EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Frederick N. Cooper (215) 938-8312
December 8, 2005 fcooper@tollbrothersinc.com
Joseph R. Sicree (215) 938-8045
jsicree@tollbrothersinc.com
TOLL BROTHERS' FY 2005 NET INCOME RISES 97% TO $806.1 MILLION
-------------------------------------------------------------
FY 2005 EPS RISES 90% TO $4.78
------------------------------
ACHIEVES 13TH CONSECUTIVE YEAR OF RECORD EARNINGS
-------------------------------------------------
FY 2005 4TH QTR NET INCOME RISES 72% TO $310.3 MILLION
------------------------------------------------------
4TH QTR EPS INCREASES 66% TO $1.84
----------------------------------
SETS SINGLE QUARTER EARNINGS RECORD IN 4TH QTR OF FY 2005
---------------------------------------------------------
Horsham, PA, December 8, 2005 -- Toll Brothers, Inc., (NYSE:TOL)
(www.tollbrothers.com), the nation's leading builder of luxury homes, today
reported record fiscal year and fourth-quarter results for earnings, revenues,
backlog and contracts for the periods ended October 31, 2005. The Company's
fourth quarter earnings and revenues were the highest for any quarter in its
history.
Robert I. Toll, chairman and chief executive officer, stated: "Our FY 2005 net
income rose 97%, which came on top of FY 2004's net income growth of 57%. What
is most noteworthy is that this growth was preceded by seventeen years of more
than 20% average annual net income growth, stretching back to 1986, when we went
public. These results have been achieved primarily through organic growth. While
demographics-driven demand has been a significant factor in this growth, so has
our organization; the great team we have today has enabled us to dramatically
increase our market share.
"Our nationwide expansion, our ability to find and entitle well-located land in
highly regulated markets, our brand name and our skill at delivering the
expanding variety of homes we offer - suburban move-up, empty-nester, active
adult, resort-style communities, and urban low-, mid- and high-rise product -
all have enabled us to significantly broaden our customer base. This has led to
the growth in size and profitability of our Company.
"As we have previously discussed, it appears that the housing market is not as
robust today as it was throughout 2004 and through the summer of 2005, although
there is wide variation in local markets. Many believe the deceleration in price
growth was inevitable, as the increases of 2004 and most of 2005 were not
sustainable and were fueled, in part, by speculation. Our sales results indicate
that housing demand is returning to the more normalized levels of the decade
from 1994 to mid-2003, before home prices really took off in quite a few
markets. That period from 1994 through 2003 was an excellent one for Toll
Brothers, as our revenues rose five-fold and our earnings grew seven-fold. We
grew despite the NASDAQ implosion, a terrorist attack, a national recession,
several global financial crises and three periods of Fed-initiated interest rate
hikes, in 1995, 1997 and 2000, which drove mortgage rates as high as 9.2%, 8.2%
and 8.6%, respectively, in those years compared to 6.125% today."
*more*
Joel H. Rassman, chief financial officer, stated: "Looking forward, we believe
FY 2006 will be our fourteenth consecutive year of record earnings. We are
projecting FY 2006 net income of between $810 million and $890 million and
earnings per share of between $4.79 per share and $5.27 per share. Net income
and earnings per share projections include an after tax expense of approximately
$18 million, or $0.11 per share, for expensing of options; previously we have
not expensed options. We project our return on beginning-year equity should
approach or exceed 30%.
"Our earnings estimates assume FY 2006 revenues of between $6.65 billion and
$7.25 billion and deliveries of between 9,500 and 10,200 homes in FY 2006. Our
projected deliveries are expected to be at an average price of $670,000 to
$680,000 and are based on our Fiscal 2005 year-end backlog of $6.01 billion and
8,805 homes, as well as the anticipated signing of additional contracts for
homes to be delivered in FY 2006. In addition, we project $280 million to $300
million in revenues from our first four high-rise towers, which are now going
vertical. They will be accounted for using the percentage of completion method,
as required under the criteria of FAS 66.
"We expect to remain at about 230 selling communities through the first quarter
of FY 2006, the same total with which we ended our FY 2005. Our community count
should begin to increase in the second quarter of FY 2006, and we estimate
ending FY 2006, with approximately 265 selling communities. While this
represents a net increase of 35 communities, it actually results from our
closing out an estimated 108 communities, where we've completed sales, and
opening approximately 143 new ones. Typically, when we open new communities we
experience greater sales because we are not constrained by backlog already in
place.
"To some extent, the temporary slowing in our growth arises from our own success
and the accelerated growth we achieved in FY 2004 and 2005. We delivered 670
more homes in FY 2005 than the mid-point of our projection at the start of that
fiscal year, and, with backlogs out twelve months or more, we had shut down
sales at 35 communities at the end of the fourth quarter of FY 2005. We also
closed out more communities than we had expected during the year and, due to
regulatory delays, were not able to open as many new ones in order to grow our
sales.
"These new communities are already in our pipeline. We have over 440 future
communities in the approval or development process. We expect, beginning in the
second quarter of FY 2006, to start benefiting from the opening of new
communities at an accelerating pace, first through contracts and then through
revenues in mid-FY 2007 and into at least FY 2008.
"Based on our projected community count growth and assuming healthy demand, we
anticipate record results in FY 2007. However, these are uncertain times and
results could prove better or worse than the previous guidance we gave of 20%
growth for FY 2007. We will defer giving more detailed guidance with respect to
fiscal 2007 until later in the year."
*more*
Robert Toll stated: "We look to the future with cautious optimism. We believe
demand for our luxury homes relies, in large measure, on consumer confidence,
which has suffered recently among our clientele. We also believe that the
fundamental imbalance between supply and demand will reassert itself. The
strong, baby-boomer-driven demographics and the growth in high-income households
should continue to bolster demand for luxury homes. The challenging regulatory
process, exacerbated by anti-growth "NIMBY" ("not-in-my-backyard") politics,
constricts the land approval pipeline and, thus, the supply of available
building lots, especially in the affluent markets where we build. The positive
aspect of these restrictions is that with supply so constrained, we are enriched
when we finally complete our approvals and get to market. Given this
land-constrained environment, we believe we have positioned ourselves to
prosper.
"We now control more than 83,000 lots, 43% of which are owned and 57% of which
are optioned, compared to 61,000 at FYE 2004. These home sites represent a
five-to-six year supply, based on our historic 20% annual rate of growth.
"We have increased our land position without compromising our balance sheet or
the profitability standards for land acquisitions that we have maintained for
the nearly twenty years since we've been public. We ended our fiscal year with a
debt to capital ratio of 39%, our lowest ever.
"We believe that fundamentals remain healthy for our new home market. The
economy is much stronger than during the recession of 2000 to 2003, which did
not shut down demand for our homes, nor impair our ability to set records each
year. Affluent households continue to grow in wealth and numbers. The Fed
appears to be approaching the end of a period of interest rate increases, with
mortgage rates still quite attractive by historical standards. Household growth
is projected to accelerate and supplies of land remain constrained. Based on
these factors, our proven management team, our projected community count growth,
our land position, our diversity of product offerings, our strong brand and our
financial base, we look forward to future growth."
Toll Brothers will be broadcasting live via the Investor Relations section of
its website, WWW.TOLLBROTHERS.COM, a conference call hosted by Chairman and
Chief Executive Officer Robert I. Toll at 2:00 p.m. (EST) today, December 8,
2005, to discuss these results and its outlook for fiscal 2006. Prior to this
conference call, the Company intends to file a Form 8-K with the Securities and
Exchange Commission containing its guidance for expected results of operations
for Fiscal 2006 which will be discussed on the call. To access the call, enter
the Toll Brothers website, then click on the Investor Relations page, and select
"Conference Calls". Participants are encouraged to log on at least fifteen
minutes prior to the start of the presentation to register and download any
necessary software. The call can be heard live with an on-line replay which will
follow and continue through January 31, 2006.
*more*
Toll Brothers' financial highlights for the three-month and twelve-month periods
ended October 31, 2005:
o FY 2005's fourth-quarter net income of $310.3 million grew 72% versus FY
2004's fourth-quarter net income of $180.6 million. FY 2005's
fourth-quarter earnings of $1.84 per share diluted grew 66% versus FY
2004's fourth quarter of $1.11 per share diluted, the previous
single-quarter record.
o FY 2005's twelve-month net income of $806.1 million grew 97% versus FY
2004's twelve-month net income of $409.1 million. FY 2005's twelve-month
earnings of $4.78 per share diluted grew 90% versus FY 2004's earnings per
share of $2.52 per share diluted. This was the Company's thirteenth
consecutive year of record earnings.
o FY 2005 fourth quarter revenues of $2.02 billion, the highest quarter in
the Company's history, grew 40% over FY 2004's fourth quarter record $1.45
billion. Fourth-quarter home building revenues of $2.01 billion (2,957
homes), also the highest for any quarter in the Company's history,
increased 39% over FY 2004's fourth-quarter home building revenues of $1.44
billion (2,395 homes), the previous fourth-quarter record. Revenues from
land sales totaled $12.5 million for FY 2005's fourth quarter, compared to
$1.6 million in FY 2004's fourth quarter.
o FY 2005 full year revenues of $5.79 billion, the Company's fourteenth
consecutive year of record revenues, rose 50% versus FY 2004's revenues of
$3.86 billion. FY 2005 home building revenues of $5.76 billion (8,769
homes) increased 50% over FY 2004's home building revenues of $3.84 billion
(6,627 homes), the previous twelve-month record. FY 2005 revenues from land
sales for the twelve-month period totaled $34.1 million, compared to $22.5
million in the same period in FY 2004.
o In addition, in the Company's fiscal 2005 fourth-quarter and twelve-month
periods, unconsolidated entities in which the Company had an interest
delivered $63.4 million (123 homes) and $153.9 million (330 homes),
respectively, compared to $36.9 million (89 homes) and $52.4 million (130
homes), respectively, in the same periods of fiscal 2004. The Company's
share of the profits from the delivery of these homes is included in
`Equity Earnings from Unconsolidated Entities' on the Company's Income
Statement.
o The Company's FY 2005 fourth-quarter contracts of $1.59 billion (2,272
homes) grew by 4% over FY 2004's fourth-quarter contracts of $1.53 billion
(2,248 homes), the previous fourth-quarter record. In addition, in fourth
quarter 2005, unconsolidated entities in which the Company had an interest
signed contracts of $98.4 million (154 homes).
o FY 2005's full year contracts of $7.15 billion (10,372 homes), the
Company's fifteenth consecutive year of record contracts, grew by 27% over
FY 2004's total of $5.64 billion (8,684 homes), the previous fiscal year
record. In addition, in FY 2005, unconsolidated entities in which the
Company had an interest signed contracts of $262.5 million (424 homes).
*more*
o In FY 2005, fourth-quarter-end backlog of $6.01 billion (8,805 homes)
increased 36% over FY 2004's fourth-quarter-end backlog of $4.43 billion
(6,709 homes), the previous fourth-quarter record. In addition, at the end
of fourth quarter 2005, unconsolidated entities in which the Company had an
interest had a backlog of $184.4 million (268 homes).
o During the fourth quarter of FY 2005, the Company bought back 1.97 million
shares of its stock at an average price of $44.27. For the full fiscal
year, the Company bought back 2.80 million shares of its stock at an
average price of $42.27.
o In FY 2006, the Company expects to incur a pre-tax expense of approximately
$27 million, ($18 million, or $0.11 per share, after tax), for expensing of
options under FAS 123R, which the Company is required to adopt for the
first time in FY 2006.
o The Company projects approximately $280 million to $300 million in revenues
from its first four high-rise towers, which are now in the vertical
construction phase. They will be accounted for using the percentage of
completion method, as required under the criteria of FAS 66.
Toll Brothers, Inc. is the nation's leading builder of luxury homes. The Company
began business in 1967 and became a public company in 1986. Its common stock is
listed on the New York Stock Exchange and the Pacific Exchange under the symbol
"TOL". The Company serves move-up, empty-nester, active-adult and second-home
home buyers and operates in 21 states: Arizona, California, Colorado,
Connecticut, Delaware, Florida, Illinois, Massachusetts, Maryland, Michigan,
Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Rhode
Island, South Carolina, Texas, Virginia and West Virginia.
Toll Brothers builds luxury single-family detached and attached home
communities, master planned luxury residential resort-style golf communities and
urban low-, mid- and high-rise communities, principally on land it develops and
improves. The Company operates its own architectural, engineering, mortgage,
title, land development and land sale, golf course development and management,
home security, landscape, cable T.V. and broadband Internet delivery
subsidiaries. The Company also operates its own lumber distribution, and house
component assembly and manufacturing operations.
*more*
Toll Brothers, a FORTUNE 500 Company, is the only publicly traded national home
building company to have won all three of the industry's highest honors:
America's Best Builder from the National Association of Home Builders, the
National Housing Quality Award and Builder of the Year. Toll Brothers proudly
supports the communities in which it builds; among other philanthropic pursuits,
the Company now sponsors the Toll Brothers - Metropolitan Opera International
Radio Network, bringing opera to neighborhoods throughout the world. For more
information, visit tollbrothers.com.
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.
*more*
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
October 31,
-----------------------------
2005 2004
---------- ----------
ASSETS
Cash and cash equivalents $ 689,219 $ 465,834
Marketable securities 115,029
Inventory 5,068,624 3,878,260
Property, construction and office equipment, net 79,524 52,429
Receivables, prepaid expenses and other assets 185,620 146,212
Mortgage loans receivable 99,858 99,914
Customer deposits held in escrow 68,601 53,929
Investments in and advances to
unconsolidated entities 152,394 93,971
---------- ----------
$6,343,840 $4,905,578
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Loans payable $ 250,552 $ 340,380
Senior notes 1,140,028 845,665
Senior subordinated notes 350,000 450,000
Mortgage company warehouse loan 89,674 92,053
Customer deposits 415,602 291,424
Accounts payable 256,557 181,972
Accrued expenses 791,769 574,202
Income taxes payable 282,147 209,895
---------- ----------
Total liabilities 3,576,329 2,985,591
---------- ----------
Minority interest: 3,940
Stockholders' equity:
Preferred stock, none issued
Common stock 1,563 770
Additional paid-in capital 243,232 200,938
Retained earnings 2,576,061 1,770,730
Unearned compensation (686)
Treasury stock (56,599) (52,451)
---------- ----------
Total stockholders' equity 2,763,571 1,919,987
---------- ----------
$ 6,343,840 $4,905,578
========== ==========
*more*
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Twelve months ended Three months ended
October 31, October 31,
----------------------------- ---------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Home sales $5,759,301 $3,839,451 $2,007,707 $1,444,301
Land sales 34,124 22,491 12,516 1,553
---------- ---------- ---------- ----------
5,793,425 3,861,942 2,020,223 1,445,854
---------- ---------- ---------- ----------
Cost of revenues:
Home sales 3,902,697 2,747,274 1,362,812 1,030,739
Land sales 24,416 15,775 8,709 1,460
Interest 125,283 93,303 39,751 33,333
---------- ---------- ---------- ----------
4,052,396 2,856,352 1,411,272 1,065,532
---------- ---------- ---------- ----------
Selling, general and
administrative expenses 482,786 381,080 133,080 110,925
---------- ---------- ---------- ----------
Income from operations 1,258,243 624,510 475,871 269,397
Other:
Equity earnings from unconsolidated
entities 27,744 15,731 18,205 8,786
Interest and other 41,197 15,420 14,622 7,937
Expenses related to early
retirement of debt (4,056) (8,229)
---------- ---------- ---------- ----------
Income before income taxes 1,323,128 647,432 508,698 286,120
Income taxes 517,018 238,321 198,446 105,546
---------- ---------- ---------- ----------
Net income $ 806,110 $ 409,111 $310,252 $ 180,574
========== ========== ========== ==========
Earnings per share:
Basic $ 5.23 $ 2.75 $ 1.99 $ 1.21
========== ========== ========== ==========
Diluted $ 4.78 $ 2.52 $ 1.84 $ 1.11
========== ========== ========== ==========
Weighted average number of shares:
Basic 154,272 148,646 155,536 149,389
Diluted 168,552 162,330 168,930 162,992
Supplemental data:
Interest incurred 115,437 113,448 28,368 28,311
Depreciation and amortization
24,317 21,767 7,111 10,536
*more*
THREE MONTHS ENDED OCTOBER 31, UNITS $ (MILL)
CLOSINGS 2005 2004 2005 2004
- ------------------------------- ---------- ---------- --------- ---------
NORTHEAST
(CT, MA, NH, NJ, NY, RI) 450 361 274.0 193.7
MID-ATLANTIC (DE, MD, PA, VA) 982 843 656.6 462.6
MIDWEST (IL, MI, OH) 213 171 147.9 100.1
SOUTHEAST (FL, NC, SC) 444 254 229.2 123.7
SOUTHWEST (AZ, CO, NV, TX) 506 358 352.5 213.9
WEST COAST (CA) 362 408 347.5 350.3
----- ----- ------- -------
TOTAL CONSOLIDATED ENTITIES 2,957 2,395 2,007.7 1,444.3
UNCONSOLIDATED ENTITIES 123 89 63.4 36.9
----- ----- ------- --------
3,080 2,484 2,071.1 1,481.2
===== ===== ======= ========
CONTRACTS
- -------------------------------
NORTHEAST
(CT, MA, NH, NJ, NY, RI) 400 338 263.9 197.2
MID-ATLANTIC (DE, MD, PA, VA) 703 783 485.1 514.3
MIDWEST (IL, MI, OH) 151 159 108.6 105.3
SOUTHEAST (FL, NC, SC) 455 284 254.4 165.6
SOUTHWEST (AZ, CO, NV, TX) 436 431 352.0 288.9
WEST COAST (CA) 127 253 124.6 261.1
----- ----- ------- --------
TOTAL CONSOLIDATED ENTITIES 2,272 2,248 1,588.6 1,532.4
UNCONSOLIDATED ENTITIES 154 91 98.4 41.3
----- ----- ------- --------
2,426 2,339 1,687.0 1,573.7
===== ===== ======= ========
UNITS $ (MILL)
BACKLOG AT OCTOBER 31, 2005 2004 2005 2004
- ------------------------------- ---------- ---------- ---------- ----------
NORTHEAST
(CT, MA, NH, NJ, NY, RI) 1,458 1,028 956.3 599.5
MID-ATLANTIC (DE, MD, PA, VA) 2,360 2,245 1,579.4 1,372.4
MIDWEST (IL, MI, OH) 443 446 319.0 284.3
SOUTHEAST (FL, NC, SC) 2,092 726 1,175.2 463.5
SOUTHWEST (AZ, CO, NV, TX) 1,856 1,351 1,314.6 849.7
WEST COAST (CA) 596 913 670.1 864.5
----- ----- ------- -------
TOTAL CONSOLIDATED 8,805 6,709 6,014.6 4,433.9
ENTITIES UNCONSOLIDATED ENTITIES 268 174 184.4 75.8
----- ----- ------- -------
9,073 6,883 6,199.0 4,509.7
===== ===== ======= =======
*more*
TWELVE MONTHS ENDED OCTOBER 31, UNITS $ (MILL)
CLOSINGS 2005 2004 2005 2004
- ------------------------------- ---------- ---------- --------- ---------
NORTHEAST
(CT, MA, NH, NJ, NY, RI) 1,243 1,016 721.6 572.9
MID-ATLANTIC (DE, MD, PA, VA) 3,290 2,398 2,056.6 1,252.5
MIDWEST (IL, MI, OH) 627 478 404.7 274.0
SOUTHEAST (FL, NC, SC, TN) 1,032 772 558.0 366.7
SOUTHWEST (AZ, CO, NV, TX) 1,420 902 936.4 527.9
WEST COAST (CA) 1,157 1,061 1,082.0 845.5
------ ----- ------- -------
TOTAL CONSOLIDATED ENTITIES 8,769 6,627 5,759.3 3,839.5
UNCONSOLIDATED ENTITIES 330 130 153.9 52.4
------ ----- ------- -------
9,099 6,757 5,913.3 3,891.9
====== ===== ======= =======
CONTRACTS
- -------------------------------
NORTHEAST
(CT, MA, NH, NJ, NY, RI) 1,673 1,112 1,078.5 653.0
MID-ATLANTIC (DE, MD, PA, VA) 3,405 2,969 2,263.6 1,787.8
MIDWEST (IL, MI, OH) 624 630 439.3 395.2
SOUTHEAST (FL, NC, SC, TN) 1,905 1,087 1,082.1 611.8
SOUTHWEST (AZ, CO, NV, TX) 1,925 1,544 1,401.4 980.7
WEST COAST (CA) 840 1,342 887.6 1,213.0
------ ----- ------- -------
TOTAL CONSOLIDATED ENTITIES 10,372 8,684 7,152.5 5,641.5
UNCONSOLIDATED ENTITIES 424 289 262.5 123.5
------ ----- ------- -------
10,796 8,973 7,415.0 5,765.0
====== ===== ======= =======
###