1. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
6 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
x
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2006
OR
x TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ to _____________
Commission file number 1-9186
TOLL BROTHERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2416878
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
250 Gibraltar Road, Horsham, Pennsylvania 19044
(Address of principal executive offices) (Zip Code)
(215) 938-8000
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes 6 No x
x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-
accelerated filer. See definition of ‘‘an accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer 6 Accelerated filer x Non-accelerated filer x
x
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act)
Yes x No 6
x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date:
At March 6, 2006, there were approximately 154,786,000 shares of Common Stock, $.01 par value,
outstanding.

2. TOLL BROTHERS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
Statement on Forward-Looking Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART I. Financial Information
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets at January 31, 2006 (Unaudited)
and October 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Income (Unaudited) For the
Three Months ended January 31, 2006 and 2005 . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows (Unaudited) For the
Three Months ended January 31, 2006 and 2005 . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . 5
ITEM 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . 26
ITEM 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PART II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds . . . . . . . . . . 28
Item 3. Defaults upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . 28
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

3. STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein and in our other 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 our anticipated operating results, financial resources, changes in
revenues, changes in profitability, interest expense, growth and expansion, anticipated income to be realized
from our investments in unconsolidated entities, 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 prices 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. In some cases you can identify those so called
forward-looking statements by words such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘anticipate,’’
‘‘believe,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘potential,’’ ‘‘project,’’ ‘‘intend,’’ ‘‘can,’’ ‘‘could,’’ ‘‘might,’’ or ‘‘continue’’
or the negative of those words or other comparable words. 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 our other 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 we operate, 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. Additional
information concerning potential factors that we believe could cause our actual results to differ materially
from expected and historical results is included in Item 1A ‘‘Risk Factors’’ of our Annual Report on Form
10-K for the fiscal year ended October 31, 2005. Moreover, the financial guidance contained herein related to
our expected results of operations for fiscal 2006 reflects our expectations as of February 23, 2006 and is not
being reconfirmed or updated by this Quarterly Report on Form 10-Q.
If one or more of the assumptions underlying our forward-looking statements proves incorrect, then our
actual results, performance or achievements could differ materially from those expressed in, or implied by the
forward-looking statements contained in this report. Therefore, we caution you not to place undue reliance on
our forward-looking statements. This statement is provided as permitted by the Private Securities Litigation
Reform Act of 1995.
When this report uses the words ‘‘we,’’ ‘‘us,’’ and ‘‘our,’’ they refer to Toll Brothers, Inc. and its
subsidiaries, unless the context otherwise requires. Reference herein to ‘‘fiscal 2006,’’ ‘‘fiscal 2005,’’ and
‘‘fiscal 2004,’’ refer to our fiscal year ending October 31, 2006, and our fiscal years ended October 31, 2005
and October 31, 2004.
1

4. PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
January 31, October 31,
2006 2005
(Unaudited)
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . $ 363,563 $ 689,219
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . 5,531,129 5,068,624
Property, construction and office equipment, net . . . . . . . . .. . .. . . .. . . .. . . .. . 88,444 79,524
Receivables, prepaid expenses and other assets . . . . . . . . . .. . .. . . .. . . .. . . .. . 178,008 185,620
Contracts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . 57,569
Mortgage loans receivable . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . 49,017 99,858
Customer deposits held in escrow . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . 85,126 68,601
Investments in and advances to unconsolidated entities . . . .. . .. . . .. . . .. . . .. . 206,222 152,394
$6,559,078 $6,343,840
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Loans payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . $ 388,847 $ 250,552
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 1,140,312 1,140,028
Senior subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 350,000 350,000
Mortgage company warehouse loan . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 38,406 89,674
Customer deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 432,608 415,602
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 226,763 256,557
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 735,641 791,769
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . 300,610 282,147
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,613,187 3,576,329
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,940 3,940
Stockholders’ equity
Preferred stock, none issued
Common stock, 156,292 issued at January 31, 2006 and October 31, 2005 . . . . . 1,563 1,563
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228,110 242,546
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,739,911 2,576,061
Treasury stock, at cost – 784 shares and 1,349 shares at January 31, 2006 and
October 31, 2005, respectively. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,633) (56,599)
Total stockholders’ equity 2,941,951 2,763,571
$6,559,078 $6,343,840
See accompanying notes
2

5. TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended January 31,
2006 2005
Revenues:
Traditional home sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,278,709 $989,097
Percentage of completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,569
Land sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,678 1,225
1,340,956 990,322
Cost of revenues:
Traditional home sales . . . . . . .. . .. . . .. . . .. . . .. . . .. . . .. . .. . . .. . . . 884,091 685,493
Percentage of completion . . . . .. . .. . . .. . . .. . . .. . . .. . . .. . .. . . .. . . . 47,346
Land sales . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . . .. . . .. . .. . . .. . . . 3,836 779
Interest. . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . . .. . . .. . . .. . .. . . .. . . . 28,754 21,812
964,027 708,084
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,178 107,065
Income from operations . . . . . . . . . . . . . . . . .......................... 237,751 175,173
Other:
Equity earnings in unconsolidated entities . . . .. . . .. . . .. . . .. . .. . . .. . . . 16,569 1,935
Interest and other . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . . 11,327 6,883
Income before income taxes . . . . . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . . 265,647 183,991
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . . 101,797 73,798
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 163,850 $110,193
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.06 $ 0.73
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.98 $ 0.66
Weighted average number of shares:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,076 151,653
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,027 166,084
See accompanying notes
3

6. TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three months ended January 31,
2006 2005
Cash flow from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 163,850 $ 110,193
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,908 4,251
Amortization of initial benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 449 950
Share-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,075
Equity earnings in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . (16,569) (1,935)
Distributions from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . 2,643 495
Deferred tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,625 15,366
Provision for inventory write-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,129 2,343
Changes in operating assets and liabilities
Increase in inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (250,124) (222,058)
Origination of mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (176,908) (181,558)
Sale of mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,749 207,077
Increase in contracts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (57,569)
Decrease (increase) in receivables, prepaid expenses and other assets . . . 8,016 (7,626)
Increase in customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 22,311
(Decrease) increase in accounts payable and accrued expenses . . . . . . . . (85,441) 20,708
Increase (decrease) in current income taxes payable . . . . . . . . . . . . . . . . 19,173 (14,568)
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . (137,513) (44,051)
Cash flow from investing activities:
Purchase of property and equipment, net. . . . . . . . . . . . .. . . .. . .. . . .. . . . (14,264) (9,137)
Purchases of marketable securities . . . . . . . . . . . . . . . . .. . . .. . .. . . .. . . . (985,820) (1,039,017)
Sale of marketable securities . . . . . . . . . . . . . . . . . . . . .. . . .. . .. . . .. . . . 985,820 1,009,257
Investments in and advances to unconsolidated entities . .. . . .. . .. . . .. . . . (71,369) (16,214)
Acquisition of joint venture interest . . . . . . . . . . . . . . . .. . . .. . .. . . .. . . . (40,751)
Distributions from unconsolidated entities . . . . . . . . . . . .. . . .. . .. . . .. . . . 2,512 1,755
Net cash used in investing activities. ......................... (123,872) (53,356)
Cash flow from financing activities:
Proceeds from loans payable. . . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . . 258,712 246,167
Principal payments of loans payable . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . . (307,180) (289,528)
Proceeds from stock based benefit plans . . . . .. . . .. . . .. . . .. . .. . . .. . . . 5,972 15,776
Purchase of treasury stock . . . . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . . (21,775) (220)
Net cash used in financing activities . .. . . .. . . .. . . .. . .. . . .. . . . (64,271) (27,805)
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . (325,656) (125,212)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 689,219 465,834
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 363,563 $ 340,622
See accompanying notes
4

7. TOLL BROTHERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Toll
Brothers, Inc. (the ‘‘Company’’), a Delaware corporation, and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Investments in 50% or less owned partnerships
and affiliates are accounted for using the equity method unless it is determined that the Company has
effective control of the entity, in which case the entity would be consolidated.
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange Commission (‘‘SEC’’) for interim
financial information. The October 31, 2005 balance sheet amounts and disclosures included herein have been
derived from our October 31, 2005 audited financial statements. Since the accompanying condensed
consolidated financial statements do not include all the information and footnotes required by U.S. generally
accepted accounting principles for complete financial statements, we suggest that they be read in conjunction
with the consolidated financial statements and notes thereto included in our October 31, 2005 Annual Report
on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial
statements include all adjustments, which are of a normal recurring nature, necessary to present fairly our
financial position as of January 31, 2006 and the results of our operations and cash flows for the three months
ended January 31, 2006 and 2005. The results of operations for such interim periods are not necessarily
indicative of the results to be expected for the full year.
Recent Accounting Pronouncements
On December 16, 2004, the Financial Accounting Standards Board (‘‘FASB’’) issued Statement of
Financial Accounting Standards (‘‘SFAS’’) No. 123 (revised 2004), ‘‘Share-Based Payment’’ (‘‘SFAS 123R’’).
In April 2005, the SEC adopted a rule permitting implementation of SFAS 123R at the beginning of the fiscal
year commencing after June 15, 2005. Under the provisions of SFAS 123R, an entity is required to treat all
stock-based compensation as a cost that is reflected in the financial statements. The Company was required to
adopt SFAS 123R beginning in its fiscal quarter ended January 31, 2006. Under the provisions of SFAS
123R, the Company had the choice of adopting the fair-value-based method of expensing of stock options
using (a) the ‘‘modified prospective method’’, whereby the Company recognizes the expense only for periods
beginning after October 31, 2005, or (b) the ‘‘modified retrospective method’’, whereby the Company
recognizes the expense for all years and interim periods since the effective date of SFAS 123, or for only
those interim periods during the year of initial adoption of SFAS 123R. The Company adopted SFAS 123R
using the modified prospective method. See Note 7, ‘‘Stock Based Benefit Plans’’, for information regarding
expensing of stock options in fiscal 2006 and for pro forma information regarding the Company’s expensing
of stock options for fiscal 2005.
Stock Split
On June 9, 2005, the Company’s Board of Directors declared a two-for-one split of the Company’s
common stock in the form of a stock dividend to stockholders of record on June 21, 2005. The additional
shares of stock were distributed as of the close of business on July 8, 2005. All share and per share
information has been adjusted and restated to reflect this split.
Acquisition
In January 2004, the Company entered into a joint venture in which it had a 50% interest with an
unrelated party to develop Maxwell Place, an approximately 800-unit luxury condominium community in
Hoboken, New Jersey. In November 2005, the Company acquired its partner’s 50% equity ownership interest
in this joint venture. As a result of the acquisition, the Company now owns 100% of the joint venture and it
5

8. has been included as a consolidated subsidiary of the Company as of the acquisition date. As of the
acquisition date, the joint venture had open contracts of sale to deliver 165 units with a sales value of
approximately $128.3 million. The Company’s investment in and subsequent purchase of the partner’s interest
in the joint venture is not material to the financial position of the Company. The Company is recognizing
revenue and costs related to this project using the percentage of completion method of accounting.
Reclassification
The presentation of certain prior year amounts have been reclassified to conform to the fiscal 2006
presentation.
2. Inventory
Inventory consisted of the following (amounts in thousands):
January 31, October 31,
2006 2005
Land and land development costs . . . . . . . . . . . . . .. . .. . . .. . . $2,033,897 $1,717,825
Construction in progress . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . 2,849,308 2,709,795
Sample homes and sales offices . . . . . . . . . . . . . . .. . .. . . .. . . 207,770 202,286
Land deposits and costs of future development . . . .. . .. . . .. . . 428,019 427,192
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . 12,135 11,526
$5,531,129 $5,068,624
Construction in progress includes the cost of homes under construction, land and land development costs
and the carrying costs of lots that have been substantially improved.
The Company capitalizes certain interest costs to inventory during the development and construction
period. Capitalized interest is charged to cost of revenues when the related inventory is delivered for
traditional home sales or when the related inventory is charged to cost of revenues under percentage of
completion accounting. Interest incurred, capitalized and expensed for the three-month periods ended
January 31, 2006 and 2005 is summarized as follows (amounts in thousands):
2006 2005
Interest capitalized, beginning of period . . . .. . . .. . . .. . . .. . . .. . $162,672 $173,442
Interest incurred . . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . . .. . . .. . 32,436 29,150
Capitalized interest in inventory acquired . . .. . . .. . . .. . . .. . . .. . 6,679
Interest expensed to cost of revenues . . . . . .. . . .. . . .. . . .. . . .. . (28,754) (21,812)
Write-off to other . . . . . . . . . . . . . . . . . . . .. . . .. . . .. . . .. . . .. . (171) (107)
Interest capitalized, end of period. . . . . . . . .. . . .. . . .. . . .. . . .. . $172,862 $180,673
Interest included in cost of revenues for the three-month periods ended January 31, 2006 and 2005 were
(amounts in thousands):
2006 2005
Traditional home sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,830 $21,758
Percentage of completion revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,417
Land sales revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 54
$28,754 $21,812
The Company has evaluated its land purchase contracts to determine if the selling entity is a variable
interest entitiy (‘‘VIE’’) and if it is, whether the Company is the primary beneficiary of the entity. The
Company does not possess legal title to the land and its risk is generally limited to deposits paid to the seller.
The creditors of the seller generally have no recourse against the Company. At January 31, 2006 and
6

9. October 31, 2005, the Company had determined that it was not the primary beneficiary of any VIE related to
its land purchase contracts and had not recorded any land purchase contracts as inventory.
3. Investments in and Advances to Unconsolidated Entities
The Company has investments in and advances to several joint ventures with unrelated parties to develop
land. Some of these joint ventures develop land for the sole use of the venture partners, including the
Company, and others develop land for sale to the venture partners and to unrelated builders. The Company
recognizes its share of earnings from the sale of home sites to other builders. The Company does not
recognize earnings from home sites it purchases from the joint ventures, but instead reduces its cost basis in
these home sites by its share of the earnings on the home sites. At January 31, 2006, the Company had
approximately $144.8 million invested in or advanced to these joint ventures and was committed to
contributing additional capital in an aggregate amount of approximately $152.1 million (net of the Company’s
$129.6 million of loan guarantees related to two of the joint ventures’ loans) if required by the joint ventures.
At January 31, 2006, two of the joint ventures had an aggregate of $1.03 billion of loan commitments, and
had approximately $810.0 million borrowed against the commitments, of which the Company’s guarantee of
its pro-rata share of the borrowings was $102.1 million.
In October 2004, the Company entered into a joint venture in which it has a 50% interest with an
unrelated party to convert a 525-unit apartment complex, The Hudson Tea Buildings, located in Hoboken,
New Jersey, into luxury condominium units. At January 31, 2006, the Company had investments in and
advances to the joint venture of $35.4 million, and was committed to making up to $1.5 million of additional
investments in and advances to the joint venture.
In November 2005, the Company entered into a joint venture in which it has a 50% interest with an
unrelated party to develop two luxury condominium buildings in Brooklyn, New York. At January 31, 2006,
the Company had investments in and advances to the joint venture of $11.3 million, and was committed to
making up to $20.5 million of additional investments in and advances to the joint venture if required by the
joint venture. At January 31, 2006, the joint venture had a $254.2 million loan commitment and had
approximately $85.7 million borrowed against the commitment of which the Company’s guaranteed
$18.0 million.
In fiscal 2005, the Company, together with the Pennsylvania State Employees Retirement System
(‘‘PASERS’’), formed Toll Brothers Realty Trust Group II (‘‘Trust II’’) to be in a position to take advantage
of commercial real estate opportunities. Trust II is owned 50% by the Company and 50% by PASERS. At
January 31, 2006, the Company had an investment of $8.0 million in Trust II. In addition, the Company and
PASERS each entered into subscription agreements that expire in September 2007, whereby each agreed to
invest additional capital in an amount not to exceed $11.1 million if required by Trust II. The Company
provides development and management services to Trust II and recognized fees for such services under the
terms of various agreements in the amounts of $.3 million in the three months ended January 31, 2006. Prior
to the formation of Trust II, the Company used Toll Brothers Realty Trust Group (‘‘Trust’’) to invest in
commercial real estate opportunities.
The Trust, formed in 1998, is effectively owned one-third by the Company; one-third by Robert I. Toll,
Bruce E. Toll (and members of his family), Zvi Barzilay (and members of his family), Joel H. Rassman and
other members of the Company’s senior management; and one-third by PASERS (collectively, the
‘‘Shareholders’’). The Shareholders entered into subscription agreements whereby each group has agreed to
invest additional capital in an amount not to exceed $1.9 million if required by the Trust. The subscription
agreements expire in August 2006. At January 31, 2006, the Company had an investment of $6.5 million in
the Trust. The Company provides development, finance and management services to the Trust and recognized
fees under the terms of various agreements in the amounts of $.6 million and $.4 million in the three months
ended January 31, 2006 and 2005, respectively. The Company believes that the transactions between itself
and the Trust were on terms no less favorable than it would have agreed to with unrelated parties.
The Company’s investments in these entities are accounted for using the equity method.
7

10. 4. Accrued Expenses/ Warranty Costs
Accrued expenses at January 31, 2006 and October 31, 2005 consisted of the following (amounts in
thousands):
January 31, October 31,
2006 2005
Land, land development and construction costs . . .. . . .. . .. . . .. $333,815 $385,031
Compensation and employee benefit costs . . . . . . .. . . .. . .. . . .. 106,375 122,836
Insurance and litigation . . . . . . . . . . . . . . . . . . . . .. . . .. . .. . . .. 102,542 92,809
Warranty costs . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . .. . . .. 54,649 54,722
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . .. . . .. 36,795 34,431
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . .. . . .. 101,465 101,940
$735,641 $791,769
The Company accrues for the expected warranty costs at the time each home is closed and title and
possession have been transferred to the home buyer. Costs are accrued based upon historical experience.
Changes in the warranty accrual for the three-month periods ended January 31, 2006 and 2005 are as follows
(amounts in thousands):
2006 2005
Balance, beginning of period . . .. . . .. . . .. . . .. . .. . . .. . . .. . . .. . $54,722 $42,133
Additions . . . . . . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . .. . . .. . 8,531 6,682
Charges incurred . . . . . . . . . . . .. . . .. . . .. . . .. . .. . . .. . . .. . . .. . (8,604) (5,336)
Balance, end of period . . . . . . .. . . .. . . .. . . .. . .. . . .. . . .. . . .. . $54,649 $43,479
5. Employee Retirement Plan
In October 2004, the Company established an unfunded defined benefit retirement plan (the ‘‘Retirement
Plan’’) effective as of September 1, 2004, which covers a number of senior executives and a director of the
Company. For the three-month periods ended January 31, 2006 and 2005, the Company recognized the
following costs related to this plan (amounts in thousands):
2006 2005
Service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 67 $ 78
Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 194
Amortization of initial benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 449 950
$721 $1,222
The Company used a 5.65% and a 5.69% discount rate in its calculation of the present value of its
projected benefit obligations for fiscal 2006 and 2005, respectively.
6. Income Taxes
The Company’s estimated combined federal and state income tax rate for the three-month periods ended
January 31, 2006 and 2005 before providing for the effect of permanent book-tax differences (‘‘Base Rate’’)
was 39.1% and 38.5%, respectively. The effective tax rates for the three-month periods ended January 31,
2006 and 2005 were 38.3% and 40.1%, respectively.
For the three-month period ended January 31, 2006, the difference between the Company’s Base Rate
and effective tax rate was primarily due to the impact on the Company’s tax rate from tax-free income and
the manufacturing tax credit, offset, in part, by the non-deductible portion of stock option expense related to
incentive stock options.
For the three-month period ended January 31, 2005, the primary difference between the Company’s Base
Rate and effective tax rate was the effect of an adjustment due to the recomputation of the Company’s net
8

11. deferred tax liability of approximately $3.7 million resulting from the change in the Company’s Base Rate
from 37.0% at October 31, 2004 to 38.5% at January 31, 2005 offset, in part, by tax-free income.
7. Stock Based Benefit Plans
Prior to the adoption of SFAS 123R, the Company accounted for its stock option plans according to
Accounting Principles Board Opinion No. 25, ‘‘Accounting for Stock Issued to Employees.’’ Accordingly, no
compensation cost was recognized upon issuance or exercise of stock options in fiscal 2005. The Company
has developed a lattice model which it used for the fiscal 2006 and 2005 valuations. Prior to fiscal 2005, the
Company used the Black-Scholes pricing model to value stock options.
The fair value of each option award is estimated on the date of grant using a lattice-based option
valuation model that uses assumptions noted in the following table. The lattice-based option valuation models
incorporate ranges of assumptions for inputs; those ranges are disclosed in the table below. Expected
volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility
of the Company’s stock and other factors. The expected life of options granted is derived from the historical
exercise patterns and anticipated future patterns and represents the period of time that options granted are
expected to be outstanding; the range given below results from certain groups of employees exhibiting
different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S.
Treasury yield curve in effect at the time of grant.
2006 2005
Expected volatility . . . . . . . . . . . . . . . . . .. . . .. . . 36.33% – 38.28% 27.0% – 33.46%
Weighted-average volatility . . . . . . . . . . . .. . . .. . . 37.55% 31.31%
Risk-free interest rate . . . . . . . . . . . . . . . .. . . .. . . 4.38% – 4.51% 3.13% – 4.2%
Expected life (years) . . . . . . . . . . . . . . . . .. . . .. . . 4.11 – 9.07 2.8 – 9.07
Dividends . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . none none
Weighted-average grant date fair value
per share of options granted . . . . . . . .......... $15.30 $11.67
During the three-month period ended January 31, 2006, the Company recognized $11.0 million of
expense and an income tax benefit of $4.0 million related to options awards. The Company expects to
recognize approximately $26.8 million of expense and $9.2 million of income tax benefit for the full fiscal
2006 year related to option awards.
Had the Company adopted SFAS 123R as of November 1, 2004, pro forma income before taxes, income
taxes, net income and net income per share for the three-month period ended January 31, 2005 would have
been as follows (amounts in thousands, except per share amounts):
SFAS 123 R
As Reported Adjustment Pro Forma
Income before income taxes . . . . . . . . . . . . . . . . . . $183,991 $(6,025) $177,966
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,798 (1,853) 71,945
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,193 $(4,172) $106,021
Basic net income per share . . . . . . . . . . . . . . . . . . . $ .73 $ .70
Diluted net income per share . . . . . . . . . . . . . . . . . . $ .66 $ .64
8. Earnings per Share Information
Information pertaining to the calculation of earnings per share for the three-month periods ended
January 31, 2006 and 2005 are as follows (amounts in thousands):
2006 2005
Basic weighted-average shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,076 151,653
Common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,951 14,431
Diluted weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,027 166,084
9

12. 9. Stock Repurchase Program
In March 2003, the Company’s Board of Directors authorized the repurchase of up to 20 million shares
of its Common Stock, par value $.01, from time to time, in open market transactions or otherwise, for the
purpose of providing shares for its various employee benefit plans. At January 31, 2006, the number of shares
that the Company was authorized to repurchase was approximately 15.1 million shares.
10. Commitments and Contingencies
At January 31, 2006, the aggregate purchase price of land parcels under option, referred to herein as
‘‘land purchase contracts,’’ ‘‘options,’’ or ‘‘option agreements,’’ was approximately $4.71 billion (including
$1.16 billion of land to be acquired from joint ventures which the Company has invested in, made advances
to or made loan guarantees on behalf of), of which it had paid or deposited approximately $295.2 million.
The amounts included in the purchase price of such land parcels has not been reduced by any amounts the
Company has invested in or made advances to the joint ventures. The Company’s option agreements to
acquire the home sites do not typically require the Company to buy the home sites, although the Company
may, in some cases, forfeit any deposit balance outstanding if and at the time it terminates an option contract.
Of the $295.2 million the Company had paid or deposited on these purchase agreements at January 31, 2006,
$210.3 million was non-refundable. Any deposit in the form of a stand-by letter of credit is recorded as a
liability at the time the stand-by letter of credit is issued. Included in accrued liabilities is $84.0 million
representing the Company’s outstanding stand-by letters of credit issued in connection with its options to
purchase home sites.
At January 31, 2006, the Company had outstanding surety bonds amounting to approximately
$702.9 million, related primarily to its obligations to various governmental entities to construct improvements
in the Company’s various communities. The Company estimates that approximately $282.2 million of work
remains on these improvements. The Company has an additional $91.4 million of surety bonds outstanding
that guarantee other obligations of the Company. The Company does not believe it is likely that any
outstanding bonds will be drawn upon.
At January 31, 2006, the Company had agreements of sale outstanding to deliver 8,635 homes with an
aggregate sales value of approximately $6.0 billion of which the Company recognized $57.6 million of
revenues using percentage of completion accounting.
At January 31, 2006, the Company was committed to providing approximately $626.6 million of
mortgage loans to its home buyers and to others. All loans with committed interest rates are covered by
take-out commitments from third-party lenders, which minimize the Company’s interest rate risk. The
Company also arranges a variety of mortgages through programs that are offered to its home buyers through
outside mortgage lenders.
The Company has a $1.2 billion, unsecured revolving credit facility with 30 banks, which extends to
July 15, 2009. At January 31, 2006, interest was payable on borrowings under the facility at 0.625% (subject
to adjustment based upon the Company’s debt rating and leverage ratios) above the Eurodollar rate or at other
specified variable rates as selected by the Company from time to time. At January 31, 2006, the Company
had no outstanding borrowings against the facility and letters of credit of approximately $301.1 million were
outstanding under the facility. Under the terms of the revolving credit agreement, the Company is not
permitted to allow its maximum leverage ratio (as defined in the agreement) to exceed 2.00:1.00 and was
required to maintain a minimum tangible net worth (as defined in the agreement) of approximately
$1.70 billion at January 31, 2006. At January 31, 2006, the Company’s leverage ratio was approximately
.57:1.00 and its tangible net worth was approximately $2.90 billion. Based upon the minimum tangible net
worth requirement, the Company’s ability to pay dividends and repurchase its common stock was limited to
an aggregate amount of approximately $1.19 billion at January 31, 2006.
The Company is involved in various claims and litigation arising in the ordinary course of business. The
Company believes that the disposition of these matters will not have a material effect on the business or on
the financial condition of the Company.
10

13. 11. Supplemental Disclosure to Statements of Cash Flows
The following are supplemental disclosures to the statements of cash flows for the three months ended
January 31, 2006 and 2005 (amounts in thousands):
2006 2005
Cash flow information:
Interest paid, net of amount capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,602 $16,092
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,000 $73,000
Non-cash activity:
Cost of inventory acquired through seller financing . . . . . . . . . . . . . . . . . . . . . . . $ 46,120 $47,752
Income tax benefit related to exercise of employee stock options . . . . . . . . . . . . . $ 8,333 $32,500
Stock bonus awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,926 $30,396
Acquisition of joint venture assets and liabilities
Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $181,473
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,548
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,751
12. Supplemental Guarantor Information
Toll Brothers Finance Corp., a 100% owned, indirect subsidiary (the ‘‘Subsidiary Issuer’’) of the
Company, is the issuer of four series of senior notes aggregating $1.15 billion. The obligations of the
Subsidiary Issuer to pay principal, premiums, if any, and interest are guaranteed jointly and severally on a
senior basis by the Company and substantially all of its 100% owned home building subsidiaries (the
‘‘Guarantor Subsidiaries’’). The guarantees are full and unconditional. The Company’s non-home building
subsidiaries and certain home building subsidiaries (the ‘‘Non-Guarantor Subsidiaries’’) do not guarantee the
debt. 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
Subsidiary Issuer has not had and does not have any operations other than the issuance of the four series of
senior notes and the lending of the proceeds from the senior notes to subsidiaries of the Company.
Supplemental consolidating financial information of the Company, the Subsidiary Issuer, the Guarantor
Subsidiaries, the Non-Guarantor Subsidiaries and the eliminations to arrive at the Company on a consolidated
basis are as follows:
11

14. Condensed Consolidating Balance Sheet at January 31, 2006 ($ in thousands)
Toll Non-
Brothers, Subsidiary Guarantor Guarantor
Inc. Issuer Subsidiaries Subsidiaries Eliminations Consolidated
ASSETS
Cash and cash equivalents. . . . . . . .... 329,327 34,236 363,563
Inventory . . . . . . . . . . . . . . . . . . . .... 5,251,316 279,813 5,531,129
Property, construction and office
equipment, net . . . . . . . . . . . . . .... 78,986 9,458 88,444
Receivables, prepaid expenses and
other assets . . . . . . . . . . . . . . . . . . .. 5,386 113,114 89,383 (29,875) 178,008
Contracts receivable . . . . . . . . . . . . . .. 28,015 29,554 57,569
Mortgage loans receivable. . . . . . . . . .. 49,017 49,017
Customer deposits held in escrow . . . .. 62,115 23,011 85,126
Investments in and advances to
unconsolidated entities. . . . . . . . .... 206,222 206,222
Investments in and advances to
consolidated entities . . . . . . . . . . . . . 3,244,507 1,154,658 (1,485,357) (44,573) (2,869,235) —
3,244,507 1,160,044 4,583,738 469,899 (2,899,110) 6,559,078
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Loans payable . . . . . . . . . . . . . . . . . . 165,667 223,180 388,847
Senior notes . . . . . . . . . . . . . . . . . . . 1,140,312 1,140,312
Senior subordinated notes . . . . . . . . . 350,000 350,000
Mortgage company warehouse loan . . 38,406 38,406
Customer deposits . . . . . . . . . . . . . . . 409,597 23,011 432,608
Accounts payable . . . . . . . . . . . . . . . 221,913 4,850 226,763
Accrued expenses . . . . . . . . . . . . . . . 19,732 633,220 112,737 (30,048) 735,641
Income taxes payable . . . . . . . . . . . . 302,556 (1,946) 300,610
Total liabilities . . . . . . . . . . . . . . . 302,556 1,160,044 1,780,397 400,238 (30,048) 3,613,187
Minority interest . . . . . . . . . . . . . . . . . . 3,940 3,940
Stockholders’ equity
Common stock . . . . . . . . . . . .. . . .. 1,563 2,003 (2,003) 1,563
Additional paid-in capital . . . .. . . . . 228,110 3,775 2,734 (6,509) 228,110
Retained earnings . . . . . . . . . .. . . . . 2,739,911 2,799,566 60,980 (2,860,550) 2,739,911
Treasury stock, at cost. . . . . . .. . . .. (27,633) (27,633)
Total stockholders’ equity . .. . . . . 2,941,951 — 2,803,341 65,721 (2,869,062) 2,941,951
3,244,507 1,160,044 4,583,738 469,899 (2,899,110) 6,559,078
12

15. Condensed Consolidating Balance Sheet at October 31, 2005 ($ in thousands)
Toll Non-
Brothers, Subsidiary Guarantor Guarantor
Inc. Issuer Subsidiaries Subsidiaries Eliminations Consolidated
ASSETS
Cash & cash equivalents . . . . . . . . .... 664,312 24,907 689,219
Inventory . . . . . . . . . . . . . . . . . . . .... 4,951,168 117,456 5,068,624
Property, construction & office
equipment – net . . . . . . . . . . . . .... 70,438 9,086 79,524
Receivables, prepaid expenses and
other assets . . . . . . . . . . . . . . . . .... 5,453 123,815 89,115 (32,763) 185,620
Mortgage loans receivable. . . . . . . .... 99,858 99,858
Customer deposits held in escrow . .... 68,601 68,601
Investments in & advances to
unconsolidated entities. . . . . . . . .... 152,394 152,394
Investments in & advances to
consolidated entities . . . . . . . . . . . . . 3,047,664 1,155,164 (1,503,295) 3,318 (2,702,851) —
3,047,664 1,160,617 4,527,433 343,740 (2,735,614) 6,343,840
LIABILITIES & STOCKHOLDERS’ EQUITY
Liabilities:
Loans payable . . . . . . . . . . . . . . . . . . 162,761 87,791 250,552
Senior notes . . . . . . . . . . . . . . . . . . . 1,140,028 1,140,028
Senior subordinated notes . . . . . . . . . 350,000 350,000
Mortgage company warehouse loan . . 89,674 89,674
Customer deposits . . . . . . . . . . . . . . . 415,602 415,602
Accounts payable . . . . . . . . . . . . . . . 256,548 9 256,557
Accrued expenses . . . . . . . . . . . . . . . 20,589 701,627 102,425 (32,872) 791,769
Income taxes payable . . . . . . . . . . . . 284,093 (1,946) 282,147
Total liabilities . . . . . . . . . . . . . . . 284,093 1,160,617 1,886,538 277,953 (32,872) 3,576,329
Minority interest . . . . . . . . . . . . . . . . . . 3,940 3,940
Stockholders’ equity:
Common stock . . . . . . . . . . . .. . . .. 1,563 2,003 (2,003) 1,563
Additional paid-in capital . . . .. . . . . 242,546 4,420 2,734 (7,154) 242,546
Retained earnings . . . . . . . . . .. . . . . 2,576,061 2,636,475 57,110 (2,693,585) 2,576,061
Treasury stock. . . . . . . . . . . . .. . . .. (56,599) (56,599)
Total stockholders’ equity . .. . . . . 2,763,571 — 2,640,895 61,847 (2,702,742) 2,763,571
3,047,664 1,160,617 4,527,433 343,740 (2,735,614) 6,343,840
13

16. Condensed Consolidating Statement of Income for the three months ended January 31, 2006
($ in thousands)
Toll Non-
Brothers, Subsidiary Guarantor Guarantor
Inc. Issuer Subsidiaries Subsidiaries Eliminations Consolidated
Revenues:
Traditional home sales . . . . . . . . . . . . . . 1,278,709 1,278,709
Percentage of completion . . . . . . . . . . . . 28,015 29,554 57,569
Land sales . . . . . . . . . . . . . . . . . . . . . . . 4,678 4,678
— — 1,311,402 29,554 — 1,340,956
Costs of revenues:
Traditional home sales . . . . . . .. . . .. . . 883,469 1,271 (649) 884,091
Percentage of completion . . . . .. . . .. . . 21,616 25,730 47,346
Land sales . . . . . . . . . . . . . . . .. . . .. . . 3,836 3,836
Interest . . . . . . . . . . . . . . . . . .. . . .. . . 16,735 28,553 766 (17,300) 28,754
— 16,735 937,474 27,767 (17,949) 964,027
Selling, general and administrative . ...... 17 173 139,554 7,421 (7,987) 139,178
Income from operations . . . . . . . . . ...... (17) (16,908) 234,374 (5,634) 25,936 237,751
Other:
Equity earnings . . . . . . . . . . . . . . . .. . . 16,569 16,569
Interest and other . . . . . . . . . . . . . . .. . . 16,908 14,720 11,996 (32,297) 11,327
Earnings from subsidiaries . . . . . . . .. . . 265,664 (265,664) —
Income before income taxes. . . . . . . . .. . . 265,647 — 265,663 6,362 (272,025) 265,647
Income taxes . . . . . . . . . . . . . . . . . . . .. . . 101,797 102,572 2,488 (105,060) 101,797
Net income . . . . . . . . . . . . . . . . . . . . .. . . 163,850 — 163,091 (3,874) (166,965) 163,850
Condensed Consolidating Statement of Income for the three months ended January 31, 2005
($ in thousands)
Toll Non-
Brothers, Subsidiary Guarantor Guarantor
Inc. Issuer Subsidiaries Subsidiaries Eliminations Consolidated
Revenues:
Home sales . . . . . . . . . . . . . . . . . . . . . . 989,097 989,097
Land sales . . . . . . . . . . . . . . . . . . . . . . . 1,225 1,225
— — 990,322 — — 990,322
Costs of revenues:
Home sales . . . . . . . . . . . . . . . . . . . . . . 684,798 1,105 (410) 685,493
Land sales . . . . . . . . . . . . . . . . . . . . . . . 779 779
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 12,712 21,784 541 (13,225) 21,812
— 12,712 707,361 1,646 (13,635) 708,084
Selling, general and administrative . ...... 10 140 107,085 5,910 (6,080) 107,065
Income from operations . . . . . . . . . ...... (10) (12,852) 175,876 (7,556) 19,715 175,173
Other:
Equity earnings . . . . . . . . . . . . . . . .. . . 1,935 1,935
Interest and other . . . . . . . . . . . . . . .. . . 12,852 6,190 10,865 (23,024) 6,883
Earnings from subsidiaries . . . . . . . .. . . 184,001 (184,001) —
Income before income taxes. . . . . . . . .. . . 183,991 — 184,001 3,309 (187,310) 183,991
Income taxes . . . . . . . . . . . . . . . . . . . .. . . 73,798 67,228 1,223 (68,451) 73,798
Net income . . . . . . . . . . . . . . . . . . . . .. . . 110,193 — 116,773 2,086 (118,859) 110,193
14

17. Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2006
($ in thousands)
Toll Non-
Brothers, Subsidiary Guarantor Guarantor
Inc. Issuer Subsidiaries Subsidiaries Eliminations Consolidated
Cash flow from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . 163,850 163,091 3,874 (166,965) 163,850
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization . . . . . . 285 6,050 573 6,908
Amortization of initial benefit
obligation . . . . . . . . . . . . . . . . . . . 449 449
Share based compensation . . . . . . . . . 11,075 11,075
Equity earnings in unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . (16,569) (16,569)
Distributions from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . 2,643 2,643
Deferred tax provision. . . . . . . . . . . . 7,625 7,625
Provision for inventory write-offs . . . 1,129 1,129
Changes in operating assets and
liabilities
Increase in inventory . . . . . . . . . . . (215,654) (34,470) (250,124)
Origination of mortgage loans . . . . (176,908) (176,908)
Sale of mortgage loans . . . . . . . . . 227,749 227,749
Contracts receivable . . . . . . . . . . . (28,015) (29,554) (57,569)
(Increase) decrease in receivables,
prepaid expenses and other
assets . . . . . . . . . . . . . . . . . . . . (196,846) 573 (7,613) 47,977 163,925 8,016
Increase in customer deposits. . . . . 481 481
Increase (decrease) in accounts
payable and accrued expenses . . 10,926 (858) (104,876) 6,327 3,040 (85,441)
Increase in current income taxes
payable . . . . . . . . . . . . . . . . . . . 19,173 19,173
Net cash (used in) provided by
operating activities . . . . . . . . . 15,803 — (198,884) 45,568 — (137,513)
Cash flow from investing activities:
Purchase of property and equipment,
net . . . . . . . . . . . . . . . . . . . . . . . . . . (13,469) (795) — (14,264)
Purchase of marketable securities . . . . . (970,820) (15,000) (985,820)
Sale of marketable securities. . . . . . . . . 970,820 15,000 985,820
Investments in and advances to
unconsolidated entities . . . . . . . . . . . (71,369) (71,369)
Acquisition of joint venture interest. . . . (40,751) (40,751)
Distributions from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . 2,512 2,512
Net cash used in investing
activities . . . . . . . . . . . . . . . . — — (123,077) (795) — (123,872)
Cash flow from financing activities:
Proceeds from loans payable . . . . . . . . . 80,870 177,842 258,712
Principal payments of loans payable . . . (93,894) (213,286) (307,180)
Proceeds from stock based benefit plans 5,972 5,972
Purchase of treasury stock. . . . . . . . . . . (21,775) (21,775)
Net cash used in financing
activities . . . . . . . . . . . . . . . . (15,803) — (13,024) (35,444) — (64,271)
Net (decrease) increase in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . — — (334,985) 9,329 — (325,656)
Cash and cash equivalents, beginning of
period . . . . . . . . . . . . . . . . . . . . . . . . 664,312 24,907 689,219
Cash and cash equivalents, end of period . — — 329,327 34,236 — 363,563
15

18. Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2005
($ in thousands)
Toll Non-
Brothers, Subsidiary Guarantor Guarantor
Inc. Issuer Subsidiaries Subsidiaries Eliminations Consolidated
Cash flow from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . 110,193 116,773 2,086 (118,859) 110,193
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization . . . . . . . 125 3,728 398 4,251
Amortization of initial benefit
obligation. . . . . . . . . . . . . . . . . . . . . 950 950
Equity earnings in unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . (1,935) (1,935)
Distributions from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . . . 495 495
Deferred tax provision . . . . . . . . . . . . . 15,366 15,366
Provision for inventory write-offs . . . . . 2,343 2,343
Changes in operating assets and
liabilities
(Increase) decrease in inventory . . . . . . (222,059) 1 (222,058)
Origination of mortgage loans . . . . . . . (181,558) (181,558)
Sale of mortgage loans. . . . . . . . . . . . . 207,077 207,077
(Increase) decrease in receivables,
prepaid expenses and other assets . . . (156,943) (2,400) 37,573 (11,561) 125,705 (7,626)
Increase in customer deposits . . . . . . . . 22,311 22,311
Increase (decrease) in accounts payable
and accrued expenses . . . . . . . . . . . . 30,396 2,275 (16,560) 11,443 (6,846) 20,708
Decrease in current income taxes
payable . . . . . . . . . . . . . . . . . . . . . . (14,568) (14,568)
Net cash (used in) provided
by operating activities. . . . . . . . . . (15,556) — (56,381) 27,886 — (44,051)
Cash flow from investing activities:
Purchases of property and equipment,
net . . . . . . . . . . . . . . . . . . . . . . . . . . (8,402) (735) (9,137)
Purchases of marketable securities . . . . (1,034,017) (5,000) (1,039,017)
Sale of marketable securities . . . . . . . . 1,005,257 4,000 1,009,257
Investments in and advances to
unconsolidated entities . . . . . . . . . . . (16,214) (16,214)
Distributions from unconsolidated
entities . . . . . . . . . . . . . . . . . . . . . 1,755 1,755
Net cash used in investing activities . — — (51,621) (1,735) — (53,356)
Cash flow from financing activities:
Proceeds from loans payable . . . . . . . . 80,182 165,985 246,167
Principal payments of loans payable . . . (95,756) (193,772) (289,528)
Proceeds from stock based benefit
plans . . . . . . . . . . . . . . . . . . . . . . . . 15,776 15,776
Purchase of treasury stock . . . . . . . . . . (220) (220)
Net cash provided by
(used in) financing activities . . . . . 15,556 — (15,574) (27,787) — (27,805)
Net decrease in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . — — (123,576) (1,636) — (125,212)
Cash and cash equivalents, beginning of
period . . . . . . . . . . . . . . . . . . . . . . . 455,836 9,998 465,834
Cash and cash equivalents, end of period . — — 332,260 8,362 — 340,622
16

19. ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Our first quarter of fiscal 2006 was another record quarter for us with respect to revenue and net income.
Revenues and net income for the three months ended January 31, 2006 increased 35% and 49%, respectively,
as compared to the comparable quarter of fiscal 2005. In addition, our backlog, consisting of homes under
contract but not yet delivered, at January 31, 2006 of $5.95 billion increased 22% over our backlog at
January 31, 2005.
Beginning in the fourth quarter of fiscal 2005 and continuing throughout our first quarter of fiscal 2006
and into the second quarter of fiscal 2006, we have experienced a slowdown in new contracts signed. The
value of new contracts signed in the first quarter of fiscal 2006 was $1.14 billion, a 21% decline compared to
the value of new contracts signed in the first quarter of fiscal 2005. We believe this slowdown is attributable
to a softening of demand, a lack of available home sites caused by delays in new community openings,
delays in approvals of new phases of existing communities, our reluctance to sign new contracts that would
require us to extend delivery dates beyond the twelve months that we are quoting to prospective home buyers
in many communities, a decline in consumer confidence and, in some markets, increased supply due to the
availability of homes previously purchased by speculative buyers at competing communities. In addition, it
appears that customers are taking more time in making home buying decisions. Despite this slowdown, we
remain cautiously optimistic about the future growth of our business. Our industry demographics remain
strong due to the continuing regulation-induced constraints on lot supplies and the growing number of affluent
households.
On February 23, 2006, we filed a Form 8-K with the SEC that provided financial guidance related to our
expected results of operations for fiscal 2006. The guidance contained in this Form 10-Q is the guidance
given in the Form 8-K filed on February 23, 2006. We have not reconfirmed or updated this guidance since
the filing of the Form 8-K. The guidance stated that, based upon our evaluation of our backlog, our
communities open and the expected timing of new community openings in fiscal 2006, we believe that in
fiscal 2006 we will deliver between 9,200 homes and 9,900 homes with an average delivered price between
$670,000 and $680,000; recognize between $280 million and $300 million of revenues using the percentage
of completion method of accounting related to several high-rise residences that are under construction; earn
net income between $790 million and $870 million; and achieve diluted earnings per share between $4.77
and $5.26 per share.
Geographic and product diversification, access to lower-cost capital, a versatile and abundant home
mortgage market and improving demographics are creating opportunities for those builders who can control
land and persevere through the increasingly difficult regulatory approval process. We believe that this
evolution in our industry favors the large publicly traded home building companies with the capital and
expertise to control home sites and gain market share. We currently own or control approximately 87,000
home sites in 50 markets we consider to be affluent, a substantial number of which sites already have the
approvals necessary for development. We believe that as the approval process becomes more difficult, and as
the political pressure from no-growth proponents increases, our expertise in taking land through the approval
process and our already approved land positions should allow us to continue to grow for a number of years to
come.
Because of the length of time that it takes to obtain the necessary approvals on a property, complete the
land improvements on it and deliver a home after a home buyer signs an agreement of sale, we are subject to
many risks. We attempt to reduce our risk by controlling land for future development through options
whenever possible, thus allowing us to obtain the necessary governmental approvals before acquiring title to
the land; generally commencing construction of a home only after executing an agreement of sale and
receiving a substantial downpayment from a buyer; and using subcontractors to perform home construction
and land development work on a fixed-price basis.
Our revenues have grown on average over 20% per year in the last decade. We have funded this growth
through the reinvestment of profits, bank borrowings and capital market transactions. At January 31, 2006, we
17

20. had $363.6 million of cash and cash equivalents and approximately $899 million available under our bank
revolving credit facility which extends to July 15, 2009. With these resources and our history of success in
accessing the public debt markets, we believe we have the resources available to continue to grow in fiscal
2006 and beyond.
CRITICAL ACCOUNTING POLICIES
We believe the following critical accounting policies reflect the more significant judgments and estimates
used in the preparation of our consolidated financial statements.
Inventory
Inventory is stated at the lower of cost or fair value in accordance with Statement of Financial
Accounting Standards (‘‘SFAS’’) No. 144, ‘‘Accounting for the Impairment or Disposal of Long-Lived
Assets’’ (‘‘SFAS 144’’). In addition to direct land acquisition, land development and home construction costs,
costs include interest, real estate taxes and direct overhead related to development and construction, which are
capitalized to inventories during the period beginning with the commencement of development and ending
with the completion of construction.
Once a parcel of land has been approved for development, it generally takes four to five years to fully
develop, sell and deliver all the homes in one of our typical communities. Longer or shorter time periods are
possible depending on the number of home sites in a community. Our master planned communities,
consisting of several smaller communities, may take up to 10 years or more to complete. Because our
inventory is considered a long-lived asset under U.S. generally accepted accounting principles, we are
required to regularly review the carrying value of each of our communities and write down the value of those
communities for which we believe the values are not recoverable. When the profitability of a current
community deteriorates, the sales pace declines significantly or some other factor indicates a possible
impairment in the recoverability of the asset, we evaluate the property in accordance with the guidelines of
SFAS 144. If this evaluation indicates that an impairment loss should be recognized, we charge cost of sales
for the estimated impairment loss in the period determined.
In addition, we review all land held for future communities or future sections of current communities,
whether owned or under contract, to determine whether or not we expect to proceed with the development of
the land as originally contemplated. Based upon this review, we decide (a) as to land that is under a purchase
contract but not owned, whether the contract will likely be terminated or renegotiated, and (b) as to land we
own, whether the land will likely be developed as contemplated or in an alternative manner, or should be
sold. We then further determine which costs that have been capitalized to the property are recoverable and
which costs should be written off. We recognized $1.1 million and $2.3 million of write-offs of costs related
to current and future communities in the three months ended January 31, 2006 and 2005, respectively.
We have a significant number of land purchase contracts, sometimes referred to herein as ‘‘land purchase
contracts,’’ ‘‘options,’’ or ‘‘option agreements,’’ which we evaluate in accordance with the Financial
Accounting Standards Board (‘‘FASB’’) Interpretation No. 46 ‘‘Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51’’ (‘‘FIN 46’’), as amended by FIN 46R. Pursuant to FIN 46, an enterprise that
absorbs a majority of the expected losses or receives a majority of the expected residual returns of a variable
interest entity (‘‘VIE’’) is considered to be the primary beneficiary and must consolidate the operations of the
VIE. A VIE is an entity with insufficient equity investment or in which the equity investors lack some of the
characteristics of a controlling financial interest. For land purchase contracts with sellers meeting the
definition of a VIE, we perform a review to determine which party is the primary beneficiary of the VIE.
This review requires substantive judgment and estimation. These judgments and estimates involve assigning
probabilities to various estimated cash flow possibilities relative to the entity’s expected profits and losses and
the cash flows associated with changes in the fair value of the land under contract. Because, in most cases,
we do not have any ownership interests in the entities with which we contract to purchase land, we generally
do not have the ability to compel these entities to provide assistance in our review. In many instances, these
entities provide us little, if any, financial information.
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21. Revenue and Cost Recognition
Traditional Home Sales
Because the construction time for one of our traditional homes is generally less than one year, revenues
and cost of revenues from traditional home sales are recorded at the time each home is delivered and title and
possession are transferred to the buyer. Closing normally occurs shortly after construction is substantially
completed.
Land, land development and related costs, both incurred and estimated to be incurred in the future, are
amortized to the cost of homes closed based upon the total number of homes to be constructed in each
community. Any changes resulting from a change in the estimated number of homes to be constructed or in
the estimated costs subsequent to the commencement of delivery of homes are allocated to the remaining
undelivered homes in the community. Home construction and related costs are charged to the cost of homes
closed under the specific identification method. The estimated land, common area development and related
costs of master planned communities, including the cost of golf courses, net of their estimated residual value,
are allocated to individual communities within a master planned community on a relative sales value basis.
Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated
costs are allocated to the remaining home sites in each of the communities of the master planned community.
High-Rise/Mid-Rise Projects
We are developing several high-rise/mid-rise projects that will take substantially more than one year to
complete. If these projects qualify, revenues and costs will be recognized using the percentage of completion
method of accounting in accordance with SFAS No. 66, ‘‘Accounting for Sales of Real Estate’’ (‘‘SFAS 66’’).
Under the provisions of SFAS 66, revenues and costs are to be recognized when construction is beyond the
preliminary stage, the buyer is committed to the extent of being unable to require a refund except for
non-delivery of the unit, sufficient units in the project have been sold to ensure that the property will not be
converted to rental property, the sales proceeds are collectible and the aggregate sales proceeds and the total
cost of the project can be reasonably estimated. Revenues and costs of individual projects are recognized on
the individual project’s aggregate value of units for which the home buyers have signed binding agreements
of sale, less an allowance for cancellations, and are based on the percentage of total estimated construction
costs that have been incurred. Total estimated revenues and construction costs will be reviewed periodically
and any change will be applied to the current and future periods. We began recognizing revenue and costs
using percentage of completion accounting on several projects in fiscal 2006.
Land Sales
Land sales revenues and cost of revenues are recorded at the time that title and possession of the
property have been transferred to the buyer. We recognize the pro rata share of revenues and cost of revenues
of land sales to entities in which we have a 50% or less interest based upon the ownership percentage
attributable to the non-Company investors. Any profit not recognized in a transaction reduces our investment
in the entity.
Use of Estimates
In the ordinary course of doing business, we must make estimates and judgments that affect decisions on
how we operate and the reported amounts of assets, liabilities, revenues and expenses. These estimates
include, but are not limited to, those related to the recognition of income and expenses, impairment of assets,
estimates of future improvement and amenity costs, capitalization of costs to inventory, provisions for
litigation, insurance and warranty costs, and income taxes. We base our estimates on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances. On an ongoing
basis, we evaluate and adjust our estimates based on the information currently available. Actual results may
differ from these estimates and assumptions or conditions.
OFF-BALANCE SHEET ARRANGEMENTS
We have investments in and advances to several joint ventures, to Toll Brothers Realty Trust Group
(‘‘Trust’’) and to Toll Brothers Realty Trust Group II (‘‘Trust II’’). At January 31, 2006, we had investments
19