distressed loans. This was offset, in part, by $4.4 million useddividend payments.
Over the longer term, to the extent the sources of capital described above are insufficient to meet our needs, we may also conduct additional public offerings of our securities, refinance debt or dispose of certain assets to fund our investments in unconsolidated entities and $1.7 million for the purchase of property and equipment.
We generated $93.7 million of cash from financing activities in the three-month period ended January 31, 2018 primarily from the net proceeds of $396.6 million from the issuance of $400.0 million aggregate principal amount of 4.350% Senior Notes due 2028 and the proceeds of $7.6 million from our stock-based benefit plans; offset, in part, by the repurchase of $200.3 million of our common stock; the repayment of $97.9 million of loans payable, net of borrowings; and the payment of dividends on our common stock of $12.3 million.
At January 31, 2017, we had $373.5 million of cash and cash equivalents. At October 31, 2016, we had $633.7 million of cash and cash equivalents. Cash provided by operating activities during the three-month period ended January 31, 2017 was $24.2 million. Cash provided by operating activities during the fiscal 2017 period was primarily related to net income adjusted for stock-based compensation, inventory impairments, and depreciation and amortization; an increase in mortgage loans sold, net of mortgage loans originated; and an increase in customer deposits; offset, in part, by an increase in inventory; and decreases in accounts payable, accrued expenses, and income taxes payable.
In the three-month period ended January 31, 2017, cash used in investing activities was $138.6 million. Cash used in investing activities was primarily related to $99.9 million useddebt service. We expect these resources will be adequate to fund our investmentsongoing operating activities as well as provide capital for investment in unconsolidated entities, $85.2 millionfuture land purchases and related development activities and future joint ventures.
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Material Cash Requirements
We are a party to usedmany agreements that include contractual obligations and commitments to acquire Coleman,make payments to third parties. These obligations impact our short-term and $6.3 million forlong-term liquidity and capital resource needs. Certain contractual obligations are reflected on the purchaseCondensed Consolidated Balance Sheet as of propertyJuly 31, 2023, while others are considered future commitments. Our contractual obligations primarily consist of long-term debt and equipment. This was offset, in part, by $35.1 million of cash received as returnsrelated interest payments, payments due on our investments in unconsolidated entities, foreclosed real estate,mortgage company loan facility, purchase obligations related to expected acquisition of land under purchase agreements and distressed loans, and $18.0 million from net sales of restricted investments.
We used $145.6 million of cash from financing activities in the three-month period ended January 31, 2017 primarily for the repayment of $156.5 million of loans payable, net of repayments and the repurchase of $15.2 million of our common stock, offset, in part, by the proceeds of $25.8 million from our stock-based benefit plans.
In general, our cash flow from operating activities assumes that, as each home is delivered, we will purchase a home site to replace it. Because we own a supply of several years of home sites, we do not need to buy home sites immediately to replace those that we deliver. In addition, we generally do not begin construction of our detached homes until we have a signed contract with the home buyer, although in the past several years, due to the increase in the number of attached home communities from which we were operating (all of the unitsland development agreements (many of which are generally not sold beforesecured by letters of credit or surety bonds), operating leases, and obligations under our deferred compensation plan, supplemental executive retirement plans, and 401(k) savings plans. We also enter into certain short-term lease commitments, commitments to fund our existing or future unconsolidated joint ventures, letters of credit and other purchase obligations in the commencementnormal course of construction),business. For more information regarding our primary obligations, refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility,” and Note 14, “Commitments and Contingencies,” to the Condensed Consolidated Financial Statements for amounts outstanding as of July 31, 2023, related to debt and commitments and contingencies, respectively.
We also operate through a number of speculative homesjoint ventures and have undertaken various commitments as a result of those arrangements. At July 31, 2023, we had investments in our inventory increased significantly. Should our business remain at its current levelthese entities of $900.4 million and were committed to invest or decline,advance up to an additional $345.4 million to these entities if they require additional funding. At July 31, 2023, we believe that our inventory levels would decrease as we complete and deliverhad agreed to terms for the homes under construction but do not commence construction of as many new homes, as we complete the improvements on the land we already own, and as we sell and deliver the speculative homes that are currently in inventory, resulting in additional cash flow from operations. In addition, we might delay, decrease, or curtail our acquisition of additional land, as we did during the period from April 2006 through January 2010, which would further reduce our inventory levels and cash needs. At January 31, 2018, we owned or controlled through options approximately 49,500313 home sites of which we owned approximately 32,100. Of our owned home sites at January 31, 2018, significant improvements were completed on approximately 17,600 of them.
At January 31, 2018, thefrom three joint ventures for an estimated aggregate purchase price of land parcels under option and purchase agreements was approximately $2.54 billion (including $245.7 million of land to be acquired from joint ventures in which we have invested). Of the $2.54 billion of land purchase commitments, we paid or deposited $123.0 million, and, if we acquire all of these land parcels, we will be required to pay an additional $2.29 billion. The purchases of these land parcels are scheduled to occur over the next several years.$28.7 million. In addition, we expect to purchase approximately 2,4008,300 additional home sites over a number of years from several joint ventures in which we have interests. We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts. In addition, at January 31, 2018, we had purchase commitments to acquire land for apartment developments of approximately $207.3 million, of which we had outstanding deposits in the amount of $10.7 million.
We have a $1.295 billion, unsecured, five-year revolving credit facility (the “Credit Facility”) that is scheduled to expire in May 2021. Under the terms of the Credit Facility, our maximum leverage ratio (as defined in the credit agreement) may not exceed 1.75 to 1.00, and we are required to maintain a minimum tangible net worth (as defined in the credit agreement) of no less than approximately $2.49 billion. Under the terms of the Credit Facility, at January 31, 2018, our leverage ratio was approximately 0.73 to 1.00, and our tangible net worth was approximately $4.42 billion. Based upon the limitations related to our repurchase of common stock in the Credit Facility, our ability to repurchase our common stock was limited to approximately $2.47 billion as of January 31, 2018. At January 31, 2018, we had no outstanding borrowings under our Credit


Facility and had outstanding letters of credit thereunder of approximately $143.5 million. Subsequent to January 31, 2018, we borrowed $100.0 million under the Credit Facility.
We believe that we will have adequate resources and sufficient access to the capital markets and external financing sources to continue to fund our current operations and meet our contractual obligations. Due to the uncertainties in the economy and for home builders in general, we cannot be certain that we will be able to replace existing financing or find sources of additional financing in the future.
OFF-BALANCE SHEET ARRANGEMENTS
We have investments in Land Development Joint Ventures; Home Building Joint Ventures; Rental Property Joint Ventures; and Gibraltar Joint Ventures.
Our investments in these entities are 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 sales of those home sites to us.
At January 31, 2018, we had investments in these entities of $449.7 million and were committed to invest or advance up to an additional $42.2 million to these entities if they require additional funding. At January 31, 2018, we had agreed to terms for the acquisition of 317 home sites from two Land Development Joint Venture for an estimated aggregate purchase price of $245.7 million. In addition, we expect to purchase approximately 2,400 additional home sites over a number of years from several joint ventures in which we have interests; theThe purchase price of these home sites will be determined at a future date.
The unconsolidated entitiesjoint ventures in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we and our partnersjoint venture partner 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, 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 arethese situations where we have joint and several. In these situations,several guarantees with our joint venture partner, we generally haveseek to implement 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, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under thesuch a reimbursement agreement, we may be liable for more than our proportionate share.
We believe that, as of JanuaryJuly 31, 2018,2023, 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 in such entity 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 JanuaryJuly 31, 2018,2023, we havehad guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $1.08$3.18 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $269.6$642.2 million to be our maximum exposure related to repayment and carry cost guarantees. At JanuaryJuly 31, 2018,2023, the unconsolidated entities had borrowed an aggregate of $664.9 million,$1.51 billion, of which we estimate $217.7$509.8 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 7 months1 month to 37 months.3.9 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners. Nor do they include any potential exposures related to project completion guarantees or the indemnities noted above, which are not estimable.
For more information regarding these joint ventures, see Note 3,4, “Investments in Unconsolidated Entities,”Entities” in the Notes to Condensed Consolidated Financial StatementsStatements.

Debt Service Requirements
Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced profile of debt maturities, and to manage our exposure to floating interest rate volatility.
Outside of the normal course of operations, one of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of July 31, 2023, we were in this Form 10-Q.compliance with all such covenants and requirements on our term loan, credit facility and other loans payable. Refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility” in the Notes to the Condensed Consolidated Financial Statements.

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Operating Activities
At July 31, 2023 and October 31, 2022, we had $1.03 billion and $1.35 billion, respectively, of cash and cash equivalents. Cash provided by operating activities during the nine-month period ended July 31, 2023 was $675.0 million. Cash provided by operating activities during the fiscal 2023 period was primarily related to net income (adjusted for stock-based compensation, impairments, depreciation and amortization, income and distributions of earnings from unconsolidated entities and deferred taxes); and mortgage loans sold, net of mortgage loans originated. This activity was offset, in part, by an increase in inventory; decreases in accounts payable and accrued expenses, current income taxes – net, and customer deposits – net; and an increase in receivables, prepaid expenses, and other assets.
Cash used in operating activities during the nine-month period ended July 31, 2022 was $246.6 million. Cash used in operating activities during the fiscal 2022 period was primarily related to an increase in inventory and an increase in current income taxes – net. This activity was offset, in part, by net income (adjusted for stock-based compensation, impairments, depreciation and amortization, and deferred taxes); mortgage loans sold, net of mortgage loans originated; an increase in customer deposits – net, an increase in accounts payable and accrued expenses and a decrease in receivables, prepaid expenses, and other assets.
Investing Activities
In the nine-month period ended July 31, 2023, cash used in investing activities was $133.6 million, which was primarily related to $162.6 million used to fund our investments in unconsolidated entities and $54.1 million used for the purchase of property and equipment. This activity was offset, in part, by $74.0 million of cash received as returns from our investments in unconsolidated entities and $9.0 million of cash proceeds from the sale of assets.
In the nine-month period ended July 31, 2022, cash used in investing activities was $94.9 million, which was primarily related to $176.6 million used to fund our investments in unconsolidated entities and $56.5 million used for the purchase of property
and equipment. This activity was offset, in part, by $109.6 million million of cash received as returns from our investments in unconsolidated entities and $28.3 million of cash proceeds from the sale of assets.
Financing Activities
We used $857.3 million of cash in financing activities in the nine-month period ended July 31, 2023, primarily for the redemption of $400.0 million of senior notes, payments of $190.6 million of loans payable, net of borrowings, the payment of dividends on our common stock of $69.1 million, the repurchase of $239.3 million of our common stock and payments of $5.3 million of debt issuance costs. This activity was offset, in part, by $47.1 million of proceeds related to stock-based benefit plans - net.
We used $946.3 million of cash in financing activities in the nine-month period ended July 31, 2022, primarily for the redemption of $409.9 million of senior notes; the repurchase of $383.9 million of our common stock; payments of $58.4 million of loans payable, net of borrowings, the payment of dividends on our common stock of $66.9 million and payments related to noncontrolling interest - net of $25.8 million.
CRITICAL ACCOUNTING POLICIESESTIMATES
As disclosed in our 20172022 Form 10-K, our most critical accounting policiesestimates relate to inventory, income taxes–valuation allowances,cost of revenue and cost recognition, and warranty and self-insurance.self-insurance, and investments in unconsolidated entities. Since October 31, 2017,2022, there have been no material changes to those critical accounting policies.

estimates.

SUPPLEMENTAL GUARANTOR INFORMATION
At July 31, 2023, our 100%-owned subsidiary, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), had issued and outstanding $1.60 billion aggregate principal amount of senior notes maturing on various dates between November 15, 2025 and November 1, 2029 (the “Senior Notes”). For further information regarding the Senior Notes, see Note 6 to our Consolidated Condensed Financial Statements under the caption “Senior Notes.”
The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest are guaranteed jointly and severally on a senior basis by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries (the “Guarantor Subsidiaries” and, together with us, the “Guarantors”). The guarantees are full and unconditional, and the Subsidiary Issuer and each of the Guarantor Subsidiaries are consolidated subsidiaries of Toll Brothers, Inc. Our non-home building subsidiaries and several of our home building subsidiaries (together, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other than the financing of our other subsidiaries by lending the proceeds of its public debt offerings, including the Senior Notes. Our home building operations are conducted almost entirely through the Guarantor Subsidiaries. Accordingly, the Subsidiary Issuer’s cash flow and ability to service the Senior Notes is dependent upon the earnings of the Company’s subsidiaries and the distribution of
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those earnings to the Subsidiary Issuer, whether by dividends, loans or otherwise. Holders of the Senior Notes have a direct claim only against the Subsidiary Issuer and the Guarantors. The obligations of the Guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference or similar laws affecting the rights of creditors generally) under applicable law.
The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the New Revolving Credit Facility will guarantee the Senior Notes. The indentures further provide that any Guarantor Subsidiary may be released from its guarantee so long as (i) no default or event of default exists or would result from release of such guarantee; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (iv) such release would not have a material adverse effect on ours and our subsidiaries’ home building business; and (v) the Guarantor Subsidiary is released from its guaranty under the New Revolving Credit Facility. If there are no guarantors under the New Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
The following summarized financial information is presented for Toll Brothers, Inc., the Subsidiary Issuer, and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among Toll Brothers, Inc., the Subsidiary Issuer and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.
Summarized Balance Sheet Data (amounts in millions):
July 31, 2023
Assets
Cash$867.7 
Inventory$9,059.4 
Amount due from Non-Guarantor Subsidiaries$713.7 
Total assets$11,342.1 
Liabilities & Stockholders' Equity
Loans payable$1,106.7 
Senior notes$1,596.0 
Total liabilities$5,052.8 
Stockholders' equity$6,289.3 
Summarized Statement of Operations Data (amounts in millions):
For the nine months ended July 31, 2023
Revenues$6,837.3 
Cost of revenues$5,035.8 
Selling, general and administrative$664.4 
Income before income taxes$1,169.8 
Net income$875.9 


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SEGMENTS
We operate in the following five geographic segments, with current operations generally located in the states listed below:
•The North region: Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Jersey, New York and Pennsylvania;
•The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia;
•The South region: Florida, South Carolina and Texas;
•The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah; and
•The Pacific region: California, Oregon and Washington.
At October 31, 2022, we concluded that our City Living operations were no longer a reportable operating segment, primarily due to their insignificance as a result of the change in structure and shift in strategy. Amounts reported in prior periods have been restated to conform to the fiscal 2023 presentation. The realignment did not have any impact on our consolidated financial position, results of operations, earnings per share or cash flows for the periods presented.
The tables below summarize information related to units delivered and revenues, net contracts signed, and income (loss) before income taxes, by segment, for the periods indicated, and information related to backlog, by segment, as of the dates indicated.
Units Delivered and Revenues:
Three months ended July 31,
Revenues
($ in millions)		Units DeliveredAverage Delivered Price
($ in thousands)
20232022% Change20232022% Change20232022% Change
(restated)(restated)(restated)
North$377.7 $481.4 (22)%390 555 (30)%$968.6 $867.6 12 %
Mid-Atlantic288.5 254.0 14 %247 267 (7)%$1,167.9 $951.2 23 %
South632.6 352.7 79 %732 469 56 %$864.2 $752.0 15 %
Mountain726.0 660.5 10 %775 802 (3)%$936.8 $823.6 14 %
Pacific648.4 506.6 28 %380 321 18 %$1,706.4 $1,578.2 8 %
Total home building2,673.2 2,255.2 19 %2,524 2,414 5 %$1,059.1 $934.2 13 %
Other1.4 1.1 
Total home sales revenue2,674.6 2,256.3 19 %2,524 2,414 5 %$1,059.7 $934.7 13 %
Land sales and other revenue13.0 238.5 
Total revenue$2,687.6 $2,494.8 
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 Three months ended January 31,
 
Revenues
($ in millions)
 Units Delivered 
Average Delivered Price
($ in thousands)
 2018 2017 % Change 2018 2017 % Change 2018 2017 % Change
Traditional Home Building:                 
North$134.3
 $145.6
 (8)% 209
 209
 —% $642.5
 $696.8
 (8)%
Mid-Atlantic207.0
 184.1
 12 % 332
 297
 12% $623.4
 $619.7
 1 %
South171.5
 142.2
 21 % 221
 190
 16% $776.0
 $748.4
 4 %
West258.0
 211.1
 22 % 412
 335
 23% $626.3
 $630.2
 (1)%
California287.1
 219.8
 31 % 185
 155
 19% $1,551.9
 $1,417.9
 9 %
     Traditional Home Building1,057.9
 902.8
 17 % 1,359
 1,186
 15% $778.4
 $761.2
 2 %
City Living117.6
 17.9
 557 % 64
 4
 1,500% $1,837.5
 $4,484.1
 (59)%
Total$1,175.5
 $920.7
 28 % 1,423
 1,190
 20% $826.0
 $773.7
 7 %
Nine months ended July 31,
 Revenues
($ in millions)		Units DeliveredAverage Delivered Price
($ in thousands)
20232022% Change20232022% Change20232022% Change
(restated)(restated)(restated)
North$1,081.9 $1,235.6 (12)%1,155 1,467 (21)%$936.7 $842.3 11 %
Mid-Atlantic787.2 765.1 3 %687 819 (16)%$1,145.9 $934.2 23 %
South1,544.8 922.5 67 %1,880 1,263 49 %$821.7 $730.4 13 %
Mountain1,880.4 1,776.4 6 %2,090 2,219 (6)%$899.7 $800.5 12 %
Pacific1,619.1 1,433.0 13 %1,030 982 5 %$1,571.9 $1,459.3 8 %
     Total home building6,913.4 6,132.6 13 %6,842 6,750 1 %$1,010.4 $908.5 11 %
Other0.7 (2.4)
Total home sales revenue6,914.1 6,130.2 13 %6,842 6,750 1 %$1,010.5 $908.2 11 %
Land sales and other revenue60.7 433.2 
Total revenue$6,974.8 $6,563.4 

Net Contracts Signed:
Three months ended July 31,
Net Contract Value
($ in millions)		Net Contracted UnitsAverage Contracted Price
($ in thousands)
20232022% Change20232022% Change20232022% Change
(restated)(restated)(restated)
North$330.7 $308.1 7 %344 283 22 %$961.3 $1,088.8 (12)%
Mid-Atlantic296.4 224.7 32 %317 186 70 %$935.3 $1,208.0 (23)%
South513.8 340.5 51 %632 313 102 %$812.9 $1,088.0 (25)%
Mountain481.1 343.8 40 %605 263 130 %$795.2 $1,307.1 (39)%
Pacific541.5 447.1 21 %347 221 57 %$1,560.5 $2,023.1 (23)%
Total consolidated$2,163.5 $1,664.2 30 %2,245 1,266 77 %$963.7 $1,314.6 (27)%
 Nine months ended July 31,
Net Contract Value
($ in millions)		Net Contracted UnitsAverage Contracted Price
($ in thousands)
20232022% Change20232022% Change20232022% Change
(restated)(restated)(restated)
North$1,012.0 $1,204.8 (16)%1,068 1,246 (14)%$947.6 $966.9 (2)%
Mid-Atlantic886.0 871.9 2 %884 806 10 %$1,002.3 $1,081.8 (7)%
South1,433.2 1,525.7 (6)%1,796 1,666 8 %$798.0 $915.8 (13)%
Mountain1,194.4 2,045.1 (42)%1,433 2,064 (31)%$833.5 $990.8 (16)%
Pacific1,367.5 2,100.0 (35)%858 1,287 (33)%$1,593.8 $1,631.7 (2)%
Total consolidated$5,893.1 $7,747.5 (24)%6,039 7,069 (15)%$975.8 $1,096.0 (11)%

36
 Three months ended January 31,
 
Net Contract Value
($ in millions)
 Net Contracted Units 
Average Contracted Price
($ in thousands)
 2018 2017 % Change 2018 2017 % Change 2018 2017 % Change
Traditional Home Building:                 
North$197.5
 $171.7
 15 % 271
 276
 (2)% $728.7
 $622.3
 17 %
Mid-Atlantic212.2
 236.6
 (10)% 324
 380
 (15)% $654.9
 $622.6
 5 %
South239.0
 204.0
 17 % 303
 266
 14 % $788.9
 $766.8
 3 %
West333.9
 246.2
 36 % 489
 352
 39 % $682.9
 $699.4
 (2)%
California646.0
 335.2
 93 % 388
 226
 72 % $1,664.8
 $1,483.1
 12 %
Traditional Home Building1,628.6
 1,193.7
 36 % 1,775
 1,500
 18 % $917.5
 $795.8
 15 %
City Living61.8
 49.3
 25 % 47
 22
 114 % $1,316.0
 $2,243.1
 (41)%
Total$1,690.4
 $1,243.0
 36 % 1,822
 1,522
 20 % $927.8
 $816.7
 14 %
Backlog:
 At July 31,
Backlog Value
($ in millions)		Backlog UnitsAverage Backlog Price
($ in thousands)
20232022% Change20232022% Change20232022% Change
(restated)(restated)(restated)
North$1,051.1 $1,464.1 (28)%1,035 1,516 (32)%$1,015.6 $965.8 5 %
Mid-Atlantic1,060.8 1,110.8 (5)%1,039 1,039 — %$1,021.0 $1,069.1 (4)%
South2,245.8 2,636.2 (15)%2,439 2,978 (18)%$920.8 $885.2 4 %
Mountain1,917.9 3,292.0 (42)%1,867 3,443 (46)%$1,027.3 $956.1 7 %
Pacific1,599.2 2,682.2 (40)%915 1,749 (48)%$1,747.7 $1,533.6 14 %
Total consolidated$7,874.8 $11,185.3 (30)%7,295 10,725 (32)%$1,079.5 $1,042.9 4 %

At October 31,
Backlog Value
($ in millions)		Backlog UnitsAverage Backlog Price
($ in thousands)
20222021% Change20222021% Change20222021% Change
North$1,119.5 $1,494.2 (25)%1,122 1,737 (35)%$997.8 $860.2 16 %
Mid-Atlantic960.5 1,004.5 (4)%842 1,053 (20)%$1,140.7 $954.0 20 %
South2,352.5 1,965.2 20 %2,523 2,470 2 %$932.4 $795.6 17 %
Mountain2,597.3 3,021.9 (14)%2,524 3,598 (30)%$1,029.0 $839.9 23 %
Pacific1,844.3 2,013.3 (8)%1,087 1,444 (25)%$1,696.7 $1,394.3 22 %
Total consolidated$8,874.1 $9,499.1 (7)%8,098 10,302 (21)%$1,095.8 $922.1 19 %
Backlog:
 At January 31,
 
Backlog Value
($ in millions)
 Backlog Units 
Average Backlog Price
($ in thousands)
 2018 2017 % Change 2018 2017 % Change 2018 2017 % Change
Traditional Home Building:                 
North$879.3
 $718.8
 22 % 1,279
 1,044
 23 % $687.5
 $688.6
 — %
Mid-Atlantic746.8
 662.5
 13 % 1,135
 1,069
 6 % $658.0
 $619.8
 6 %
South883.5
 798.2
 11 % 1,137
 1,036
 10 % $777.0
 $770.4
 1 %
West1,047.8
 840.4
 25 % 1,474
 1,165
 27 % $710.9
 $721.4
 (1)%
California1,854.0
 983.1
 89 % 1,090
 604
 80 % $1,700.9
 $1,627.6
 5 %
Traditional Home Building5,411.4
 4,003.0
 35 % 6,115
 4,918
 24 % $884.9
 $814.0
 9 %
City Living165.1
 342.1
 (52)% 135
 227
 (41)% $1,222.6
 $1,507.0
 (19)%
Total$5,576.5
 $4,345.1
 28 % 6,250
 5,145
 21 % $892.2
 $844.5
 6 %


 At October 31,
 
Backlog Value
($ in millions)
 Backlog Units 
Average Backlog Price
($ in thousands)
 2017 2016 % Change 2017 2016 % Change 2017 2016 % Change
Traditional Home Building:                 
North$816.1
 $692.8
 18 % 1,217
 977
 25 % $670.6
 $709.1
 (5)%
Mid-Atlantic741.6
 610.0
 22 % 1,143
 986
 16 % $648.8
 $618.7
 5 %
South815.9
 736.4
 11 % 1,055
 960
 10 % $773.4
 $767.1
 1 %
West972.0
 766.5
 27 % 1,397
 1,020
 37 % $695.7
 $751.5
 (7)%
California1,495.1
 867.7
 72 % 887
 533
 66 % $1,685.6
 $1,627.9
 4 %
Traditional Home Building4,840.7
 3,673.4
 32 % 5,699
 4,476
 27 % $849.4
 $820.7
 3 %
City Living220.8
 310.7
 (29)% 152
 209
 (27)% $1,452.7
 $1,486.5
 (2)%
Total$5,061.5
 $3,984.1
 27 % 5,851
 4,685
 25 % $865.1
 $850.4
 2 %

Income (Loss) Before Income Taxes ($ amounts in millions):
 Three months ended July 31,Nine months ended July 31,
 20232022% Change20232022% Change
(restated)(restated)
North$49.1 $81.4 (40)%$136.6 $177.8 (23)%
Mid-Atlantic71.1 39.9 78 %158.5 117.2 35 %
South126.9 56.3 125 %268.0 121.8 120 %
Mountain146.8 120.6 22 %368.0 296.6 24 %
Pacific183.4 120.1 53 %419.9 299.9 40 %
Total home building577.3 418.3 38 %1,351.0 1,013.3 33 %
Corporate and other(24.2)(52.3)54 %(113.6)(150.7)25 %
Total consolidated$553.1 $366.0 51 %$1,237.4 $862.6 43 %
 Three months ended January 31,
 2018 2017 % Change
Traditional Home Building:     
North$0.4
 $10.1
 (96)%
Mid-Atlantic13.9
 11.6
 20 %
South12.1
 13.1
 (8)%
West30.6
 25.5
 20 %
California60.9
 43.2
 41 %
Traditional Home Building117.9
 103.5
 14 %
City Living30.0
 43.1
 (30)%
Corporate and other(16.3) (36.8) (56)%
Total$131.6
 $109.8
 20 %

“Corporate and other” is comprised principally of general corporate expenses such as the offices of our executive officers;offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including Gibraltar;our apartment rental development business and our high-rise urban luxury condominium business; and income from a number of our unconsolidated entities.Rental Property Joint Ventures and Gibraltar Joint Ventures.

37

Traditional Home Building
North
 Three months ended January 31,
 2018 2017 Change
Units Delivered and Revenues:     
Revenues ($ in millions)$134.3
 $145.6
 (8)%
Units delivered209
 209
 — %
Average delivered price ($ in thousands)$642.5
 $696.8
 (8)%
      
Net Contracts Signed:     
Net contract value ($ in millions)$197.5
 $171.7
 15 %
Net contracted units271
 276
 (2)%
Average contracted price ($ in thousands)$728.7
 $622.3
 17 %
      
Cost of revenues as a percentage of revenues87.3% 82.4%  
      
Income before income taxes ($ in millions)$0.4
 $10.1
 (96)%
      
Number of selling communities at January 31,49
 58
 (16)%
FISCAL 2023 COMPARED TO FISCAL 2022 (Restated)
North
Three months ended July 31,Nine months ended July 31,
20232022Change20232022Change
Units Delivered and Revenues:
Home sales revenues ($ in millions)$377.7 $481.4 (22)%$1,081.9 $1,235.6 (12)%
Units delivered390 555 (30)%1,155 1,467 (21)%
Average delivered price ($ in thousands)$968.6 $867.6 12 %$936.7 $842.3 11 %
Net Contracts Signed:
Net contract value ($ in millions)$330.7 $308.1 7 %$1,012.0 $1,204.8 (16)%
Net contracted units344 283 22 %1,068 1,246 (14)%
Average contracted price ($ in thousands)$961.3 $1,088.8 (12)%$947.6 $966.9 (2)%
Home sales cost of revenues as a percentage of home sale revenues81.0 %76.2 %79.9 %77.3 %
Income before income taxes ($ in millions)$49.1 $81.4 (40)%$136.6 $177.8 (23)%
Number of selling communities at July 31,41 49 (16)%
The decreasedecreases in the average pricenumber of homes delivered in the fiscal 2018 period,2023 periods were mainly due to a decrease in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, offset, in part by higher backlog conversion and an increase in spec homes delivered. The increases in the average prices of homes delivered in the fiscal 2017 period, was mainly2023 periods were primarily due to sales price increases and a shift in the number of homes delivered to lessmore expensive areas and/or products in the fiscal 2018 period, as compared to the fiscal 2017 period, particularly in Connecticut and Michigan, where we had a significantproducts.
The increase in the number of homes closednet contracts signed in multifamilythe three-month fiscal 2023 period was primarily the result of an increase in demand compared to the fiscal 2022 period, offset, in part, by a decrease in the average number of selling communities. The decrease in the number of net contracts signed in the nine-month fiscal 2023 period was mainly due to a decrease in the average number of selling communities, as well as weaker demand in the first and active-adult communities.
second quarters of fiscal 2023. The increasedecreases in the average value of each contract signed in the fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were mainly due to a shift in the number of contracts signed to moreless expensive areas and/or products and an increase in the fiscal 2018 period, as compared to the fiscal 2017 period, particularly in Connecticut, Michigan and New Jersey.sales incentives.
The decrease in income before income taxes in the three-month fiscal 2018 period, as compared to the fiscal 20172023 period was principally attributable to lower earnings from decreased revenue and higher home sales cost of revenues, as a percentage of home sale revenues, offset, in part, by lower earnings from decreased revenues and higher SG&A costs as a percent of revenues.costs. The higherincrease in home sales cost of revenues, as a percentage of home sales revenues, in the three-month fiscal 2018 period, as compared to the fiscal 20172023 period was primarily due to higher inventory impairment charges, a shift in product mix/areas to lower-margin areas, offset, in part, by lower interest expense as a percentage of home sales revenues.
The decrease in income before income taxes in the nine-month fiscal 2023 period was attributable to lower earnings from decreased revenue and higher material and labor costshome sales cost of revenues, as a percentage of home sale revenues, offset, in part, by lower SG&A costs. The increase in home sales cost of revenues, as a percentage of home sales revenues, in the nine-month fiscal 20182023 period as compared to the fiscal 2017 period.
Inventory impairment charges were $3.1 million in the fiscal 2018 period, as compared to $0.1 million in the fiscal 2017 period. During our review of operating communities for impairment in the fiscal 2018,was primarily due to a lack of improvement and/or a decreaseshift in customer demandproduct mix/areas to lower-margin areas, offset, in part, by lower interest expense as a resultpercentage of weaker than expected market conditions,home sales revenues. In addition, we decidedrecognized $2.7 million of land impairment charges during the nine-month fiscal 2023 period in connection with a planned land sale. We also recorded impairment charges of $1.4 million and $6.6 million related to sell the remaining lotsoffice space within one of our Hoboken, New Jersey condominium projects in connection with a bulkplanned sale in one community located in Illinois rather than sellthe three-month and construct homes as previously intended. The carrying value of this community was written down to its estimated fair value resulting in a charge to income before income taxes of $2.2 million.nine-month fiscal 2022 periods, respectively.

38

Mid-Atlantic
 Three months ended January 31,
 2018 2017 Change
Units Delivered and Revenues:     
Revenues ($ in millions)$207.0
 $184.1
 12 %
Units delivered332
 297
 12 %
Average delivered price ($ in thousands)$623.4
 $619.7
 1 %
      
Net Contracts Signed:     
Net contract value ($ in millions)$212.2
 $236.6
 (10)%
Net contracted units324
 380
 (15)%
Average contracted price ($ in thousands)$654.9
 $622.6
 5 %
      
Cost of revenues as a percentage of revenues84.0% 83.9%  
      
Income before income taxes ($ in millions)$13.9
 $11.6
 20 %
      
Number of selling communities at January 31,60
 69
 (13)%
Mid-Atlantic
Three months ended July 31,Nine months ended July 31,
20232022Change20232022Change
Units Delivered and Revenues:
Home sales revenues ($ in millions)$288.5 $254.0 14 %$787.2 $765.1 3 %
Units delivered247 267 (7)%687 819 (16)%
Average delivered price ($ in thousands)$1,167.9 $951.2 23 %$1,145.9 $934.2 23 %
Net Contracts Signed:
Net contract value ($ in millions)$296.4 $224.7 32 %$886.0 $871.9 2 %
Net contracted units317 186 70 %884 806 10 %
Average contracted price ($ in thousands)$935.3 $1,208.0 (23)%$1,002.3 $1,081.8 (7)%
Home sales cost of revenues as a percentage of home sale revenues69.2 %75.8 %71.5 %76.6 %
Income before income taxes ($ in millions)$71.1 $39.9 78 %$158.5 $117.2 35 %
Number of selling communities at July 31,34 40 (15)%
The increasedecreases in the number of homes delivered in the three-month and nine-month fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were mainly due to an increase in the number of homes closed in Pennsylvania and Maryland, which was attributable to an increasea decrease in the number of homes in backlog in those markets at October 31, 2017,2022, as compared to the number of homes in backlog at October 31, 2016.2021, offset, in part, by higher backlog conversion, and an increase in spec homes delivered. The increaseincreases in the average price of homes delivered in the three-month and nine-month fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were primarily due to a shift in the number of homes delivered to more expensive areas and/or products in the fiscal 2018 period, as compared to the fiscal 2017 period.and sales price increases.
The decreaseincreases in the number of net contracts signed in the fiscal 2018 period, as compared2023 periods were mainly due to improved demand, particularly in the fiscal 2017 period, was principally due tothird quarter, partially offset by a decrease in the average number of selling communities and a decrease in available inventory for sale in Virginia, offset, in part, by increases in demand in Maryland and Pennsylvania in the fiscal 2018 period, as compared to the fiscal 2017 period.communities. The increasedecreases in the average value of each contract signed in the fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were mainly due to a shift in the number of contracts signed to moreless expensive areas and/or products and an increase in the fiscal 2018 period, as compared to the fiscal 2017 period.sales incentives.
The increase in income before income taxes in the three-month fiscal 2018 period, as compared to the fiscal 20172023 period was mainly due to higher earnings from increased revenues. The slight increase inrevenue, lower home sales cost of revenues, as a percentpercentage of home sales revenues, and lower SG&A costs. The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 20182023 period was primarily due to a shift in product mix/areas to higher-margin areas and lower interest expense as compared toa percentage of home sales revenues.
The increase in income before income taxes in the nine-month fiscal 20172023 period was mainly due to higher materiallower home sales cost of revenues, as a percentage of home sales revenues and labor costslower SG&A costs. The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the nine-month fiscal 20182023 period was primarily due to a shift in product mix/areas to higher-margin areas and lower interest expense as compared to the fiscal 2017 period, partiallya percentage of home sales revenues. This decrease was offset, in part, by lower inventoryan increase in impairment charges in the nine-month fiscal 2018 period, as compared to the fiscal 20172023 period. In addition, we recognized a $10.3 million land impairment charge, included in land sales and other cost of revenues, during the nine-month fiscal 20182023 period inventory impairmentin connection with a planned land sale. No similar charges were $4,000, as compared to $4.3 millionrecognized in the nine-month fiscal 20172022 period. In the first quarter of fiscal 2017, during our review of operating communities for impairment, primarily due to a lack of improvement and/or a decrease in customer demand as a result of weaker than expected market conditions, we determined that the pricing assumptions used in prior impairment reviews for one operating community located in Maryland needed to be reduced. As a result of this reduction in expected sales prices, we determined that this community was impaired. Accordingly, the carrying value of this community was written down in the fiscal 2017 period to its estimated fair value resulting in a charge to income before taxes of $3.9 million.

39

South
Three months ended January 31,Three months ended July 31,Nine months ended July 31,
2018 2017 Change20232022Change20232022Change
Units Delivered and Revenues:     Units Delivered and Revenues:
Revenues ($ in millions)$171.5
 $142.2
 21 %
Home sales revenues ($ in millions)Home sales revenues ($ in millions)$632.6 $352.7 79 %$1,544.8 $922.5 67 %
Units delivered221
 190
 16 %Units delivered732 469 56 %1,880 1,263 49 %
Average delivered price ($ in thousands)$776.0
 $748.4
 4 %Average delivered price ($ in thousands)$864.2 $752.0 15 %$821.7 $730.4 13 %
     
Net Contracts Signed:     Net Contracts Signed:
Net contract value ($ in millions)$239.0
 $204.0
 17 %Net contract value ($ in millions)$513.8 $340.5 51 %$1,433.2 $1,525.7 (6)%
Net contracted units303
 266
 14 %Net contracted units632 313 102 %1,796 1,666 8 %
Average contracted price ($ in thousands)$788.9
 $766.8
 3 %Average contracted price ($ in thousands)$812.9 $1,088.0 (25)%$798.0 $915.8 (13)%
     
Cost of revenues as a percentage of revenues84.5% 81.1%  
Home sales cost of revenues as a percentage of home sale revenuesHome sales cost of revenues as a percentage of home sale revenues72.8 %74.5 %74.7 %76.6 %
     
Income before income taxes ($ in millions)$12.1
 $13.1
 (8)%Income before income taxes ($ in millions)$126.9 $56.3 125 %$268.0 $121.8 120 %
     
Number of selling communities at January 31,72
 70
 3 %
Number of selling communities at July 31,Number of selling communities at July 31,108 95 14 %
The increaseincreases in the number of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were mainly due to an increase in the number of homes closed in Florida which was attributable to an increase in the number of homes in backlog as ofat October 31, 2017,2022, as compared to the number of homes in backlog at October 31, 2016.2021, an increase in spec homes delivered, and higher backlog conversion. The increaseincreases in the average priceprices of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were primarily due to sales price increases and a shift in the number of homes delivered to more expensive areas and/or productsareas.
The increases in the number of net contracts signed in the fiscal 2018 period,2023 periods were due principally to improved demand and an increase in the number of selling communities. The decreases in the average value of each contract signed in the fiscal 2023 periods were primarily due to a shift in the number of contracts signed to less expensive areas or product types and increased sales incentives.
The increases in income before income taxes in the fiscal 2023 periods were principally due to higher earnings from increased revenues and lower home sales cost of revenues, as a percentage of home sale revenues, offset, in part, by higher SG&A costs. The decreases in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2023 periods were primarily due to a shift in product mix/areas to higher-margin areas, sales price increases and lower interest expense as a percentage of home sales revenues.

40
Mountain
Three months ended July 31,Nine months ended July 31,
20232022Change20232022Change
Units Delivered and Revenues:
Home sales revenues ($ in millions)$726.0 $660.5 10 %$1,880.4 $1,776.4 6 %
Units delivered775 802 (3)%2,090 2,219 (6)%
Average delivered price ($ in thousands)$936.8 $823.6 14 %$899.7 $800.5 12 %
Net Contracts Signed:
Net contract value ($ in millions)$481.1 $343.8 40 %$1,194.4 $2,045.1 (42)%
Net contracted units605 263 130 %1,433 2,064 (31)%
Average contracted price ($ in thousands)$795.2 $1,307.1 (39)%$833.5 $990.8 (16)%
Home sales cost of revenues as a percentage of home sale revenues73.6 %74.9 %73.6 %75.6 %
Income before income taxes ($ in millions)$146.8 $120.6 22 %$368.0 $296.6 24 %
Number of selling communities at July 31,111 102 9 %
The decreases in the number of homes delivered in the fiscal 2023 periods were mainly due to decreases in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, partially offset by higher backlog conversion and an increase in spec homes delivered in the fiscal 2017 period.2023 periods. The increases in the average price of homes delivered in the fiscal 2023 periods were primarily due to sales price increases.
The increase in the number of net contracts signed in the three-month fiscal 2018 period, as compared to the fiscal 20172023 period was mainly due principally to an increase inimproved demand in Florida and Texas and an increase in the number of selling communities in Texas, partially offset by decreased demand in North Carolina.communities. The increasedecrease in the average value of each contract signed in the three-month fiscal 2018 period, as compared to the fiscal 20172023 period was mainlyprimarily due to a shift in the number of contracts signed to moreless expensive areas and/or products in the fiscal 2018 period, as compared to the fiscal 2017 period.product types and increased sales incentives.
The decrease in income before income taxes in the fiscal 2018 period, as compared to the fiscal 2017 period, was principally due to higher cost of revenues, as a percentage of revenues, offset, in part, by higher earnings from increased revenues. The increase in cost of revenues, as a percentage of revenues, was primarily due to a shift in the number of homes delivered to lower-margin products and/or locations.
West
 Three months ended January 31,
 2018 2017 Change
Units Delivered and Revenues:     
Revenues ($ in millions)$258.0
 $211.1
 22 %
Units delivered412
 335
 23 %
Average delivered price ($ in thousands)$626.3
 $630.2
 (1)%
      
Net Contracts Signed:     
Net contract value ($ in millions)$333.9
 $246.2
 36 %
Net contracted units489
 352
 39 %
Average contracted price ($ in thousands)$682.9
 $699.4
 (2)%
      
Cost of revenues as a percentage of revenues79.3% 79.3%  
      
Income before income taxes ($ in millions)$30.6
 $25.5
 20 %
      
Number of selling communities at January 31,67
 84
 (20)%
The increase in the number of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was mainly due to an increase in the number of homes closed in Colorado, Idaho, and Nevada, which was attributable to an increase in the


number of homes in backlog in those markets at October 31, 2017, as compared to the number of homes in backlog at October 31, 2016. The decrease in the average price of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was primarily due to an increase in deliveries in Idaho, where average delivered home prices are lower than our company average, in the fiscal 2018 period, as compared to the fiscal 2017 period.
The increasedecreases in the number of net contracts signed in the nine-month fiscal 2018 period, as compared to the fiscal 20172023 period was principallyprimarily due to a significantweaker demand in the first and second quarters of fiscal 2023, partially offset by an increase in demand, offset, in part, by a decrease in the number of selling communities. The decrease in the average value of each contract signed in the fiscal 2018 period, as compared to the fiscal 20172023 period was mainly due to a shift in the number of contracts signed to less expensive areas and/or products in the fiscal 2018 period, as compared to the fiscal 2017 period.product types and increased sales incentives.
The increaseincreases in income before income taxes in the fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were due mainly to higher earnings from increased revenues in the increased revenues.fiscal 2023 period, lower home sales cost of revenues, as a percentage of home sale revenues and lower SG&A costs. The decreases in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2023 periods were primarily due to a shift in product mix/areas to higher-margin areas and sales price increases. The nine-month fiscal 2023 period was also impacted by an increase in impairment charges.
California
41
 Three months ended January 31,
 2018 2017 Change
Units Delivered and Revenues:     
Revenues ($ in millions)$287.1
 $219.8
 31%
Units delivered185
 155
 19%
Average delivered price ($ in thousands)$1,551.9
 $1,417.9
 9%
      
Net Contracts Signed:     
Net contract value ($ in millions)$646.0
 $335.2
 93%
Net contracted units388
 226
 72%
Average contracted price ($ in thousands)$1,664.8
 $1,483.1
 12%
      
Cost of revenues as a percentage of revenues72.3% 74.2%  
      
Income before income taxes ($ in millions)$60.9
 $43.2
 41%
      
Number of selling communities at January 31,41
 35
 17%
Pacific
Three months ended July 31,Nine months ended July 31,
20232022Change20232022Change
Units Delivered and Revenues:
Home sales revenues ($ in millions)$648.4 $506.6 28 %$1,619.1 $1,433.0 13 %
Units delivered380 321 18 %1,030 982 5 %
Average delivered price ($ in thousands)$1,706.4 $1,578.2 8 %$1,571.9 $1,459.3 8 %
Net Contracts Signed:
Net contract value ($ in millions)$541.5 $447.1 21 %$1,367.5 $2,100.0 (35)%
Net contracted units347 221 57 %858 1,287 (33)%
Average contracted price ($ in thousands)$1,560.5 $2,023.1 (23)%$1,593.8 $1,631.7 (2)%
Home sales cost of revenues as a percentage of home sale revenues66.2 %69.8 %67.8 %71.8 %
Income before income taxes ($ in millions)$183.4 $120.1 53 %$419.9 $299.9 40 %
Number of selling communities at July 31,51 46 11 %
The increaseincreases in the number of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were mainly due to higher backlog conversion and an increase in thespec homes delivered, offset, in part, by a lower number of homes in backlog at October 31, 2017,2022, as compared to the number of homes in backlog at October 31, 2016.2021. The increaseincreases in the average priceprices of homes delivered in fiscal 2018 period, as compared to the fiscal 2017 period, was2023 periods were primarily due to a shift in the number of homes delivered to more expensive areas and/or products and increased selling prices of homes delivered in fiscal 2018 period, as compared to the fiscal 2017 period.sales price increases.
The increase in the number of net contracts signed in the three-month fiscal 2018 period, as compared to the fiscal 20172023 period was due mainlyprincipally to improved demand and an increase in the number of selling communities. The decrease in the average value of each contract signed in the three-month fiscal 2023 period was primarily due to a shift in the number of contracts signed to less expensive areas or product types and increased sales incentives.
The decrease in the number of net contracts signed in the nine-month fiscal 2023 period was primarily due to weaker demand in the first and second quarters of fiscal 2023, partially offset by an increase in the number of selling communities in the fiscal 2018 period, as compared to the fiscal 20172023 period. The increasedecrease in the average value of each contract signed in the nine-month fiscal 2018 period, as compared to the fiscal 20172023 period was mainlyprimarily due to a shift in the number of contracts signed to moreless expensive areas and/or productsproduct types and increased selling pricessales incentives.
The increase in income before income taxes in the three-month fiscal 2023 period was mainly due to higher earnings from increased revenues in the fiscal 20182023 period and lower home sales cost of revenues, as a percentage of home sales revenues, offset, in part, by higher SG&A costs on higher volume. The decrease in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in product mix/areas to higher-margin areas and sales price increases, coupled with lower interest expense as a percentage of home sales revenues. Home sales cost of revenues, as a percentage of home sales revenues, was also impacted by decreased impairment charges in the 2023 period compared to the fiscal 20172022 period.
The increase in income before income taxes in the nine-month fiscal 20182023 period as compared to the fiscal 2017, was primarilymainly due to higher earnings from the increased revenues andin the fiscal 2023 period, lower home sales cost of revenues, as a percentage of home sales revenues and lower SG&A costs. This increase was offset, in part, by higher impairment charges in the fiscal 20182023 period as compared to the fiscal 2017.2022 period, including a $2.2 million impairment charged recognized in land sales and other cost of revenues in connection with a planned land sale. No similar charges were recognized in the fiscal 2022 periods. The lowerdecrease in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in the number of homes deliveredproduct mix/areas to higher-margin products and/or locationsareas and sales price increases, on delivered homes, in the fiscal 2018 period,coupled with lower interest expense as compared to the fiscal 2017.


City Living
 Three months ended January 31,
 2018 2017 Change
Units Delivered and Revenues:     
Revenues ($ in millions)$117.6
 $17.9
 557 %
Units delivered64
 4
 1,500 %
Average delivered price ($ in thousands)$1,837.5
 $4,484.1
 (59)%
      
Net Contracts Signed:     
Net contract value ($ in millions)$61.8
 $49.3
 25 %
Net contracted units47
 22
 114 %
Average contracted price ($ in thousands)$1,316.0
 $2,243.1
 (41)%
      
Cost of revenues as a percentage of revenues73.1% 65.7%  
      
Income before income taxes ($ in millions)$30.0
 $43.1
 (30)%
      
Number of selling communities at January 31,6
 5
 20 %
The increase in the numbera percentage of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was principally due to homes delivered at one building located in Hoboken, New Jersey which commenced deliveries in the third quarter of fiscal 2017. The decrease in the average price of homes delivered in the fiscal 2018 period, as compared to the fiscal 2017 period, was primarily due to a shift in the number of homes delivered to less expensive buildings in the fiscal 2018 period, as compared to the fiscal 2017 period.
The increase in the number of net contracts signed in the fiscal 2018 period, as compared to the fiscal 2017 period, was primarily due to stronghome sales at one building located in Jersey City, New Jersey, which opened in the third quarter of fiscal 2017. The decrease in the average sales price of net contracts signed in the fiscal 2018 period, as compared to the fiscal 2017 period, was principally due to a shift to less expensive buildings in the fiscal 2018 period, as compared to the fiscal 2017 period.
The decrease in income before income taxes in the fiscal 2018 period, as compared to the fiscal 2017 period, was mainly due to a $32.6 million decrease in earnings from our investments in unconsolidated entities; a shift in the number of homes delivered to buildings with a lower margin; and $3.1 million recognized in the fiscal 2017 period of a previously deferred gain. These decreases were partially offset by higher earnings from increased revenues. The deferred gains recognized in the fiscal 2017 period relates to the sale of a property in fiscal 2015 to a Home Building Joint Venture in which we had a 25% interest. Due to our continued involvement in this unconsolidated entity through our ownership interest and guarantees provided on the entity’s debt, we deferred the $9.3 million gain realized on the sale. Through September 2017, we recognized the gain as units were delivered to the ultimate home buyers. In the fourth quarter of fiscal 2017, we purchased the remaining inventory from this Home Building Joint Venture. The remaining unamortized deferred gain was used to reduce the basis of the inventory acquired.
In the fiscal 2018 period, we recognized $1.9 million in earnings from our investments in unconsolidated entities as compared to $34.5 million the fiscal 2017 period. The fiscal 2017 period benefited from the commencement of deliveries from two City Living Home Building Joint Ventures in the fourth quarter of fiscal 2016. The tables below provide information related to deliveries and revenues and net contracts signed by our City Living Home Building Joint Ventures, for the periods indicated, and the related backlog for the dates indicated ($ amounts in millions):
 Three months ended January 31,
 2018
Units		 2017
Units		 2018
$		 2017
$
Deliveries3
 73
 $10.6
 $204.6
Net contracts signed56
 14
 $102.6
 $30.0
 At January 31, At October 31,
 2018
Units		 2017
Units		 2018
$		 2017
$		 2017
Units		 2016
Units		 2017
$		 2016
$
Backlog99
 55
 $191.1
 $233.8
 46
 114
 $99.1
 $408.5


Corporate and Other
In the fiscal 2018three months ended July 31, 2023 and 2017 periods,2022, loss before income taxes was $16.3$24.2 million and $36.8$52.3 million, respectively. The decrease in the loss before income taxes in the fiscal 2018 period, as compared to the fiscal 20172023 period was principally attributable to a $23.7 million increase in earnings from our investments in unconsolidated entities, offset, in part, by higher SG&A costs. The increase in earnings from our investments in unconsolidated entities in the fiscal 2018 period, as compared to the fiscal 2017 period, was mainly due to a $30.8$35.0 million gain recognized from thea property sale in the fiscal 2018 period, by one of our Rental Property Joint Ventures of its student housing community in College Park, Maryland, partiallythe fiscal 2023 period, increased interest income due to higher interest rates, lower SG&A costs and increased earnings from our high-rise urban luxury condominium operations. These decreases are offset, in part, by lower earnings from our mortgage company operations primarily due to reduced volume and increased competition resulting in decreased spreads, higher losses incurred by our Rental Property Joint Ventures, and higher losses incurred in our apartment living operations.
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In the nine months ended July 31, 2023 and 2022, loss before income taxes was $113.6 million and $150.7 million, respectively. The decrease in the loss before income taxes in the fiscal 2023 period was principally due to a $6.2$35.0 million gain recognized from thea property sale of 50% of our ownership interests inby one of our Rental Property Joint Ventures located in the suburbs of Philadelphia, Pennsylvania in the fiscal 2017 period. The increase2023 period, $27.7 million of gains from litigation settlements - net, recognized in the fiscal 2023 period, lower SG&A costs, and increased interest income due to higher interest rates. This decrease was offset, in part, by a $21.0 million gain recognized in the fiscal 20182022 period as comparedrelated to a property sale by one of our Rental Property Joint Ventures, a $9.0 million gain related to the bulk sale of security monitoring accounts by our smart home technologies business during the fiscal 20172022 period, was duelower earnings from our mortgage company operations primarily to increased compensation costs due to a decrease in volume, higher losses incurred by our increased number of employees primarily related toRental Property Joint Ventures, and higher losses incurred in our increased business activity and increased spending on computer software upgrades.apartment living operations. In addition, we recognized a $2.5 million land impairment charge during the nine-month fiscal 2023 period in connection with a planned land sale.
AVAILABLE INFORMATION
Our principal Internet address is www.tollbrothers.com, and our Investor Relations website is located at www.tollbrothers.com/investor-relations.investors.tollbrothers.com. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 available through our Investor Relations website, free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We provide information about our business and financial performance, including our corporate profile,company overview, on our Investor Relations website. Additionally, we webcast our earnings calls and certain events we participate in with members of the investment community on our Investor Relations website. Further corporateCorporate governance information, including our codecodes of ethics, code of business conduct, corporate governance guidelines, and board committee charters, is also available on our Investor Relations website. The content of our websites is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk primarily due to fluctuations in interest rates. We utilize both fixed-rate and variable-rate debt. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not our earnings or cash flow. Conversely, for variable-rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but do affect our earnings and cash flow. We generally do not have the obligation to prepay fixed-rate debt before maturity, and, as a result, interest rate risk and changes in fair value should not have a significant impact on our fixed-rate debt until we are required or elect to refinance it.
The table below sets forth, at JanuaryJuly 31, 2018,2023, our debt obligations by scheduled maturity, weighted-average interest rates, and estimated fair value (amounts in thousands):
 Fixed-rate debt
Variable-rate debt (a),(b)
Fiscal year of maturityAmountWeighted-
average
interest rate		AmountWeighted-
average
interest rate
2023$37,265 5.26%$— 
2024204,467 4.30%72,127 7.05%
2025111,919 5.47%— 
2026413,722 4.99%101,563 6.20%
2027471,748 4.84%60,937 6.20%
Thereafter875,884 4.02%487,500 6.20%
Bond discounts, premiums and deferred issuance costs - net(7,543)— 
Total$2,107,462 4.51%$722,127 
Fair value at July 31, 2023$2,022,302  $722,127  
(a)    Based upon the amount of variable-rate debt outstanding at July 31, 2023, and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $7.2 million per year, without consideration of the Company’s interest rate swap transactions.
(b)    In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility, which is included in the variable-rate debt column in the table above. The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility through October 2025. The spread was 1.15% as of July 31, 2023. These interest rate swaps were designated as cash flow hedges.

43
  Fixed-rate debt Variable-rate debt (a)
Fiscal year of maturity Amount 
Weighted-
average
interest rate
 Amount 
Weighted-
average
interest rate
2018 $56,983
 4.04% $38,344
 3.47%
2019 377,555
 3.99% 150
 1.32%
2020 255,226
 6.71% 150
 1.32%
2021 1,421
 5.88% 500,150
 2.97%
2022 421,316
 5.87% 150
 1.32%
Thereafter 1,877,110
 4.77% 13,060
 1.73%
Bond discounts, premiums and deferred issuance costs, net (10,187) 
 (1,604) 
Total $2,979,424
 4.98% $550,400
 2.97%
Fair value at January 31, 2018 $3,092,246
   $552,004
  
(a)Based upon the amount of variable-rate debt outstanding at January 31, 2018, and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $5.5 million per year.
ITEM 4. CONTROLS AND PROCEDURES
Any controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected; however, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.
Our Chief Executive Officer and Chief Financial Officer, with the assistance of management, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), as of the end of the period covered by this report (the “Evaluation Date”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
ThereWe continue to implement a new enterprise resource planning (“ERP”) system that affects many of our financial processes and is expected to improve the efficiency and effectiveness of certain financial and business transaction processes, as well as the underlying systems environment. The new ERP system will be a significant component of our internal control over financial reporting. Other than the ERP system implementation noted above, there has not been any change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our quarter ended JanuaryJuly 31, 2018,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


44
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that adequate provision for resolution of all current claims and pending litigation has been made for probable losses and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.
In April 2017, the SEC informed the Company that it was conducting an investigation and requested that we voluntarily produce documents and information relating to our estimated repair costs for stucco and other water intrusion claims in fiscal 2016. The Company has produced detailed information and documents in response to this request. Management cannot at this time predict the eventual scope or outcome of this matter. See Note 6, “Accrued Expenses” in Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional information regarding these warranty charges.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors as previously disclosed in Part I, Item 1A., “Risk Factors,”Factors” in our 20172022 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
During the three-month period ended JanuaryJuly 31, 2018,2023, we repurchased the following shares of our common stock:
Period
Total number
of shares purchased (a)
Average
price
paid per share (b)
Total number of shares purchased as part of publicly announced plans or programs (c)
Maximum
number of shares
that may yet be
purchased under the plans or programs (c)
 (in thousands) (in thousands)(in thousands)
May 1, 2023 to May 31, 2023177 $68.03 177 12,770 
June 1, 2023 to June 30, 20231,186 $75.09 1,186 11,584 
July 1, 2023 to July 31, 2023568 $79.41 568 11,016 
Total1,931 $75.71 1,931 
(a)    Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a performance based restricted stock unit recipient or a restricted stock unit recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the recipient. During the three months ended July 31, 2023, we withheld 936 of the shares subject to performance based restricted stock units and/or restricted stock units to cover approximately $62,500 of income tax withholdings and we issued the remaining 2,786 shares to the recipients. The shares withheld are not included in the total number of shares purchased in the table above.
Period Total number
of shares purchased (a)		 Average
price
paid per share		 Total number of shares purchased as part of publicly announced plans or programs (b) Maximum
number of shares
that may yet be
purchased under the plans or programs (b)
  (in thousands)   (in thousands) (in thousands)
November 1, 2017 to November 30, 2017 1
 $46.25
 1
 8,144
December 1, 2017 to December 31, 2017 4,215
 $47.47
 4,215
 18,881
January 1, 2018 to January 31, 2018 211
 $46.56
 211
 18,670
Total 4,427
 $47.43
 4,427
  
(a)Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a performance based restricted stock unit recipient or a restricted stock unit recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the recipient. During the three months ended January 31, 2018, we withheld 148,076 of the shares subject to performance based restricted stock units and restricted stock units to cover approximately $7.1 million of income tax withholdings and we issued the remaining 216,963 shares to the recipients. The shares withheld are not included in the total number of shares purchased in the table above.
Our stock incentive plans also permit participants to exercise non-qualified stock options using a “net exercise” method. In a net exercise, we generally withhold from the total number of shares that otherwise would be issued to the participant upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable income tax withholdings, and remit the remaining shares to the participant. During the three-month period ended JanuaryJuly 31, 2018,2023, the net exercise method was not employed to exercise options.
(b)On May 23, 2016, our Board of Directors authorized the repurchase of 20 million shares of our common stock in open market transactions or otherwise for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans. Effective December 13, 2017, our Board of Directors terminated the May 2016 share repurchase program and authorized, under a new repurchase program, the repurchase of 20 million shares of our common stock in open market transactions or otherwise for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans. The Board of Directors did not fix any expiration date for this new repurchase program.
(b) Average price paid per share includes costs associated with the purchases, but excludes any excise tax that we accrue on our share repurchases as a result of the Inflation Reduction Act of 2022.
(c)    On May 17, 2022, our Board of Directors authorized the repurchase of 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans. This authorization terminated, effective May 17, 2022, the existing authorization that had been in effect since March 10, 2020. Our Board of Directors did not fix any expiration date for the current share repurchase program.
Except as set forth above, we have not repurchased any of our equity securities during the three-month period ended January
July 31, 2018.2023.



45
Dividends
In February 2017, our Board of Directors approvedDuring the initiation of quarterlynine months ended July 31, 2023, we paid cash dividends to shareholders. During the three months ended January 31, 2018, we paid a quarterly cash dividend of $0.08$0.62 per share on January 26, 2018 to shareholders of record on the close of business on January 12, 2018.our shareholders. The payment of dividends is within the discretion of our Board of Directors and any decision to pay dividends in the future will depend upon an evaluation of a number of factors, including our results of operations, our capital requirements, our operating and financial condition, and any contractual limitations then in effect. Our bankrevolving credit agreement requiresand term loan agreement each require us to maintain a minimum tangible net worth (as defined in the creditapplicable agreement), which restricts the amount of dividends we may pay. At JanuaryJuly 31, 2018,2023, under the most restrictive provisions of our bank credit agreement,agreements, we could have paid up to approximately $1.93$2.54 billion of cash dividends.


ITEM 5. OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6. EXHIBITS
3.1
31.1*4.1*
31.1*
31.2*
32.1*
32.2*
101.INS*XBRL Instance Document
101.SCH*XBRL Schema Document
101.CAL*XBRL Calculation Linkbase Document
101.LAB*XBRL Labels Linkbase Document
101.PRE*XBRL Presentation Linkbase Document
101.DEF*XBRL Definition Linkbase Document
*101The following financial statements from Toll Brothers, Inc. Quarterly Report on Form 10-Q for the quarter ended July 31, 2023, filed on August 31, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*Filed electronically herewith.



46
SIGNATURES
Pursuant to the requirements 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.
TOLL BROTHERS, INC.
(Registrant)
Date:March 8, 2018August 31, 2023By:
/s/ Martin P. Connor

Martin P. Connor

Senior Vice President and Chief Financial

Officer (Principal Financial Officer)
Date:March 8, 2018August 31, 2023By:/s/ Michael J. Grubb
Michael J. Grubb

Senior Vice President and Chief Accounting

Officer (Principal Accounting Officer)



47