June 11, 2013
VIA EDGAR TRANSMISSION
Mr. Terence O'Brien
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-7010
Re: | Toll Brothers, Inc. |
Form 10-K | |
Filed December 28, 2012 | |
File No. 1-9186 |
Dear Mr. O'Brien:
We have reviewed your letter of May 28, 2013 regarding the Toll Brothers, Inc. (the “Company”) Annual Report on Form 10-K for the fiscal year ended October 31, 2012 (the “Form 10-K”). To facilitate your review, we have organized our response to include each comment to which we are responding herein prior to the response to that comment. This document is being submitted via EDGAR.
We understand that your review and comments are intended to assist us in compliance with applicable disclosure requirements and to enhance the overall quality of the disclosure in our filings. We share these objectives and are responding to your comments with these goals in mind.
Form 10-K for the year ended October 31, 2012
19. Supplemental Guarantor Information, page F-45
1. | We have read your response to comment 3 in our letter dated April 22, 2013, and thank you for the revised accompanying condensed financial statements. The changes made to the classification of the transactions representing the receipt or payment of intercompany advances (part (d)) have a material impact on all categories of cash flows for the past two fiscal years and, consequently, it would appear that a revision to your Form 10-K is warranted. Therefore, please amend your Form 10-K accordingly. |
Response:
We will file an amended Form 10-K for the year ended October 31, 2012 and Form 10-Q for the quarter ended January 31, 2013 to present the supplemental guarantor information in a format that has been adjusted from prior annual and quarterly reports in order to (i) retrospectively reflect the transfer of the balance sheet, statements of operations and cash flows of certain non-guarantor subsidiaries to guarantor subsidiaries as a result of such entities becoming guarantor subsidiaries as of April 30, 2013 and the reclassification of guarantor and non-guarantor intercompany advances and equity balances with corresponding offsets in the elimination column and (ii) revise the presentation of cash flows from operating activities, financing activities and investing activities in the condensed consolidating statements of cash flows to reflect intercompany activity, which had previously been included in cash flow from operating activities, as cash flow from investing activities and cash flow from financing activities.
Securities and Exchange Commission
June 11, 2013
Page 2
We expect to file the amended 10-K by July 3, 2013 and the amended Form 10-Q shortly thereafter. We would expect that the disclosures in the amended Form 10-K and Form 10-Q will be similar to those included in Note 18 - "Supplemental Guarantor Information" of our Form 10-Q for the quarter ended April 30, 2013 (“Form 10-Q”), attached as Exhibit A.
2. | We remind you that when you file your amended fiscal year 2012 Form 10-K and subsequent Form 10-Q, you should appropriately consider the following: |
• | If you conclude that your prior filings should not be relied upon due to an error, please be advised that you are required to disclose the information listed under Item 4.02(a) of Form 8-K within four days of your conclusion. |
• | An explanatory paragraph at the beginning of the document explaining why you are amending the document; |
• | An explanatory paragraph in the reissued audit opinion; |
• | Full compliance with paragraphs ASC 250-10-45-22 - 45-24 and 250-10-50-7 - 50-10; |
• | Label the appropriate footnotes as restated; |
• | Updated Item 9A disclosures in your Form 10-K and Item 4 disclosures in your Form 10-Q should include the following: |
◦ | A discussion of the amendment and restated footnotes along with the facts and circumstances surrounding it; |
◦ | How the amendment and restated footnotes impacted the CEO and CFO's original conclusions regarding the effectiveness of their disclosure controls and procedures and internal control over financial reporting; |
◦ | Changes to internal control over financial reporting; and |
◦ | Anticipated changes to disclosure controls and procedures and/or internal control over financial reporting to prevent future material deficiencies and misstatements of a similar nature. |
Refer to Items 307 and 308 of Regulation S-K.
• | Updated reports from management and your independent auditors regarding your internal control over financial reporting. |
• | Include all updated certifications that refer to the amended filings. |
Response:
In conjunction with the filing of our Form 10-K/A for the fiscal year ended October 31, 2012 and our Form 10Q/A for the three-month period ended January 31, 2013, we will consider each of the points outlined in this comment. Those filings will include an explanatory paragraph at the beginning of each document explaining why the amendments are being filed together with the adjusted financial statements as well as the required certifications. We direct you to Note 18 - "Supplemental Guarantor Information" of our recently filed Form 10-Q in which we disclosed changes to historical presentations in the supplemental guarantor information. The footnote disclosure included in our Form 10-Q related to the above is attached as Exhibit A. If you have any comments on these disclosures, please let us know prior to our amended filings.
While we recognize the errors are material to the separate footnote and therefore require amendment, we respectfully advise the Staff that we have concluded that our prior filings may continue to be relied upon, as the consolidated financial statements of Toll Brothers, Inc. as of October 31, 2012 and 2011 and for each of the three years in the period then ended and subsequent interim periods were and continue to be fairly stated in all material respects. In reaching this conclusion we considered the guidance in Staff Accounting Bulletin 1M, Materiality in the context of the financial statements taken as a whole. Our analysis included consideration of quantitative as well as qualitative factors. We note that there is no impact to the consolidated balance sheets of Toll
Securities and Exchange Commission
June 11, 2013
Page 3
Brothers, Inc. as of October 31, 2012 and 2011 or to the related consolidated statements of operations, changes in equity, or cash flows for each of the three years in the period ended October 31, 2012, as a result of changes to the supplemental guarantor information footnote disclosure.
We have concluded that the adjustments to the previously filed financial statements did not change our conclusions regarding the effectiveness of disclosure controls and procedures or our internal control over financial reporting. We do not expect to file any updated Item 9A or Item 4 disclosures, updated reports from management or our independent auditors regarding internal control over financial reporting.
Please do not hesitate to call me at (215) 938-8045 with any questions or further comments you may have regarding this letter or if you wish to discuss our responses to the Comment Letter.
Yours truly,
/s/ Joseph R. Sicree
Joseph R. Sicree
Senior Vice President and
Chief Accounting Officer
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 1)
18. Supplemental Guarantor Information
A 100% owned subsidiary of the Company, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), has issued the following Senior Notes (amounts in thousands):
Original Amount Issued | Amount outstanding at April 30, 2013 | |||||||
5.95% Senior Notes due 2013 | $ | 250,000 | $ | 104,785 | ||||
4.95% Senior Notes due 2014 | $ | 300,000 | $ | 267,960 | ||||
5.15% Senior Notes due 2015 | $ | 300,000 | $ | 300,000 | ||||
8.91% Senior Notes due 2017 | $ | 400,000 | $ | 400,000 | ||||
6.75% Senior Notes due 2019 | $ | 250,000 | $ | 250,000 | ||||
5.875% Senior Notes due 2022 | $ | 419,876 | $ | 419,876 | ||||
4.375% Senior Notes due 2023 | $ | 300,000 | $ | 300,000 | ||||
0.5% Exchangeable Senior Notes due 2032 | $ | 287,500 | $ | 287,500 |
The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest is guaranteed jointly and severally on a senior basis by the Company and substantially all of the Company’s 100% owned home building subsidiaries (the “Guarantor Subsidiaries”). The guarantees are full and unconditional. The Company’s non-home building subsidiaries and several of its home building subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the debt. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other the the financing of other subsidiaries of the Company by lending the proceeds from the above described debt issuances.
As of April 30, 2013, certain Non-Guarantor Subsidiaries became Guarantor Subsidiaries. This change in status has been retrospectively reflected in the accompanying condensed consolidating financial statements.
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.
The condensed consolidating financial statements have been revised in order to (i) reflect the transfer of the balance sheet, statements of operations and cash flows of certain non-guarantor subsidiaries to guarantor subsidiaries as a result of such entities becoming guarantor subsidiaries as of April 30, 2013 and the reclassification of guarantor and non-guarantor intercompany advances and equity balances with corresponding offsets in the elimination column and (ii) revise the presentation of cash flows from operating activities, financing activities and investing activities in the condensed consolidating statements of cash flows for the six-month period ended April 30, 2012 to reflect intercompany activity, which had previously been included in cash flow from operating activities, as cash flow from investing activities and cash flow from financing activities.
This revised presentation has no impact or effect on Toll Brothers, Inc.'s condensed consolidated financial statements for any period presented, including the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, or Statements of Cash Flows.
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 2)
Summary financial information related to the transfer of certain Non-Guarantor Subsidiaries to Guarantor Subsidiaries and the reclassification of guarantor and non-guarantor intercompany advances and equity balances, resulting in a decrease in Non-Guarantor Subsidiaries amounts, is presented below (amounts in thousands).
April 30, 2013 | October 31, 2012 | ||||||
Inventory | $ | 214,313 | $ | 168,218 | |||
Investments in and advances to unconsolidated entities | $ | 103,871 | $ | 110,014 | |||
Total assets | $ | 327,574 | $ | 282,638 | |||
Loans payable | $ | 14,576 | $ | 30,424 | |||
Intercompany advances | $ | 303,879 | $ | 253,550 | |||
Total liabilities | $ | 333,865 | $ | 291,990 | |||
Equity | $ | (6,291 | ) | $ | (9,352 | ) |
Six months ended April 30, | Three months ended April 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue | $ | 24,316 | $ | — | $ | 13,872 | $ | — | |||||||
Operating income | $ | 2,930 | $ | (673 | ) | $ | 1,937 | $ | (428 | ) | |||||
Income before income taxes | $ | 5,030 | $ | 958 | $ | 4,027 | $ | 1,187 |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 3)
Following is a reconciliation of the amounts previously reported to the reclassified amounts as stated in the following components of the revised condensed consolidating statements of cash flows for the six-month period ended April 30, 2012.
As Previously Reported | Reclassification of intercompany activity | Change in status from Non-Guarantor to Guarantor | As Reclassified | ||||||||||||
Cash flow (used in) provided by operating activities: | |||||||||||||||
Net cash (used in) provided by operating activities: | |||||||||||||||
Toll Brothers, Inc. | $ | (16,905 | ) | $ | (9,460 | ) | $ | — | $ | (26,365 | ) | ||||
Subsidiary Issuer | $ | (296,227 | ) | $ | 300,492 | $ | — | $ | 4,265 | ||||||
Guarantor Subsidiaries | $ | (61,438 | ) | $ | (268,885 | ) | $ | 95,972 | $ | (234,351 | ) | ||||
Non-Guarantor Subsidiaries | $ | 101,711 | $ | (8,953 | ) | $ | (94,191 | ) | $ | (1,433 | ) | ||||
Elimination | $ | — | $ | (13,194 | ) | $ | — | $ | (13,194 | ) | |||||
Cash flow (used in) provided by investing activities: | |||||||||||||||
Intercompany advances | |||||||||||||||
Toll Brothers, Inc. | $ | — | $ | 9,460 | $ | — | $ | 9,460 | |||||||
Subsidiary Issuer | $ | — | $ | (300,492 | ) | $ | — | $ | (300,492 | ) | |||||
Guarantor Subsidiaries | $ | — | $ | — | $ | — | $ | — | |||||||
Non-Guarantor Subsidiaries | $ | — | $ | — | $ | — | $ | — | |||||||
Elimination | $ | — | $ | 291,032 | $ | — | $ | 291,032 | |||||||
Net cash (used in) provided by investing activities | |||||||||||||||
Toll Brothers, Inc. | $ | — | $ | 9,460 | $ | — | $ | 9,460 | |||||||
Subsidiary Issuer | $ | — | $ | (300,492 | ) | $ | — | $ | (300,492 | ) | |||||
Guarantor Subsidiaries | $ | (58,270 | ) | $ | — | $ | (1,602 | ) | $ | (59,872 | ) | ||||
Non-Guarantor Subsidiaries | $ | (149,688 | ) | $ | — | $ | (179 | ) | $ | (149,867 | ) | ||||
Elimination | $ | — | $ | 291,032 | $ | — | $ | 291,032 | |||||||
Cash flow provided by (used in) financing activities: | |||||||||||||||
Intercompany advances | |||||||||||||||
Toll Brothers, Inc. | $ | — | $ | — | $ | — | $ | — | |||||||
Subsidiary Issuer | $ | — | $ | — | $ | — | $ | — | |||||||
Guarantor Subsidiaries | $ | — | $ | 268,885 | $ | (95,552 | ) | $ | 173,333 | ||||||
Non-Guarantor Subsidiaries | $ | — | $ | 8,953 | $ | 95,552 | $ | 104,505 | |||||||
Elimination | $ | — | $ | (277,838 | ) | $ | — | $ | (277,838 | ) | |||||
Net cash provided by (used in) financing activities | |||||||||||||||
Toll Brothers, Inc. | $ | 16,905 | $ | — | $ | — | $ | 16,905 | |||||||
Subsidiary Issuer | $ | 296,227 | $ | — | $ | — | $ | 296,227 | |||||||
Guarantor Subsidiaries | $ | (17,074 | ) | $ | 268,885 | $ | (96,083 | ) | $ | 155,728 | |||||
Non-Guarantor Subsidiaries | $ | (12,543 | ) | $ | 8,953 | $ | 96,083 | $ | 92,493 | ||||||
Elimination | $ | — | $ | (277,838 | ) | $ | — | $ | (277,838 | ) |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 4)
Supplemental consolidating financial information of Toll Brothers, Inc., the Subsidiary Issuer, the Guarantor Subsidiaries, the Non-Guarantor Subsidiaries and the eliminations to arrive at Toll Brothers, Inc. on a consolidated basis is presented below ($ amounts in thousands).
Condensed Consolidating Balance Sheet at April 30, 2013:
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
ASSETS | |||||||||||||||||
Cash and cash equivalents | — | — | 608,939 | 94,162 | — | 703,101 | |||||||||||
Marketable securities | 192,562 | 40,337 | 232,899 | ||||||||||||||
Restricted cash | 15,134 | 17,198 | 1,469 | 33,801 | |||||||||||||
Inventory | 4,304,896 | 62,321 | 4,367,217 | ||||||||||||||
Property, construction and office equipment, net | 110,624 | 14,665 | 125,289 | ||||||||||||||
Receivables, prepaid expenses and other assets | 76 | 16,363 | 87,111 | 82,416 | (20,221 | ) | 165,745 | ||||||||||
Mortgage loans held for sale | 66,538 | 66,538 | |||||||||||||||
Customer deposits held in escrow | 45,304 | 45,304 | |||||||||||||||
Investments in and advances to unconsolidated entities | 183,475 | 174,057 | 357,532 | ||||||||||||||
Investments in distressed loans | 48,707 | 48,707 | |||||||||||||||
Investments in foreclosed real estate | 71,458 | 71,458 | |||||||||||||||
Investments in and advances to consolidated entities | 2,894,431 | 2,334,391 | 4,740 | (5,233,562 | ) | — | |||||||||||
Deferred tax assets, net of valuation allowances | 341,014 | 341,014 | |||||||||||||||
3,250,655 | 2,350,754 | 5,554,849 | 656,130 | (5,253,783 | ) | 6,558,605 | |||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Liabilities: | |||||||||||||||||
Loans payable | 96,572 | 96,572 | |||||||||||||||
Senior notes | 2,278,941 | 43,456 | 2,322,397 | ||||||||||||||
Mortgage company warehouse loan | 58,526 | 58,526 | |||||||||||||||
Customer deposits | 205,821 | 205,821 | |||||||||||||||
Accounts payable | 149,383 | 218 | 149,601 | ||||||||||||||
Accrued expenses | 26,527 | 327,662 | 135,412 | (20,368 | ) | 469,233 | |||||||||||
Advances from consolidated entities | 1,573,146 | 427,742 | (2,000,888 | ) | — | ||||||||||||
Income taxes payable | 84,157 | 84,157 | |||||||||||||||
Total liabilities | 84,157 | 2,305,468 | 2,352,584 | 621,898 | (1,977,800 | ) | 3,386,307 | ||||||||||
Equity: | |||||||||||||||||
Stockholders’ equity: | |||||||||||||||||
Common stock | 1,693 | 48 | 3,006 | (3,054 | ) | 1,693 | |||||||||||
Additional paid-in capital | 418,844 | 49,400 | 1,734 | (51,134 | ) | 418,844 | |||||||||||
Retained earnings | 2,750,503 | (4,114 | ) | 3,202,547 | 23,362 | (3,221,795 | ) | 2,750,503 | |||||||||
Treasury stock, at cost | (78 | ) | (78 | ) | |||||||||||||
Accumulated other comprehensive loss | (4,464 | ) | (330 | ) | (67 | ) | (4,861 | ) | |||||||||
Total stockholders’ equity | 3,166,498 | 45,286 | 3,202,265 | 28,035 | (3,275,983 | ) | 3,166,101 | ||||||||||
Noncontrolling interest | 6,197 | 6,197 | |||||||||||||||
Total equity | 3,166,498 | 45,286 | 3,202,265 | 34,232 | (3,275,983 | ) | 3,172,298 | ||||||||||
3,250,655 | 2,350,754 | 5,554,849 | 656,130 | (5,253,783 | ) | 6,558,605 |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 5)
Revised Condensed Consolidating Balance Sheet at October 31, 2012:
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
ASSETS | |||||||||||||||||
Cash and cash equivalents | — | — | 712,024 | 66,800 | — | 778,824 | |||||||||||
Marketable securities | 378,858 | 60,210 | 439,068 | ||||||||||||||
Restricted cash | 28,268 | 17,561 | 1,447 | 47,276 | |||||||||||||
Inventory | 3,695,895 | 65,292 | 3,761,187 | ||||||||||||||
Property, construction and office equipment, net | 106,963 | 3,008 | 109,971 | ||||||||||||||
Receivables, prepaid expenses and other assets | 134 | 15,130 | 80,932 | 64,543 | (16,181 | ) | 144,558 | ||||||||||
Mortgage loans held for sale | 86,386 | 86,386 | |||||||||||||||
Customer deposits held in escrow | 27,312 | 2,267 | 29,579 | ||||||||||||||
Investments in and advances to unconsolidated entities | 180,159 | 150,458 | 330,617 | ||||||||||||||
Investments in distressed loans | 37,169 | 37,169 | |||||||||||||||
Investments in foreclosed real estate | 58,353 | 58,353 | |||||||||||||||
Investments in and advances to consolidated entities | 2,816,607 | 2,092,810 | 4,740 | (4,914,157 | ) | — | |||||||||||
Deferred tax assets, net of valuation allowances | 358,056 | 358,056 | |||||||||||||||
3,203,065 | 2,107,940 | 5,204,444 | 595,933 | (4,930,338 | ) | 6,181,044 | |||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Liabilities: | |||||||||||||||||
Loans payable | 99,817 | 99,817 | |||||||||||||||
Senior notes | 2,032,335 | 48,128 | 2,080,463 | ||||||||||||||
Mortgage company warehouse loan | 72,664 | 72,664 | |||||||||||||||
Customer deposits | 142,919 | 58 | 142,977 | ||||||||||||||
Accounts payable | 99,889 | 22 | 99,911 | ||||||||||||||
Accrued expenses | 27,476 | 344,555 | 115,922 | (11,603 | ) | 476,350 | |||||||||||
Advances from consolidated entities | 1,342,213 | 378,946 | (1,721,159 | ) | — | ||||||||||||
Income taxes payable | 80,991 | 80,991 | |||||||||||||||
Total liabilities | 80,991 | 2,059,811 | 2,029,393 | 567,612 | (1,684,634 | ) | 3,053,173 | ||||||||||
Equity: | |||||||||||||||||
Stockholders’ equity: | |||||||||||||||||
Common stock | 1,687 | 48 | 3,006 | (3,054 | ) | 1,687 | |||||||||||
Additional paid-in capital | 404,418 | 49,400 | 1,734 | (51,134 | ) | 404,418 | |||||||||||
Retained earnings | 2,721,397 | (1,271 | ) | 3,175,370 | 17,417 | (3,191,516 | ) | 2,721,397 | |||||||||
Treasury stock, at cost | (983 | ) | (983 | ) | |||||||||||||
Accumulated other comprehensive loss | (4,445 | ) | (367 | ) | (7 | ) | (4,819 | ) | |||||||||
Total stockholders’ equity | 3,122,074 | 48,129 | 3,175,051 | 22,150 | (3,245,704 | ) | 3,121,700 | ||||||||||
Noncontrolling interest | 6,171 | 6,171 | |||||||||||||||
Total equity | 3,122,074 | 48,129 | 3,175,051 | 28,321 | (3,245,704 | ) | 3,127,871 | ||||||||||
3,203,065 | 2,107,940 | 5,204,444 | 595,933 | (4,930,338 | ) | 6,181,044 |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 6)
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the six months ended April 30, 2013 ($ in thousands):
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
Revenues | 953,625 | 35,383 | (48,403 | ) | 940,605 | ||||||||||||
Cost of revenues | 772,981 | 9,935 | (16,966 | ) | 765,950 | ||||||||||||
Selling, general and administrative | 61 | 1,402 | 170,586 | 21,057 | (35,509 | ) | 157,597 | ||||||||||
61 | 1,402 | 943,567 | 30,992 | (52,475 | ) | 923,547 | |||||||||||
Income (loss) from operations | (61 | ) | (1,402 | ) | 10,058 | 4,391 | 4,072 | 17,058 | |||||||||
Other: | |||||||||||||||||
Income from unconsolidated entities | 5,040 | 3,036 | 8,076 | ||||||||||||||
Other income - net | 4,685 | 24,472 | 2,567 | (7,564 | ) | 24,160 | |||||||||||
Intercompany interest income | 60,060 | (60,060 | ) | — | |||||||||||||
Interest expense | (63,330 | ) | (222 | ) | 63,552 | — | |||||||||||
Income from subsidiaries | 44,670 | 5,100 | (49,770 | ) | — | ||||||||||||
Income (loss) before income taxes | 49,294 | (4,672 | ) | 44,670 | 9,772 | (49,770 | ) | 49,294 | |||||||||
Income tax provision (benefit) | 20,188 | (1,830 | ) | 17,493 | 3,827 | (19,490 | ) | 20,188 | |||||||||
Net income (loss) | 29,106 | (2,842 | ) | 27,177 | 5,945 | (30,280 | ) | 29,106 | |||||||||
Other comprehensive (loss) income | (18 | ) | 36 | (60 | ) | (42 | ) | ||||||||||
Total comprehensive income (loss) | 29,088 | (2,842 | ) | 27,213 | 5,885 | (30,280 | ) | 29,064 |
Revised Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the six months ended April 30, 2012 ($ in thousands):
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
Revenues | 711,351 | 25,622 | (41,337 | ) | 695,636 | ||||||||||||
Cost of revenues | 581,320 | 2,744 | (5,635 | ) | 578,429 | ||||||||||||
Selling, general and administrative | 27 | 1,782 | 149,441 | 18,961 | (32,318 | ) | 137,893 | ||||||||||
27 | 1,782 | 730,761 | 21,705 | (37,953 | ) | 716,322 | |||||||||||
Loss from operations | (27 | ) | (1,782 | ) | (19,410 | ) | 3,917 | (3,384 | ) | (20,686 | ) | ||||||
Other: | |||||||||||||||||
Income from unconsolidated entities | 10,803 | 2,873 | 13,676 | ||||||||||||||
Other income - net | 20 | 7,594 | 3,471 | 5,166 | 16,251 | ||||||||||||
Intercompany interest income | 57,891 | (57,891 | ) | — | |||||||||||||
Interest expense | (56,109 | ) | 56,109 | — | |||||||||||||
Income from subsidiaries | 9,248 | 10,261 | (19,509 | ) | — | ||||||||||||
Income before income taxes | 9,241 | — | 9,248 | 10,261 | (19,509 | ) | 9,241 | ||||||||||
Income tax benefit | (4,845 | ) | (4,849 | ) | (5,380 | ) | 10,229 | (4,845 | ) | ||||||||
Net income | 14,086 | — | 14,097 | 15,641 | (29,738 | ) | 14,086 | ||||||||||
Other comprehensive (loss) income | 92 | (534 | ) | (38 | ) | (480 | ) | ||||||||||
Total comprehensive income | 14,178 | — | 13,563 | 15,603 | (29,738 | ) | 13,606 |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 7)
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the three months ended April 30, 2013 ($ in thousands):
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
Revenues | 523,403 | 20,337 | (27,736 | ) | 516,004 | ||||||||||||
Cost of revenues | 424,278 | 5,704 | (9,969 | ) | 420,013 | ||||||||||||
Selling, general and administrative | 45 | 715 | 86,079 | 10,916 | (18,205 | ) | 79,550 | ||||||||||
45 | 715 | 510,357 | 16,620 | (28,174 | ) | 499,563 | |||||||||||
Income (loss) from operations | (45 | ) | (715 | ) | 13,046 | 3,717 | 438 | 16,441 | |||||||||
Other: | |||||||||||||||||
Income from unconsolidated entities | 3,890 | 1,103 | 4,993 | ||||||||||||||
Other income - net | 2,299 | 18,477 | 833 | (2,075 | ) | 19,534 | |||||||||||
Intercompany interest income | 30,333 | (30,333 | ) | — | |||||||||||||
Interest expense | (31,908 | ) | (62 | ) | 31,970 | — | |||||||||||
Income from subsidiaries | 38,714 | 3,301 | (42,015 | ) | — | ||||||||||||
Income (loss) before income taxes | 40,968 | (2,290 | ) | 38,714 | 5,591 | (42,015 | ) | 40,968 | |||||||||
Income tax provision (benefit) | 16,294 | (897 | ) | 15,160 | 2,189 | (16,452 | ) | 16,294 | |||||||||
Net income (loss) | 24,674 | (1,393 | ) | 23,554 | 3,402 | (25,563 | ) | 24,674 | |||||||||
Other comprehensive (loss) income | 155 | (189 | ) | (24 | ) | (58 | ) | ||||||||||
Total comprehensive income (loss) | 24,829 | (1,393 | ) | 23,365 | 3,378 | (25,563 | ) | 24,616 |
Revised Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the three months ended April 30, 2012 ($ in thousands):
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
Revenues | 383,659 | 13,236 | (23,214 | ) | 373,681 | ||||||||||||
Cost of revenues | 308,436 | 824 | (2,439 | ) | 306,821 | ||||||||||||
Selling, general and administrative | 14 | 1,304 | 75,909 | 9,687 | (18,658 | ) | 68,256 | ||||||||||
14 | 1,304 | 384,345 | 10,511 | (21,097 | ) | 375,077 | |||||||||||
(Loss) income from operations | (14 | ) | (1,304 | ) | (686 | ) | 2,725 | (2,117 | ) | (1,396 | ) | ||||||
Other: | |||||||||||||||||
Income from unconsolidated entities | 5,574 | 1,415 | 6,989 | ||||||||||||||
Other income - net | 13 | 4,614 | 2,678 | 2,751 | 10,056 | ||||||||||||
Intercompany interest income | 32,127 | (32,127 | ) | — | |||||||||||||
Interest expense | (30,823 | ) | 30,823 | — | |||||||||||||
Income from subsidiaries | 15,650 | 6,148 | (21,798 | ) | — | ||||||||||||
Income before income taxes | 15,649 | — | 15,650 | 6,818 | (22,468 | ) | 15,649 | ||||||||||
Income tax benefit | (1,223 | ) | (1,231 | ) | (7,326 | ) | 8,557 | (1,223 | ) | ||||||||
Net income | 16,872 | — | 16,881 | 14,144 | (31,025 | ) | 16,872 | ||||||||||
Other comprehensive income (loss) | 201 | 18 | (38 | ) | 181 | ||||||||||||
Total comprehensive income | 17,073 | — | 16,899 | 14,106 | (31,025 | ) | 17,053 |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 8)
Condensed Consolidating Statement of Cash Flows for the six months ended April 30, 2013 ($ in thousands):
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
Net cash (used in) provided by operating activities | 45,380 | 2,599 | (484,680 | ) | 3,688 | (12,395 | ) | (445,408 | ) | ||||||||
Cash flow provided by (used in) investing activities: | |||||||||||||||||
Purchase of property and equipment - net | (8,588 | ) | (11,676 | ) | (20,264 | ) | |||||||||||
Purchase of marketable securities | (25,938 | ) | (10,224 | ) | (36,162 | ) | |||||||||||
Sale and redemption of marketable securities | 209,484 | 30,000 | 239,484 | ||||||||||||||
Investments in and advances to unconsolidated entities | (21,637 | ) | (10,357 | ) | (31,994 | ) | |||||||||||
Return of investments in unconsolidated entities | 23,437 | 11,249 | 34,686 | ||||||||||||||
Investments in distressed loans and foreclosed real estate | (26,155 | ) | (26,155 | ) | |||||||||||||
Return of investments in distressed loans and foreclosed real estate | 6,114 | 6,114 | |||||||||||||||
Intercompany advances | (53,632 | ) | (241,581 | ) | 295,213 | — | |||||||||||
Net cash provided by (used in) investing activities | (53,632 | ) | (241,581 | ) | 176,758 | (11,049 | ) | 295,213 | 165,709 | ||||||||
Cash flow provided by (used in) financing activities: | |||||||||||||||||
Net proceeds from issuance of senior notes | 298,050 | 298,050 | |||||||||||||||
Proceeds from loans payable | 501,884 | 501,884 | |||||||||||||||
Principal payments of loans payable | (29,153 | ) | (516,022 | ) | (545,175 | ) | |||||||||||
Redemption of senior notes | (59,068 | ) | (59,068 | ) | |||||||||||||
Proceeds from stock-based benefit plans | 8,430 | 8,430 | |||||||||||||||
Receipts related to non-controlling interest | 33 | 33 | |||||||||||||||
Purchase of treasury stock | (178 | ) | (178 | ) | |||||||||||||
Intercompany advances | 233,990 | 48,828 | (282,818 | ) | — | ||||||||||||
Net cash provided by financing activities | 8,252 | 238,982 | 204,837 | 34,723 | (282,818 | ) | 203,976 | ||||||||||
Net (decrease) increase in cash and cash equivalents | — | — | (103,085 | ) | 27,362 | — | (75,723 | ) | |||||||||
Cash and cash equivalents, beginning of period | — | — | 712,024 | 66,800 | — | 778,824 | |||||||||||
Cash and cash equivalents, end of period | — | — | 608,939 | 94,162 | — | 703,101 |
Securities and Exchange Commission
June 11, 2013
Exhibit A (Page 9)
Revised Condensed Consolidating Statement of Cash Flows for the six months ended April 30, 2012 ($ in thousands):
Toll Brothers, Inc. | Subsidiary Issuer | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||
Net cash (used in) provided by operating activities | (26,365 | ) | 4,265 | (234,351 | ) | (1,433 | ) | (13,194 | ) | (271,078 | ) | ||||||
Cash flow (used in) provided by investing activities: | |||||||||||||||||
Purchase of property and equipment — net | (6,487 | ) | (41 | ) | (6,528 | ) | |||||||||||
Purchase of marketable securities | (117,781 | ) | (60,052 | ) | (177,833 | ) | |||||||||||
Sale and redemption of marketable securities | 189,716 | 189,716 | |||||||||||||||
Investments in and advances to unconsolidated entities | (1,142 | ) | (73,866 | ) | (75,008 | ) | |||||||||||
Return of investments in unconsolidated entities | 20,568 | 20,568 | |||||||||||||||
Investments in distressed loans and foreclosed real estate | (27,490 | ) | (27,490 | ) | |||||||||||||
Return of investments in distressed loans and foreclosed real estate | 11,582 | 11,582 | |||||||||||||||
Acquisition of a business | (144,746 | ) | (144,746 | ) | |||||||||||||
Intercompany advances | 9,460 | (300,492 | ) | 291,032 | — | ||||||||||||
Net cash (used in) provided by investing activities | 9,460 | (300,492 | ) | (59,872 | ) | (149,867 | ) | 291,032 | (209,739 | ) | |||||||
Cash flow provided by (used in) financing activities: | |||||||||||||||||
Net proceeds from issuance of senior notes | 296,227 | 296,227 | |||||||||||||||
Proceeds from loans payable | 400,092 | 400,092 | |||||||||||||||
Principal payments of loans payable | (17,605 | ) | (412,104 | ) | (429,709 | ) | |||||||||||
Proceeds from stock-based benefit plans | 17,189 | 17,189 | |||||||||||||||
Purchase of treasury stock | (284 | ) | (284 | ) | |||||||||||||
Intercompany advances | 173,333 | 104,505 | (277,838 | ) | — | ||||||||||||
Net cash provided by financing activities | 16,905 | 296,227 | 155,728 | 92,493 | (277,838 | ) | 283,515 | ||||||||||
Net decrease in cash and cash equivalents | — | — | (138,495 | ) | (58,807 | ) | — | (197,302 | ) | ||||||||
Cash and cash equivalents, beginning of period | — | — | 777,013 | 129,327 | — | 906,340 | |||||||||||
Cash and cash equivalents, end of period | — | — | 638,518 | 70,520 | — | 709,038 |