EXHIBIT 99.2
In our fourth quarter 2004 Earnings Conference Call to be held at 2:00 P.M.
(EDT) on December 9, 2004, we will provide the following guidance regarding our
expected results of operations for our fiscal year ending October 31, 2005.
These forecasts are subject to many risks, uncertainties and assumptions and may
vary significantly from the actual results, as further noted below. Information
with respect to quarterly data is subject to even greater fluctuation and risk.
We undertake no obligation to publicly update the information provided due to
changes in economic conditions, future events or otherwise. However, any further
disclosures made on related subjects in our subsequent filings, releases or
presentations should be consulted. We suggest that you listen to the conference
call in its entirety. The conference call in its entirety can be heard via the
Investor Relations portion of our website, www.tollbrothers.com, until January
31, 2005.
For ease of reference, we have included the actual results for fiscal 2004. The
columns designated as "Low" and "High" represents the low and high ends of the
ranges of unit deliveries, average price, home building gross margins as a
percentage of home building revenues and selling, general and administrative
expenses ("SG&A") as a percentage of total revenues expected for fiscal 2005. We
expect that the actual results of operations will be somewhere in between the
low end and the high end of the ranges provided.
Unit deliveries and average prices in fiscal 2005 are expected to be:
Unit Deliveries Average Price
------------------------------- -----------------------------------------
2004 2005 Estimated 2004 2005 Estimated
Actual Low High Actual Low High
--------- --------- --------------------------------------- ------------
Quarter ending January 31 1,085 1,475 1,575 $543,389 $620,000 $625,000
Quarter ending April 30 1,463 1,900 2,000 $556,602 $630,000 $640,000
Quarter ending July 31 1,684 2,000 2,100 $588,637 $640,000 $650,000
Quarter ending October 31 2,395 2,525 2,625 $603,048 $650,000 $660,000
Year 6,627 7,900 8,300 $579,365 $635,000 $645,000
Home building gross margins as a percentage of home building revenues in fiscal
2005 are expected to be:
2005 Estimated
2004 -------------------------------
Actual Low High
-------------- -------------- -------------
Quarter ending January 31 28.35% 28.85% 29.00%
Quarter ending April 30 28.21% 29.50% 29.80%
Quarter ending July 31 28.43% 30.58% 30.88%
Quarter ending October 31 28.63% 31.78% 32.13%
Year 28.45% 30.40% 30.70%
Land sales revenues and gross margins for fiscal 2005 are expected to be
approximately:
2004 2005
Actual Estimated
--------------- ----------------
(In thousands)
Revenue
- -------------------------------------------------
Quarter ending January 31 $5,987 $1,000
Quarter ending April 30 $2,011 $14,000
Quarter ending July 31 $12,940 $1,000
Quarter ending October 31 $1,553 $1,000
Year $22,491 $17,000
2004 2005
Actual Estimated
--------------- ----------------
Gross Margin
- -------------------------------------------------
Quarter ending January 31 11.4% 15.0%
Quarter ending April 30 25.3% 35.0%
Quarter ending July 31 42.0% 15.0%
Quarter ending October 31 6.0% 15.0%
Year 29.9% 31.5%
Other income for fiscal 2005 is expected to be approximately:
2004 2005
Actual Estimated
---------------- ----------------
(In thousands)
Quarter ending January 31 $1,683 $3,000
Quarter ending April 30 $2,436 $3,000
Quarter ending July 31 $3,364 $4,500
Quarter ending October 31 $7,937 $7,500
Year $15,420 $18,000
Income from unconsolidated entities for fiscal 2005 is expected to be
approximately:
2004 2005
Actual Estimated
----------------- ----------------
(In thousands)
Quarter ending January 31 $ 665 $1,500
Quarter ending April 30 $ 729 $2,500
Quarter ended July 31 $5,551 $8,000
Quarter ending October 31 $8,786 $3,500
Year $15,731 $15,500
Selling, general and administrative expenses as a percentage of total revenues
in fiscal 2005 are expected to be:
2005 Estimated
2004 ------------------------------
Actual Low High
---------------- ------------- ------------
Quarter ending January 31 12.82% 11.82% 11.72%
Quarter ending April 30 10.97% 9.97% 9.77%
Quarter ending July 31 10.23% 9.88% 9.73%
Quarter ending October 31 7.58% 8.58% 8.58%
Year 9.79% 9.84% 9.74%
Interest expense as a percentage of total revenues for fiscal 2004 was 2.4%.
Interest expense as a percentage of total revenues is expected to be
approximately 2.3% for fiscal 2005.
Our effective income tax rate for fiscal 2004 was 36.8% of income before income
taxes. Our effective income tax rate is expected to be approximately 37% of
income before income taxes for fiscal year of 2005.
In-the-money stock options are included in shares outstanding using the
"treasury stock method" for calculating common stock equivalents. Because we
have assumed that our stock price will increase during fiscal 2005 and we expect
that options will be exercised and stock will be issued under our Cash Bonus
Program, the number of shares used to determine earnings per share will increase
in fiscal 2005 as compared to 2004. We estimate that the share count for
determining diluted earnings per share for fiscal 2005 will be:
2004 2005
Actual Estimated
--------------- ------------
(in thousands)
Quarter ending January 31 80,819 82,400
Quarter ending April 30 81,426 83,600
Quarter ending July 31 80,920 84,300
Quarter ending October 31 81,499 84,900
Year 81,166 83,800
FORWARD LOOKING STATEMENT
Certain information included herein and in other Company reports, SEC filings,
statements and presentations is forward-looking within the meaning of the
Private Securities Litigation Reform Act of 1995, including, but not limited to,
statements concerning anticipated operating results, financial resources,
changes in revenues, changes in profitability, interest expense, growth and
expansion, anticipated income from joint ventures and the Toll Brothers Realty
Trusts Group, the ability to acquire land, the ability to secure governmental
approvals and the ability to open new communities, the ability to sell homes and
properties, the ability to deliver homes from backlog, the average delivered
price of homes, the ability to secure materials and subcontractors, the ability
to maintain the liquidity and capital necessary to expand and take advantage of
future opportunities, and stock market valuations. Such forward-looking
information involves important risks and uncertainties that could significantly
affect actual results and cause them to differ materially from expectations
expressed herein and in other Company reports, SEC filings, statements and
presentations. These risks and uncertainties include local, regional and
national economic conditions, the demand for homes, domestic and international
political events, uncertainties created by terrorist attacks, the effects of
governmental regulation, the competitive environment in which the Company
operates, fluctuations in interest rates, changes in home prices, the
availability and cost of land for future growth, the availability of capital,
uncertainties and fluctuations in capital and securities markets, changes in tax
laws and their interpretation, legal proceedings, the availability of adequate
insurance at reasonable cost, the ability of customers to finance the purchase
of homes, the availability and cost of labor and materials, and weather
conditions.