EXHIBIT 99.2
FINANCIAL GUIDANCE
In our fourth quarter 2005 Earnings Conference Call to be held at 2:00 P.M.
(EDT) on December 8, 2005, we will provide the following guidance regarding our
expected results of operations for our fiscal year ending October 31, 2006.
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, 2006.
For ease of reference, we have included the actual results for fiscal 2005. The
columns designated as "Low" and "High" represents the low and high ends of the
ranges for unit deliveries of homes, average delivered price of homes, land
sales revenues, percentage of completion revenues, cost of revenue by line as a
percentage of the applicable revenue and selling, general and administrative
expenses ("SG&A") as a percentage of total revenues expected for fiscal 2006. 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 OF HOMES, AVERAGE DELIVERED PRICE OF HOMES, LAND SALES AND
PERCENTAGE OF COMPLETION REVENUES IN FISCAL 2006 ARE EXPECTED TO BE:
REVENUES
HOME SALES
UNIT DELIVERIES
2006 Estimated 2005
---------------------------------- -----------------
Low High Actual
---------------- ---------------- -----------------
Quarter ending January 31 1,925 2,025 1,590
Quarter ending April 30 2,000 2,150 1,912
Quarter ending July 31 2,425 2,625 2,310
Quarter ending October 31 3,150 3,400 2,957
Year 9,500 10,200 8,769
AVERAGE DELIVERED PRICE
2006 Estimated 2005
---------------------------------- -----------------
Low High Actual
---------------- ---------------- -----------------
Quarter ending January 31 $680,000 $690,000 $622,074
Quarter ending April 30 $660,000 $670,000 $641,212
Quarter ending July 31 $670,000 $680,000 $665,151
Quarter ending October 31 $670,000 $680,000 $678,968
Year $670,000 $680,000 $656,780
LAND SALES (IN THOUSANDS)
2006 Estimated 2005
---------------------------------- -----------------
Low High Actual
---------------- ---------------- -----------------
Quarter ending January 31 $3,000 $3,000 $1,225
Quarter ending April 30 $2,000 $2,000 $9,800
Quarter ending July 31 $2,000 $2,000 $10,583
Quarter ending October 31 $2,000 $2,000 $12,516
Year $9,000 $9,000 $34,124
PERCENTAGE OF COMPLETION REVENUES (IN THOUSANDS)
2006 Estimated
---------------- ---------------
Low High
---------------- ---------------
Quarter ended January 31 $50,000 $55,000
Quarter ended April 30 $75,000 $80,000
Quarter ended July 31 $90,000 $95,000
Quarter ended October 31 $65,000 $70,000
Year $280,000 $300,000
COST OF REVENUES FOR HOME SALES, LAND SALES AND PERCENTAGE OF COMPLETION
REVENUES AS A PERCENTAGE OF THE APPLICABLE REVENUES AND INTEREST AS A PERCENTAGE
OF TOTAL REVENUES IN FISCAL 2006 ARE EXPECTED TO BE:
COST OF REVENUES
HOME SALES
2006 Estimated 2005
----------------------------------- ----------------
Low High Actual
----------------- ----------------- ----------------
Quarter ending January 31 69.50% 69.30% 69.30%
Quarter ending April 30 68.80% 68.60% 67.75%
Quarter ending July 31 69.00% 68.80% 66.63%
Quarter ending October 31 70.20% 70.00% 67.88%
Year 69.50% 69.30% 67.76%
LAND SALES
2006 Estimated 2005
----------------------------------- ----------------
Low High Actual
----------------- ----------------- ----------------
Quarter ending January 31 90.00% 90.00% 63.59%
Quarter ending April 30 90.00% 90.00% 54.24%
Quarter ending July 31 90.00% 90.00% 90.82%
Quarter ending October 31 90.00% 90.00% 69.58%
Year 90.00% 90.00% 71.60%
PERCENTAGE OF COMPLETION
2006 Estimated
-----------------------------------
Low High
----------------- -----------------
Quarter ending January 31 80.00% 80.00%
Quarter ending April 30 80.00% 80.00%
Quarter ending July 31 77.50% 77.50%
Quarter ending October 31 72.50% 72.50%
Year 77.50% 77.50%
INTEREST
2006 Estimated 2005
----------------------------------- ----------------
Low High Actual
----------------- ----------------- ----------------
Quarter ending January 31 2.10% 2.10% 2.20%
Quarter ending April 30 2.10% 2.10% 2.28%
Quarter ending July 31 2.10% 2.10% 2.30%
Quarter ending October 31 2.10% 2.10% 1.97%
Year 2.10% 2.10% 2.16%
INCOME FROM UNCONSOLIDATED ENTITIES FOR FISCAL 2006 IS EXPECTED TO BE
APPROXIMATELY:
2006 2005
Estimated Actual
----------------- ----------------
(in thousands)
Quarter ending January 31 $15,000 $1,935
Quarter ending April 30 $15,000 $3,373
Quarter ending July 31 $15,000 $4,231
Quarter ending October 31 $15,000 $18,205
Year $60,000 $27,744
INTEREST AND OTHER INCOME FOR FISCAL 2006 IS EXPECTED TO BE APPROXIMATELY:
2006 2005
Estimated Actual
----------------- ----------------
(in thousands)
Quarter ending January 31 $7,300 $6,883
Quarter ending April 30 $5,700 $9,109
Quarter ending July 31 $7,000 $10,583
Quarter ending October 31 $8,100 $14,622
Year $28,100 $41,197
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AS A PERCENTAGE OF TOTAL REVENUES
IN FISCAL 2006 ARE EXPECTED TO BE:
2006 Estimated
------------------------------------ 2005
Low High Actual
----------------- ---------------- ----------------
Quarter ending January 31 10.90% 10.80% 10.81%
Quarter ending April 30 10.40% 10.30% 9.42%
Quarter ending July 31 9.10% 9.00% 8.16%
Quarter ending October 31 8.10% 8.00% 6.59%
Year 9.40% 9.30% 8.33%
Our effective income tax rate for fiscal 2005 was 39.1% of income before income
taxes. Our effective income tax rate is expected to be approximately 39.0% of
income before income taxes for fiscal 2006.
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 2006, we expect
that options will be exercised and stock will be issued under our Cash Bonus
Program, and we will continue to repurchase shares under our share repurchase
program, the number of shares used to determine earnings per share will increase
in fiscal 2006 as compared to 2005. We estimate that the share count for
determining diluted earnings per share for fiscal 2006 will be:
2006 2005
Estimated Actual
---------------- ----------------
(in thousands)
Quarter ending January 31 167,500 166,084
Quarter ending April 30 169,000 169,352
Quarter ending July 31 170,000 169,483
Quarter ending October 31 170,500 168,930
Year 169,000 168,552
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.