What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2020-12-22 compared with 2019-12-26 · 156 added, 122 removed, 260 unchanged (52% of the section changed)

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In the five years ended October 31, 2020, we delivered 38,117 homes from 779 communities, including 8,496 homes from 457 communities in fiscal 2020.

At October 31, 2019 , we had 715 communities containing approximately 59,200 home sites that we owned or controlled through options.

At October 31, 2020, we had 778 communities in various stages of planning, development or operations containing approximately 63,200 home sites that we owned or controlled through options.

Backlog consists of homes under contract but not yet delivered to our home buyers.

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we expect to deliver approximately 94% of these homes in fiscal 2021.

We operate our own architectural, engineering, mortgage, title, land development, golf course development, and landscaping subsidiaries.

We operate our own architectural, engineering, mortgage, title, land development, insurance, and landscaping subsidiaries.

We also operate our own security company, TBI Smart Home Solutions, which provides homeowners with home automation and technology options.

In addition, we operate our own lumber distribution, house component assembly, and manufacturing operations.

In addition, in certain regions we operate our own lumber distribution, house component assembly, and manufacturing operations.

We are developing several land parcels for master planned communities in which we intend to build homes on a portion of the lots and sell the remaining lots to other builders.

Two of these master planned communities are being developed 100% by us, and the remaining communities are being developed through joint ventures with other builders or financial partners.

One of these master planned communities is being developed 100% by us, and the remaining communities are being developed through joint ventures with other builders or financial partners.

In addition to our residential for-sale business, we also develop and operate for-rent apartments primarily through joint ventures.

These projects are located in multiple metropolitan areas throughout the country and are being operated or developed, (or we expect will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living.

® At October 31, 2019 , we or joint ventures in which we have an interest controlled 56 land parcels as for-rent apartment projects containing approximately 18,300 units.

Primarily through several joint ventures, our wholly-owned subsidiary, Gibraltar Capital and Asset Management, LLC (“Gibraltar”), provides builders and developers with land banking and venture capital, owns certain foreclosed real estate, and is a participant in an entity that owns and controls a portfolio of loans and real estate.

® At October 31, 2020, we or joint ventures in which we have an interest controlled 64 land parcels as for-rent apartment projects containing approximately 20,800 planned units.

See “Investments in Unconsolidated Entities” below for more information relating to our joint ventures.

As part of our strategy to expand our geographic footprint and product offerings, in fiscal 2019, we acquired substantially all of the assets and operations of Sharp Residential, LLC (“Sharp”) and Sabal Homes LLC (“Sabal”), for approximately $92.8 million and $69.6 million , respectively, in cash.

Sharp operates in metropolitan Atlanta, Georgia;

Sabal operates in the Charleston, Greenville, and Myrtle Beach, South Carolina markets.

The assets acquired, based on our preliminary purchase price allocations, were primarily inventory, including approximately 2,550 home sites owned or controlled through land purchase agreements.

In connection with these acquisitions, we assumed contracts to deliver 204 homes with an aggregate value of $96.1 million .

The average price of those undelivered homes was approximately $471,100 as of the applicable acquisition date.

As a result of these acquisitions, our selling community count increased by 22 communities.

Our Communities and Homes

Our traditional home building communities are generally located in affluent suburban areas near major highways providing access to major cities and are generally located on land we have either acquired and developed or acquired fully approved and, in some cases, improved.

Our City Living communities currently operate in Hoboken and Jersey City, New Jersey;

City, New York;

Our traditional home building communities are generally located in affluent suburban areas near major transit hubs and highways that provide access to urban centers.

They are generally located on land we have either acquired and developed or acquired fully approved and, in some cases, improved.

Our City Living division is currently selling units out of communities in Hoboken and Jersey City, New Jersey and New York City, New York, and also has planned developments in New York City, New York;

Northern New Jersey;

Philadelphia, Pennsylvania;

the suburbs of Washington, D.C.;

a suburb of Washington, D.C.;

Los Angeles, California;

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• Westchester and Dutchess Counties, New York

Boroughs of Manhattan and Brooklyn in New York City

• New York City, New York

• Central and northern New Jersey

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• Raleigh and Charlotte, North Carolina, metropolitan areas

• Nashville, Tennessee

• Charleston, Greenville, and Myrtle Beach, South Carolina

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• Dallas, Houston, and Austin, Texas, metropolitan areas

Denver, Colorado, metropolitan area and Fort Collins, Colorado

• Denver, Colorado, metropolitan area, Fort Collins and Colorado Springs, Colorado

• Phoenix, Arizona, metropolitan area

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We develop individual stand-alone communities as well as multi-product, master planned communities.

Our master planned communities, many of which include golf courses and other country club-type amenities, enable us to offer multiple home types and sizes to a broad range of move-up, empty-nester, active-adult, and second-home buyers.

Our master planned communities enable us to offer multiple home types and sizes to a broad range of move-up, affordable luxury, empty-nester, active-adult, and second-home buyers.

We seek to realize efficiencies from shared common costs, such as land development and infrastructure, over the several communities within the master planned community.

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We are continuously developing new designs to replace or augment existing ones to ensure that our homes reflect current consumer tastes.

Increasingly, we are simplifying designs and the number of options we provide in order to offer our customers a more curated experience and gain efficiencies in the home building process, particularly in respect of our affordable luxury product.

We use our own architectural staff and also engage unaffiliated architectural firms to develop new designs.

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The number and complexity of options in our Traditional Home Building Product typically increase with the size and base selling price of our homes.

Major options include additional garages, extra fireplaces, guest suites, finished lofts, and other additional rooms.

Major options include home offices, fitness rooms, multi-generational living suites and spacious indoor/outdoor living areas.

We also offer numerous interior fit-out options such as flooring, wall tile, plumbing fixtures, lighting and home-automation and security technologies.

We market our high-quality homes to upscale luxury home buyers, generally comprised of those persons who have previously owned a principal residence and who are seeking to buy a larger or more desirable home — the so-called “move-up” market.

We believe our reputation as a builder of homes for this market enhances our competitive position with respect to the sale of our smaller, more moderately priced homes.

We market our high-quality homes to both upscale luxury and affordable luxury home buyers.

Our luxury homes are marketed primarily to buyers who generally have previously owned a home and who are seeking to buy a larger or more desirable home — the so-called “move-up” market.

Our affordable luxury homes are marketed primarily to more affluent first time buyers.

We believe our reputation as a builder of homes in these markets enhances our competitive position with respect to the sale of our smaller, more moderately priced homes.

We continue to pursue growth initiatives by expanding our geographic footprint and by broadening our product lines and price points to appeal to buyers across the demographic spectrum.

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As of October 31, 2020, we were selling from 39 active-adult communities, in which at least one home occupant must be at least 55 years of age.

We expect to open additional active-adult communities during the next few years.

As the millennial generation enters its prime family formation years, we continue to focus on this group with our core suburban homes, affordable luxury offerings, urban condominiums and luxury rental apartment products.

We have developed and are developing, on our own or through joint ventures with third parties, a number of high-density, high-, mid- and low-rise urban luxury communities to serve a growing market of affluent move-up families, empty-nesters, and young professionals seeking to live in or close to major cities.

These communities are currently marketed under our City Living brand.

These communities, which we are currently developing or planning to develop on our own or through joint ventures, are located in Los Angeles, California;

Bethesda, Maryland;

Hoboken and Jersey City, New Jersey;

the boroughs of Manhattan and Brooklyn, New York;

With the millennial generation in its prime family formation years, we continue to focus on this group with our core suburban homes, affordable luxury offerings, urban condominiums and luxury rental apartment products.

Our City Living division is currently selling units in communities in Hoboken and Jersey City, New Jersey and New York City, and has planned developments in New York City, New York;

Northern New Jersey;

Philadelphia, Pennsylvania;

a suburb of Washington, D.C.;

Los Angeles, California;

and Seattle, Washington.

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Once construction has been completed, the homes in backlog in these communities are generally delivered quickly.

Following the onset of the COVID-19 pandemic, we have temporarily paused development of future communities in our City Living division.

For a detailed discussion of the impact of the COVID-19 pandemic on our business, see “Risk Factors – General Risk Factors” in Item 1A of this Form 10-K.

We believe that the demographics supporting the luxury first-time, move-up, empty-nester, active-adult, affordable luxury and second-home upscale markets will provide us with an opportunity for growth in the future.

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The following table summarizes certain information with respect to our operating communities at October 31, 2020:

Total number of operating communities

Number of selling communities

Homes approved

Homes under contract but not closed

Home sites available

Total number of operating communities Number of selling communities Homes approved Homes closed Homes under contract but not closed Home sites available

Traditional Home Building:

North 92 70 13,879 8,693 1,906 3,280

Mid-Atlantic 56 39 7,095 4,636 990 1,469

South 84 67 9,847 4,554 1,488 3,805

Mountain 107 94 15,068 4,596 2,274 8,198

Pacific 61 44 6,002 2,808 1,044 2,150

Traditional Home Building 400 314 51,891 25,287 7,702 18,902

City Living 3 3 618 355 89 174

Total 403 317 52,509 25,642 7,791 19,076

At October 31, 2020, significant site improvements had not yet commenced on approximately 10,300 of the 19,076 available home sites.

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Of our 403 operating communities at October 31, 2020, a total of 317 communities were offering homes for sale;

48 communities were sold out but not all homes had been completed and delivered;

and two communities had been temporarily shut down and are expected to reopen in fiscal 2020.

and the remaining operating communities primarily relate to communities that were sold out but not all homes had been completed and delivered.

Of the 317 communities in which homes were being offered for sale at October 31, 2020, a total of 254 were detached home communities and 63 were attached home communities.

At October 31, 2020, we had 895 homes (exclusive of model homes) under construction or completed but not under contract in our traditional communities, of which 457 were in detached home communities and 438 were in attached home communities.

At October 31, 2019 , we had 364 homes (exclusive of model homes) under construction or completed but not under contract in four City Living communities that were wholly owned.

As a result of our wide product and geographic diversity, we have a wide range of base sales prices.

The general range of base sales prices for our different lines of homes at October 31, 2019 was as follows:

Traditional Home Building Product

Detached homes

Attached homes

Townhomes/Carriage homes

City Living Product

In fiscal 2019, of the 8,107 homes delivered, 21% had a delivered price of less than $500,000;

35% had a delivered price of between $500,000 and $750,000;

20% had a delivered price of between $750,000 and $1,000,000;

18% had a delivered price of between $1,000,000 and $2,000,000;

and 6% had a delivered price of over $2,000,000.

At October 31, 2020, we had 173 homes (exclusive of model homes) under construction or completed but not under contract in three City Living communities that were wholly owned.

As a result of the breath of our products and geographic footprint, we have a wide range of base sales prices for our homes.

The percentage of the 8,496 home delivered in fiscal 2020 within the various ranges of base sales price was as follows:

Range of Base Sales Price Percentage of Homes Delivered in Fiscal 2020

Less than $500,000 24%

$500,000 to $750,000 33%

$750,000 to $1,000,000 21%

$1,000,000 to 2,000,000 18%

More than $2,000,000 4%

Of the homes delivered in fiscal 2020, approximately 19% of our home buyers paid the full purchase price in cash;

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The table below provides the average value of options purchased by our home buyers, including lot premiums, and the value of the options as a percent of the base selling price of the homes purchased in fiscal 2020, 2019, and 2018:

Option value (in thousands)

Percent of base selling price

Option value (in thousands)

Percent of base selling price

Option value (in thousands)

Percent of base selling price

2020 2019 2018

Option value (in thousands) Percent of base selling price Option value (in thousands) Percent of base selling price Option value (in thousands) Percent of base selling price

Overall $ 173 25.5 % $ 178 24.4 % $ 165 22.8 %

Traditional Home Building Product

Detached $ 198 28.8 % $ 203 26.6 % $ 189 24.8 %

Attached $ 98 15.7 % $ 99 18.8 % $ 94 19.6 %

City Living Product $ 47 3.8 % $ 31 2.5 % $ 25 1.3 %

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For more information regarding revenues, net contracts signed, income (loss) before income taxes, and assets by segment, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Segments” in Item 7 of this Form 10-K.

As part of our strategy to continue expanding our geographic footprint and product offerings, in fiscal 2020, we acquired substantially all of the assets and operations of The Thrive Group, LLC (“Thrive”), an urban infill builder with operations in Atlanta, Georgia and Nashville, Tennessee.

We also acquired substantially all of the assets and operations of Keller Homes, Inc.

(“Keller”), a builder with operations is Colorado Springs, Colorado.

The aggregate purchase price for these acquisitions was approximately $79.2 million in cash.

The assets acquired were primarily inventory, including approximately 1,100 home sites owned or controlled through land purchase agreements.

In fiscal 2019, we acquired substantially all of the assets and operations of Sharp Residential, LLC (“Sharp”) and Sabal Homes LLC (“Sabal”), for approximately $92.8 million and $69.6 million, respectively, in cash.

Sharp operates in metropolitan Atlanta, Georgia;

Sabal operates in the Charleston, Greenville, and Myrtle Beach, South Carolina markets.

The assets acquired, were primarily inventory, including approximately 2,550 home sites owned or controlled through land purchase agreements.

In connection with these acquisitions, we assumed contracts to deliver 204 homes with an aggregate value of $96.1 million.

average price of those undelivered homes was approximately $471,100 as of the applicable acquisition date.

As a result of these acquisitions, our selling community count increased by 22 communities.

Before entering into an agreement to purchase a land parcel, we complete extensive comparative studies and analyses that assist us in evaluating the acquisition.

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We are developing several parcels of land for master planned communities in which we intend to build homes on a portion of the lots and sell the remaining lots to other builders.

Two of these master planned communities are being developed 100% by us, and the remaining communities are being developed through joint ventures with other builders or financial partners.

One of these master planned communities is being developed 100% by us, and the remaining communities are being developed through joint ventures with other builders or financial partners.

At October 31, 2020, our Land Development Joint Ventures owned approximately 9,600 home sites.

At October 31, 2020, we had agreed to acquire 139 home sites and expect to purchase approximately 2,100 additional home sites from several of our Land Development Joint Ventures over a number of years.

Our ability to continue development activities over the long term will be dependent upon, among other things, a suitable economic environment and our continued ability to locate and enter into options or agreements to purchase land, obtain

governmental approvals for suitable parcels of land, and consummate the acquisition and complete the development of such land.

Our ability to continue development activities over the long term will depend on, among other things, a suitable economic environment and our continued ability to locate and enter into options or agreements to purchase land, obtain governmental approvals for suitable parcels of land, and consummate the acquisition and complete the development of such land.

The following is a summary of home sites for future communities that we either owned or controlled through options or purchase agreements at October 31, 2020, as distinguished from our operating communities:

Number of communities

Number of home sites

Number of communities Number of home sites

Traditional Home Building:

North 67 5,639

Mid-Atlantic 94 7,690

South 73 6,871

Mountain 77 9,963

Pacific 56 5,195

Traditional Home Building 367 35,358

City Living 8 957

Total 375 36,315

Of the 36,315 planned home sites at October 31, 2020, we owned 12,555 and controlled 23,760 through options and purchase agreements.

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The purchases of these land parcels are expected to occur over the next several years.

We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase price since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.

We have additional land parcels under option that have been excluded from this aggregate purchase price because we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.

These option contracts have either been written off or written down to the estimated amount that we expect to recover when the contracts are terminated.

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We generally have multiple sources for the materials we purchase, and we have not experienced significant delays due to unavailability of necessary materials.

See “Manufacturing/Distribution Facilities” in Item 2 of this Form 10-K.

For certain materials, where lead time has increased as a result of the COVID-19 pandemic, we believe we have adequately adjusted our purchasing timelines to meet construction milestones.

See “Risk Factors – General Risk Factors” in Item 1A and “Manufacturing/Distribution Facilities” in Item 2, in each case of this Form 10-K.

Our construction managers coordinate subcontracting activities and supervise all aspects of construction work and quality control.

One of the ways in which we seek to achieve home buyer satisfaction is by providing our construction managers with incentive compensation arrangements based upon each home buyer’s satisfaction, as expressed by the buyers’ responses on pre- and post-closing questionnaires.

The most significant variable affecting the timing of our revenue stream, other than housing demand, is the opening of the community for sale, which generally occurs shortly after receipt of final land regulatory approvals.

Receipt of approvals

permits us to begin the process of obtaining executed sales contracts from home buyers.

The most significant variable affecting the timing of our sales, other than housing demand, is the opening of the community for sale, which generally occurs shortly after receipt of final land regulatory approvals.

Receipt of approvals allows us to begin the process of obtaining executed sales contracts from home buyers.

Although our sales and construction activities vary somewhat by season, which can affect the timing of closings, any such seasonal effect is relatively insignificant compared to the effect of the timing of receipt of final regulatory approvals, the opening of the community, and the subsequent timing of closings.

Marketing and Sales

We believe that our marketing strategy for our Traditional Home Building Product lines of homes, has enhanced our reputation as a builder and developer of high quality upscale homes.

We believe this reputation results in greater demand for all of our lines of homes.

We believe that our marketing strategy for our Traditional Home Building Products has enhanced our reputation as a builder and developer of high quality luxury homes.

We believe this reputation results in greater demand for all of our product types.

We generally include attractive decorative features even in our less expensive homes, based on our belief that these enhancements improve our marketing and sales effort.

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A significant portion of our sales is also derived from the introduction of customers to our communities by local real estate agents.

We expend great effort and cost in designing and decorating our model homes, which play an important role in our marketing.

Interior decorating varies among the models and is carefully selected to reflect the lifestyles of prospective buyers.

We expend great effort and cost in designing and merchandising our model homes, which play an important role in our marketing.

Interior merchandising varies among the models and is carefully selected to reflect the lifestyles of prospective buyers.

Visitors to our website, www.TollBrothers.com, can obtain detailed information regarding our communities and homes across the country, take panoramic or video tours of our homes, and design their own home based upon our available floor plans and options .

We also advertise in newspapers, in other local and regional publications, and on billboards and online media sites.

We also advertise on social media platforms, in newspapers, in other local and regional publications, and on billboards and online media sites.

We have increasingly focused our marketing efforts to the digital environment and have adopted a number of virtual tools and techniques to allow our sales personnel to engage in remote interactions with potential customers.

We have a two-step sales process.

The first step takes place when a potential home buyer visits one of our communities and decides to purchase one of our homes, at which point the home buyer signs a non-binding deposit agreement and provides a small, refundable deposit.

The first step takes place when a potential home buyer visits one of our communities (either in person or virtually) and decides to purchase one of our homes, at which point the home buyer signs a non-binding deposit agreement and provides a small, refundable deposit.

This deposit will reserve, for a short period of time, the home site or unit that the home buyer has selected.

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If demand for the homes in a particular community is weak, we determine whether or not sales incentives and/or discounts on home prices should be adjusted.

The second step in the sales process occurs when we sign a binding agreement of sale with the home buyer and the home buyer gives us a cash down payment that is generally non-refundable.

Cash down payments currently average approximately 7% of the total purchase price of a home.

Between the time that the home buyer signs the non-binding deposit agreement and the binding agreement of sale, he or she is required to complete a financial questionnaire that gives us the ability to evaluate whether the home buyer has the financial resources necessary to purchase the home.

The second step in the sales process occurs when we sign a binding agreement of sale with the home buyer and the home buyer provides a larger cash down payment that is generally non-refundable.

Cash down payments averaged approximately 7% of the total purchase price of a home at the end of fiscal year 2020.

Between the time that the home buyer signs the non-binding deposit agreement and the binding agreement of sale, which typically takes about three weeks, the home buyer is required to complete a financial questionnaire that gives us the ability to evaluate whether the home buyer has the financial resources necessary to purchase the home.

If we determine that the home buyer is not financially qualified, we will not enter into an agreement of sale with the home buyer.

During fiscal 2020, 2019, and 2018, our customers signed net contracts for $8.00 billion (9,932 homes), $6.71 billion (8,075 homes), and $7.60 billion (8,519 homes), respectively.

When we report net contracts signed, the number and value of contracts signed are reported net of all cancellations occurring during the reporting period, whether signed in that reporting period or in a prior period.

When we report net contracts signed, the number and value of contracts signed are reported net of all cancellations occurring during the reporting period, whether originally signed in that reporting period or in a prior period.

Only outstanding agreements of sale that have been signed by both the home buyer and us as of the end of the period for which we are reporting are included in backlog.

Customer Mortgage Financing

We maintain relationships with a widely-diversified group of mortgage financial institutions, many of which are among the largest in the industry.

We maintain relationships with a diversified group of mortgage financial institutions, many of which are among the largest in the industry.

We believe that regional and community banks continue to recognize the long-term value in creating relationships with affluent customers such as our home buyers, and these banks continue to provide these customers with financing.

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Information about the number and amount of loans funded by our mortgage subsidiary is contained in the table below.

Fiscal year Total

Toll Brothers, Inc.

TBI Mortgage Company

(a) TBI Mortgage Company

financed settlements*

capture rate (b/a)

capture rate (b/a) Amount

(in millions)

2020 8,496 3,782 44.5% $ 1,757.5

2019 8,107 3,259 40.2% $ 1,572.1

2018 8,265 2,918 35.3% $ 1,411.6

* Amounts under “TBI Mortgage Company financed settlements” exclude brokered and referred loans, which amounted to approximately 4.7%, 4.0%, and 5.0% of our home closings in fiscal 2020, 2019, and 2018, respectively.

Prior to the actual closing of the home and funding of the mortgage, the home buyer may lock in an interest rate based upon the terms of the commitment.

At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”) that are willing to honor the terms and conditions, including the interest rate, committed to the home buyer.

At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several third-party established mortgage financing institutions (“investors”) that are willing to honor the terms and conditions,

including the interest rate, committed to the home buyer.

We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary.

Mortgage loans are sold to investors with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements.

These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower.

The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market.

At October 31, 2020, our mortgage subsidiary was committed to fund $2.07 billion of mortgage loans.

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We believe our financial stability, relative to many others in our industry, is a favorable competitive factor.

Our quarterly operating results fluctuate with the seasons.

A significant portion of our agreements of sale are entered into with customers in the winter and spring months and weather-related events will from time to time delay housing starts and closings and increase costs.

See “Risk Factors – Risks Related to Our Business and Industry – Our quarterly operating results may fluctuate due to the seasonal nature of our business” in Item 1A of this Form 10-K

Investments in Unconsolidated Entities

We have investments in various unconsolidated entities.

These entities include Land Development Joint Ventures, Home Building Joint Ventures, Rental Property Joint Ventures, and Gibraltar Joint Ventures.

We have investments in joint ventures (i) to develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”);

(ii) to develop for-sale homes (“Home Building Joint Ventures”);

(iii) to develop luxury for-rent residential apartments, commercial space and a hotel (“Rental Property Joint Ventures”);

and (iv) to invest in distressed loans and real estate and provide financing and land banking for residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).

At October 31, 2020, we had investments of $430.7 million in these unconsolidated entities and were committed to invest or advance up to an additional $75.0 million to these entities if they require additional funding.

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Land Development Joint Ventures

At October 31, 2019 , we have investments in eight Land Development Joint Ventures to develop land.

At October 31, 2020, we had investments in nine Land Development Joint Ventures to develop land.

Some of these Land Development Joint Ventures develop land for the sole use of the venture participants, including us, and others develop land for sale to the joint venture participants and to unrelated builders.

At October 31, 2019 , we had approximately $110.3 million invested in our Land Development Joint Ventures and funding commitments of $28.6 million to two of the Land Development Joint Ventures which will be funded if additional investments in the ventures are required.

At October 31, 2019 , three of these joint ventures had aggregate loan commitments of $100.9 million and outstanding borrowings against these commitments of $88.3 million .

At October 31, 2020, we had approximately $127.7 million invested in our Land Development Joint Ventures and funding commitments of $33.0 million to three of the Land Development Joint Ventures which will be funded if additional investments in the ventures are required.

At October 31, 2020, four of these joint ventures had aggregate loan commitments of $158.8 million and outstanding borrowings against these commitments of $118.1 million.

At October 31, 2020, our Land Development Joint Ventures owned approximately 9,600 home sites.

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Home Building Joint Ventures

At October 31, 2019 , we had an aggregate of $60.5 million of investments in four Home Building Joint Ventures to develop approximately 100 luxury for-sale homes.

At October 31, 2019 , we had $1.4 million of funding commitments to one of these joint ventures.

At October 31, 2020, we had an aggregate of $33.8 million of investments in four Home Building Joint Ventures to develop 67 luxury for-sale homes.

In fiscal 2020, the value of net contracts signed by our Home Building Joint Ventures was $73.3 million (22 homes), and they delivered $139.6 million (44 homes) of revenue.

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At October 31, 2020, we had an aggregate of $247.0 million of investments in 26 Rental Property Joint Ventures.

At October 31, 2019 , we or joint ventures in which we have an interest controlled 56 land parcels as for-rent apartment projects containing approximately 18,300 units.

At October 31, 2019 , joint ventures in which we had an interest had aggregate loan commitments of $1.39 billion and outstanding borrowings against these commitments of $1.02 billion .These projects are located in multiple metropolitan areas throughout the country and are being operated or developed (or we expect will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living.

In fiscal 2019, one of our Rental Property Joint Ventures, located in Phoenixville, Pennsylvania, sold its assets to an unrelated party for $77.8 million .

From our investment in this joint venture, we received cash of $7.4 million and recognized a gain from this sale of $3.8 million in fiscal 2019.

In fiscal 2018, three of our Rental Property Joint Ventures sold their assets to unrelated parties for $477.5 million .

These joint ventures had owned, developed, and operated multifamily rental properties located in suburban Washington, D.C.

and Westborough, Massachusetts, and a student housing community in College Park, Maryland.

From our investment in these joint ventures, we received cash of $79.1 million and recognized gains from these sales of $67.2 million in fiscal 2018.

The gains recognized from these sales are included in “Income from unconsolidated entities” in our Consolidated Statement of Operations and Comprehensive Income included in Item 15(a)1 of this Form 10-K.

At October 31, 2020, we or joint ventures in which we have an interest controlled 64 land parcels that are planned as for-rent apartment projects containing approximately 20,800 units.

At October 31, 2020, joint ventures in which we had an interest had aggregate loan commitments of $1.66 billion and outstanding borrowings against these commitments of $1.22 billion.

These projects are located in multiple metropolitan areas throughout the country and are being operated or developed (or we expect will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living.

At October 31, 2020, we had approximately 2,000 units in for-rent apartment projects that were occupied or ready for occupancy, 2,200 units in the lease-up stage, 11,100 units in the design phase or under development, and 5,500 units in the planning stage.

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Gibraltar Joint Ventures

Over the past three years, we, through Gibraltar, entered into several ventures with an institutional investor to provide builders and developers with land banking and venture capital.

Over the past three years, we, through Gibraltar, entered into several ventures with an institutional investor to provide financing and land banking to residential buildings and developers.

We have approximately a 25% interest in these ventures.

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As of October 31, 2020, we had an investment of $22.1 million in these ventures.

Regulation and Environmental Matters

Regulatory and Environmental Matters

We are subject to various local, state, and federal statutes, ordinances, rules, and regulations concerning zoning, building design, construction, and similar matters, including local regulations that impose restrictive zoning and density requirements.

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In order to secure certain approvals in some areas, we may be required to provide affordable housing at below market rental or sales prices.

The impact of these requirements on us depends on how the various state and local governments in the areas in

which we engage, or intend to engage, in development implement their programs for affordable housing.

The impact of these requirements on us depends on how the various state and local governments in the areas in which we engage, or intend to engage, in development implement their programs for affordable housing.

To date, these restrictions have not had a material impact on us.

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Complying with these environmental laws may result in delays, may cause us to incur substantial compliance and other costs, and/or may prohibit or severely restrict development in certain environmentally sensitive regions or areas.

Before consummating an acquisition, we generally engage independent environmental consultants to evaluate land for the potential of hazardous or toxic materials, wastes, or substances, and we believe that because of this, we have not been significantly affected to date by the presence of such materials on our land.

Before consummating an acquisition of land, we generally engage independent environmental consultants to evaluate land for the potential of hazardous or toxic materials, wastes, or substances, and we believe that because of this, we have not been significantly affected to date by the presence of such materials on our land.

Our mortgage subsidiary is subject to various state and federal statutes, rules, and regulations, including those that relate to licensing, lending operations, and other areas of mortgage origination and financing.

The impact of those statutes, rules, and regulations can be to increase our home buyers’ cost of financing, increase our cost of doing business, and restrict our home buyers’ access to some types of loans.

The impact of those statutes, rules, and

regulations can be to increase our home buyers’ cost of financing, increase our cost of doing business, and restrict our home buyers’ access to some types of loans.

Insurance/Warranty

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We accrue for our expected costs associated with the deductibles and self-insured amounts.

At October 31, 2019 , we employed approximately 5,100 persons full-time.

At October 31, 2019 , we were subject to one collective bargaining agreement that covered less than 2% of our employees.

We believe our employee relations are good.

Human Capital Resources

At October 31, 2020, we employed approximately 4,500 persons full-time, as compared to 5,100 employees at October 31, 2019.

At October 31, 2020, less than 2% of our employees were covered by a collective bargaining agreement.

We believe our employees are among our most important resources and are critical to our continued success.

We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization.

Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues.

We pay our employees competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry.

We are committed to hiring, developing and supporting a diverse and inclusive workplace.

Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace.

All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination.

During fiscal 2020, in response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees, our subcontractors and our customers.

These protocols include complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

In addition, we modified the way we conduct many aspects of our business to reduce the number of in-person interactions.

For example, we significantly expanded the use of virtual interactions in all aspects of our business, including customer facing activities.

Many of our administrative and operational functions during this time have required modification as well, including most of our workforce working remotely.

For a detailed discussion of the impact of the COVID-19 pandemic on our human capital resources, see “Risk Factors - Public health issues such as the COVID-19 pandemic have adversely affected, and could in the future adversely affect, our business or financial results in Item 1A of this Form 10-K.

Available Information

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One can identify these statements by the fact that they do not relate to matters of strictly historical or factual nature and generally discuss or relate to future events.

These statements contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should,” and other words or phrases of similar meaning.

These statements contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should,” “likely,” “will,” and other words or phrases of similar meaning.

Such statements may include, but are not limited to, information related to:

the impact of COVID-19 on the U.S.

economy, the markets in which we operate or may operate, and on our business;

our strategic priorities;

our land acquisition, land development and capital allocation priorities;

market conditions;

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changes in accounting treatment;

cost of revenues;

cost of revenues, including expected labor and material costs;

selling, general and administrative expenses;

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home warranty and construction defect claims;

tax benefits;

unrecognized tax benefits;

anticipated tax refunds;

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anticipated results from our investments in unconsolidated entities;

the ability to acquire land and pursue real estate opportunities;

the ability to gain approvals and open new communities;

the ability to sell homes and properties;

the ability to deliver homes from backlog;

the ability to secure materials and subcontractors;

the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities;

and legal proceedings, investigations, and claims.

our ability to acquire land and pursue real estate opportunities;

our ability to gain approvals and open new communities;

our ability to market, construct and sell homes and properties;

our ability to deliver homes from backlog;

our ability to secure materials and subcontractors;

our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities;

and the outcome of legal proceedings, investigations, and claims.

Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate.

Many of the factors mentioned in “Item 1A - Risk Factors” below or in other reports or public statements made by us will be important in determining our future performance.

Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

From time to time, forward-looking statements also are included in other reports on Forms 10-Q and 8-K;

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on our website;

and in other materials released to the public.

This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties.

Many factors mentioned in this report or in other reports or public statements made by us, such as market conditions, government regulation and the competitive environment, will be important in determining our future performance.

Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

and in other materials released to the public.This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties.

Forward-looking statements speak only as of the date they are made.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

For a discussion of factors that we believe could cause our actual results to differ materially from expected and historical results, see “Item 1A – Risk Factors” below.

For a more detailed discussion of factors that we believe could cause our actual results to differ materially from expected and historical results, see “Item 1A – Risk Factors” below.

This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all of our forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business