9 unchanged sentences
Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Independent Registered Public Accounting Firm
−Removed: Management’s Annual Report on Internal Control Over Financial Reporting and the attestation report of our independent registered public accounting firm on internal control over financial reporting on pages F-1 and F-2, respectively, are incorporated herein by reference.
−Removed: The Company is in the process of evaluating the existing controls and procedures of each of The Thrive Group, LLC and Keller Homes, Inc.
−Removed: and integrating their controls into the Company’s internal control over financial reporting.
−Removed: In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we have excluded each of The Thrive Group, LLC and Keller Homes, Inc.
−Removed: from the Company’s assessment of the effectiveness of internal control over financial reporting as of October 31, 2020.
−Removed: These companies represented approximately 1% of the Company’s total assets as of October 31, 2020 and less than 1% of the Company’s revenues for the fiscal year ended October 31, 2020.
−Removed: The Company's acquisition of each of these companies is discussed in Note 2 to its Consolidated Financial Statements for fiscal 2020.
+Added: Management’s Annual Report on Internal Control Over Financial Reporting and the attestation report of our independent registered public accounting firm on internal control over financial reporting on pa ges F-1 and F-2, re spectively, are incorporated herein by reference.
+Added: The Company is in the process of evaluating the existing controls and procedures of StoryBook Homes, LLC and integrating its controls into the Company’s internal control over financial reporting.
+Added: In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we have excluded StoryBook Homes, LLC from the Company’s assessment of the effectiveness of internal control over financial reporting as of October 31, 2021.
+Added: This company represented less than 1% of the Company’s total assets as of October 31, 2021 and less than 1% of the Company’s revenues for the fiscal year ended October 31, 2021.
+Added: The Company's acquisition of this company is discussed in Note 2 to its Consolidated Financial Statements for fiscal 2021.
Changes in Internal Control Over Financial Reporting
7 unchanged sentences
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
−Removed: The following table includes information with respect to all persons serving as executive officers as of the date of this
+Added: The following table includes information with respect to all persons serving as executive officers as of the date of this Form 10-K (or, in the case of Mr.
+Added: Boyd, as of October 31, 2021).
All executive officers serve at the pleasure of our Board of Directors.
Name Age Positions
−Removed: 60 Chairman of the Board, President and Chief Executive Officer
−Removed: Boyd 64 Executive Vice President and Co-Chief Operating Officer
−Removed: Robert Parahus 57 Executive Vice President and Co-Chief Operating Officer
+Added: 61 Chairman of the Board and Chief Executive Officer
+Added: Boyd 65 Former Executive Vice President and Co-Chief Operating Officer
+Added: Robert Parahus 58 President and Chief Operating Officer
Connor 57 Senior Vice President and Chief Financial Officer
1 unchanged sentence
He has been an officer since 1994, holding the position of Senior Vice President from January 2002 until November 2005, the position of Regional President from November 2005 until November 2009, and the position of Executive Vice President from November 2009 until June 2010, when he was promoted to Chief Executive Officer.
−Removed: On November 1, 2018, he was appointed to the position of Chairman of the Board and Chief Executive Officer and was appointed President effective November 1, 2019.
+Added: On November 1, 2018, he was appointed to the position of Chairman of the Board and Chief Executive Officer.
Yearley was elected a Director in June 2010.
3 unchanged sentences
Boyd oversaw the Company’s home building operations in California, Nevada and Idaho.
+Added: Effective November 1, 2021, Mr.
+Added: Boyd resigned from his role as Executive Vice President and Co-Chief Operating Officer and will retire from all positions with the Company on December 31, 2021.
Robert Parahus joined us in 1986 and served in various positions with us, including Regional President from 2006 through October 31, 2019.
+Added: During this time, he oversaw the Company’s home building operations in New Jersey, New York, Connecticut, Massachusetts, and Florida, and had oversight responsibility for Toll Integrated Systems, the Company’s building component manufacturing operations.
He was appointed to the position of Executive Vice President and Co-Chief Operating Officer effective November 1, 2019, with responsibility for the Company’s eastern region.
−Removed: Prior to his appointment to Executive Vice President and Co-Chief Operating Officer, Mr.
−Removed: Parahus oversaw the Company’s home building operations in New Jersey, New York, Connecticut, Massachusetts and Florida, and had oversight responsibility for Toll Integrated Systems, the Company’s building component manufacturing operations.
+Added: Effective November 1, 2021, Mr.
+Added: Parahus was promoted to President and Chief Operating Officer.
Connor joined us as Vice President and Assistant Chief Financial Officer in December 2008 and was appointed a Senior Vice President in December 2009.
40 unchanged sentences
3.3 Certificate of Amendment of the Second Restated Certificate of Incorporation of the Registrant, dated as of March 16, 2011, is hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2011.
−Removed: 3.4 Certificate of Amendment of the Second Restated Certificate of Incorporation of the Registrant, dated as of March 8, 2016, is hereby incorporated by reference to Annex B to the Registrant’s definitive proxy statement on Schedule 14A its 2016 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on February 2, 2016.
Exhibit Number Description
+Added: 3.4 Certificate of Amendment of the Second Restated Certificate of Incorporation of the Registrant, dated as of March 8, 2016, is hereby incorporated by reference to Annex B to the Registrant’s definitive proxy statement on Schedule 14A its 2016 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on February 2, 2016.
3.5 Bylaws of the Registrant, as Amended and Restated June 11, 2008, are hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2008.
14 unchanged sentences
4.7 Form of Global Note for Toll Brothers Finance Corp.’s 4.375% Senior Notes due 2023 is hereby incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 10, 2013.
−Removed: 4.8 Authorizing Resolutions, dated as of November 21, 2013, relating to the $250,000,000 principal amount of 5.625% Senior Notes due 2024 of Toll Brothers Finance Corp.
−Removed: guaranteed on a senior basis by the Registrant and certain of its subsidiaries, is hereby incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2013.
−Removed: 4.9 Form of Global Note for Toll Brothers Finance Corp.’s 5.625% Senior Notes due 2024 is hereby incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2013.
4.8 Authorizing Resolutions, dated as of October 30, 2015, relating to the $350,000,000 principal amount of 4.875% Senior Notes due 2025 of Toll Brothers Finance Corp.
guaranteed on a senior basis by the Registrant and certain of its subsidiaries, is hereby incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2015.
−Removed: Exhibit Number Description
4.9 Form of Global Note for Toll Brothers Finance Corp.’s 4.875% Senior Notes due 2025 is hereby incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2015.
+Added: Exhibit Number Description
4.10 Authorizing Resolutions, dated as of March 10, 2017, relating to the $300,000,000 principal amount of 4.875% Senior Notes due 2027 of Toll Brothers Finance Corp.
37 unchanged sentences
A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 on the Registrant’s Form 10-Q for the quarter ended April 30, 2020.
−Removed: 4.44 Twenty-fifth Supplemental Indenture dated as of October 30, 2020, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee.
−Removed: 4.45 Description of Certain of Registrant’s Securities is hereby incorporated by reference to Exhibit 4.43 of the Registrant’s Form 10-K for the year ended October 31, 2019.
+Added: 4.42 Twenty-fifth Supplemental Indenture dated as of October 30, 2020, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.44 of the Registrant’s Form 10-K for the year ended October 31, 2020.
+Added: 4.43 Twenty-sixth Supplemental Indenture dated as of April 30, 2021, to the Indenture dated as of February 7, 2012 by and among the parties listed on Schedule A thereto, and The Bank of New York Mellon, as successor Trustee, is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-A for the quarter ended April 30, 2021.
+Added: 4.44 Description of Certain of Registrant’s Securities.**
10.1 Amended and Restated Credit Agreement, dated as of October 31, 2019, among the First Huntingdon Finance Corp., Toll Brothers, Inc., and the lenders party thereto and Citibank, N.A., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 1, 2019.
10.2 Revolving Extension Agreements, effective as of October 31, 2020, with respect to the Amended and Restated Credit Agreement, dated as of October 31, 2019, among the Borrower, the Registrant, the lenders party thereto and Citibank, N.A., as Administrative Agent is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2020.
+Added: 10.3 Revolving Extension Agreements, effective as of October 31, 2021, with respect to the Amended and Restated Credit Agreement, dated as of October 31, 2019, among the Borrower, the Registrant, the lenders party thereto and Citibank, N.A., as Administrative Agent is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2021.
10.4 Credit Agreement by and among First Huntingdon Finance Corp., Toll Brothers, Inc., the lenders party thereto and SunTrust Bank, as Administrative Agent dated February 3, 2014, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 5, 2014
+Added: Exhibit Number Description
10.5 Amendment No.
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2, dated August 2, 2016, to Credit Agreement dated as of February 3, 2014, as amended, by and among First Huntingdon Finance Corp., Toll Brothers, Inc., the designated guarantors party thereto, the lenders party thereto and SunTrust Bank, as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on August 4, 2016.
−Removed: Exhibit Number Description
10.7 Amendment No.
7 unchanged sentences
4, dated as of November 1, 2019) among the Registrant, the Borrower, the lenders party thereto and SunTrust Bank, as Administrative Agent is hereby incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2020.
+Added: 10.10 Term Loan Extension Agreements, effective as of October 31, 2021, with respect to the Term Loan Credit Agreement dated as of February 3, 2014 (as amended by Amendment No.
+Added: 1, dated as of May 19, 2016, Amendment No.
+Added: 2, dated as of August 2, 2016, Amendment No.
+Added: 3, dated as of November 1, 2018, and Amendment No.
+Added: 4, dated as of November 1, 2019) among the Registrant, the Borrower, the lenders party thereto and Truist Bank (as successor by merger to SunTrust Bank), as Administrative Agent is hereby incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2020.
10.11* Toll Brothers, Inc.
14 unchanged sentences
Stock Incentive Plan for Employees (2007) is hereby incorporated by reference to Exhibit 10.3 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007.
+Added: Exhibit Number Description
10.17* Form of Stock Award Grant pursuant to the Toll Brothers, Inc.
7 unchanged sentences
10.21* Form of Non-Qualified Stock Option Grant, is hereby incorporated by reference to Exhibit 10.18 of the Registrant’s Form 10-K for the year ended October 31, 2016.
−Removed: Exhibit Number Description
10.22* Form of Restricted Stock Unit Agreement (Performance Based), is hereby incorporated by reference to Exhibit 10.19 of the Registrant’s Form 10-K for the year ended October 31, 2016.
20 unchanged sentences
2019 Omnibus Incentive Plan, is hereby incorporated by reference to Exhibit 10.29 of the Registrant’s Form 10-K for the year ended October 31, 2019.
+Added: Exhibit Number Description
10.34* Form of Restricted Stock Unit Agreement (Performance Based) pursuant to the Toll Brothers, Inc.
9 unchanged sentences
Non-Qualified Deferred Compensation Plan, amended and restated as of November 1, 2008, is incorporated by reference to Exhibit 10.45 of the Registrant’s Form 10-K for the period ended October 31, 2008.
−Removed: Exhibit Number Description
10.39* Amendment Number 1 dated November 1, 2010 to the Toll Bros., Inc.
10 unchanged sentences
10.44* Form of Indemnification Agreement between the Registrant and the members of its Board of Directors, is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2009.
−Removed: 10.43* Advisory and Non-Competition Agreement between the Registrant and Robert I.
−Removed: Toll, dated as of October 17, 2018, is hereby incorporated by reference to Exhibit 10.34 to the Registrant’s Form 10-K for the year ended October 31, 2018.
−Removed: 10.44* Advisory and Non-Competition Agreement Extension between the Registrant and Robert I.
−Removed: Toll, dated as of October 29, 2019, is hereby incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2019.
−Removed: 10.45* Advisory and Non-Competition Agreement Extension between the Registrant and Robert I.
−Removed: Toll, dated as of October 16.2020**
21** Subsidiaries of the Registrant .
12 unchanged sentences
(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.
+Added: Exhibit Number Description
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
22 unchanged sentences
Grubb Officer (Principal Accounting Officer)
−Removed: /s/ Edward G.
−Removed: Boehne Director December 22, 2020
/s/ Richard J.
7 unchanged sentences
McLean Director December 17, 2021
−Removed: /s/ Stephen A.
−Removed: Director December 22, 2020
−Removed: Signature Title Date
/s/ Wendell E.
Pritchett Director December 17, 2021
+Added: Signature Title Date
Shapiro Director December 17, 2021
12 unchanged sentences
Based on this evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of October 31, 2021.
−Removed: During fiscal 2020, we completed the acquisitions of each of The Thrive Group, LLC (“Thrive”) and Keller Homes, Inc.
−Removed: In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we have excluded each of Thrive and Keller from the Company’s assessment of the effectiveness of internal control over financial reporting as of October 31, 2020.
−Removed: These companies represented approximately 1% of the Company’s total assets as of October 31, 2020 and less than 1% of the Company’s revenues for the fiscal year ended October 31, 2020.
+Added: During fiscal 2021, we completed the acquisition of each of StoryBook Homes, LLC (“StoryBook”).
+Added: In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we have excluded StoryBook from the Company’s assessment of the effectiveness of internal control over financial reporting as of October 31, 2021.
+Added: This company represented less than 1% of the Company’s total assets as of October 31, 2021 and less than 1% of the Company’s revenues for the fiscal year ended October 31, 2021.
Our independent registered public accounting firm, Ernst & Young LLP, has issued its report, which is included herein, on the effectiveness of our internal control over financial reporting.
5 unchanged sentences
(the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2021, based on the COSO criteria.
−Removed: As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of The Thrive Group, LLC and Keller Homes, Inc., which are included in the 2020 consolidated financial statements of the Company and constitute approximately 1% of total assets as of October 31, 2020 and less than 1% of revenues for the year then ended.
−Removed: Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of The Thrive Group, LLC and Keller Homes, Inc.
+Added: As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of StoryBook Homes, LLC, which are included in the 2021 consolidated financial statements of the Company and constitute less than 1% of total assets as of October 31, 2021 and less than 1% of revenues for the year then ended.
+Added: Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of StoryBook Homes, LLC.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements of the Company and our report dated December 17, 2021 expressed an unqualified opinion thereon.
26 unchanged sentences
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 17, 2021 expressed an unqualified opinion thereon.
−Removed: Adoption of ASU No.
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue recognition, inventory and cost of revenues in 2019 due to the adoption of ASU No.
−Removed: 2014-09, Revenue from Contracts with Customers (Topic 606) , and related Subtopic ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers.
−Removed: Adoption of ASU No.
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2020 due to the adoption of ASU No.
−Removed: 2016-02, Leases.
Basis for Opinion
13 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Water Intrusion Reserves
−Removed: Description of the Matter As described in Note 7 of the consolidated financial statements, the Company accrues for the estimated repair costs to be incurred for known and unknown water intrusion claims from owners of certain homes built in Pennsylvania and Delaware.
−Removed: At October 31, 2020, the Company had an accrued liability for water intrusion claims of $79.5 million, representing its best estimate of the expected costs related to known and future water intrusion claims.
−Removed: The Company calculated the estimated liability for water intrusion claims using assumptions that are subject to significant uncertainty, including the number of homes that require repairs, outcomes of litigation or arbitrations, the extent of repairs required, the repair procedures employed, and the expected costs of those repairs or costs incurred to otherwise settle the homeowner’s claim.
−Removed: Due to the degree of judgment required in making these assumptions and the inherent uncertainty of certain outcomes, it is reasonably possible that the actual costs will differ from the amount accrued.
−Removed: If it is reasonably possible that such additional costs may be incurred and the effect on the financial statements is material, the Company discloses an estimate of the amount or range of additional costs or a statement that such an estimate cannot be made within the notes to the financial statements.
−Removed: Auditing the Company’s accounting for water intrusion claims, and the related disclosures, was especially challenging as evaluating the likelihood and amount of cost was highly subjective and required significant judgment.
−Removed: In particular, management’s estimates were sensitive to assumptions about the number of claims and the costs to settle the claims, which are projected to be resolved over an extended period of time, and the amount accrued by the Company was sensitive to relatively small changes in those assumptions.
−Removed: How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the accrual calculation, including controls over the significant assumptions and the data inputs utilized in the calculations, as well as the financial statement disclosures.
−Removed: For example, we tested controls over management’s review of the accrual calculation, including its review of the significant assumptions and the data inputs utilized in the calculations.
−Removed: We also tested controls over management’s review of the disclosure in the notes to the consolidated financial statements for compliance with generally accepted accounting principles.
−Removed: To test the estimated liability and related financial statement disclosures for water intrusion claims, we performed audit procedures that included, among others, testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.
−Removed: We compared the significant assumptions used by management to historical water intrusion claims data, historical data about additional homes delivered by the Company that could potentially be subject to water intrusion claims, and historical costs incurred to either repair homes or otherwise settle water intrusion claims from homeowners.
−Removed: We also reviewed contractual agreements and evaluated management’s conclusions about the Company’s legal and contractual obligations with respect to water intrusion claims.
−Removed: We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the accrual for water intrusion claims that would result from changes in the assumptions.
−Removed: We recalculated the Company’s liability for water intrusion claims using management’s data and evaluated the disclosure of the liability in the Company’s consolidated financial statements.
−Removed: Insurance Receivable
−Removed: Description of the Matter As described in Note 7 of the consolidated financial statements, the Company recorded a receivable for expected recoveries from insurance carriers.
−Removed: At October 31, 2020, the Company recorded an estimated insurance receivable of $68.4 million, inclusive of amounts that are subject to dispute with the Company’s insurance carriers.
−Removed: Auditing management’s accounting for the existence of insurance receivable was especially challenging due to the complexity and variability of the underlying claims.
−Removed: Evaluating the likelihood and amount of recoveries from insurance carriers was highly subjective and required significant judgment.
−Removed: In particular, as stated in Note 7 of the consolidated financial statements, management’s estimates were sensitive to assumptions about the amount of losses that the Company will incur on warranty related repairs by policy year and management’s conclusions about the legal merits that support the pending and future insurance claims.
−Removed: How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the expected recoveries from insurance carriers and the recorded receivable, including controls over the significant assumptions and the data inputs used to calculate the expected recoverable amount, as well as the financial statement disclosures.
−Removed: For example, we tested controls over management’s review of the insurance policies and related coverage, the legal merits of the claims made and the expected amounts to be covered under those insurance policies.
−Removed: To test the expected recoveries from insurance carriers, we performed audit procedures that included, among others, reading and understanding the Company’s insurance policies, testing the claims submitted under the Company’s insurance policies to verify the completeness, occurrence and measurement of the loss, and, when applicable, vouching cash receipts from the insurance carrier for previously submitted claims.
−Removed: We also tested the Company’s calculation of the losses the Company expects to incur on warranty related repairs by policy year.
−Removed: We reviewed communications between the Company and its insurance carriers and evaluated management’s conclusions about the legal merits of the insurance claims with respect to the recorded receivable by performing procedures that included, among others, reviewing correspondence from external counsel regarding the legal merits of the Company’s insurance claims.
+Added: Accrual for Self-Insurance
+Added: Description of the Matter As described in Notes 1 and 7 of the consolidated financial statements, the Company maintains general liability insurance, including construction defect and bodily injury coverage, and workers’ compensation insurance.
+Added: These insurance policies protect the Company against a portion of the risk of loss from claims related to home building activities, subject to certain self-insured retentions, deductibles and other coverage limits.
+Added: The Company accrues for expected costs associated with the self-insured retentions, deductibles and other coverage limits which constitute the accrual for self-insurance.
+Added: The Company’s accrual for self-insurance was $236.4 million as of October 31, 2021.
+Added: The Company records expenses and accrues liabilities based on the estimated costs required to cover the accrual for self-insurance and the estimated costs of potential claims and claim adjustment expenses that are above coverage limits or that are not covered by insurance policies.
+Added: These estimated costs are based on an analysis of historical claims and industry data.
+Added: The majority of the accrual for self-insurance is an estimate of claims incurred but not yet reported (“IBNR”).
+Added: The Company engages a third-party actuary that uses historical claim and expense data, input from the Company’s internal legal and risk management groups, as well as industry data, to estimate the IBNR associated with the risks that the Company is assuming for its accrual for self-insurance, and other required costs to administer current and expected claims.
+Added: These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a home buyer and when a structural warranty or construction defect claim may be made, and the ultimate resolution of the claim.
+Added: Auditing the Company’s estimate of IBNR was especially challenging as evaluating the projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to markets and types of product the Company build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors.
+Added: Key assumptions used in these estimates include claim frequencies, severity, and settlement patterns, which can occur over an extended period of time.
+Added: In addition, the estimate of IBNR is sensitive to significant assumptions including changes in the frequency and severity of reported claims and loss development factors for reported claims.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the estimate of IBNR, including controls over the significant assumptions and the data inputs used in the actuarial analysis.
+Added: For example, we tested controls over management’s review of the actuarial analysis, including its review of the model and methodology, significant assumptions and the data inputs used in the analysis.
+Added: To test the estimate of IBNR we performed audit procedures that included, among others, testing the significant assumptions as well as the completeness and accuracy of the underlying data used by the Company as inputs to develop the assumptions.
+Added: We reviewed the Company’s contractual self-insured retentions, deductibles and other coverage limits.
+Added: We also evaluated management’s conclusions about the Company’s legal and contractual obligations with respect to certain claims.
+Added: We involved our internal actuarial specialists to assist in evaluating the Company’s estimate of IBNR, including evaluating the appropriateness of the model and methodology used by management, evaluating the reasonableness of the actuarial assumptions used by management and independently calculating an estimate of IBNR.
Inventory Impairment
−Removed: Description of the Matter As described in Note 1 of the consolidated financial statements, the Company states its inventory at cost unless an impairment exists, in which case the inventory is written down to fair value.
−Removed: For the year ended October 31, 2020, the Company recorded inventory impairment charges of $32.3 million.
+Added: Description of the Matter As described in Notes 1 and 3 of the consolidated financial statements, the Company states its inventory at cost unless an impairment exists, in which case the inventory is written down to fair value.
+Added: For the year ended October 31, 2021, the Company recorded inventory impairment charges of $20.9 million to operating communities and land owned for future communities.
The Company regularly evaluates whether there are any impairment indicators for inventory present at the community level.
11 unchanged sentences
We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of inventory that would result from changes in the assumptions.
+Added: We also evaluated the Company’s disclosures in its consolidated financial statements.
/s/ Ernst & Young LLP
8 unchanged sentences
Receivables, prepaid expenses, and other assets (1)
+Added: 738,078 956,294
Mortgage loans held for sale, at fair value 247,211 231,797
14 unchanged sentences
Preferred stock, none issued — —
−Removed: Common stock, 152,937 shares issued at October 31, 2020 and 2019 1,529 1,529
+Added: Common stock, 127,937 and 152,937 shares issued at October 31, 2021 and 2020, respectively 1,279 1,529
Additional paid-in capital 714,453 717,272
1 unchanged sentence
Treasury stock, at cost — 7,820 and 26,410 shares at October 31, 2021 and 2020, respectively ( 391,656 ) ( 1,000,454 )
−Removed: Accumulated other comprehensive loss ( 7,198 ) ( 5,831 )
+Added: Accumulated other comprehensive income (loss) ("AOCI") 1,109 ( 7,198 )
Total stockholders’ equity 5,295,024 4,875,235
20 unchanged sentences
Other income – net 40,614 35,693 81,502
+Added: Expenses related to early retirement of debt ( 35,211 ) — —
Income before income taxes 1,100,315 586,901 787,170
1 unchanged sentence
Net income $ 833,627 $ 446,624 $ 590,007
−Removed: Other comprehensive (loss) income, net of tax ( 1,367 ) ( 6,525 ) 2,926
+Added: Other comprehensive income (loss), net of tax 8,307 ( 1,367 ) ( 6,525 )
Total comprehensive income $ 841,934 $ 445,257 $ 583,482
9 unchanged sentences
Earnings Treasury
−Removed: hensive Loss Stock-holders’ Equity Non-controlling Interest Total
+Added: Stock AOCI Stock-holders’ Equity Non-controlling Interest Total
Shares $ $ $ $ $ $ $ $
Balance, 11/1/2018 177,937 1,779 727,053 5,161,551 ( 1,130,878 ) 694 4,760,199 8,713 4,768,912
−Removed: Cumulative effect adjustment upon adoption of ASU 2016-09 and ASU 2018-02 372 1,413 ( 322 ) 1,463 1,463
+Added: Cumulative effect adjustment upon adoption of ASC 606, net of tax ( 17,987 ) ( 17,987 ) ( 17,987 )
Net income 590,007 590,007 590,007
5 unchanged sentences
Stock-based compensation 26,180 26,180 26,180
+Added: Cancellation of treasury
+Added: stock ( 25,000 ) ( 250 ) ( 895,267 ) 895,517 — —
Dividends declared
( 63,882 ) ( 63,882 ) ( 63,882 )
−Removed: Other comprehensive income
−Removed: 2,926 2,926 2,926
+Added: Other comprehensive loss ( 6,525 ) ( 6,525 ) ( 6,525 )
Loss attributable to non-controlling interest — ( 19 ) ( 19 )
−Removed: — ( 15 ) ( 15 )
−Removed: Capital contribution — 2,832 2,832
+Added: Capital contributions, net — 38,183 38,183
Balance, 10/31/2019 152,937 1,529 726,879 4,774,422 ( 425,183 ) ( 5,831 ) 5,071,816 46,877 5,118,693
−Removed: Cumulative effect adjustment upon adoption of ASC 606, net of tax ( 17,987 ) ( 17,987 ) ( 17,987 )
Net income 446,624 446,624 446,624
5 unchanged sentences
Stock-based compensation 24,326 24,326 24,326
−Removed: Cancellation of treasury stock ( 25,000 ) ( 250 ) ( 895,267 ) 895,517 — —
Dividends declared
3 unchanged sentences
— ( 10 ) ( 10 )
−Removed: Capital contributions — 38,183 38,183
+Added: Capital contributions, net — 5,374 5,374
Balance, 10/31/2020 152,937 1,529 717,272 5,164,086 ( 1,000,454 ) ( 7,198 ) 4,875,235 52,241 4,927,476
+Added: Cumulative effect adjustment upon adoption of ASU 2016-13, net of tax ( 595 ) ( 595 ) ( 595 )
Net income 833,627 833,627 833,627
5 unchanged sentences
Stock-based compensation 23,187 23,187 23,187
+Added: Cancellation of treasury stock
+Added: ( 25,000 ) ( 250 ) ( 950,315 ) 950,565 — —
Dividends declared ( 76,964 ) ( 76,964 ) ( 76,964 )
3 unchanged sentences
— ( 6,770 ) ( 6,770 )
−Removed: Capital contributions — 5,374 5,374
+Added: Capital distributions, net — ( 40 ) ( 40 )
Balance, 10/31/2021 127,937 1,279 714,453 4,969,839 ( 391,656 ) 1,109 5,295,024 45,431 5,340,455
11 unchanged sentences
Distributions of earnings from unconsolidated entities 83,118 27,236 31,799
−Removed: Income from foreclosed real estate and distressed loans ( 623 ) ( 947 ) ( 1,551 )
−Removed: Deferred tax provision (benefit) 97,780 102,764 ( 21,930 )
+Added: Deferred tax provision 11,815 97,780 102,764
Inventory impairments and write-offs 26,535 55,883 42,360
−Removed: Gain on the sale of golf club properties and an office building ( 12,970 ) ( 36,277 ) —
+Added: Gain on sale of assets ( 38,706 ) ( 12,970 ) ( 36,277 )
Other ( 406 ) ( 3,774 ) ( 1,989 )
+Added: Expenses related to early retirement of debt 35,211 — —
Changes in operating assets and liabilities:
−Removed: Decrease (increase) in inventory 352,858 ( 40,236 ) ( 143,598 )
+Added: Inventory ( 196,227 ) 352,858 ( 40,236 )
Origination of mortgage loans ( 2,178,468 ) ( 1,815,824 ) ( 1,611,496 )
Sale of mortgage loans 2,159,827 1,806,278 1,565,944
−Removed: Increase in receivables, prepaid expenses, and other assets ( 176,293 ) ( 185,261 ) ( 99,604 )
−Removed: Increase in income taxes receivable ( 2,884 ) ( 20,791 ) —
−Removed: Increase (decrease) in customer deposits – net 70,423 14,041 ( 718 )
−Removed: Increase (decrease) in accounts payable and accrued expenses 71,835 ( 64,518 ) 57,927
−Removed: Decrease in income taxes payable ( 1,306 ) ( 22,147 ) ( 4,296 )
+Added: Receivables, prepaid expenses, and other assets 135,806 ( 176,293 ) ( 185,261 )
+Added: Income taxes receivable 23,675 ( 2,884 ) ( 20,791 )
+Added: Customer deposits – net 165,637 70,423 14,041
+Added: Accounts payable and accrued expenses 214,825 71,835 ( 64,518 )
+Added: Income taxes payable 1,456 ( 1,306 ) ( 22,147 )
Net cash provided by operating activities 1,303,127 1,008,117 437,661
−Removed: Cash flow (used in) provided by investing activities:
+Added: Cash flow used in investing activities:
Purchase of property, construction, and office equipment – net ( 66,878 ) ( 109,564 ) ( 86,971 )
1 unchanged sentence
Return of investments in unconsolidated entities 203,504 47,403 147,927
−Removed: Investment in foreclosed real estate and distressed loans ( 1,110 ) ( 731 ) ( 966 )
−Removed: Return of investments in foreclosed real estate and distressed loans 1,808 3,147 4,765
−Removed: Proceeds from the sale of golf club properties and an office building 15,617 79,647 —
+Added: Proceeds from the sale of assets 80,418 15,617 79,647
Business acquisitions — ( 60,349 ) ( 162,373 )
−Removed: Net cash (used in) provided by investing activities ( 177,845 ) ( 75,914 ) 81,266
+Added: Other 652 698 2,416
+Added: Net cash used in investing activities ( 4,236 ) ( 177,845 ) ( 75,914 )
Cash flow used in financing activities:
27 unchanged sentences
As a result, actual results could differ from the estimates and assumptions we make that affect the amounts reported in the Consolidated Financial Statements and accompanying notes, and such differences may be material.
−Removed: Reclassifications
−Removed: Effective October 31, 2020, we reclassified sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense in our Consolidated Statements of Operations and Comprehensive Income.
−Removed: The reclassification aligns the treatment of sales commissions paid to third-party brokers with the treatment of sales commissions paid to in-house salespersons, and is consistent with the manner in which the majority of the Company’s peers treat such commissions.
−Removed: The reclassification had the effect of lowering home sales cost of revenues (and increasing home sales gross margin) and increasing selling, general and administrative expense by the amount of third-party broker commissions, which totaled $ 138.6 million, $ 144.7 million and $ 136.2 million, or 2.0 %, 2.0 % and 1.9 % of home sales revenues, for the years ended October 31, 2020, 2019 and 2018, respectively.
−Removed: All prior period amounts have been reclassified to conform to the 2020 presentation.
Cash and Cash Equivalents
11 unchanged sentences
Interest incurred on home building indebtedness in excess of qualified inventory, as defined in ASC 835-20, is charged to the Consolidated Statements of Operations and Comprehensive Income in the period incurred.
+Added: During fiscal 2021, 2020 and 2019, the Company’s qualified inventory exceeded its indebtedness and all interest incurred was capitalized to inventory.
+Added: See Note 3, “Inventory”.
Once a parcel of land has been approved for development and we open one of our typical communities, it may take four or more years to fully develop, sell, and deliver all the homes in such community.
−Removed: Longer or shorter time periods are possible
−Removed: depending on the number of home sites in a community and the sales and delivery pace of the homes in a community.
+Added: Longer or shorter time periods are possible depending on the number of home sites in a community and the sales and delivery pace of the homes in a community.
Our master-planned communities, consisting of several smaller communities, may take up to 10 years or more to complete.
5 unchanged sentences
The impairment is charged to home sales cost of revenues in the period in which the impairment is determined.
−Removed: In estimating the future undiscounted cash flow of a community, we use various estimates such as (i) the expected sales pace in a community, based upon general economic conditions that will have a short-term or long-term impact on the market in which the community is located and on competition within the market, including the number of home sites available and pricing and incentives being offered in other communities owned by us or by other builders;
+Added: In estimating the
+Added: future undiscounted cash flow of a community, we use various estimates such as (i) the expected sales pace in a community, based upon general economic conditions that will have a short-term or long-term impact on the market in which the community is located and on competition within the market, including the number of home sites available and pricing and incentives being offered in other communities owned by us or by other builders;
(ii) the expected sales prices and sales incentives to be offered in a community;
23 unchanged sentences
Property, construction, and office equipment are recorded at cost and are stated net of accumulated depreciation of $ 266.3 million and $ 266.7 million at October 31, 2021 and 2020, respectively.
−Removed: For property and equipment related to onsite sales offices, depreciation is recorded using the units of production method as homes are delivered.
+Added: For property and equipment related to onsite sales centers, depreciation is recorded using the units of production method as homes are delivered.
For all other property and equipment, depreciation is recorded using a straight-line method over the estimated useful lives of the related assets.
In fiscal 2021, 2020, and 2019, we recognized $ 74.8 million, $ 67.6 million, and $ 67.6 million of depreciation expense, respectively.
−Removed: Subsequent events
−Removed: In November 2020, we closed on the sale of a parking garage at one of our City Living properties in Hoboken, New Jersey for $ 34.7 million and we expect to recognize a gain of approximately $ 24.0 million during our first quarter of fiscal 2021 as a result of this sale.
Mortgage Loans Held for Sale
13 unchanged sentences
The evaluation of our investment in unconsolidated entities entails a detailed cash flow analysis using many estimates, including, but not limited to, expected sales pace, expected sales prices, expected incentives, costs incurred and anticipated, sufficiency of financing and capital, competition, market conditions, and anticipated cash receipts, in order to determine projected future distributions from the unconsolidated entity.
−Removed: In addition, for in vestments in rental properties, we review rental trends, expected future expenses, and expected cash flows to determine estimated fair values of the properties.
+Added: In addition, for investments in rental properties, we review rental trends, expected future expenses, and expected cash flows to determine estimated fair values of the properties.
Our unconsolidated entities that develop land or develop for-sale homes and condominiums evaluate their inventory in a similar manner as we do.
15 unchanged sentences
Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.
+Added: Derivative Instruments and Hedging Activities
+Added: Our objective in entering into derivative transactions is to manage our exposure to interest rate movements associated with certain variable rate debt, mortgage loans held for sale and forward loan commitments we have entered into related to our mortgage operations.
+Added: We recognize derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value.
+Added: We have entered into interest rate swaps related to a portion of our variable rate debt.
+Added: These derivative transactions are designated as cash flow hedges.
+Added: The entire change in the fair value of these derivative transactions included in the assessment of hedge effectiveness is initially reported in accumulated other comprehensive income (loss) and subsequently reclassified to home sales cost of revenues in the accompanying Consolidated Statements of Operations and Comprehensive Income when the hedged transaction affects earnings.
+Added: If it is determined that a derivative is not highly effective as a hedge, or if the hedged forecasted transaction is no longer probable of occurring, the amount recognized in Accumulated other comprehensive income (loss) is released to earnings.
+Added: Our derivative transactions related to our mortgage loans held for sale and our forward loan commitments are not designated as hedges and therefore the entire change in the fair value of these derivative transactions is included as a gain or loss in Other income – net in the accompanying Consolidated Statements of Operations and Comprehensive Income.
+Added: See Note 12 “Fair Value Disclosures” for more information.
Treasury Stock
3 unchanged sentences
When treasury stock is canceled, any excess purchase price over par value is charged directly to retained earnings.
+Added: In each of fiscal 2021 and 2019, we cancelled 25 million shares of treasury stock.
Revenue and Cost Recognition
−Removed: As discussed under “Recent Accounting Pronouncements” below, on November 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC 606”).
−Removed: As a result of this adoption, we updated our revenue recognition policies effective November 1, 2018, as follows:
Home sales revenues:
2 unchanged sentences
In certain states where we build, we are not able to complete certain outdoor features prior to the closing of the home.
−Removed: Effective November 1, 2018, to the extent these separate performance obligations are not complete upon the home closing, we defer a portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations.
+Added: To the extent these separate performance obligations are not complete upon the home closing, we defer a portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations.
As of October 31, 2021, the home sales revenues and related costs we deferred related to these obligations were immaterial.
14 unchanged sentences
and (3) bulk land sales to third parties of land we have decided no longer meets our development criteria.
−Removed: In general, our performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration from the counterparty.
−Removed: Effective November 1, 2018, in land sale transactions that contain repurchase options, revenues and related costs are not recognized until the repurchase option expires.
+Added: In general, our performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration
+Added: from the counterparty.
+Added: For land sale transactions that contain repurchase options, revenues and related costs are not recognized until the repurchase option expires.
In addition, when we sell land to a joint venture in which we retain an interest, we do not recognize revenue or gains on the sale to the extent of our retained interest in such joint venture.
Forfeited Customer Deposits:
−Removed: Effective November 1, 2018, forfeited customer deposits are recognized in “Home sales revenues” in our Consolidated Statements of Operations and Comprehensive Income in the period in which we determine that the customer will not complete the purchase of the home and we have the right to retain the deposit.
+Added: Forfeited customer deposits are recognized in “Home sales revenues” in our Consolidated Statements of Operations and Comprehensive Income in the period in which we determine that the customer will not complete the purchase of the home and we have the right to retain the deposit.
Sales Incentives:
5 unchanged sentences
We expense advertising costs as incurred.
−Removed: Advertising costs were $ 37.1 million, $ 38.5 million, and $ 28.5 million for the years ended October 31, 2020, 2019, and 2018, respectively.
+Added: Advertising costs, including brochures and signage, were $ 39.1 million, $ 46.3 million, and $ 48.4 million for the years ended October 31, 2021, 2020, and 2019, respectively.
Warranty and Self-Insurance
25 unchanged sentences
We use a lattice model for the valuation of our stock option grants.
−Removed: The option pricing models used are designed to estimate the value of options that, unlike employee stock options and restricted stock units, can be traded at any time and are
−Removed: transferable.
+Added: The option pricing models used are designed to estimate the value of options that, unlike employee stock options and restricted stock units, can be traded at any time and are transferable.
In addition to restrictions on trading, employee stock options and restricted stock units may include other restrictions such as vesting periods.
1 unchanged sentence
Stock-based compensation expense is generally included in “Selling, general and administrative” expense in our Consolidated Statements of Operations and Comprehensive Income.
+Added: We recognize forfeitures of stock-based awards as a reduction to compensation expense in the period in which they occur.
Legal Expenses
25 unchanged sentences
If, based on the available evidence, it is more-likely-than-not that such asset will not be realized, a valuation allowance is established against a deferred tax asset.
−Removed: The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under tax law.
+Added: The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward
+Added: periods under tax law.
This assessment considers, among other matters, the nature, consistency, and magnitude of current and cumulative income and losses;
9 unchanged sentences
We operate in two segments:
−Removed: traditional home building and urban infill.
−Removed: We build and sell homes for detached and attached homes in luxury residential communities located in affluent suburban markets and cater to move-up, empty-nester, active-adult, affordable luxury and second-home buyers in the United States (“Traditional Home Building”).
−Removed: We also build and sell homes in urban infill markets through Toll Brothers City Living ® (“City Living”).
−Removed: We have determined that our Traditional Home Building operations operate in five geographic segments.
−Removed: In the first quarter of fiscal 2020, we made certain changes to our Traditional Home Building regional management structure and realigned certain of the states falling among our five geographic segments, as follows:
+Added: Traditional Home Building and City Living, our urban development division.
+Added: Within Traditional Home Building, we operate in five geographic segments around the United States as follows:
Eastern Region:
• The North region:
−Removed: Connecticut, Delaware, Illinois, Massachusetts, Michigan, Pennsylvania, New Jersey and New York;
+Added: Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Jersey, New York and Pennsylvania;
• The Mid-Atlantic region:
7 unchanged sentences
California, Oregon and Washington.
−Removed: Previously, our geographic segments were:
−Removed: Connecticut, Illinois, Massachusetts, Michigan, New Jersey and New York;
−Removed: • Mid-Atlantic :
−Removed: Delaware, Maryland, Pennsylvania and Virginia;
−Removed: Florida, Georgia, North Carolina, South Carolina and Texas;
−Removed: Arizona, Colorado, Idaho, Nevada, Oregon, Utah and Washington;
−Removed: • California :
−Removed: Our geographic reporting segments are consistent with how our chief operating decision makers are assessing operating performance and allocating capital following the realignment of the regional management structure.
−Removed: The realignment did not have any impact on our consolidated financial position, results of operations, earnings per share or cash flows.
−Removed: Prior period segment information was restated to conform to the new reporting structure.
−Removed: In fiscal 2018, we acquired land and commenced development activities in the Salt Lake City, Utah and Portland, Oregon markets.
−Removed: We opened communities in these markets in fiscal 2019.
+Added: Our geographic reporting segments are consistent with how our chief operating decision makers are assessing operating performance and allocating capital.
+Added: We opened communities in the Salt Lake City, Utah and Portland, Oregon markets in fiscal 2019.
In addition, as a result of recent acquisitions, we commenced operations in Georgia and South Carolina in fiscal 2019 and Tennessee in fiscal 2020.
Recent Accounting Pronouncements
−Removed: In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in Rule 3-10 of Regulation S-X.
−Removed: The amended rule focuses on providing material, relevant and decision-useful information regarding guarantees and other credit enhancements, while eliminating certain prescriptive requirements.
−Removed: The Company adopted these amendments on October 31, 2020.
−Removed: Accordingly, summarized financial information has been presented only for the issuers and guarantors of the Company's registered securities for the most recent fiscal year and as permitted, this information is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: In October 2020, the FASB issued ASU 2020-09, “Debt (Topic 470) - Amendments to SEC Paragraphs Pursuant to SEC Release No.
−Removed: 33-10762,” to reflect the SEC’s new disclosure rules on guaranteed debt securities offerings adopted by the Company.
−Removed: In February 2016, the FASB issued ASU No.
−Removed: 2016-02, “Leases” (“ASU 2016-02”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures.
−Removed: In July 2018, the FASB issued ASU No.
−Removed: 2018-11, “Leases:
−Removed: Targeted Improvements” (“ASU 2018-11”), which provides an entity with the option to apply the transition provisions of the new standard at its adoption date instead of at its earliest comparative period presented.
−Removed: ASU 2018-11 also provides an entity with a practical expedient that permits lessors to not separate non-lease components from the associated lease component if certain conditions are met.
−Removed: ASU 2016-02, as amended by ASU 2018-11, became effective for our fiscal year beginning November 1, 2019, and we adopted the new standard using a modified retrospective approach.
−Removed: The prior year period was not recast and our Consolidated Balance Sheet as of October 31, 2019 does not reflect any changes resulting from the adoption of the new standard.
−Removed: We elected to apply the transition provisions that allow us to carry forward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs.
−Removed: In addition, we elected the practical expedient that allows lessees the option to account for lease and non-lease components together as a single component for all classes of underlying assets.
−Removed: As a result of the adoption, we recorded a
−Removed: right-of-use (“ROU”) asset and lease liability of $ 114.5 million and $ 118.5 million, respectively, as of November 1, 2019.
−Removed: The ROU asset is included in “Receivables, prepaid expenses, and other assets” and the corresponding lease liability is included in “Accrued expenses” in our Consolidated Balance Sheet.
−Removed: The adoption of ASU 2016-02 had no impact on retained earnings and did not materially impact our Consolidated Statements of Operations and Comprehensive Income or Consolidated Statements of Cash Flows.
In June 2016, the FASB issued ASU No.
2 unchanged sentences
ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses.
−Removed: ASU 2016-13 will be effective for our fiscal year beginning November 1, 2020.
−Removed: We believe that the adoption of ASU 2016-13 will not have a material impact on our consolidated financial statements or disclosures.
−Removed: We also do not expect significant changes to our business processes, systems, or internal controls as a result of implementing the standard.
−Removed: In May 2014, the FASB created ASC 606 with the issuance ASU No.
−Removed: 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition.
−Removed: ASC 606 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets.
−Removed: ASC 606 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition,” and most industry-specific guidance.
−Removed: ASC 606 also supersedes some cost guidance included in ASC Subtopic 605-35, “Revenue Recognition—Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services.
−Removed: In doing so, companies will need to use more judgment and make more estimates than under the previous guidance.
−Removed: These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation.
−Removed: In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers” (“ASU 2015-14”), which delayed the effective date of ASC 606 by one year.
−Removed: ASC 606, as amended by ASU 2015-14, became effective for our fiscal year beginning November 1, 2018, and we adopted the new standard under the modified retrospective transition method applied to contracts that were not completed as of November 1, 2018.
−Removed: We elected to apply the practical expedient which allows us to immediately expense incremental costs of obtaining a contract that would otherwise have been recognized in one year or less.
−Removed: We recognized the cumulative effect, net of tax, of applying ASC 606 as an adjustment to the opening balance of retained earnings.
−Removed: The comparative information has not been restated and continues to be reported under the previous accounting standards.
−Removed: The adoption of ASC 606 did not have a material impact on our Consolidated Balance Sheet or Consolidated Statement of Operations or Comprehensive Income, and there have been no significant changes to our internal controls, processes, or systems as a result of implementing this new standard.
−Removed: However, the adoption of ASC 606 resulted in the following changes:
−Removed: • Prior to adoption of ASC 606, we capitalized certain costs related to our marketing efforts, including sales offices and model home upgrades and furnishings within “Inventory” on our Consolidated Balance Sheets and amortized such costs through “Selling, general, and administrative” on our Consolidated Statements of Operations and Comprehensive Income.
−Removed: As of November 1, 2018, we reclassifi ed $ 104.8 million to “Property, construction, and office equipment, net” on our Consolidated Balance Sheets, primarily related to sales offices and model home improvement costs.
−Removed: The amortization of such costs will remain unchanged and will continue to be included in “Selling, general, and administrative” on our Consolidated Statements of Operations and Comprehensive Income.
−Removed: Additionally, we recorded a net cumulative effect adjustment to retained earnings of approximately $ 13.2 million for certain other marketing costs that no longer qualify for capitalization under the new guidance, and such costs will be expensed as incurred in the future.
−Removed: • Prior to adoption of ASC 606, we recorded our land sale revenues, net of their related expenses, within “Other income – net” on our Consolidated Statements of Operations and Comprehensive Income.
−Removed: As of November 1, 2018, we are presenting this activity in income from operations and breaking out the components of land sales revenues and land sales cost of revenues on our Consolidated Statements of Operations and Comprehensive Income.
−Removed: In addition, due to the existence of certain repurchase options in existing agreements to sell lots to third party builders in our master planned communities, both for wholly owned projects as well as projects in which we are a joint venture partner, we recorded a net cumulative effect adjustment to retained earnings of approximately $ 4.6 million to account for previously settled lots for which the related repurchase option had not yet expired.
−Removed: Because the amount of the deferred earning is not material to our consolidated financial statements, we have elected to recognize the revenue and related expenses for such lots in future periods when such repurchase options expire rather than account for them as leases under ASC 840, “Leases.”
−Removed: • Prior to adoption of ASC 606, retained customer deposits were classified in “Other income – net” on our Consolidated Statements of Operations and Comprehensive Income.
−Removed: As of November 1, 2018, retained customer deposits, which totaled $ 11.8 million for our fiscal year ending October 31, 2020, are included in “Home sales revenue” on our Consolidated Statements of Operations and Comprehensive Income.
−Removed: Prior period balances for retained customer deposits have not been reclassified and are not material to our consolidated financial statements.
+Added: ASU 2016-13 became effective for our fiscal year beginning November 1, 2020, and we adopted the standard under the modified retrospective transition method.
+Added: As a result of the adoption, we recognized a cumulative effect adjustment, net of tax, of $ 0.6 million to the opening balance of retained earnings.
+Added: The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements or disclosures, and there have been no significant changes to our internal controls, processes, or systems as a result of implementing this new standard.
+Added: In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848),” as amended by ASU 2021-01 in January 2021, directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the publication of certain LIBOR rates beginning December 31, 2021, with complete elimination of the publication of the LIBOR rates by June 30, 2023.
+Added: The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued.
+Added: This guidance became effective on March 12, 2020 and can be adopted no later than December 31, 2022, with early adoption permitted.
+Added: We are currently evaluating the effect that such new guidance will have on our consolidated financial statements and related disclosures, but do not expect that the adoption of ASU 2020-04, as amended by ASU 2021-01, will have a material impact on our Consolidated Balance Sheet or Consolidated Statement of Operations or Comprehensive Income.
+Added: In fiscal 2021, we acquired substantially all of the assets and operations of StoryBook Homes, LLC (“StoryBook”), a privately-held home builder with operations in Las Vegas, Nevada for approximately $ 38.8 million in cash.
+Added: The assets acquired were primarily inventory for future communities, including approximately 550 home sites owned or controlled through land purchase agreements.
+Added: This acquisition was accounted for as an asset acquisition and was not material to our results of operations or financial condition.
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, and Keller Homes, Inc.
1 unchanged sentence
The aggregate purchase price for these acquisitions was approximately $ 79.2 million in cash.
−Removed: The assets acquired were primarily inventory, including approximately 1,100 home sites owned or controlled through land purchase agreements.
+Added: The assets acquired were primarily inventory, including approximately 1,100 home sites owned or controlled through
+Added: land purchase agreements.
One of these acquisitions was accounted for as a business combination and neither were material to our results of operations or financial condition.
2 unchanged sentences
Sabal operates in the Charleston, Greenville, and Myrtle Beach, South Carolina markets.
−Removed: The assets acquired, were primarily inventory, including approximately 2,550 home sites owned or controlled through land purchase agreements.
−Removed: In connection with these acquisitions, we assumed contracts to deliver 204 homes with an aggregate value of $ 96.1 million.
−Removed: The average price of undelivered homes at the dates of acquisitions was approximately $ 471,100 .
−Removed: As a result of these acquisitions, our selling community count increased by 22 communities.
−Removed: These acquisitions were accounted for as a business combination and were not material to our results of operations or financial condition.
+Added: The assets acquired, which consisted of 22 communities, were primarily inventory, including approximately 2,550 home sites owned or controlled through land purchase agreements.
+Added: These acquisitions were accounted for as business combinations and were not material to our results of operations or financial condition.
Inventory at October 31, 2021 and 2020 consisted of the following (amounts in thousands):
3 unchanged sentences
$ 7,915,884 $ 7,658,906
−Removed: Operating communities include communities offering homes for sale, communities that have sold all available home sites but have not completed delivery of the homes, communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within 12 months of the end of the fiscal year being reported on, and communities preparing to open for sale.
+Added: Operating communities include communities offering homes for sale;
+Added: communities that have sold all available home sites but have not completed delivery of the homes;
+Added: communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within 12 months of the end of the fiscal year being reported on;
+Added: and communities preparing to open for sale.
The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.
−Removed: Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on have been classified as land owned for future communities.
+Added: Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on are included in land owned for future communities.
Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).
7 unchanged sentences
Carrying value (in thousands) $ — $ 32,112 $ 2,871
−Removed: We provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2020, 2019, and 2018, as shown in the table below (amounts in thousands):
+Added: The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2021, 2020, and 2019, are shown in the table below (amounts in thousands):
2021 2020 2019
19 unchanged sentences
Interest expensed in other income – net — ( 2,440 ) —
+Added: Interest reclassified to property, construction and office equipment ( 1,034 ) — —
Interest capitalized on investments in unconsolidated entities ( 4,574 ) ( 3,835 ) ( 4,571 )
1 unchanged sentence
Interest capitalized, end of year $ 253,938 $ 297,975 $ 311,323
+Added: During the year ended October 31, 2021, we incurred approximately $ 946,000 of interest related to our interest rate swaps which is included in accumulated other comprehensive income, and approximately $ 211,000 was reclassified out of accumulated other comprehensive income to home sales cost of revenues.
+Added: No similar amounts were incurred during the years ended October 31, 2020 and 2019.
Investments in Unconsolidated Entities
17 unchanged sentences
The table below provides information at October 31, 2021, regarding the debt financing obtained by category ($ amounts in thousands):
−Removed: Joint Ventures Home Building
Joint Ventures Rental Property
6 unchanged sentences
New Joint Ventures
+Added: In August 2021, we announced a strategic partnership with Equity Residential, an NYSE-listed company focused on the acquisition, development and management of residential rental properties, to selectively acquire and develop sites for new rental apartment communities in metro Boston, MA;
+Added: Orange County/San Diego, CA;
+Added: and Dallas-Fort Worth, TX.
+Added: The strategic partnership has an initial term of three years.
+Added: For selected projects, Equity Residential is expected to invest 75 % of the equity and Toll Brothers is expected to invest the remaining 25 % of the equity.
+Added: It is expected that each project will also be financed with approximately 60 % leverage.
+Added: Equity Residential will have the option to acquire each property upon stabilization.
+Added: The parties have targeted an initial minimum co-investment of $ 733.0 million in combined equity, or $ 1.83 billion in aggregate value, assuming 60 % leverage.
+Added: In connection with this strategic partnership, our apartment living division will act as the managing member of each project, overseeing approvals, design and construction for which we will receive development, construction management, and financing fees, as well as a promoted interest to be realized upon the sale of each property.
+Added: We have agreed, with limited exceptions, to develop apartment projects exclusively with Equity Residential in the designated metro markets.
+Added: In connection with this strategic partnership, Equity Residential will receive fees for property management, leasing and marketing services, as well as construction oversight.
+Added: In the fourth quarter of fiscal 2021, we entered into three joint ventures with Equity Residential under this arrangement.
The table below provides information on joint ventures entered into during fiscal 2021 ($ amounts in thousands):
2 unchanged sentences
Investment balance at October 31, 2021
+Added: $ 112,400 $ 112,900
The table below provides information on joint ventures entered into during fiscal 2020 ($ amounts in thousands):
2 unchanged sentences
Investment balance at October 31, 2020
−Removed: Number of consolidated joint ventures entered into during the period — 4
−Removed: Carrying value of consolidated joint ventures’ assets at October 31, 2019 $ — $ 124,988
−Removed: Noncontrolling interests in consolidated joint ventures at October 31, 2019 $ — $ 37,832
+Added: $ 24,602 $ 80,448
Results of Operations and Intra-entity Transactions
1 unchanged sentence
In connection with these sales, we recognized gains of $ 74.8 million, $ 10.7 million, and $ 3.8 million, respectively, which is included in “Income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income.
−Removed: In fiscal 2020, we recognized other-than-temporary impairment charges on a Home Building Joint Venture of $ 6.0 million.
−Removed: In fiscal 2019 and 2018, we recognized an other-than-temporary impairment charge on certain Land Development Joint Ventures of $ 1.0 million and $ 6.0 million, respectively.
−Removed: In fiscal 2020, 2019 and 2018, purchases from unconsolidated entities principally related to our acquisition of lots from our Land Development Joint Ventures and were $ 17.6 million, $ 137.1 million, and $ 153.2 million, respectively.
+Added: In fiscal 2021 and 2020, we recognized other-than-temporary impairment charges on our investments in certain Home Building Joint Ventures of $ 2.1 million and $ 6.0 million, respectively.
+Added: In fiscal 2019, we recognized an other-than-temporary impairment charge on a certain Land Development Joint Venture of $ 1.0 million.
+Added: In fiscal 2021, 2020 and 2019, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $ 18.5 million, $ 17.6 million, and $ 137.1 million, respectively.
Our share of income from the lots we acquired was insignificant in each period.
−Removed: Sales to unconsolidated entities principally related to land
−Removed: sales to our Rental Property Joint Ventures for which we recognized gains in land sales and other revenues of $ 1.2 million, $ 9.4 million and $ 1.0 million in our fiscal 2020, 2019 and 2018, Consolidated Statements of Operations and Comprehensive Income, respectively.
+Added: We sold land to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, totaling $ 227.8 million, $ 74.1 million and $ 110.9 million in our fiscal 2021, 2020 and 2019.
+Added: These amounts are included in “Land sales and other revenue” on our Consolidated Statements of Operations and Comprehensive Income and are generally sold at or near our land basis.
+Added: Subsequent Event
+Added: In November 2021, one of our Rental Property Joint Ventures sold their assets to an unrelated party for $ 91.0 million.
+Added: In connection with such sale, the joint venture repaid its then-outstanding loan, in an aggregate principal amount of $ 36.9 million.
+Added: We received cash of $ 30.5 million and expect to recognize gains of approximately $ 20.0 million, which will be included in “Income (loss) from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income for the three-month period ending January 31, 2022.
The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing.
19 unchanged sentences
Estimated fair value of guarantees provided by us related to debt and other obligations $ 11,000
−Removed: Terms of guarantees 1 month - 3.5 years
+Added: Terms of guarantees 4 months -
The maximum exposure estimates presented above do not take into account any recoveries from the underlying collateral or any reimbursement from our partners.
19 unchanged sentences
Management and other fees earned by us are nominal and believed to be at market rates, and there is no significant economic disproportionality between us and other members.
−Removed: Subsequent events
−Removed: In November 2020, we entered into a joint venture with an unrelated party to develop a for-rent residential apartment project in Cambridge, Massachusetts.
−Removed: Prior to the formation of this venture, we acquired the property and incurred approximately $ 60.1 million of land and land development costs.
−Removed: Our partner acquired a 75 % interest in this entity for approximately $ 49.2 million, of which $ 44.0 million was distributed to us.
−Removed: Our initial investment is $ 16.4 million.
−Removed: Concurrent with its formation, the joint venture entered into a $ 141.7 million construction loan agreement to finance the development of this project.
−Removed: We and an affiliate of our partner provided certain guarantees under the construction loan agreement.
−Removed: We estimate that our maximum exposure under recourse guarantees, if the full amount of the loan commitment was borrowed, would be the $ 28.3 million without taking into account any recoveries from the underlying collateral or any reimbursement from our partner.
−Removed: In December 2020, a Rental Property Joint Venture that we previously formed in fiscal 2018 secured a $ 160.0 million construction loan to finance the development of a project located in Washington, D.C.
−Removed: We and an affiliate of our partner provided certain guarantees under the construction loan agreement.
−Removed: We estimate that our maximum exposure under recourse guarantees, if the full amount of the loan commitment was borrowed, would be $ 24.0 million without taking into account any recoveries from the underlying collateral or any reimbursement from our partner.
−Removed: Joint Venture Condensed Financial Information
−Removed: The Condensed Balance Sheets, as of the dates indicated, and the Condensed Statements of Operations and Comprehensive Income, for the periods indicated, for the unconsolidated entities in which we have an investment, aggregated by type of business, are included below (in thousands).
−Removed: Condensed Balance Sheets:
+Added: Joint Venture Condensed Combined Financial Information
+Added: The Condensed Combined Balance Sheets, as of the dates indicated, and the Condensed Combined Statements of Operations and Comprehensive Income, for the periods indicated, for the unconsolidated entities in which we have an investment, aggregated by type of business, are included below (in thousands).
+Added: Condensed Combined Balance Sheets:
October 31, 2021
14 unchanged sentences
Members’ equity 613,421 125,550 846,446 115,283 1,700,700
−Removed: Noncontrolling interest — — — 416 416
Total liabilities and equity $ 1,004,427 $ 137,275 $ 2,351,430 $ 133,732 $ 3,626,864
21 unchanged sentences
$ 127,690 $ 33,819 $ 247,049 $ 22,143 $ 430,701
−Removed: (1) Differences between our net investment in unconsolidated entities and our underlying equity in the net assets of the entities amounted to $ 29.4 million and $ 30.9 million as of October 31, 2020 and 2019, respectively, and are primarily a result of other than temporary impairments related to our investments in unconsolidated entities;
+Added: (1) Our underlying equity in the net assets of the unconsolidated entities exceeded our net investment in unconsolidated entities by $ 16.5 million and $ 29.4 million as of October 31, 2021 and 2020, respectively, and these differences are primarily a result of other than temporary impairments related to our investments in unconsolidated entities;
interest capitalized on our investments;
3 unchanged sentences
and distributions from entities in excess of the carrying amount of our net investment.
−Removed: Condensed Statements of Operations and Comprehensive Income:
+Added: Condensed Combined Statements of Operations and Comprehensive Income:
For the year ended October 31, 2021
10 unchanged sentences
Income (loss) from operations 26,501 ( 21,789 ) ( 62,955 ) 4,795 ( 53,448 )
−Removed: Other income (loss) 3,061 536 ( 448 ) — 3,149
+Added: Other income 8,807 317 177,777 — 186,901
Income (loss) before income taxes 35,308 ( 21,472 ) 114,822 4,795 133,453
Income tax provision (benefit) 258 ( 875 ) ( 824 ) — ( 1,441 )
−Removed: Net income (loss) including earnings from noncontrolling interests
−Removed: 22,289 ( 253 ) ( 44,515 ) 10,567 ( 11,912 )
−Removed: loss attributable to noncontrolling interest — — — 48 48
−Removed: Net income (loss) attributable to controlling interest
−Removed: $ 22,289 $ ( 253 ) $ ( 44,515 ) $ 10,615 $ ( 11,864 )
+Added: Net income (loss) $ 35,050 $ ( 20,597 ) $ 115,646 $ 4,795 $ 134,894
Company’s equity (deficit) in earnings of unconsolidated entities (2)
12 unchanged sentences
Income (loss) from operations 19,416 ( 1,043 ) ( 44,067 ) 10,567 ( 15,127 )
−Removed: Other income 3,079 6,144 16,651 12,793 38,667
+Added: Other income (loss) 3,061 536 ( 448 ) 3,149
Income (loss) before income taxes 22,477 ( 507 ) ( 44,515 ) 10,567 ( 11,978 )
−Removed: Income tax provision
−Removed: 193 457 — — 650
+Added: Income tax provision (benefit) 188 ( 254 ) — ( 66 )
Net income (loss) including earnings from noncontrolling interests 22,289 ( 253 ) ( 44,515 ) 10,567 ( 11,912 )
−Removed: income attributable to noncontrolling interest
−Removed: — — — ( 9,593 ) ( 9,593 )
+Added: loss attributable to noncontrolling interest — — — 48 48
Net income (loss) attributable to controlling interest $ 22,289 $ ( 253 ) $ ( 44,515 ) $ 10,615 $ ( 11,864 )
Company’s equity (deficit) in earnings of unconsolidated entities (2)
+Added: $ 11,412 $ ( 3,424 ) $ ( 9,389 ) $ 2,349 $ 948
For the year ended October 31, 2019
11 unchanged sentences
Other income 3,079 6,144 16,651 12,793 38,667
−Removed: Income before income taxes 30,848 29,037 207,572 53,703 321,160
+Added: Income (loss) before income taxes 13,024 32,334 ( 11,378 ) 23,439 57,419
Income tax provision
193 457 — — 650
−Removed: Net income including earnings from noncontrolling interests 30,762 28,270 207,572 53,703 320,307
+Added: Net income (loss) including earnings from noncontrolling interests 12,831 31,877 ( 11,378 ) 23,439 56,769
income attributable to noncontrolling interest
— — — ( 9,593 ) ( 9,593 )
−Removed: Net income attributable to controlling interest 30,762 28,270 207,572 25,406 292,010
−Removed: Company’s equity in earnings of unconsolidated entities (2)
+Added: Net income (loss) attributable to controlling interest $ 12,831 $ 31,877 $ ( 11,378 ) $ 13,846 $ 47,176
+Added: Company’s equity (deficit) in earnings of unconsolidated entities (2)
$ 6,160 $ 17,004 $ ( 824 ) $ 2,528 $ 24,868
5 unchanged sentences
and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired.
−Removed: (3) Effective October 31, 2020, we reclassified sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense.
−Removed: Prior year periods have been reclassified to conform to the 2020 presentation.
Receivables, Prepaid Expenses, and Other Assets
8 unchanged sentences
$ 738,078 $ 956,294
−Removed: (1) On November 1, 2019, we adopted ASU 2016-02 which resulted in the establishment of a right-of-use (“ROU”) asset on our Consolidated Balance Sheet as of October 31, 2020.
−Removed: The Consolidated Balance Sheet as of October 31, 2019 does not reflect any changes resulting from the adoption of the new standard.
−Removed: See Note 1, “Significant Accounting Policies – Recent Accounting Pronouncements” for additional information regarding the adoption of ASU 2016-02.
See Note 7, “Accrued Expenses,” for additional information regarding the expected recoveries from insurance carriers and others.
9 unchanged sentences
Senior Unsecured Term Loan
−Removed: At October 31, 2020, we had an $ 800.0 million, five -year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks.
+Added: We are party to a five -year $ 650.0 million senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks, most of which is scheduled to expire on November 1, 2026.
+Added: In the first quarter of fiscal 2021, we voluntarily repaid $ 150.0 million of the then $ 800.0 million in principal amount that was outstanding.
+Added: No prepayment charges were incurred in connection with the repayment.
+Added: On October 31, 2021, we entered into term loan extension agreements to extend the maturity date of $ 548.4 million of outstanding term loans from November 1, 2025 to November 1, 2026, with the remainder of the term loans remaining due November 1, 2025.
The Term Loan Facility provides an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the Term Loan Facility up to a maximum aggregate amount of $ 1.5 billion.
−Removed: On October 31, 2020, we entered into term loan extension agreements with the banks which extended the maturity date of all $ 800.0 million of outstanding term loans under the Term Loan Facility from November 1, 2024 to November 1, 2025, with no payments being required before the maturity date.
+Added: Other than $ 101.6 million of term loans that are scheduled to mature on November 1, 2025, there are no payments required before the final maturity date on the Term Loan Facility.
Under the Term Loan Facility, as amended, we may select interest rates equal to (i) London Interbank Offered Rate (“LIBOR”) plus an applicable margin, (ii) the base rate (as defined in the agreement) plus an applicable margin, or (iii) the federal funds/Euro rate (as defined in the agreement) plus an applicable margin, in each case, based on our leverage ratio.
2 unchanged sentences
The Term Loan Facility contains substantially the same financial covenants as the Revolving Credit Facility, as described below.
+Added: In November 2020, we entered into five interest rate swap transactions to hedge $ 400.0 million of the Term Loan Facility through October 2025.
+Added: The interest rate swaps effectively fix the interest cost on the $ 400.0 million at 0.369 % plus the spread set forth in the pricing schedule in the Term Loan Facility, which was 1.30 % as of October 31, 2021.
+Added: These interest rate swaps were designated as cash flow hedges.
Revolving Credit Facility
−Removed: We have a $ 1.905 billion senior unsecured, five -year revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks that was scheduled to expire on November 1, 2024.
−Removed: On October 31, 2020, we entered into extension letter agreements (the “Revolver Extension Agreements”) with respect to the Revolving Credit Facility.
−Removed: In connection with the Revolver Extension Agreements, the Company extended the maturity date of $ 1.850 billion of the revolving loans and commitments under the Revolving Credit Agreement from November 1, 2024 to November 1, 2025, with the remainder of the revolving loans and commitments continuing to terminate on November 1, 2024.
−Removed: On October 31, 2019, we amended our Revolving Credit Facility to replace our then existing $ 1.295 billion revolving credit facility.
−Removed: Under the amended terms, up to 100 % of the commitment is available for letters of credit.
−Removed: The Revolving Credit Facility, as amended, has an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the Revolving Credit Facility up to a maximum aggregate amount of $ 2.5 billion.
−Removed: Prior to the amendment, the maximum aggregate amount of the accordion feature was $ 2.0 billion.
+Added: We are party to a $ 1.905 billion senior unsecured, five -year revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks, substantially all of which is scheduled to expire on November 1, 2026.
+Added: On October 31, 2021, we entered into extension letter agreements (the “Revolver Extension Agreements”) to extend the maturity date of $ 1.780 billion of the revolving loans and commitments from November 1, 2025 to November 1, 2026, with the remainder of the revolving loans and commitments continuing to terminate on November 1, 2025.
+Added: Under the Revolving Credit Facility, up to 100 % of the commitment is available for letters of credit.
+Added: The Revolving Credit Facility has an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the Revolving Credit Facility up to a maximum aggregate amount of $ 2.50 billion.
We may select interest rates for the Revolving Credit Facility equal to (i) LIBOR plus an applicable margin or (ii) the lenders’ base rate plus an applicable margin, which in each case is based on our credit rating and leverage ratio.
9 unchanged sentences
Loans Payable – Other
−Removed: “Loans payable – other” primarily represent purchase money mortgages on properties we acquired that the seller had financed and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure and our manufacturing facilities.
+Added: “Loans payable – other” primarily represent purchase money mortgages on properties we acquired that the seller had financed, project-level financing, and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure and our manufacturing facilities.
Information regarding our loans payable at October 31, 2021 and 2020, is included in the table below ($ amounts in thousands):
21 unchanged sentences
Each series of senior notes is redeemable in whole or in part at any time at our option, at prices that vary based upon the then-current rates of interest and the remaining original term of the senior notes to be redeemed.
+Added: In March 2021, we redeemed, prior to maturity, all $ 250.0 million aggregate principal amount of our then-outstanding 5.625 % Senior Notes due 2024.
+Added: In connection with this redemption, we incurred a pre-tax charge of $ 34.2 million, inclusive of the write-off of unamortized deferred financing costs, which is recorded in our Consolidated Statement of Operations and Comprehensive Income.
+Added: In the first quarter of fiscal 2021, we redeemed, prior to maturity, approximately $ 10.0 million of the $ 419.9 million then-outstanding principal amount of 5.875 % Senior Notes due February 15, 2022, plus accrued interest.
On October 31, 2019, we redeemed, prior to maturity, the $ 250.0 million of then-outstanding principal amount of 6.75 % Senior Notes due November 1, 2019, at par, plus accrued interest.
2 unchanged sentences
On November 30, 2018, we redeemed, prior to maturity, the $ 350.0 million of then-outstanding principal amount of 4.00 % Senior Notes due December 31, 2018, at par, plus accrued interest.
−Removed: In January 2018, we issued $ 400.0 million aggregate principal amount of 4.350 % Senior Notes due 2028.
−Removed: The Company received $ 396.4 million of net proceeds from the issuance of these senior notes.
+Added: Subsequent event
+Added: On November 15, 2021, we redeemed the remaining $ 409.9 million principal amount of 5.875 % Senior Notes due February 15, 2022, at par, plus accrued interest.
Mortgage Company Loan Facility
−Removed: In October 2017, TBI Mortgage ® Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, entered into a mortgage warehousing agreement (“Warehousing Agreement”) with a bank to finance the origination of mortgage loans by TBI Mortgage.
−Removed: The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” In December 2018, the Warehousing Agreement was amended to provide for loan purchases up to $ 75.0 million, subject to certain sublimits.
−Removed: In addition, the Warehousing Agreement, as amended, provides for an accordion feature under which TBI Mortgage
−Removed: may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $ 150.0 million for a short period of time.
−Removed: In December 2019, the Warehousing Agreement was amended to extend the expiration date on substantially the same terms as the existing agreement.
−Removed: The Warehousing Agreement, as amended, expires on December 4, 2020 , and borrowings thereunder bear interest at LIBOR plus 1.90 % per annum.
+Added: TBI Mortgage ® Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, has a mortgage warehousing agreement (“Warehousing Agreement”) with a bank, which has been amended from time to time, to finance the origination of mortgage loans by TBI Mortgage.
+Added: The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” The Warehousing Agreement provides for loan purchases up to $ 75.0 million, subject to certain sublimits.
+Added: In addition, the Warehousing Agreement, provides for an accordion feature under which TBI Mortgage may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $ 150.0 million for a short period of time.
+Added: We are also subject to an under usage fee based on outstanding balances, as defined in the Warehousing Agreement.
+Added: Prior to its scheduled expiration on March 4, 2021 , the Warehousing Agreement was amended and restated to extend the expiration date to March 3, 2022 and to reduce the interest rate thereunder to LIBOR plus 1.75 % per annum (with a LIBOR floor of 0.75 %).
+Added: Prior to the extension, borrowings under the facility bore interest at LIBOR plus 1.90 % per annum.
At October 31, 2021, the interest rate on the Warehousing Agreement was 2.50 % per annum.
−Removed: In addition, we are subject to an under usage fee based on outstanding balances, as defined in the Warehousing Agreement.
−Removed: Borrowings under this facility are included in the fiscal 2021 maturities.
+Added: Borrowings under this facility are included in the fiscal 2022 maturities in the table below.
At each of October 31, 2021 and 2020, there was $ 147.5 million and $ 148.6 million, respectively, outstanding under the Warehousing Agreement, which are included in liabilities in our Consolidated Balance Sheets.
2 unchanged sentences
There are several restrictions on purchased loans under the agreement, including that they cannot be sold to others, they cannot be pledged to anyone other than the agent, and they cannot support any other borrowing or repurchase agreements.
−Removed: Subsequent events
−Removed: In November 2020, we entered into five interest rate swap transactions to hedge $ 400.0 million of the Term Loan Facility through October 2025.
−Removed: The interest rate swaps effectively fix the interest cost on the $ 400.0 million at 0.369 % plus the spread set forth in the pricing schedule in the Term Loan Facility, which was 1.3 % as of October 31, 2020.
−Removed: These interest rate swaps were designated as cash flow hedges.
−Removed: In December 2020, TBI Mortgage amended the Warehousing Agreement to extend the expiration date to January 18, 2021 on substantially the same terms as the existing agreement.
As of October 31, 2021, the annual aggregate maturities of our loans and notes during each of the next five fiscal years are as follows (amounts in thousands):
17 unchanged sentences
$ 1,220,235 $ 1,110,196
−Removed: (1) On November 1, 2019, we adopted ASU 2016-02, which resulted in the establishment of lease liabilities on our Consolidated Balance Sheet as of October 31, 2020.
−Removed: The Consolidated Balance Sheet as of October 31, 2019 does not
−Removed: reflect any changes resulting from the adoption of the new standard.
−Removed: See Note 1, “Significant Accounting Policies – Recent Accounting Pronouncements” for additional information regarding the adoption of ASU 2016-02.
At the time each home is closed and title and possession are transferred to the home buyer, we record an initial accrual for expected warranty costs on that home.
5 unchanged sentences
Additions - homes closed during the year 42,316 36,103 35,475
−Removed: Addition - liabilities acquired 190 855
−Removed: Increase in accruals for homes closed in prior years 6,711 6,023 6,162
+Added: Addition - liabilities assumed 100 190 855
+Added: Increase in accruals for homes closed in prior years, net 9,155 6,711 6,023
+Added: Reclassification from self-insurance accruals 3,618 — —
Decrease to water intrusion accrual ( 11,823 ) ( 24,400 ) —
14 unchanged sentences
From October 31, 2016 through the second quarter of fiscal 2020, our recorded aggregate estimated repair costs to be incurred for known and unknown water intrusion claims was $ 324.4 million and our recorded aggregate expected recoveries from insurance carriers and suppliers were approximately $ 152.6 million.
−Removed: Based on trends in claims experience over several years and lower than anticipated repair costs, in the second fiscal quarter of 2020, we reduced the estimate of the aggregate estimated repair costs to be incurred for known and unknown water intrusion claims by $ 24.4 million.
−Removed: Because this reduction was associated with periods in which we expect our insurance deductibles and self-insured retentions to be exhausted, we reduced our aggregate expected recoveries from insurance carriers and suppliers by a corresponding $ 24.4 million.
+Added: Based on trends in claims experience over several years and lower than anticipated repair costs, in the second fiscal quarter of 2020 and again in the fourth fiscal quarter of 2021, we reduced the estimate of the aggregate estimated repair costs to be incurred for known and unknown water intrusion claims by $ 24.4 million and $ 11.8 million, respectively.
+Added: Because these reductions were associated with periods in which we expect our insurance deductibles and self-insured retentions to be exhausted, we reduced our aggregate expected recoveries from insurance carriers and suppliers by a corresponding $ 24.4 million and $ 11.8 million, in fiscal 2020 and fiscal 2021, respectively.
Our recorded remaining estimated repair costs, which reflects a reduction for the aggregate amount expended to resolve claims, were approximately $ 54.7 million at October 31, 2021 and $ 79.5 million at October 31, 2020.
−Removed: Our recorded remaining expected recoveries from insurance carriers and suppliers were approximately $ 68.4 million at October 31, 2020 and $ 97.9 million at October 31, 2019.
+Added: Our recorded remaining expected
+Added: recoveries from insurance carriers and suppliers were approximately $ 5.8 million at October 31, 2021 and $ 68.4 million at October 31, 2020.
As noted above, our review process includes a number of estimates that are based on assumptions with uncertain outcomes, including, but not limited to, the number of homes to be repaired, the extent of repairs needed, the repair procedures employed, the cost of those repairs, outcomes of litigation or arbitrations, and expected recoveries from insurance carriers and suppliers.
1 unchanged sentence
In addition, due to such uncertainty, we are unable to estimate the range of any such differences.
−Removed: With respect to our insurance receivables, disputes between homebuilders and carriers over coverage positions relating to construction defect claims are common, and resolution of claims with carriers involves the exchange of significant amounts of information and frequently involves legal action.
−Removed: While our primary insurance carrier has funded substantially all of the water intrusion claims that we have submitted to it to date, other insurance carriers have disputed coverage for the same claims under policies that are substantially the same.
−Removed: As a result, we entered arbitration proceedings during the third quarter of fiscal 2019 with these carriers.
−Removed: Based on the legal merits that support our pending insurance claims, review by legal counsel, our history of collecting significant amounts funded by our primary carrier under policies that are substantially the same, and the high credit ratings of our insurance carriers, we believe collection of our remaining recorded insurance receivables is probable.
−Removed: However, due to the complexity of the underlying claims and the variability of the other factors described above, it is reasonably possible that our actual insurance
−Removed: recoveries could materially differ from those recorded.
−Removed: Resolution of these known and unknown claims is expected to take several years.
+Added: With respect to our insurance receivables, disputes between home builders and carriers over coverage positions relating to construction defect claims are common, and resolution of claims with carriers involves the exchange of significant amounts of information and frequently involves legal action.
+Added: As a result of coverage disputes related to water intrusion claims, we entered arbitration proceedings during the third quarter of fiscal 2019 with certain of our insurance carriers.
+Added: During the third quarter of fiscal 2021, we settled all such outstanding disputes and have since entered into coverage agreements with the relevant insurance carriers.
+Added: Based on the resolution of such disputes and the terms of these coverage agreements, we concluded that no adjustments to our insurance receivables were necessary and we continue to believe that the collection of our remaining recorded insurance receivables is probable.
The following table provides a reconciliation of our effective tax rate from the federal statutory tax rate for the fiscal years ended October 31, 2021, 2020, and 2019 ($ amounts in thousands):
3 unchanged sentences
State tax provision, net of federal benefit 50,153 4.6 25,793 4.4 37,898 4.8
−Removed: Domestic production activities deduction — — — — ( 18,168 ) ( 1.9 )
Other permanent differences 8,388 0.8 4,755 0.8 4,866 0.6
9 unchanged sentences
* Due to rounding, percentages may not add
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which changed many longstanding foreign and domestic corporate and individual tax rules, as well as rules pertaining to the deductibility of employee compensation and benefits.
−Removed: The Tax Act, among other changes, reduced the corporate income tax rate from 35 % to 21 % and repealed the domestic production activities deduction effective for tax years beginning after December 31, 2017.
−Removed: For companies with a fiscal year that does not end on December 31, the change in law requires the application of a blended tax rate for the year of the change.
−Removed: Our blended tax rate for our fiscal year ending October 31, 2018 was 23.3 %.
−Removed: Thereafter, the applicable statutory rate is 21 %.
−Removed: ASC 740, “Income Taxes” (“ASC 740”), requires all companies to reflect the effects of the new law in the period in which the law was enacted.
−Removed: Accordingly, we reduced the statutory tax rate applied to earnings from 35 % in fiscal 2017 to 23.3 % in fiscal 2018 and to 21 % in fiscal 2019.
−Removed: In addition, we remeasured our net deferred tax liability for the tax law change, which resulted in an income tax benefit of $ 35.5 million in fiscal 2018.
We are subject to state tax in the jurisdictions in which we operate.
2 unchanged sentences
Our state income tax rate, before federal benefit, was 5.6 % and 6.1 % in fiscal 2020 and 2019, respectively
−Removed: The following table provides information regarding the provision (benefit) for income taxes for each of the fiscal years ended October 31, 2020, 2019, and 2018 (amounts in thousands):
+Added: The following table provides information regarding the provision for income taxes for each of the fiscal years ended October 31, 2021, 2020, and 2019 (amounts in thousands):
2021 2020 2019
58 unchanged sentences
On February 21, 2017, our Board of Directors approved the initiation of quarterly cash dividends to shareholders.
+Added: In March 2021, our Board of Directors approved an increase in the quarterly dividend from $ 0.11 to $ 0.17 per share.
During the fiscal years ended October 31, 2021, 2020 and 2019, we declared and paid aggregate cash dividends of $ 0.62 , $ 0.44 and $ 0.44 per share, respectively, to our shareholders.
Stock Repurchase Program
−Removed: In each year since fiscal 2017, our Board of Directors has renewed its authorization to repurchase up to 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans.
+Added: From time to time since fiscal 2017, our Board of Directors has renewed its authorization to repurchase up to 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans.
Most recently, on March 10, 2020, our Board of Directors authorized the repurchase of 20 million shares of our common stock and terminated, effective the same date, the existing authorization that had been in effect since December 11, 2019.
5 unchanged sentences
Remaining authorization at October 31 (in thousands) 12,563 19,984 13,953
−Removed: Subsequent to October 31, 2020 and through December 21, 2020, we repurchased approximat ely 2.4 million shares of our common stock at an average price of $ 45.04 per sh are, substantially all of which were purchased under the repurchase program authorized by our Board of Directors on March 10, 2020.
Transfer Restriction
3 unchanged sentences
Any direct or indirect transfer attempted in violation of this restriction would be void as of the date of the prohibited transfer as to the purported transferee.
+Added: Accumulated Other Comprehensive Income (Loss)
+Added: The changes in each component of accumulated other comprehensive income (loss) (“AOCI”), for fiscal years ended October 31, 2021, 2020, and 2019, were as follows (amounts in thousands):
+Added: 2021 2020 2019
+Added: Employee Retirement Plans
+Added: Beginning balance $ ( 7,198 ) $ ( 5,831 ) $ 694
+Added: Gains (losses) arising during the period 152 ( 2,477 ) ( 6,750 )
+Added: Tax expense ( 316 ) ( 852 ) ( 2,344 )
+Added: Net losses arising during the period ( 164 ) ( 3,329 ) ( 9,094 )
+Added: Gains reclassified from AOCI to net income (1)
+Added: 1,801 1,491 304
+Added: Tax (expense) benefit (2)
+Added: ( 463 ) 471 2,265
+Added: Net gains reclassified from AOCI to net income 1,338 1,962 2,569
+Added: Other comprehensive income (loss), net of tax 1,174 ( 1,367 ) ( 6,525 )
+Added: Ending balance $ ( 6,024 ) $ ( 7,198 ) $ ( 5,831 )
+Added: Derivative Instruments
+Added: Beginning balance $ — $ — $ —
+Added: Gains on derivative instruments 9,383 — —
+Added: Tax expense ( 2,408 ) — —
+Added: Net gains on derivative instruments 6,975 — —
+Added: Gains reclassified from AOCI to net income (3)
+Added: Tax expense (2)
+Added: Net gains reclassified from AOCI to net income 158 — —
+Added: Other comprehensive income, net of tax 7,133 — —
+Added: Ending balance $ 7,133 $ — $ —
+Added: Total AOCI ending balance $ 1,109 $ ( 7,198 ) $ ( 5,831 )
+Added: (1) Reclassified to “Other income – net”
+Added: (2) Reclassified to “Income tax provision”
+Added: (3) Reclassified to “Cost of revenues – home sales”
Stock-Based Benefit Plans
We grant stock options, restricted stock, and various types of restricted stock units to our employees and our non-employee directors under our stock incentive plans.
+Added: Restricted stock unit awards may be based on performance conditions, market conditions or service over a requisite time period (time-based).
On March 12, 2019, shareholders approved the Toll Brothers, Inc.
1 unchanged sentence
Stock Incentive Plan for Employees (2014) and the Toll Brothers, Inc.
−Removed: Stock Incentive Plan for Non-Executive Directors (2016) with respect to prospective equity awards, and no additional equity awards may be granted under such prior plans.
+Added: Stock Incentive Plan for Non-Executive Directors (2016) with respect to equity awards granted after its adoption, and no additional equity awards may be granted under such prior plans.
As a result, the Omnibus Plan is the sole plan out of which new equity awards may be granted to employees (including executive officers), directors and other eligible participants under the plan.
The Omnibus Plan provides for the granting of incentive stock options (solely to employees) and nonqualified stock options with a term of up to 10 years at a price not less than the market price of the stock at the date of grant.
−Removed: The Omnibus Plan also provide for the issuance of stock appreciation rights and restricted and unrestricted stock awards and stock units, which may be performance-based.
+Added: The Omnibus Plan also provides for the issuance of stock appreciation rights and restricted and unrestricted stock awards and stock units, which may be performance-based.
+Added: Stock options and restricted stock units granted under the Omnibus Plan generally vest over a four-year period for employees and a two-year period for non-employee directors.
+Added: Shares issued upon the exercise of a stock option or settlement of restricted stock units are either from shares held in treasury or newly issued shares.
At October 31, 2021, 2020, and 2019, we had 5.7 million;
and 7.7 million shares, respectively, available for grant under the plans.
−Removed: Prior to the adoption of the Omnibus Plan, the Company had granted equity awards under four separate stock incentive plans for employees, officers, and directors with respect to which equity awards remained outstanding as of October 31, 2020.
−Removed: No additional equity awards may be granted under these plans.
−Removed: Stock options granted under these plans were made with a term of up to 10 years at a price not less than the market price of the stock at the date of grant.
−Removed: Stock options and restricted stock units granted under these plans generally vested over a four-year period for employees and a two-year period for non-employee directors.
−Removed: The following table provides information regarding the amount of total stock-based compensation expense recognized by us for fiscal 2020, 2019, and 2018 (amounts in thousands):
+Added: The following table provides information regarding the amount of total stock-based compensation expense recognized by us for fiscal year 2021, 2020, and 2019 (amounts in thousands):
2021 2020 2019
1 unchanged sentence
Income tax benefit recognized $ 5,910 $ 6,227 $ 6,749
−Removed: At October 31, 2020, 2019, and 2018, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $ 15.9 million, $ 18.7 million, and $ 20.9 million, respectively.
−Removed: Information about our more significant stock-based compensation programs is outlined below.
+Added: At October 31, 2021, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $ 14.7 million and the weighted-average period over which we expect to recognize such compensation costs was approximately 2.4 years.
Stock Options:
−Removed: Stock options granted to employees generally vest over a four-year period, although certain grants may vest over a longer or shorter period.
−Removed: Stock options granted to non-employee directors generally vest over a two-year period.
−Removed: Shares issued upon the exercise of a stock option are either from shares held in treasury or newly issued shares.
The fair value of each option award is estimated on the date of grant using a lattice-based option valuation model that uses ranges of assumptions noted in the following table.
−Removed: Expected volatilities were based on implied volatilities from traded options on our stock, historical volatility of our stock, and other factors.
+Added: Expected volatilities were based on a combination of implied volatilities from traded options on our stock, historical volatility of our stock, and other factors.
The expected lives of options granted were derived from the historical exercise patterns and anticipated future patterns and represent the period of time that options granted are expected to be outstanding.
−Removed: The ranges set forth below result from certain groups of employees exhibiting different behaviors.
+Added: The ranges set forth below result from certain groups of employees exhibiting different behaviors impacting exercisability.
The risk-free rate for periods within the expected life of the option is based on the U.S.
6 unchanged sentences
Expected life (years) 5.75 4.64 - 5.76 4.63 - 8.50
−Removed: Dividends 1.11 % 1.36 % none
+Added: Dividends 0.96 % 1.11 % 1.36 %
Weighted-average fair value per share of options granted
4 unchanged sentences
Stock compensation expense recognized - options $ 1,812 $ 3,144 $ 5,181
−Removed: At October 31, 2020, total compensation cost related to nonvested stock option awards not yet recognized was approximately $ 2.5 million, and the weighted-average period over which we expect to recognize such compensation costs was approximately 1.1 years.
−Removed: The following table summarizes stock option activity for our plans during each of the fiscal years ended October 31, 2020, 2019, and 2018 (amounts in thousands, except per share amounts):
−Removed: 2020 2019 2018
−Removed: options Weighted-
−Removed: options Weighted-
+Added: The following table summarizes stock option activity for our plans during the fiscal year ended October 31, 2021 (amounts in thousands, except per share amounts):
options Weighted-
−Removed: Balance, beginning 4,780 $ 30.59 5,503 $ 28.84 6,120 $ 27.60
+Added: price Weighted average remaining contractual life (in years) Aggregate intrinsic value
+Added: Balance, November 1, 3,560 $ 33.03
Granted 40 $ 46.02
1 unchanged sentence
Canceled ( 17 ) $ 35.41
−Removed: Balance, ending 3,560 $ 33.03 4,780 $ 30.59 5,503 $ 28.84
−Removed: Options exercisable, at October 31, 2,969 $ 32.38 3,799 $ 29.52 4,231 $ 27.03
−Removed: The weighted average remaining contractual life (in years) for options outstanding and exercisable at October 31, 2020, was 4.7 and 4.1 , respectively.
−Removed: The intrinsic value of options outstanding and exercisable is the difference between the fair market value of our common stock on the applicable date (“Measurement Value”) and the exercise price of those options that had an exercise price that was less than the Measurement Value.
−Removed: The intrinsic value of options exercised is the difference between the fair market value of our common stock on the date of exercise and the exercise price.
−Removed: The following table provides information pertaining to the intrinsic value of options outstanding and exercisable at October 31, 2020, 2019, and 2018 (amounts in thousands):
−Removed: 2020 2019 2018
−Removed: Intrinsic value of options outstanding $ 34,058 $ 45,551 $ 30,477
−Removed: Intrinsic value of options exercisable $ 29,961 $ 39,350 $ 29,010
+Added: Balance, October 31, 2,998 $ 34.10 4.08 years $ 78,142
+Added: Options exercisable, at October 31, 2,674 $ 33.60 3.68 years $ 71,070
Information pertaining to the intrinsic value of options exercised and the fair market value of options that became vested or modified in each of the fiscal years ended October 31, 2021, 2020, and 2019, is provided below (amounts in thousands):
2 unchanged sentences
Fair market value of options vested $ 3,578 $ 5,926 $ 7,723
−Removed: Our stock option plans permit optionees to exercise stock options using a “net exercise” method at the discretion of the Executive Compensation Committee of the Board of Directors (“Executive Compensation Committee”).
−Removed: In a net exercise, we withhold from the total number of shares that otherwise would be issued to an optionee upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable minimum income tax withholdings and remit the remaining shares to the optionee.
−Removed: In fiscal 2018, the net exercise method was not utilized to exercise options.
−Removed: The following table provides information regarding the use of the net exercise method for fiscal 2020 and 2019:
−Removed: Options exercised 100,000 33,250
−Removed: Shares withheld 65,487 21,842
−Removed: Shares issued 34,513 11,408
−Removed: Average fair market value per share withheld $ 43.11 $ 33.03
−Removed: Aggregate fair market value of shares withheld (in thousands) $ 2,823 $ 721
Performance-Based Restricted Stock Units:
1 unchanged sentence
The number of shares earned for Performance-Based RSUs are based on the attainment of certain operational performance metrics approved by the Executive Compensation Committee in the year of grant.
−Removed: The number of shares underlying the Performance-Based RSUs that may be issued to the recipients ranges from, 0 % to 150 % for grants awarded in fiscal 2020 and 2019 and 0 % to 110 % for grants awarded in fiscal 2018, of the base award depending on actual achievement as compared to the target performance goals.
−Removed: Shares earned based on actual performance generally vest pro-rata over a four-year period provided the recipients continue to be employed by us as specified in the award document.
+Added: The number of shares underlying the Performance-Based RSUs that may be issued to the recipients ranges from 0 % to 150 % of the base award depending on actual achievement as compared to the target performance goals.
+Added: Shares earned based on actual performance vest pro-rata over a four-year period (provided the recipients continue to be employed by us as specified in the award document) or cliff vest at the end of a three-year performance period.
The value of the Performance-Based RSUs was determined to be equal to the estimated number of shares of our common stock to be issued multiplied by the closing price of our common stock on the New York Stock Exchange (“NYSE”) on the date the Performance-Based RSU awards were approved by the Executive Compensation Committee (“Valuation Date”), adjusted for post-vesting restrictions applicable to retirement eligible participants.
−Removed: We evaluate the performance goals quarterly and estimate the number of shares underlying the Performance-Based RSUs that are probable of being issued.
+Added: Compensation expense related to these grants is based on the Company’s performance against the related performance criteria, the elapsed portion of the performance period and the grant date fair value of the award.
+Added: To estimate the fair value of the award, we evaluate the performance goals quarterly and estimate the number of shares underlying the Performance-Based RSUs that are probable of being issued.
+Added: A summary of the status of our nonvested Performance-Based RSUs as of October 31, 2021, and changes during the year ended October 31, 2021, is presented below (share amounts in thousands):
+Added: 2021 Weighted average grant date fair value
+Added: Nonvested at November 1, 345 $ 35.17
+Added: Granted/Target 129 $ 37.00
+Added: Vested ( 145 ) $ 35.12
+Added: Forfeited — $ —
+Added: Nonvested at October 31, 329 $ 35.87
The following table provides information regarding the issuance, valuation assumptions, and amortization of the Performance-Based RSUs issued in fiscal 2021, 2020, and 2019:
2021 2020 2019
−Removed: Number of shares underlying Performance-Based RSUs to be issued 116,423 158,721 135,554
+Added: Estimated number of shares underlying Performance-Based RSUs to be issued 128,894 116,423 158,721
Aggregate number of Performance-Based RSUs outstanding at October 31 539,592 579,115 645,538
−Removed: Weighted-average fair value per share of Performance-Based RSUs $ 32.55 $ 34.86 $ 47.84
+Added: Weighted-average fair value per share of Performance-Based RSUs issued $ 29.87 $ 32.55 $ 34.86
Aggregate grant date fair value of Performance-Based RSUs issued (in thousands) $ 5,030 $ 3,790 $ 5,533
Performance-Based RSU expense recognized (in thousands) $ 5,989 $ 5,986 $ 5,514
−Removed: Unamortized value of Performance-Based RSUs at October 31 (in thousands) $ 1,674 $ 3,431 $ 3,824
+Added: Fair market value of Performance-Based RSUs vested (in thousands) $ 5,084 $ 5,638 $ 6,735
Shares earned with respect to Performance-Based RSUs issued in December 2014, 2015, and 2016 were delivered in fiscal 2019, 2020, and 2021, respectively.
−Removed: The recipients of these Performance-Based RSUs elected to use a portion of the shares underlying the Performance-Based RSUs to pay the required income withholding taxes on the payout.
−Removed: In fiscal 2020, the gross value of the payout was $ 7.2 million ( 182,846 shares), the minimum income tax withholding was $ 3.0 million ( 75,206 shares) and the net value of the shares delivered was $ 4.3 million ( 107,640 shares).
−Removed: In fiscal 2019, the gross value of the payout was $ 9.7 million ( 300,040 shares), the minimum income tax withholding was $ 4.0 million ( 123,409 shares) and the net value of the shares delivered was $ 5.7 million ( 176,631 shares).
−Removed: In fiscal 2018, the gross value of the payout was $ 13.7 million ( 288,814 shares), the minimum income tax withholding was $ 6.0 million ( 126,330 shares) and the net value of the shares delivered was $ 7.7 million ( 162,484 shares).
−Removed: Total Shareholder Return Restricted Stock Units:
−Removed: In fiscal 2020, 2019, and 2018, the Executive Compensation Committee approved awards of relative total shareholder return performance-based restricted stock units (“TSR RSUs”) relating to 37,527 , 48,710 and 39,411 target shares, respectively, of our common stock to certain members of our senior management.
−Removed: Shares underlying the TSR RSUs granted are earned by comparing our total shareholder return during specified performance periods to the total shareholder returns of companies in a performance peer group as defined in the award document.
−Removed: The specified performance periods are as follows:
−Removed: Performance Period Target Number of TSR RSUs issued
−Removed: Fiscal 2020 November 1, 2019 to October 31, 2022 37,527
−Removed: Fiscal 2019 November 1, 2018 to October 31, 2021 48,710
−Removed: Fiscal 2018 November 1, 2017 to October 31, 2020 39,411
−Removed: The TSR RSUs generally vest at the end of a 3 -year period provided the recipients continue to be employed by us as specified in the award document.
−Removed: Based upon our ranking in the performance peer group, the recipient of the TSR RSUs may earn a total award ranging from 0 % to 150 % for awards granted in fiscal 2020 and 2019 and 0 % to 200 % for awards granted in fiscal 2018, of the target number of TSR RSUs granted.
−Removed: In fiscal 2020, recipients of the fiscal 2018 TSR RSUs earned 0 % of the target based on total shareholder return ranking in the performance peer group during the three-year period ending October 31, 2020.
−Removed: In fiscal 2019, recipients of the fiscal 2017 TSR RSUs earned 0 % of the target based on total shareholder return ranking in the performance peer group during the three-year period ending October 31, 2019.
−Removed: In fiscal 2018, recipients earned 76.81 % of the 52,679 target TSR RSUs awarded in fiscal 2016 based upon our total shareholder return ranking in the performance peer group during the three-year period ended October 31, 2018.
−Removed: We estimated the fair value of the TSR RSUs at the grant date using a Monte Carlo simulation.
−Removed: The following table summarizes the assumptions used in the Monte Carlo simulation and the fair value per share of the TSR RSUs granted in fiscal 2020, 2019, and 2018:
−Removed: 2020 2019 2018
−Removed: Weighted-average volatility 27.96 % 29.06 % 26.58 %
−Removed: Risk-free interest rate 1.66 % 2.64 % 1.92 %
−Removed: Dividends none none none
−Removed: Weighted-average fair value per share of TSR RSUs $ 37.66 $ 36.46 $ 52.62
−Removed: The length of each performance period was used as the expected term in the simulation for each respective tranche.
−Removed: The following table provides information on expense recognized and the unamortized value of our TSR RSUs for fiscal 2020, 2019, and 2018 (amounts in thousands):
−Removed: 2020 2019 2018
−Removed: TSR RSUs expense recognized $ 2,264 $ 1,673 $ 2,502
−Removed: Unamortized value of TSR RSUs at October 31 $ 716 $ 1,875 $ 1,773
−Removed: Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a TSR RSU recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the restricted stock unit recipient.
−Removed: The following table provides information regarding the number of shares withheld, the income tax withholding due, and the remaining shares issued to the recipients for fiscal 2019:
−Removed: Number of shares withheld 16,643
−Removed: Income tax withholdings due $ 537,902
−Removed: Remaining shares issued to the recipients 23,817
Time-Based Restricted Stock Units:
−Removed: In fiscal 2020, 2019, and 2018, we issued time-based restricted stock units (“Time-Based RSUs”) to various officers, employees, and non-employee directors.
−Removed: These Time-Based RSUs generally vest in annual installments over a two- to four-year period.
+Added: We issued time-based restricted stock units (“Time-Based RSUs”) to various officers, employees, and non-employee directors on an annual basis.
+Added: These Time-Based RSUs generally vest in annual installments over a two-year (for non-employee directors) or four-year (for employees) period and are generally settled at the end of such period.
The value of the Time-Based RSUs was determined to be equal to the number of shares of our common stock underlying the Time-Based RSUs multiplied by the closing price of our common stock on the NYSE on the date the Time-Based RSUs were awarded, adjusted for post-vesting restrictions applicable to retirement eligible participants.
−Removed: The following table provides information regarding these Time-Based RSUs for fiscal 2020, 2019, and 2018:
+Added: The fair value of Time-Based RSUs is expensed evenly over the shorter of the vesting period or the period between the grant date and the time the award becomes nonforfeitable by the participant.
+Added: A summary of our Time-Based RSUs nonvested shares as of October 31, 2021, and changes during the year ended October 31, 2021, is presented below (share amounts in thousands):
+Added: 2021 Weighted average grant date fair value
+Added: Nonvested at November 1, 910 $ 36.74
+Added: Granted 439 $ 42.85
+Added: Vested ( 382 ) $ 36.70
+Added: Forfeited ( 56 ) $ 40.88
+Added: Nonvested at October 31, 911 $ 39.45
+Added: The following table provides additional information on the Time-Based RSUs for fiscal 2021, 2020, and 2019:
2021 2020 2019
1 unchanged sentence
Number of Time-Based RSUs issued 386,017 461,280 449,380
−Removed: Weighted-average fair value per share of Time-Based RSUs $ 37.43 $ 33.04 $ 47.84
+Added: Weighted-average fair value per share of Time-Based RSUs issued $ 33.21 $ 37.43 $ 33.04
Aggregate fair value of Time-Based RSUs issued (in thousands) $ 12,820 $ 17,267 $ 14,848
1 unchanged sentence
$ 14,531 $ 12,744 $ 13,627
+Added: Fair market value of Time-Based RSUs vested (in thousands):
$ 14,029 $ 11,837 $ 7,936
+Added: 2021 2020 2019
At October 31:
2 unchanged sentences
$ 12,919 $ 10,972 $ 8,694
−Removed: Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a restricted stock unit recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the restricted stock unit recipient.
−Removed: The following table provides information regarding the number of shares withheld, the income tax withholding due, and the remaining shares issued to the recipients for fiscal 2020, 2019, and 2018:
−Removed: 2020 2019 2018
−Removed: Number of shares withheld 58,356 29,681 23,289
−Removed: Income tax withholdings due $ 2,214 $ 1,042 $ 1,145
−Removed: Remaining shares issued to the recipients 236,697 82,795 58,552
−Removed: Employee Stock Purchase Plan
−Removed: Our employee stock purchase plan enables substantially all employees to purchase our common stock at 95 % of the market price of the stock on specified offering dates without restriction or at 85 % of the market price of the stock on specified offering dates subject to restrictions.
−Removed: The plan, which terminates in December 2027, provides that 500,000 shares be reserved for purchase.
+Added: Employee Stock Purchase Plan (“ESPP”)
+Added: Our ESPP enables substantially all employees to purchase our common stock at 95 % of the market price of the stock on specified offering dates without restriction or at 85 % of the market price of the stock on specified offering dates subject to restrictions.
+Added: The ESPP, which is scheduled to terminate in December 2027, provides that 500,000 shares be reserved for purchase.
At October 31, 2021, 321,000 shares were available for issuance.
−Removed: The following table provides information regarding our employee stock purchase plan for fiscal 2020, 2019, and 2018:
−Removed: 2020 2019 2018
−Removed: Shares issued 54,235 41,744 35,471
−Removed: Average price per share $ 26.10 $ 31.80 $ 34.08
−Removed: Compensation expense recognized (in thousands) $ 189 $ 184 $ 171
+Added: In fiscal 2021, 2020 and 2019, we issued 31,257 shares, 54,235 shares, and 41,744 shares under the ESPP, respectively.
+Added: The expense is recognized in all fiscal periods was not material.
Earnings Per Share Information
3 unchanged sentences
Basic weighted-average shares 124,100 130,095 145,008
−Removed: Common stock equivalents (a) 1,152 1,493 2,217
+Added: Common stock equivalents (1)
+Added: 1,707 1,152 1,493
Diluted weighted-average shares 125,807 131,247 146,501
Other information:
−Removed: Weighted-average number of antidilutive options and restricted stock units (b) 2,141 1,156 813
+Added: Weighted-average number of antidilutive options and restricted stock units (2)
+Added: 166 2,141 1,156
Shares issued under stock incentive and employee stock purchase plans 1,011 1,541 1,394
−Removed: (a) Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method and shares expected to be issued under our restricted stock units programs.
−Removed: (b) Weighted-average number of antidilutive options and restricted stock units are based upon the average of the average quarterly closing prices of our common stock on the NYSE for the year.
+Added: (1) Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method and shares expected to be issued under our restricted stock units programs.
+Added: (2) Weighted-average number of antidilutive options and restricted stock units are based upon the average of the average quarterly closing prices of our common stock on the NYSE for the year.
Fair Value Disclosures
6 unchanged sentences
Forward Loan Commitments – IRLCs Level 2 $ 1,773 $ ( 628 )
+Added: Interest Rate Swap Contracts Level 2 $ 10,330 $ —
At October 31, 2021 and 2020, the carrying value of cash and cash equivalents and customer deposits held in escrow approximated fair value.
+Added: The fair values of the interest rate swap contracts are included in “Receivables, prepaid expenses and other assets” in our Consolidated Balance Sheets and are determined using widely accepted valuation techniques including discounted cash flow analysis based on the expected cash flows of each swap contract.
+Added: Although the Company has determined that the significant inputs, such as interest yield curve and discount rate, used to value its interest rate swap contracts fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.
+Added: However, as of October 31, 2021, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our interest rate swap contract positions and have determined that the credit valuation adjustments were not significant to the overall valuation of our interest rate swap contracts.
+Added: As a result, we have determined that our interest rate swap contracts valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Mortgage Loans Held for Sale
17 unchanged sentences
The fair values of IRLCs and forward loan commitments are included in either “Receivables, prepaid expenses and other assets” or “Accrued expenses” in our Consolidated Balance Sheets, as appropriate.
−Removed: To manage the risk of non-performance of investors regarding the Forward Commitments, we assess the creditworthiness of the investors on a periodic basis.
+Added: manage the risk of non-performance of investors regarding the Forward Commitments, we assess the creditworthiness of the investors on a periodic basis.
We recognize inventory impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation.
4 unchanged sentences
If we used a different input for any of the various unobservable inputs used in our impairment analysis, the results of the analysis may have been different, absent any other changes.
−Removed: The table below summarizes, for the periods indicated, the ranges of certain quantitative unobservable inputs utilized in determining the fair value of impaired operating communities:
−Removed: Three months ended:
−Removed: Selling price per unit
−Removed: ($ in thousands) Sales pace per year
−Removed: (in units) Discount rate
−Removed: January 31 — — —
−Removed: April 30 613 - 789 9 14.3%
−Removed: July 31 — — —
−Removed: October 31 — — —
−Removed: January 31 836 - 13,495 2 - 12 12.5% - 15.8%
−Removed: April 30 372 - 1,915 2 - 19 12.0% - 26.0%
−Removed: July 31 530 - 1,113 2 - 9 7.8% - 13.0%
−Removed: October 31 478 - 857 2 - 5 13.8% - 14.5%
−Removed: In fiscal 2020, we recognized $ 31.7 million of impairment charges on land owned for future communities relating to nine communities.
−Removed: As of the period the impairment charges were recognized, the estimated fair value of these communities in the aggregate, net of impairment charges, was $ 21.8 million.
+Added: Impairments on operating communities were insignificant in fiscals 2021 and 2020 and, accordingly, we did not disclose the ranges of certain quantitative unobservable inputs utilized in determining the fair value of such impaired operating communities.
+Added: In fiscal 2021 and 2020, we recognized $ 19.8 million and $ 31.7 million of impairment charges on land owned for future communities relating to six and nine communities, respectively.
+Added: As of the period the impairment charges were recognized, the estimated fair value of these communities in the aggregate, net of impairment charges, were $ 23.9 million and $ 21.8 million, respectively.
For the majority of these communities, the estimated fair values were determined based upon the expected sales price per lot in a community sale to another builder.
−Removed: The range of sales price per lot utilized in determining fair values in fiscal 2020 was approximately $ 33,000 - $ 180,000 per lot.
−Removed: There were no impairment charges on land owned for future communities in 2019 and $ 2.2 million recognized in fiscal 2018.
+Added: The range of sales price per lot utilized in determining fair values was approximately $ 25,000 - $ 200,000 per lot.
+Added: There were no impairment charges on land owned for future communities in 2019.
The table below provides, for the periods indicated, the number of operating communities that we reviewed for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and, as of the end of the period indicated, the fair value of those communities, net of impairment charges
20 unchanged sentences
fair value Book value Estimated
−Removed: Loans payable (a) Level 2 $ 1,151,257 $ 1,157,315 $ 1,114,577 $ 1,112,040
−Removed: Senior notes (b) Level 1 2,669,876 2,888,822 2,669,876 2,823,043
−Removed: Mortgage company loan facility (c) Level 2 148,611 148,611 150,000 150,000
+Added: Loans payable (1)
+Added: Level 2 $ 1,014,042 $ 1,021,662 $ 1,151,257 $ 1,157,315
+Added: Senior notes (2)
+Added: Level 1 2,409,856 2,577,818 2,669,876 2,888,822
+Added: Mortgage company loan facility (3)
+Added: Level 2 147,512 147,512 148,611 148,611
$ 3,571,410 $ 3,746,992 $ 3,969,744 $ 4,194,748
−Removed: (a) The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.
−Removed: (b) The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.
−Removed: (c) We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.
+Added: (1) The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.
+Added: (2) The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.
+Added: (3) We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.
Employee Retirement and Deferred Compensation Plans
5 unchanged sentences
The deferred compensation, together with certain of our contributions, earns various rates of return depending upon when the compensation was deferred.
−Removed: A portion of the deferred compensation and interest earned may be forfeited by a
−Removed: participant if he or she elects to withdraw the compensation prior to the end of the deferral period.
+Added: A portion of the deferred compensation and interest earned may be forfeited by a participant if he or she elects to withdraw the compensation prior to the end of the deferral period.
We accrued $ 36.3 million and $ 35.1 million at October 31, 2021 and 2020, respectively, for our obligations under the plan.
2 unchanged sentences
Retirement benefits generally vest when the participant reaches normal retirement age.
−Removed: Such age was reduced from age 62 to age 58 in fiscal 2019.
Unrecognized prior service costs are being amortized over the period from the date participants enter the plans until their interests are fully vested.
22 unchanged sentences
Unamortized prior service cost, end of year $ 5,484 $ 6,452 $ 5,320
−Removed: Accumulated unrecognized (loss) gain, October 31 $ ( 3,273 ) $ ( 2,567 ) $ 1,571
+Added: Accumulated unrecognized loss, October 31 $ ( 2,288 ) $ ( 3,273 ) $ ( 2,567 )
Accumulated benefit obligation, October 31 $ 47,705 $ 48,374 $ 45,070
4 unchanged sentences
November 1, 2026 – October 31, 2031 $ 17,506
−Removed: Accumulated Other Comprehensive (Loss) Income
−Removed: Accumulated other comprehensive (loss) income was primarily related to employee retirement plans.
−Removed: The tables below provide, for the fiscal years ended October 31, 2020, 2019 and 2018, the components of accumulated other comprehensive (loss) income (amounts in thousands):
−Removed: 2020 2019 2018
−Removed: Balance, beginning of period $ ( 5,831 ) $ 694 $ ( 1,910 )
−Removed: Other comprehensive (loss) income before reclassifications
−Removed: ( 3,329 ) ( 9,094 ) 3,115
−Removed: Gross amounts reclassified from accumulated other comprehensive income
−Removed: 1,491 304 953
−Removed: Income tax benefit (expense) 471 2,265 ( 1,142 )
−Removed: Other comprehensive (loss) income, net of tax ( 1,367 ) ( 6,525 ) 2,926
−Removed: Adoption of ASU 2018-02 — — ( 322 )
−Removed: Balance, end of period $ ( 7,198 ) $ ( 5,831 ) $ 694
−Removed: Reclassifications for the amortization of the employee retirement plans are included in “Other income – net” in the Consolidated Statements of Operations and Comprehensive Income.
Commitments and Contingencies
2 unchanged sentences
We believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.
−Removed: In March 2018, the Pennsylvania Attorney General informed the Company that it was conducting a review of our construction of stucco homes in Pennsylvania after January 1, 2005 and requested that we voluntarily produce documents and information.
−Removed: The Company has produced documents and information in response to this request and, in addition, has produced requested information and documents in response to a subpoena issued in the second quarter of fiscal 2019.
−Removed: Management cannot at this time predict the eventual scope or outcome of this matter.
+Added: We previously disclosed that the Pennsylvania Attorney General was conducting a review of our construction of stucco homes in Pennsylvania after January 1, 2005 and had requested that we voluntarily produce documents and information.
+Added: The Company complied with the Attorney General’s request by producing information and documents in response to a subpoena issued in the
+Added: second quarter of fiscal 2019.
+Added: Because the Attorney General has requested no further information from the Company, we do not expect to include this disclosure in future filings unless a material development occurs.
Land Purchase Commitments
14 unchanged sentences
the purchase prices of these home sites will be determined at a future date.
−Removed: At October 31, 2020, we also had purchase commitments to acquire land for apartment developments of approximately $ 111.3 million, of which we had outstanding deposits in the amount of $ 6.5 million.
+Added: At October 31, 2021, we also had similar purchase commitments to acquire land for apartment developments of approximately $ 143.7 million, of which we had outstanding deposits in the amount of $ 7.1 million.
+Added: We intend to develop these projects in joint ventures with unrelated parties in the future.
We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts 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.
10 unchanged sentences
We do not believe that it is probable that any outstanding letters of credit will be drawn upon.
+Added: At October 31, 2021, we had provided financial guarantees of $ 25.2 million related to fronted letters of credit to secure obligations related to certain of our insurance policy deductibles and other claims.
At October 31, 2021, we had agreements of sale outstanding to deliver 10,302 homes with an aggregate sales value of $ 9.50 billion.
21 unchanged sentences
We recognize lease expense for these leases on a straight-line basis over the lease term.
−Removed: ROU assets and lease liabilities are recorded on the balance sheet for all leases with an expected term over one year.
+Added: Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases with an expected term over one year.
A majority of our facility lease agreements include rental payments based on a pro-rata share of the lessor’s operating costs which are variable in nature.
Our lease agreements do not contain any residual value guarantees or material restrictive covenants.
−Removed: ROU assets are classified within “Receivables, prepaid expenses, and other assets” and the corresponding lease liability is included in “Accrued expenses” in our Consolidated Balance Sheet.
+Added: ROU assets are classified within “Receivables, prepaid expenses, and other assets” and the corresponding lease liability is included in “Accrued expenses” in our Consolidated Balance Sheets.
We elected the short-term lease recognition exemption for all leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that we are reasonably certain to exercise.
1 unchanged sentence
At October 31, 2021, ROU assets and lease liabilities were $ 96.3 million and $ 116.2 million, respectively.
−Removed: Payments on lease liabilities totaled $ 16.6 million for the year ending October 31, 2020.
+Added: At October 31, 2020, ROU assets and lease liabilities were $ 105.0 million and $ 124.8 million, respectively.
+Added: Payments on lease liabilities totaled $ 19.4 million and $ 16.6 million for the years ending October 31, 2021 and 2020, respectively.
Lease expense includes costs for leases with terms in excess of one year as well as short-term leases with terms of one year or less.
−Removed: For the fiscal years ending October 31, 2020, 2019 and 2018, our total lease expense was $ 21.6 million, $ 20.2 million, and $ 15.8 million, respectively, inclusive of variable lease costs of approximately $ 3.1 million and short-term lease costs of approxima tel y $ 3.5 million in fiscal 2020.
−Removed: S ublease income was de minimis.
+Added: For the fiscal years ending October 31, 2021, 2020, and 2019, our total lease expense was $ 22.2 million, $ 24.7 million, and $ 22.4 million, respectively, inclusive of variable lease costs of approximately $ 3.1 million, $ 3.1 million, and $ 2.3 million, respectively.
+Added: Short-term lease costs and sublease income was de minimis.
Information regarding our remaining lease payments as of October 31, 2021 is provided in the table below (amounts in thousands):
2 unchanged sentences
Thereafter 217,089
−Removed: Total lease payments (a) $ 280,658
−Removed: Interest (b) 155,902
+Added: Total lease payments (1)
Present value of lease liabilities $ 116,248
−Removed: (a) Lease payments include options to extend lease terms that are reasonably certain of being exercised
−Removed: (b) Our leases do not provide a readily determinable implicit rate.
+Added: (1) Lease payments include options to extend lease terms that are reasonably certain of being exercised.
+Added: (2) Our leases do not provide a readily determinable implicit rate.
Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date.
2 unchanged sentences
For several of our facility leases we are reasonably certain the option will be exercised and thus the renewal term has been included in our calculation of the ROU asset and lease liability.
−Removed: The weighted average remaining lease term and weighted average discount rate used in calculating these facility lease liabilities, excluding our land leases, were 8.81 years and 4.1 %, respectively, at October 31, 2020.
+Added: The weighted average remaining lease term and weighted average discount rate used in calculating these facility lease liabilities, excluding our land leases, were 8.1 years and 4.0 %, respectively, at October 31, 2021 and 8.8 years and 4.1 %, respectively, at October 31, 2020.
We have a small number of land leases with initial terms of 99 years.
1 unchanged sentence
We have therefore excluded the renewal terms from our ROU asset and lease liability for these leases.
−Removed: The weighted average remaining lease term and weighted average discount rate used in calculating these land lease liabilities were 93.9 years and 4.5 %, respectively, at October 31, 2020.
+Added: The weighted average remaining lease term and weighted average discount rate used in calculating these land lease liabilities were 93.4 years and 4.5 %, respectively, at October 31, 2021 and 93.9 years and 4.5 %, respectively, at October 31, 2020.
Other Income – Net
3 unchanged sentences
Income from ancillary businesses 36,711 25,540 53,568
−Removed: Management fee income from home building unconsolidated entities, net 3,636 9,948 11,740
−Removed: Retained customer deposits — — 8,937
−Removed: Income from land sales — — 6,331
+Added: Management fee income from Home Building Joint Ventures, net 1,646 3,636 9,948
Directly expensed interest — ( 2,440 ) —
1 unchanged sentence
Total other income – net $ 40,614 $ 35,693 $ 81,502
−Removed: As a result of our adoption of ASC 606 as of November 1, 2018, revenues and cost of revenues from land sales are presented as separate components on our Consolidated Statement of Operations and Comprehensive Income.
−Removed: In addition, retained customer deposits are presented in home sales revenues on our Consolidated Statement of Operations and Comprehensive Income.
−Removed: Because we elected to apply the modified retrospective method of adoption, prior periods have not been restated to reflect these changes in presentation .
−Removed: See Note 1, “Significant Accounting Policies – Recent Accounting Pronouncements” for additional information regarding the impact of the adoption of ASC 606.
Management fee income from home building unconsolidated entities presented above primarily represents fees earned by our City Living and Traditional Home Building operations.
1 unchanged sentence
Fees earned by our apartment living operations are included in income from ancillary businesses above.
−Removed: Income from ancillary businesses is generated by our mortgage, title, landscaping, security monitoring, Gibraltar, apartment living, and golf course and country club operations.
+Added: Income from ancillary businesses is generated by our mortgage, title, landscaping, smart home technology, Gibraltar, apartment living, and golf course and country club operations.
The table below provides revenues and expenses for these ancillary businesses for the years ended October 31, 2021, 2020, and 2019 (amounts in thousands):
6 unchanged sentences
In fiscal 2019, we sold seven of our golf club properties to third parties for $ 64.3 million and we recognized a gain of $ 35.1 million during the year ended October 31, 2019 as a result of these sales.
−Removed: In fiscal 2018, we recognized a $ 10.7 million gain from a bulk sale of security monitoring accounts by our home control solutions business, which is included in income from ancillary businesses above.
−Removed: In addition, in fiscal 2018, we recognized a $ 3.5 million write-down of a commercial property operated by Toll Brothers Apartment Living, which is included in income from ancillary businesses above.
−Removed: The table below provides revenues and expenses recognized from land sales for the year ended October 31, 2018 (amounts in thousands):
−Removed: Revenue $ 134,327
−Removed: Expense 127,996
−Removed: Land sale revenues for the year ended October 31, 2018 included $ 80.3 million related to sale transactions with four Rental Property Joint Ventures in which we have interests ranging from 25 % to 50 %.
−Removed: On one of these transactions, we recognized a gain of $ 1.0 million in fiscal 2018.
−Removed: In addition, due to our continued involvement in the joint venture primarily through guarantees provided on the joint venture’s debt, we deferred $ 3.8 million of the gain realized on this sale.
−Removed: We will recognize the deferred gain into income as the guarantees provided expire.
−Removed: See Note 4, “Investments in Unconsolidated Entities,” for more information on these transactions.
Information on Segments
The table below summarizes revenue and income (loss) before income taxes for our segments for each of the fiscal years ended October 31, 2021, 2020, and 2019 (amounts in thousands).
−Removed: In the first quarter of fiscal 2020, we made certain changes to our Traditional Home Building regional management structure and realigned certain of the states falling among our five geographic segments.
−Removed: Amounts for fiscal 2019 and 2018 have been restated to reflect this change.
Revenue Income (loss) before income taxes
2021 2020 2019 2021 2020 2019
−Removed: (Restated) (Restated) (Restated) (Restated)
Traditional Home Building:
6 unchanged sentences
City Living (1)
+Added: 370,772 120,946 253,188 157,653 29,679 70,133
Corporate and other 519 ( 748 ) ( 999 ) ( 154,887 ) ( 180,142 ) ( 143,871 )
2 unchanged sentences
Total $ 8,790,361 $ 7,077,659 $ 7,223,966 $ 1,100,315 $ 586,901 $ 787,170
−Removed: “Corporate and other” is comprised principally of general corporate expenses such as the offices of our executive officers;
+Added: (1) In the first quarter of fiscal 2021, we sold certain commercial assets associated with our Hoboken, New Jersey condominium projects for $ 82.4 million which is included in Land sales and other revenues above.
+Added: City Living recognized net gains of $ 38.3 million from these sales.
+Added: “Corporate and other” is comprised principally of general corporate expenses such as our executive offices;
the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups;
interest income;
−Removed: income from certain of our ancillary businesses, including Gibraltar;
−Removed: and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.
+Added: income from certain of our ancillary businesses, and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.
Total assets for each of our segments at October 31, 2021 and 2020, are shown in the table below (amounts in thousands):
22 unchanged sentences
$ 185,656 $ 564,737 $ 7,165,491 $ 7,915,884
−Removed: Balances at October 31, 2019 (Restated)
+Added: Balances at October 31, 2020
Traditional Home Building:
9 unchanged sentences
2021 2020 2019
−Removed: (Restated) (Restated)
Traditional Home Building:
6 unchanged sentences
City Living 1,100 — 4,800
−Removed: Corporate and other — — 769
$ 26,535 $ 55,883 $ 42,360
4 unchanged sentences
2021 2020 2021 2020 2019
−Removed: (Restated) (Restated) (Restated)
Traditional Home Building:
12 unchanged sentences
Cash flow information:
−Removed: Interest paid, net of amount capitalized $ 18,326 $ 35,422 $ 20,812
−Removed: Income tax payments $ 48,509 $ 141,681 $ 215,092
−Removed: Income tax refunds $ 1,822 $ 4,344 $ 3,101
+Added: Income tax paid, net $ 229,742 $ 46,687 $ 137,337
Noncash activity:
−Removed: Cost of inventory acquired through seller financing, municipal bonds, or accrued liabilities, net
−Removed: $ 158,435 $ 213,824 $ 185,633
−Removed: Increase in inventory for capitalized interest, our share of earnings, and allocation of basis difference in land purchased from unconsolidated entities $ 215 $ 5,300 $ 1,320
−Removed: Increase in receivables, prepaid expenses, and other assets and accrued expenses related to the adoption of ASU 2016-02 $ 122,269 $ — $ —
+Added: Cost of inventory acquired through seller financing, municipal bonds, or included in accrued expenses, net $ 174,726 $ 158,435 $ 213,824
+Added: Increase in receivables, prepaid expenses, and other assets and accrued expenses related to the adoption of ASU 2016-02 and other lease activity $ — $ 122,269 $ —
Reclassification from inventory to property, construction, and office equipment, net due to the adoption of ASC 606
$ — $ — $ 104,807
−Removed: Net decrease in inventory and retained earnings due to the adoption of ASC 606
−Removed: $ — $ 8,989 $ —
−Removed: Net increase in accrued expenses and decrease in retained earnings due to the adoption of ASC 606
−Removed: $ — $ 6,541 $ —
−Removed: Net decrease in investment in unconsolidated entities and retained earnings due to the adoption of ASC 606
−Removed: $ — $ 2,457 $ —
−Removed: Cost of inventory acquired through foreclosure
−Removed: $ — $ — $ 4,609
−Removed: Cancellation of treasury stock $ — $ 895,517 $ —
Non-controlling interest $ ( 1,320 ) $ 7,092 $ 38,134
Reclassification of inventory to property, construction, and office equipment, net $ 39,309 $ 16,558 $ —
−Removed: Decrease (increase) in unrecognized gain in defined benefit plans
−Removed: $ 729 $ 4,138 $ ( 3,115 )
−Removed: Defined benefit plan amendment
−Removed: $ 2,600 $ 4,956 $ —
−Removed: Income tax benefit (expense) recognized in total comprehensive income
−Removed: $ 471 $ 2,265 $ ( 1,141 )
Transfer of other assets to inventory, net
$ — $ — $ 7,100
−Removed: 2020 2019 2018
Transfer of inventory to investment in unconsolidated entities $ 50,841 $ 13,690 $ —
1 unchanged sentence
$ 94,332 $ 52,345 $ 44,139
−Removed: Reclassification of deferred income from accrued expenses to investment in unconsolidated entities
−Removed: $ — $ — $ 5,995
−Removed: Increase in investments in unconsolidated entities for change in the fair value of debt guarantees
−Removed: $ 25 $ 928 $ 623
−Removed: Miscellaneous increases (decreases) to investments in unconsolidated entities $ 645 $ ( 1,876 ) $ 1,776
+Added: Unrealized gain on derivatives $ 10,330 $ — $ —
Business Acquisitions:
17 unchanged sentences
Gross profit:
−Removed: Home sales (a) $ 502,079 $ 341,704 $ 295,256 $ 264,215
+Added: Home sales $ 694,373 $ 508,241 $ 401,767 $ 288,911
Land sales and other $ 4,490 $ 2,407 $ 1,773 $ 40,938
1 unchanged sentence
Net income $ 374,330 $ 234,932 $ 127,866 $ 96,499
−Removed: Earnings per share (b)
+Added: Earnings per share (a)
Basic $ 3.06 $ 1.90 $ 1.03 $ 0.77
5 unchanged sentences
Land sales and other $ 49,693 $ 23,677 $ 32,838 $ 34,094
−Removed: Home sales (a) $ 478,262 $ 391,653 $ 373,183 $ 303,064
+Added: Home sales $ 502,079 $ 341,704 $ 295,256 $ 264,215
Land sales and other $ 4,798 $ 1,418 $ 6,420 $ 1,812
1 unchanged sentence
Net income $ 199,317 $ 114,761 $ 75,670 $ 56,876
−Removed: Earnings per share (b)
+Added: Earnings per share (a)
Basic $ 1.57 $ 0.91 $ 0.59 $ 0.41
3 unchanged sentences
Diluted 128,892 127,399 128,809 139,889
−Removed: (a) Effective October 31, 2020, we reclassified sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense.
−Removed: Prior periods have been reclassified to conform to the 2020 presentation.
−Removed: (b) Due to rounding, the sum of the quarterly earnings per share amounts may not equal the reported earnings per share for the year.
+Added: (a) Due to rounding, the sum of the quarterly earnings per share amounts may not equal the reported earnings per share for the year.
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.