TOL

Toll Brothers Inc.

Toll Brothers, Inc., a Delaware corporation formed in May 1986, began doing business through predecessor entities in 1967. When this report uses the words “we,” “us,” and “our,” it refers to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires.

We design, build, market and arrange financing for single-family detached and attached homes in luxury residential communities. We are also involved, directly and through joint ventures, in projects where we are building, or converting existing rental apartment buildings into, high-, mid- and low-rise luxury homes. We cater to move-up, empty-nester, active-adult, age-qualified and second-home buyers in 21 states of the United States. In the five years ended October 31, 2009, we delivered 32,189 homes from 604 communities, including 2,965 homes from 318 communities in fiscal 2009. Included in the five-year deliveries are 424 units that were delivered in four communities where we used the percentage of completion accounting method to recognize revenues and cost of revenues.

Our traditional, single-family communities are generally located on land we have either acquired and developed or acquired fully approved and, in some cases, improved. We also operate through a number of joint ventures. Currently, we operate in the major suburban and urban residential areas of:


•the Philadelphia, Pennsylvania metropolitan area

•the Lehigh Valley area of Pennsylvania

•central and northern New Jersey

•the Virginia and Maryland suburbs of Washington, D.C.

•the Baltimore, Maryland metropolitan area

•the Eastern Shore of Maryland and Delaware

•the Richmond, Virginia metropolitan area

•the Boston, Massachusetts metropolitan area

•Fairfield, Hartford and New Haven Counties, Connecticut

•Westchester, Dutchess, Ulster and Saratoga Counties, New York

•the boroughs of Manhattan, Brooklyn and Queens in New York City

•the Los Angeles, California metropolitan area

•the San Francisco Bay, Sacramento and San Jose areas of northern California

•the Palm Springs, California area

•the Phoenix, Arizona metropolitan area

•the Raleigh and Charlotte, North Carolina metropolitan areas

•the Dallas, Austin, San Antonio and Houston, Texas metropolitan areas

•the southeast and southwest coasts and the Jacksonville and Orlando areas of Florida

•the Atlanta, Georgia metropolitan area

•the Las Vegas and Reno, Nevada metropolitan areas

•the Detroit, Michigan metropolitan area

•the Chicago, Illinois metropolitan area

•the Denver, Colorado metropolitan area

•the Hilton Head area of South Carolina

•the Minneapolis/St. Paul, Minnesota metropolitan area, and

•the Martinsburg, West Virginia area.

We continue to explore additional geographic areas and markets for expansion, as appropriate.

We operate our own land development, architectural, engineering, mortgage, title, landscaping, lumber distribution, house component assembly, and manufacturing operations. We also develop, own and operate golf courses and country clubs associated with several of our master planned communities.

Our Homes

In most of our single-family detached home communities, we offer at least four different house floor plans, each with several substantially different architectural styles. In addition, the exterior of each basic floor plan may be varied further by the use of stone, stucco, brick or siding. Our traditional attached home communities generally offer several different floor plans with two, three or four bedrooms.

We offer some of the same basic home designs in similar communities. However, we are continuously developing new designs to replace or augment existing ones to ensure that our homes reflect current consumer tastes. We use our own architectural staff, and also engage unaffiliated architectural firms, to develop new designs. During the past year, we introduced 14 new single-family detached models, 16 new single-family attached models and 2 new condominium models.

Land Policy

Before entering into an agreement to purchase a land parcel, we complete extensive comparative studies and analyses on detailed internally-designed forms that assist us in evaluating the acquisition. Historically, we have attempted to enter into option agreements to purchase land for future communities. However, in order to obtain better terms or prices, or due to competitive pressures, we acquire property outright from time to time. We have also entered into several joint ventures with other builders or developers to develop land for the use of the joint venture participants or for sale to outside third parties. In addition, we have, at times, acquired the underlying mortgage on a property and subsequently obtained title to that property.

Community Development

We expend considerable effort in developing a concept for each community, which includes determining the size, style and price range of the homes, the layout of the streets and individual home sites, and the overall community design. After the necessary governmental subdivision and other approvals have been obtained, which may take several years, we improve the land by: clearing and grading it; installing roads, underground utility lines and recreational amenities; erecting distinctive entrance structures; and staking out individual home sites.

Each community is managed by a project manager. Working with sales staff, construction managers, marketing personnel and, when required, other in-house and outside professionals such as accountants, engineers, architects and legal counsel, a project manager is responsible for supervising and coordinating the various developmental steps such as land approval, land acquisition, marketing, selling, construction and customer service, and the monitoring of the progress of work and controlling expenditures. Major decisions regarding each community are made in consultation with senior members of our management team.

Employees

At October 31, 2009, we employed 2,066 persons full-time. At October 31, 2009, we were subject to one collective bargaining agreement that covered approximately 2% of our employees. We consider our employee relations to be good.