Toll Brothers, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures Any controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected; however, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Our Chief Executive Officer and Chief Financial Officer, with the assistance of management, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (“Exchange Act”), as of the end of the period covered by this report (“Evaluation Date”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Independent Registered Public Accounting Firm 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. Changes in Internal Control Over Financial Reporting There has not been any change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our quarter ended October 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION Securities Trading Plans of Directors and Executive Officers During the period covered by this Annual Report on Form 10-K, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 44 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table includes information with respect to all persons serving as executive officers as of the date of this Form 10-K. All executive officers serve at the pleasure of our Board of Directors. Name Age Positions Douglas C. Yearley, Jr. 64 Chairman of the Board and Chief Executive Officer Robert Parahus 61 President and Chief Operating Officer Martin P. Connor 60 Senior Vice President and Chief Financial Officer Douglas C. Yearley, Jr. joined us in 1990, specializing in land acquisitions and project finance. 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. On November 1, 2018, he was appointed to the position of Chairman of the Board and Chief Executive Officer. Mr. Yearley was first elected as a Director in June 2010. Robert Parahus joined us in 1986 and served in various positions with us, including Regional President from 2006 through October 31, 2019. 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 North, Mid-Atlantic, and South regions. Effective November 1, 2021, Mr. Parahus was promoted to President and Chief Operating Officer. Martin P. Connor joined us as Vice President and Assistant Chief Financial Officer in December 2008 and was appointed a Senior Vice President in December 2009. Mr. Connor was appointed to his current position of Senior Vice President and Chief Financial Officer in September 2010. From June 2008 to December 2008, Mr. Connor was President of Marcon Advisors LLC, a finance and accounting consulting firm that he founded. From October 2006 to June 2008, Mr. Connor was Chief Financial Officer and Director of Operations for O’Neill Properties, a diversified commercial real estate developer in the Mid-Atlantic area. Prior to October 2006, he spent over 20 years at Ernst & Young LLP as an Audit and Advisory Business Services Partner, responsible for the real estate practice for Ernst & Young LLP in the Philadelphia marketplace. During the period from 1998 to 2005, he served on the Toll Brothers, Inc. audit engagement. Mr. Connor is a director of Univest Financial Corporation, a publicly traded banking and financial services provider serving customers primarily in Pennsylvania and New Jersey. Code of Ethics We have adopted a Code of Ethics for the Principal Executive Officer and Senior Financial Officers (“Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer, controller, and persons performing similar functions designated by our Board of Directors. The Code of Ethics is available on our Internet website at www.tollbrothers.com under “Investor Relations – Corporate Governance.” If we were to amend or waive any provision of our Code of Ethics, we intend to satisfy our disclosure obligations with respect to any such waiver or amendment by posting such information on our Internet website set forth above rather than by filing a Form 8-K. Insider Trading Policy The Company has an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to all Company personnel, including directors, officers, employees, and other covered persons, as well as the Company itself. The Company also follows procedures for the repurchase of its securities. The Company believes that its insider trading policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company. A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this Form 10-K. Indemnification of Directors and Officers Our Certificate of Incorporation and Bylaws provide for indemnification of our directors and officers. We have also entered into individual indemnification agreements with each of our directors. The remaining information required by this Item 10 will be included in our Proxy Statement for the 2025 Annual Meeting of Stockholders (the “2025 Proxy Statement”), and is incorporated herein by reference. 45 ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be included in the “Executive Compensation” section of our 2025 Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required in this item will be included in the “Voting Securities and Beneficial Ownership” and “Equity Compensation Plan Information” sections of our 2025 Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE The information required in this item will be included in the “Corporate Governance” and “Certain Relationships and Transactions” sections of our 2025 Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required in this item will be included in the “Ratification of the Re-Appointment of Independent Registered Public Accounting Firm” section of the 2025 Proxy Statement and is incorporated herein by reference. 46 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Financial Statements and Financial Statement Schedules Page 1. Financial Statements Management’s Annual Report on Internal Control Over Financial Reporting F- 1 Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 2 Consolidated Balance Sheets F- 6 Consolidated Statements of Operations and Comprehensive Income F- 7 Consolidated Statements of Changes in Equity F- 8 Consolidated Statements of Cash Flows F- 9 Notes to Consolidated Financial Statements F- 10 2. Financial Statement Schedules None Financial statement schedules have been omitted because either they are not applicable or the required information is included in the financial statements or notes hereto. (b) Exhibits The following exhibits are included with this report or incorporated herein by reference: Exhibit Number Description 3.1 Second Restated Certificate of Incorporation of the Registrant, dated September 8, 2005, is hereby incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10-Q for the quarter ended July 31, 2005. 3.2 Certificate of Amendment of the Second Restated Certificate of Incorporation of the Registrant, filed with the Secretary of State of the State of Delaware, 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 22, 2010. 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. 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 By-Laws of Toll Brothers, Inc., as Amended and Restated June 13, 2023 is hereby incorporated by reference to Exhibit 3.01 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2023 4.1 Specimen Stock Certificate is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10-K for the year ended October 31, 2017. 4.2 Indenture, dated as of February 7, 2012, among Toll Brothers Finance Corp., the Registrant and the other guarantors named therein and The Bank of New York Mellon, as trustee, is hereby incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2012. 47 Exhibit Number Description 4.3 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. 4.4 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. 4.5 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. 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 March 10, 2017. 4.6 Form of Global Note for Toll Brothers Finance Corp.’s 4.875% Senior Notes due 2027 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 March 10, 2017. 4.7 Authorizing Resolutions, dated as of June 12, 2017, relating to the $150,000,000 principal amount of 4.875% Senior Notes due 2027 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 June 12, 2017. 4.8 Form of Global Note for Toll Brothers Finance Corp.’s 4.875% Senior Notes due 2027 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 June 12, 2017 4.9 Authorizing Resolution, dated as of January 22, 2018, relating to the $400,000,000 aggregate principal amount of 4.350% Senior Notes due 2028 of Toll Brothers Finance Corp., guaranteed on a senior basis by Toll Brothers, Inc. 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 January 22, 2018. 4.10 Form of Global Note for the Issuer’s 4.350% Senior Notes due 2028 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 January 22, 2018. 4.11 Authorizing Resolution, dated as of September 12, 2019, relating to the $400,000,000 aggregate principal amount of 3.800% Senior Notes due 2029 of Toll Brothers Finance Corp., guaranteed on a senior basis by Toll Brothers, Inc. 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 September 12, 2019. 4.12 Form of Global Note for the Issuer’s 3.800% Senior Notes due 2029 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 September 12, 2019. 4.13 First Supplemental Indenture dated as of April 27, 2012, 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 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2012. 4.14 Second Supplemental Indenture dated as of April 30, 2013, 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 4.4 of the Registrant’s Form 10-Q for the quarter ended April 30, 2013. 4.15 Third Supplemental Indenture dated as of April 30, 2014, 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-Q for the quarter ended April 30, 2014. 4.16 Fourth Supplemental Indenture dated as of July 31, 2014, 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-Q for the quarter ended July 31, 2014. 48 Exhibit Number Description 4.17 Fifth Supplemental Indenture dated as of October 31, 2014, 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 4.55 of the Registrant’s Form 10-K for the year ended October 31, 2014. 4.18 Sixth Supplemental Indenture dated as of January 30, 2015, 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 4.3 of the Registrant’s Form 10-Q for the quarter ended January 31, 2015. 4.19 Seventh Supplemental Indenture dated as of April 30, 2015, 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 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2015. 4.20 Eighth Supplemental Indenture dated as of October 30, 2015, 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 4.34 of the Registrant’s Form 10-K for the year ended October 31, 2015. 4.21 Ninth Supplemental Indenture dated as of January 29, 2016, 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 4.2 of the Registrant’s Form 10-Q for the quarter ended January 31, 2016. 4.22 Tenth Supplemental Indenture dated as of April 29, 2016, 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 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2016. 4.23 Eleventh Supplemental Indenture dated as of October 31, 2016, 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 4.41 of the Registrant’s Form 10-K for the year ended October 31, 2016. 4.24 Twelfth Supplemental Indenture dated as of October 31, 2016, 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 4.42 of the Registrant’s Form 10-K for the year ended October 31, 2016. 4.25 Thirteenth Supplemental Indenture dated as of January 31, 2017, 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 4.2 of the Registrant’s Form 10-Q for the quarter ended January 31, 2017. 4.26 Fourteenth Supplemental Indenture dated as of April 28, 2017, 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 4.2 of the Registrant’s Form 10-Q for the quarter ended April 30, 2017. 4.27 Fifteenth Supplemental Indenture dated as of July 31, 2017, 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 4.2 of the Registrant’s Form 10-Q for the quarter ended July 31, 2017. 4.28 Sixteenth Supplemental Indenture dated as of October 31, 2017, 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 4.55 of the Registrant’s Form 10-K for the year ended October 31, 2017. 4.29 Seventeenth Supplemental Indenture dated as of October 31, 2017, 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 4.56 of the Registrant’s Form 10-K for the year ended October 31, 2017. 49 Exhibit Number Description 4.30 Eighteenth Supplemental Indenture dated as of April 13, 2018, 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 4.3 of the Registrant’s Form 10-Q for the quarter ended April 30, 2018. 4.31 Nineteenth Supplemental Indenture dated as of April 30, 2018, 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 4.4 of the Registrant’s Form 10-Q for the quarter ended April 30, 2018. 4.32 Twentieth Supplemental Indenture dated as of October 31, 2018, 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 4.62 of the Registrant’s Form 10-K for the year ended October 31, 2018. 4.33 Twenty-First Supplemental Indenture dated as of January 31, 2019, 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 4.2 of the Registrant’s Form 10-Q for the quarter ended January 31, 2019. 4.34 Twenty-Second Supplemental Indenture dated as of October 30, 2019, 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 4.41 of the Registrant’s Form 10-K for the year ended October 31, 2019. 4.35 Twenty-third Supplemental Indenture dated as of October 30, 2019, 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 4.42 of the Registrant’s Form 10-K for the year ended October 31, 2019. 4.36 Twenty-fourth Supplemental Indenture dated as of April 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 4.1 of the Registrant’s Form 10-Q for the quarter ended April 30, 2020. 4.37 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. 4.38 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-Q for the quarter ended April 30, 2021. 4.39 Twenty-seventh Supplemental Indenture dated as of July 29, 2022, 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-Q for the quarter ended July 31, 2022. 4.40 Twenty-eighth Supplemental Indenture dated as of October 31, 2022, 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 incorporate d by reference to Exhibit 4.43 of the Registrants’s Form 10-K for the year ended October 31, 2022. 4.41 Twenty-ninth Supplemental Indenture dated as of January 31, 2023, 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 incorporate d by reference to Exhibit 4.1 of the Registrants’s Form 10-Q for the quarter ended January 31, 2023. 4.42 Thirtieth Supplemental Indenture dated as of July 31, 2023, 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 incorporate d by reference to Exhibit 4.1 of the Registrants’s Form 10-Q for the quarter ended July 31, 2023. 50 Exhibit Number Description 4.43 Thirty-first Supplemental Indenture dated as of October 31, 2023, 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 incorporate d by re ference to Exhib it 4.43 of the Registrant ’ s Form 10-K for the year ended October 31, 2023 . 4.44 Thirty-Second Supplemental Indenture dated as of April 30, 2024 to the Indenture dated as of February 7, 2012 by and among the party listed on Schedule A hereto and The Bank of New York Mellon, as successor truste e , is hereby incorporate d by re ference to Exhi bit 4.1 of the Registra nt ’ s Form 10-Q for the quarter en ded July 31, Apri l 30, 2024. 4.45 Thirty-Third Supplemental Indenture dated as of July 31, 2024 to the Indenture dated as of February 7, 2012 by and among the party listed on Schedule A hereto and The Bank of New York Mellon, as successor truste e, is hereby incorporate d by re ference to Exhi bit 4.1 of the Regi strant ’ s Form 10-Q for the quarter ended July 31, 2024. 4.46 Thirty-Fourth Supplemental Indenture dated as of October 31, 2024 to the Indenture dated as of February 7, 2012 by and among the party listed on Schedule A hereto and The Bank of New York Mellon, as successor trustee.** 4.47 Description of Certain of Registrant’s Securities is hereby incorporated by reference to Exhibit 4.44 of the Registrant’s Form 10-K for the year ended October 31, 2021. 10.1 Credit Agreement, dated as of February 14, 2023, by and among First Huntingdon Finance Corp., Toll Brothers, Inc., the Lenders party thereto and Mizuho Bank, Ltd. 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 February 15, 2023 10.2 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 10.3 Amendment No. 1, dated as of May 19, 2016, to the Credit Agreement, dated as of February 3, 2014, among First Huntingdon Finance Corp., Toll Brothers, Inc., the Lenders party thereto and SunTrust Bank, as Administrative Agent, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 24, 2016. 10.4 Amendment No. 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. 10.5 Amendment No. 3, dated November 1, 2018, 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 November 2, 2018. 10.6 Amendment No. 4, dated as of October 31, 2019, to the Credit Agreement, dated as of February 3, 2014, as amended, by and 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 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 1, 2019. 10.7 Amendment No. 5, dated as of February 14, 2023, to the Credit Agreement, dated as of February 3, 2014 (as amended by Amendment No. 1, dated as of May 19, 2016, Amendment No. 2, dated as of August 2, 2016, Amendment No. 3, dated as of November 1, 2018 and Amendment No. 4, dated as of October 31, 2019), among First Huntingdon Finance Corp., Toll Brothers, Inc., the Lenders party thereto and Truist 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 February 15, 2023 51 Exhibit Number Description 10.8 Term Loan Extension Agreements, effective as of October 31, 2020, with respect to the Term Loan Credit Agreement dated as of February 3, 2014 (as amended by Amendment No. 1, dated as of May 19, 2016, Amendment No. 2, dated as of August 2, 2016, Amendment No. 3, dated as of November 1, 2018, and Amendment No. 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. 10.9 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. 1, dated as of May 19, 2016, Amendment No. 2, dated as of August 2, 2016, Amendment No. 3, dated as of November 1, 2018, and Amendment No. 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. 10.10* Toll Brothers, Inc. Employee Stock Purchase Plan (2017) is hereby incorporated by reference to Annex A to the Registrant’s Definitive Proxy Statement on Schedule 14A for its 2017 Annual Meeting of Stockholders filed with the SEC on January 31, 2017. 10.11* Amendment No. 1, dated as of December 13, 2017, to the Toll Brothers, Inc. Employee Stock Purchase Plan (2017) is hereby incorporated by reference to Exhibit 10.7 of the Registrant’s Form 10-K for the year ended October 31, 2017. 10.12* Amendment No. 2, dated as of June 19, 2018, to the Toll Brothers, Inc. Employee Stock Purchase Plan (2017) is hereby incorporated by reference to Exhibit 10.8 of the Registrant’s Form 10-K for the year ended October 31, 2018. 10.13* Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) is hereby incorporated by reference to Annex A to the Registrant’s definitive proxy statement on Schedule 14A for its 2014 Annual Meeting of Stockholders filed with the SEC on February 3, 2014. 10.14* Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) is incorporated by reference to Exhibit 10.16 of the Registrant’s Form 10-K for the period ended October 31, 2014. 10.15* 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. 10.16* Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) (amended and restated as of September 17, 2008) is hereby incorporated by reference to Exhibit 4.1 of the Registrant’s Amendment No. 1 to its Registration Statement on Form S-8 (No. 333-144230) filed with the Securities and Exchange Commission on October 29, 2008. 10.17* Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Stock Incentive Plan for Non-Employee Directors (2007) is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2007. 10.18* Form of Addendum to Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) is hereby incorporated by reference to Exhibit 10.6 of the Registrant’s Form 10-Q for the quarter ended July 31, 2007. 10.19* Toll Brothers, Inc. Stock Incentive Plan for Non-Executive Directors (2016) is hereby incorporated by reference to Annex A to the Registrant’s definitive proxy statement on Schedule 14A for its 2016 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on February 2, 2016. 10.20* Form of Non-Qualified Stock Option Grant (Non-Executive Directors), is hereby incorporated by reference to Exhibit 10.26 of the Registrant’s Form 10-K for the year ended October 31, 2016. 10.21* Form of Restricted Stock Unit Agreement (Non-Executive Directors) pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan** 10.22* Toll Brothers, Inc. 2019 Omnibus Incentive Plan, is hereby incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2019. 52 Exhibit Number Description 10.23* Form of Non-Qualified Stock Option Grant pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan, is hereby incorporated by reference to Exhibit 10.28 of the Registrant’s Form 10-K for the year ended October 31, 2019. 10.24* Form of Restricted Stock Unit Agreement pursuant to the Toll Brothers, Inc. 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. 10.25* Form of Restricted Stock Unit Agreement (Performance Based) pursuant to the Toll Brothers, Inc. 2019 Omnibus Incentive Plan, is hereby incorporated by reference to Exhibit 10.30 of the Registrant’s Form 10-K for the year ended October 31, 2019. 10.26* Toll Brothers, Inc. Supplemental Executive Retirement Plan, as amended effective as of October 29, 2019, is hereby incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 10-Q filed with the Securities and Exchange Commission on October 30, 2019. 10.27* Toll Bros., Inc. 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. 10.28* Amendment Number 1 dated November 1, 2010 to the Toll Bros., Inc. Non-Qualified Deferred Compensation Plan, amended and restated as of November 1, 2008, is incorporated by reference to Exhibit 10.40 of the Registrant’s Form 10-K for the period ended October 31, 2010. 10.29* Amendment Number 2 dated December 30, 2010 to the Toll Bros., Inc. Non-Qualified Deferred Compensation Plan, amended and restated as of November 1, 2008 is incorporated by reference to Exhibit 10.28 of the Registrant’s Form 10-K for the period ended October 31, 2014. 10.30* Amendment Number 3 dated December 22, 2011 to the Toll Bros., Inc. Non-Qualified Deferred Compensation Plan, amended and restated as of November 1, 2008, is incorporated by reference to Exhibit 10.29 of the Registrant’s Form 10-K for the period ended October 31, 2014. 10.31* Toll Bros., Inc. Nonqualified Deferred Compensation Plan, amended and restated effective as of December 31, 2014, is incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended January 31, 2015. 10.32* Toll Brothers, Inc. Executive Severance Plan, 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 March 14, 2019. 10.33* 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. 19.1** Insider Trading Policy. 21** Subsidiaries of the Registrant. 22** List of guarantor subsidiaries . 23** Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. 31.1** Certification of Douglas C. Yearley, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of Martin P. Connor pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Douglas C. Yearley, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Martin P. Connor pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97* Compensation Clawback Policy . ** 53 Exhibit Number Description 101 The following financial statements from Toll Brothers, Inc. Annual Report on Form 10-K for the year ended October 31, 2024, filed on December 20, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (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. 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. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * This exhibit is a management contract or compensatory plan or arrangement required to be filed as an exhibit to this report. ** Filed electronically herewith. The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves; they should not be relied on for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time. ITEM 16. FORM 10-K SUMMARY None. 54 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on December 20, 2024. TOLL BROTHERS, INC. By: /s/ Douglas C. Yearley, Jr. Douglas C. Yearley, Jr. Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Douglas C. Yearley, Jr. Chairman of the Board and Chief Executive December 20, 2024 Douglas C. Yearley, Jr. Officer (Principal Executive Officer) /s/ Martin P. Connor Senior Vice President and Chief Financial Officer December 20, 2024 Martin P. Connor (Principal Financial Officer) /s/ Michael J. Grubb Senior Vice President and Chief Accounting December 20, 2024 Michael J. Grubb Officer (Principal Accounting Officer) /s/ Stephen F. East Director December 20, 2024 Stephen F. East /s/ Christine N. Garvey Director December 20, 2024 Christine N. Garvey /s/ Karen H. Grimes Director December 20, 2024 Karen H. Grimes /s/ Derek T. Kan Director December 20, 2024 Derek T. Kan /s/ John A. McLean Director December 20, 2024 John A. McLean /s/ Wendell E. Pritchett Director December 20, 2024 Wendell E. Pritchett /s/ Judith A. Reinsdorf Director December 20, 2024 Judith A. Reinsdorf 55 Signature Title Date /s/ Katherine A. Sandstrom Director December 20, 2024 Katherine A. Sandstrom /s/ Paul E. Shapiro Director December 20, 2024 Paul E. Shapiro /s/ Scott D. Stowell Director December 20, 2024 Scott D. Stowell 56 Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). 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, 2024. 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. F-1 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Toll Brothers, Inc. Opinion on Internal Control Over Financial Reporting We have audited Toll Brothers, Inc.’s internal control over financial reporting as of October 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Toll Brothers, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company and our report dated December 20, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Philadelphia, Pennsylvania December 20, 2024 F-2 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Toll Brothers, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Toll Brothers, Inc. (the Company) as of October 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for each of the three years in the period ended October 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2024, in conformity with U.S. generally accepted accounting principles. 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, 2024, 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 20, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit and risk committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. 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. Accrual for Self-insurance 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. 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. The Company accrues for expected costs associated with the self-insured retentions, deductibles and other coverage limits which constitute the accrual for self-insurance. The Company’s accrual for self-insurance was $242.3 million as of October 31, 2024. The Company records expenses and accrues liabilities based on the estimated costs required to cover its self-insured liability and the estimated costs of potential claims and claim adjustment expenses that are above coverage limits or that are not covered by insurance policies. These estimated costs are based on an analysis of historical claims and industry data. The majority of the accrual for self-insurance is an estimate of claims incurred but not yet reported (“IBNR”). F-3 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. 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. 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 products the Company builds, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors. Key assumptions used in these estimates include claim frequencies, severity, and settlement patterns, which can occur over an extended period of time. 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. 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. 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. 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. We reviewed the Company’s contractual self-insured retentions, deductibles and other coverage limits. We also evaluated management’s conclusions about the Company’s legal and contractual obligations with respect to certain claims. 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. We also evaluated the Company’s disclosures in its consolidated financial statements. Inventory Impairment 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. For the year ended October 31, 2024, the Company recorded inventory impairment charges of $52.8 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. If impairment indicators are present, the Company reviews the carrying value of each community’s inventory by comparing the estimated future undiscounted cash flows to the carrying value. For inventory for which the carrying value exceeds the future undiscounted cash flows, the Company writes down the carrying value of the inventory to its estimated fair value primarily based on a discounted cash flow model. Auditing management’s accounting for inventory impairment and its tests for recoverability was especially challenging and involved a high degree of subjectivity as a result of the assumptions and estimates inherent in these evaluations. In particular, management’s assumptions and estimates included future home and/or land sales prices and the pace of future sales, which were sensitive to expectations about future demand, operations and economic factors. Additionally, the fair value of certain communities was highly sensitive to relatively small changes in one or more of those assumptions. F-4 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 inventory impairment review process. For example, we tested controls over management’s review of the significant assumptions and data inputs utilized in the calculation of future undiscounted cash flows. To test the Company’s estimated future cash flows used to test for the recoverability of a community and, if applicable, the measurement of an impairment loss, we performed audit procedures that included, among others, testing the significant assumptions discussed above and the underlying data used by the Company in its impairment analyses, evaluating the methodologies applied by management, and recalculating the total undiscounted cash flows in each analysis. In certain cases, we involved our internal real estate valuation specialists to assist in performing these procedures. We compared the significant assumptions used by management to historical sales data, sales trends, and observable market-specific data. 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. We also evaluated the Company’s disclosures in its consolidated financial statements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1983. Philadelphia, Pennsylvania December 20, 2024 F-5 CONSOLIDATED BALANCE SHEETS (Amounts in thousands) October 31, 2024 2023 ASSETS Cash and cash equivalents $ 1,303,039 $ 1,300,068 Inventory 9,712,925 9,057,578 Property, construction, and office equipment – net 453,007 323,990 Receivables, prepaid expenses, and other assets (1) 590,611 691,256 Mortgage loans held for sale – at fair value 191,242 110,555 Customer deposits held in escrow 109,691 84,530 Investments in unconsolidated entities (1) 1,007,417 959,041 $ 13,367,932 $ 12,527,018 LIABILITIES AND EQUITY Liabilities Loans payable $ 1,085,817 $ 1,164,224 Senior notes 1,597,102 1,596,185 Mortgage company loan facility 150,000 100,058 Customer deposits 488,690 540,718 Accounts payable 492,213 597,582 Accrued expenses 1,752,848 1,548,781 Income taxes payable 114,547 166,268 Total liabilities 5,681,217 5,713,816 Equity Stockholders’ equity Preferred stock, none issued — — Common stock, 112,937 shares issued at October 31, 2024 and October 31, 2023 1,129 1,129 Additional paid-in capital 694,713 698,548 Retained earnings 8,153,356 6,675,719 Treasury stock, at cost —13,149 and 9,146 shares at October 31, 2024 and October 31, 2023, respectively ( 1,209,547 ) ( 619,150 ) Accumulated other comprehensive income ("AOCI") 31,277 40,910 Total stockholders’ equity 7,670,928 6,797,156 Noncontrolling interest 15,787 16,046 Total equity 7,686,715 6,813,202 $ 13,367,932 $ 12,527,018 (1) As of October 31, 2024 and 2023, Receivables, prepaid expenses and other assets and Investments in unconsolidated entities include $ 105.3 million and $ 89.6 million, respectively, of assets related to consolidated variable interest entities ("VIEs"). See Note 4, “Investments in Unconsolidated Entities” for additional information regarding VIEs. See accompanying notes. F-6 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands, except per share data) Year ended October 31, 2024 2023 2022 Revenues: Home sales $ 10,563,332 $ 9,866,026 $ 9,711,170 Land sales and other 283,408 128,911 564,388 10,846,740 9,994,937 10,275,558 Cost of revenues: Home sales 7,753,351 7,207,279 7,237,409 Land sales and other 70,911 153,457 551,770 7,824,262 7,360,736 7,789,179 Selling, general and administrative 982,291 909,446 977,753 Income from operations 2,040,187 1,724,755 1,508,626 Other: (Loss) income from unconsolidated entities ( 23,843 ) 50,098 23,723 Other income – net 69,296 67,518 171,377 Income before income taxes 2,085,640 1,842,371 1,703,726 Income tax provision 514,445 470,300 417,226 Net income $ 1,571,195 $ 1,372,071 $ 1,286,500 Other comprehensive (loss) income – net of tax ( 9,633 ) 3,292 36,509 Total comprehensive income $ 1,561,562 $ 1,375,363 $ 1,323,009 Per share: Basic earnings $ 15.16 $ 12.47 $ 11.02 Diluted earnings $ 15.01 $ 12.36 $ 10.90 Weighted-average number of shares: Basic 103,653 110,020 116,771 Diluted 104,690 111,008 117,975 See accompanying notes. F-7 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Amounts in thousands) Common Stock Addi- tional Paid-in Capital Retained Earnings Treasury Stock AOCI Stock-holders’ Equity Non-controlling Interest Total Equity Shares $ $ $ $ $ $ $ $ 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 Net income 1,286,500 1,286,500 1,286,500 Purchase of treasury stock ( 542,739 ) ( 542,739 ) ( 542,739 ) Exercise of stock options, and stock based compensation issuances, and employee stock plan issuances ( 18,762 ) 18,068 ( 694 ) ( 694 ) Stock-based compensation 21,095 21,095 21,095 Dividends declared ( 89,607 ) ( 89,607 ) ( 89,607 ) Other comprehensive income 36,509 36,509 36,509 Income attributable to non-controlling interest — 64 64 Capital distributions, net — ( 29,743 ) ( 29,743 ) Balance, 10/31/2022 127,937 1,279 716,786 6,166,732 ( 916,327 ) 37,618 6,006,088 15,752 6,021,840 Net income 1,372,071 1,372,071 1,372,071 Purchase of treasury stock ( 565,950 ) ( 565,950 ) ( 565,950 ) Exercise of stock options, and stock based compensation issuances, and employee stock plan issuances ( 43,043 ) 91,308 48,265 48,265 Stock-based compensation 24,805 24,805 24,805 Cancellation of treasury stock ( 15,000 ) ( 150 ) ( 771,669 ) 771,819 — — Dividends declared ( 91,415 ) ( 91,415 ) ( 91,415 ) Other comprehensive income 3,292 3,292 3,292 Loss attributable to non-controlling interest — ( 666 ) ( 666 ) Capital contributions, net — 960 960 Balance, 10/31/2023 112,937 1,129 698,548 6,675,719 ( 619,150 ) 40,910 6,797,156 16,046 6,813,202 Net income 1,571,195 1,571,195 1,571,195 Purchase of treasury stock ( 627,920 ) ( 627,920 ) ( 627,920 ) Exercise of stock options, and stock based compensation issuances, and employee stock plan issuances ( 33,393 ) 37,523 4,130 4,130 Stock-based compensation 29,558 29,558 29,558 Dividends declared ( 93,558 ) ( 93,558 ) ( 93,558 ) Other comprehensive loss ( 9,633 ) ( 9,633 ) ( 9,633 ) Loss attributable to non-controlling interest — ( 1,093 ) ( 1,093 ) Capital contributions, net — 834 834 Balance, 10/31/2024 112,937 1,129 694,713 8,153,356 ( 1,209,547 ) 31,277 7,670,928 15,787 7,686,715 See accompanying notes. F-8 CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year ended October 31, 2024 2023 2022 Cash flow provided by operating activities: Net income $ 1,571,195 $ 1,372,071 $ 1,286,500 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 81,201 76,473 76,816 Stock-based compensation 29,558 24,805 21,095 Loss (income) from unconsolidated entities 23,843 ( 50,098 ) ( 23,723 ) Distributions of earnings from unconsolidated entities 39,276 88,393 32,316 Deferred tax provision ( 80,330 ) 36,239 ( 96,680 ) Impairment charges and write-offs 72,789 69,537 39,541 (Gain) loss on sale of assets ( 5,042 ) ( 416 ) 576 Other - net ( 1,544 ) 3,181 3,781 Changes in operating assets and liabilities: Inventory ( 575,734 ) ( 22,212 ) ( 618,829 ) Origination of mortgage loans ( 2,137,278 ) ( 1,602,700 ) ( 2,035,637 ) Sale of mortgage loans 2,058,780 1,681,610 2,086,358 Receivables, prepaid expenses, and other assets 505 ( 135,924 ) ( 95,018 ) Current income taxes – net 31,927 ( 162,570 ) 160,500 Customer deposits – net ( 77,189 ) ( 88,285 ) ( 3,279 ) Accounts payable and accrued expenses ( 21,790 ) ( 23,674 ) 152,499 Net cash provided by operating activities 1,010,167 1,266,430 986,816 Cash flow used in investing activities: Purchase of property, construction, and office equipment – net ( 73,643 ) ( 72,961 ) ( 71,726 ) Investments in unconsolidated entities ( 193,235 ) ( 216,438 ) ( 226,724 ) Return of investments in unconsolidated entities 101,363 112,749 116,769 Proceeds from the sale of assets, including ownership interests in unconsolidated entities 1,139 26,049 28,309 Other – net ( 3,242 ) — 196 Net cash used in investing activities ( 167,618 ) ( 150,601 ) ( 153,176 ) Cash flow used in financing activities: Proceeds from loans payable 3,744,727 3,079,142 4,304,635 Debt issuance costs ( 202 ) ( 5,365 ) — Principal payments of loans payable ( 3,844,816 ) ( 3,239,418 ) ( 4,356,185 ) Redemption of senior notes — ( 400,000 ) ( 409,856 ) Proceeds (payments) related to stock-based benefit plans – net 4,131 48,269 ( 690 ) Purchase of treasury stock and excise tax payment ( 627,061 ) ( 561,595 ) ( 542,739 ) Dividends paid ( 93,401 ) ( 91,082 ) ( 88,901 ) Receipts (payments) related to noncontrolling interest – net 167 11 ( 25,766 ) Net cash used in financing activities ( 816,455 ) ( 1,170,038 ) ( 1,119,502 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 26,094 ( 54,209 ) ( 285,862 ) Cash, cash equivalents, and restricted cash, beginning of year 1,344,341 1,398,550 1,684,412 Cash, cash equivalents, and restricted cash, end of year $ 1,370,435 $ 1,344,341 $ 1,398,550 See accompanying notes. F-9 Notes to Consolidated Financial Statements 1. Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company,” “we,” “us,” or “our”), a Delaware corporation, and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. References herein to fiscal year refer to our fiscal years ended or ending October 31. Use of Estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. In times of economic disruption when uncertainty regarding future economic conditions is heightened, these estimates and assumptions are subject to greater variability. 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. Cash and Cash Equivalents Investments with original maturities of three months or less are classified as cash equivalents. Our cash balances exceed federally insurable limits. We monitor the cash balances in our operating accounts and adjust the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts. Inventory Inventory is stated at cost unless an impairment exists, in which case it is written down to fair value in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment” (“ASC 360”). In addition to direct land acquisition costs, land development costs, and home construction costs, costs also include interest, real estate taxes, and direct overhead related to development and construction, which are capitalized to inventory during the period beginning with the commencement of development and ending with the completion of construction. For those communities that have been temporarily closed, no additional capitalized interest is allocated to a community’s inventory until it reopens. While the community remains closed, carrying costs such as real estate taxes are expensed as incurred. We capitalize certain interest costs to qualified inventory during the development and construction period of our communities in accordance with ASC 835-20, “Capitalization of Interest” (“ASC 835-20”). Capitalized interest is charged to home sales cost of sales revenues when the related inventory is delivered. 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. During fiscal 2024, 2023 and 2022, the Company’s qualified inventory exceeded its indebtedness and substantially all interest incurred, excluding interest related to our mortgage company subsidiary’s operations, was capitalized to inventory. 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. 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. Because our inventory is considered a long-lived asset under GAAP, we are required, under ASC 360, to regularly review the carrying value of each community and write down the value of those communities for which we believe the values are not recoverable. Operating Communities : When the profitability of an operating community deteriorates, the sales pace declines significantly, or some other factor indicates a possible impairment in the recoverability of the asset, the asset is reviewed for impairment by comparing the estimated future undiscounted cash flow for the community to its carrying value. If the estimated future undiscounted cash flow is less than the community’s carrying value, the carrying value is written down to its estimated fair value. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. The impairment is charged to home sales cost of revenues in the period in which the impairment is determined. 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 F-10 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; (iii) costs expended to date and expected to be incurred in the future, including, but not limited to, land and land development, home construction, interest, and overhead costs; (iv) alternative product offerings that may be offered in a community that will have an impact on sales pace, sales price, building cost, or the number of homes that can be built on a particular site; and (v) alternative uses for the property such as the possibility of a sale of the entire community to another builder or the sale of individual home sites. Future Communities : We evaluate all land held for future communities or future sections of operating communities, whether owned or under contract, to determine whether or not we expect to proceed with the development of the land as originally contemplated. This evaluation encompasses the same types of estimates used for operating communities described above, as well as an evaluation of the regulatory environment applicable to the land and the estimated probability of obtaining the necessary approvals, the estimated time and cost it will take to obtain the approvals, and the possible concessions that may be required to be given in order to obtain them. Concessions may include cash payments to fund improvements to public places such as parks and streets, dedication of a portion of the property for use by the public or as open space, or a reduction in the density or size of the homes to be built. Based upon this review, we decide (i) as to land under contract to be purchased, whether the contract will likely be terminated or renegotiated, and (ii) as to land owned, whether the land will likely be developed as contemplated or in an alternative manner, or should be sold. We then further determine whether costs that have been capitalized to the community are recoverable or should be written off. The write-off is charged to home sales cost of revenues in the period in which the need for the write-off is determined. The estimates used in the determination of the estimated cash flows and fair value of both current and future communities are based on factors known to us at the time such estimates are made and our expectations of future operations and economic conditions. Should the estimates or expectations used in determining estimated fair value deteriorate in the future, we may be required to recognize additional impairment charges and write-offs related to current and future communities and such amounts could be material. Variable Interest Entities We are required to consolidate variable interest entities (“VIEs”) in which we have a controlling financial interest in accordance with ASC 810, “Consolidation” (“ASC 810”). A controlling financial interest will have both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Our variable interest in VIEs may be in the form of equity ownership, contracts to purchase assets, management services and development agreements between us and a VIE, loans provided by us to a VIE or other member, and/or guarantees provided by members to banks and other parties. We have a significant number of land purchase contracts and financial interests in other entities which we evaluate in accordance with ASC 810. We analyze our land purchase contracts and the entities in which we have an investment to determine whether the land sellers and entities are VIEs and, if so, whether we are the primary beneficiary. We examine specific criteria and use our judgment when determining if we are the primary beneficiary of a VIE. Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other member(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality between us and the other member(s), and contracts to purchase assets from VIEs. The determination whether an entity is a VIE and, if so, whether we are the primary beneficiary may require significant judgment. Property, Construction, and Office Equipment Property, construction, and office equipment are recorded at cost and are stated net of accumulated depreciation of $ 310.5 million and $ 285.7 million at October 31, 2024 and 2023, respectively. 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 2024, 2023, and 2022, we recognized $ 80.9 million, $ 75.5 million, and $ 75.9 million of depreciation expense, respectively. F-11 Mortgage Loans Held for Sale Residential mortgage loans held for sale are measured at fair value in accordance with the provisions of ASC 825, “Financial Instruments” (“ASC 825”). We believe the use of ASC 825 improves consistency of mortgage loan valuations between the date the borrower locks in the interest rate on the pending mortgage loan and the date of the mortgage loan sale. At the end of the reporting period, we determine the fair value of our mortgage loans held for sale and the forward loan commitments we have entered into as a hedge against the interest rate risk of our mortgage loans using the market approach to determine fair value. The evaluation is based on the current market pricing of mortgage loans with similar terms and values as of the reporting date, and such pricing is applied to the mortgage loan portfolio. We recognize the difference between the fair value and the unpaid principal balance of mortgage loans held for sale as a gain or loss. In addition, we recognize the change in fair value of our forward loan commitments as a gain or loss. Interest income on mortgage loans held for sale is calculated based upon the stated interest rate of each loan. In addition, net origination costs and fees associated with residential mortgage loans originated are expensed as incurred. These gains and losses, interest income, and origination costs and fees are recognized in “Other income – net” in the Consolidated Statements of Operations and Comprehensive Income. Investments in Unconsolidated Entities We have investments in a number of unconsolidated entities, including joint ventures, with independent third parties. Investments in 50% or less owned partnerships and affiliates are accounted for using the equity method unless it is determined that we have effective control of the entity, in which case we would consolidate the entity. Under the equity method of accounting, we recognize our proportionate share of the earnings and losses of these entities. Additionally, we track cumulative earnings and distributions from our investments in unconsolidated entities. For cash flow classification, to the extent distributions do not exceed cumulative earnings, we designate such distributions as return on capital and reflected in the operating section of our Consolidated Statements of Cash Flows. Distributions in excess of cumulative earnings are treated as return of capital and reflected in the investing section of our Consolidated Statements of Cash Flows. In accordance with ASC 323, “Investments—Equity Method and Joint Ventures,” we review each of our investments on a quarterly basis for indicators of impairment. A series of net operating losses of an investee, the inability to recover our invested capital, or other factors may indicate that a loss in value of our investment in the unconsolidated entity has occurred. If a loss exists, we further review the investment to determine if the loss is other than temporary, in which case we write down the investment to its estimated fair value. The evaluation of our investment in unconsolidated entities, other than those that own rental properties, 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. 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. See “Inventory” above for more detailed disclosure on our evaluation of inventory. For our unconsolidated entities that own, develop, and manage for-rent residential apartments, we review rental trends, expected future expenses, and expected future cash flows to determine estimated fair values of the underlying properties. If a valuation adjustment is recorded by an unconsolidated entity related to its assets, our proportionate share is reflected in income from unconsolidated entities with a corresponding decrease to our investment in unconsolidated entities. We are a party to several joint ventures with unrelated parties to develop and sell land that is owned by the joint ventures. We recognize our proportionate share of the earnings from the sale of home sites to other builders, including our joint venture partners. We do not recognize earnings from the home sites we purchase from these ventures at the time of purchase; instead, our cost basis in those home sites is reduced by our share of the earnings realized by the joint venture from sales of those home sites to us. Fair Value Disclosures We use ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), to measure the fair value of certain assets and liabilities. ASC 820 provides a framework for measuring fair value in accordance with GAAP, establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and requires certain disclosures about fair value measurements. F-12 The fair value hierarchy is summarized below: Level 1: Fair value determined based on quoted prices in active markets for identical assets or liabilities. Level 2: Fair value determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities or quoted prices in markets that are not active. Level 3: Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques. Derivative Instruments and Hedging Activities 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, interest rate lock commitments, and forward loan commitments we have entered into related to our mortgage operations. We recognize derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. We have entered into interest rate swaps related to a portion of our variable rate debt. These derivative transactions are designated as cash flow hedges. 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. 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. Our derivative transactions related to our mortgage loans held for sale, interest rate lock commitments, 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. See Note 12 “Fair Value Disclosures” for more information. Treasury Stock Treasury stock is recorded at cost. Issuance of treasury stock is accounted for on a first-in, first-out basis. Differences between the cost of treasury stock and the re-issuance proceeds are charged to additional paid-in capital. When treasury stock is cancelled, any excess purchase price over par value is charged directly to retained earnings. In fiscal 2023, we cancelled 15 million shares of treasury stock. No treasury stock was cancelled in fiscal 2024 and 2022. Revenue and Cost Recognition Home sales revenues: Revenues and cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer. For the majority of our home closings, our performance obligation to deliver a home is satisfied in less than one year from the date a binding sale agreement is signed. In certain states where we build, we may not be able to complete certain outdoor features prior to the closing of the home. To the extent these separate performance obligations are not complete upon the home closing, we defer the portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations. As of October 31, 2024, the home sales revenues and related costs we deferred related to these obligations were immaterial. Our contract liabilities, consisting of deposits received from customers for sold but undelivered homes, totaled $ 488.7 million and $ 540.7 million at October 31, 2024 and October 31, 2023, respectively. Of the outstanding customer deposits held as of October 31, 2023, we recognized $ 476.5 million in home sales revenues during the fiscal year ended October 31, 2024. Of the outstanding customer deposits held as of October 31, 2022, we recognized $ 542.0 million in home sales revenues during the fiscal year ended October 31, 2023. For our standard attached and detached homes, land, land development, and related costs, both incurred and estimated to be incurred in the future, are amortized to the cost of homes closed based upon the total number of homes to be constructed in each community. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated land, land development, and related costs subsequent to the commencement of delivery of homes are allocated to the remaining undelivered homes in the community. Home construction and related costs are charged to the cost of homes closed under the specific identification method. The estimated land, common area development, and related costs of master-planned communities, including the cost of golf courses, net of their estimated residual value, are allocated to individual communities within a master-planned community on a relative sales value basis. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs are allocated to the remaining home sites in each of the communities of the master-planned community. F-13 For high-rise/mid-rise projects, land, land development, construction, and related costs, both incurred and estimated to be incurred in the future, are generally amortized to the cost of units closed based upon an estimated relative sales value of the units closed to the total estimated sales value. Any changes resulting from a change in the estimated total costs or revenues of the project are allocated to the remaining units to be delivered. Land sales and other revenues: Our revenues from land sales and other generally consist of: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk land sales to third parties of land we have decided no longer meets our development criteria; (4) sales of land parcels to third parties (typically because there is a superior economic use of the property); and (5) sales of commercial and retail properties generally located at our high-rise urban luxury condominium projects. 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. 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. In fiscal 2024, we sold a parcel of land to a commercial developer for net cash proceeds of $ 180.7 million , which resulted in a pre-tax gain of $ 175.2 million during the year ended October 31, 2024. Forfeited Customer Deposits: Forfeited customer deposits are recognized in “Home sales revenues” in our Consolidated Statements of Operations and Comprehensive Income in the period in which the customer defaults on or cancels the contract and we determine that we have the right to retain the deposit. Sales Incentives: In order to promote sales of our homes, we may offer our home buyers sales incentives. These incentives will vary by type of incentive and by amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sales revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds. Advertising Costs Advertising costs are expensed as incurred. Advertising costs, including brochures and signage, were $ 63.1 million, $ 49.6 million, and $ 42.5 million for the years ended October 31, 2024, 2023, and 2022, respectively. Warranty and Self-Insurance Warranty: We provide all of our home buyers with a limited warranty as to workmanship and mechanical equipment. We also provide many of our home buyers with a limited 10 -year warranty as to structural integrity. We accrue for expected warranty costs at the time each home is closed and title and possession are transferred to the home buyer. Warranty costs are accrued based upon historical experience. Adjustments to our warranty liabilities related to homes delivered in prior periods are recorded in the period in which a change in our estimate occurs. Self-Insurance: We maintain, and require the majority of our subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our home building activities, subject to certain self-insured retentions, deductibles and other coverage limits (“self-insured liability”). We also provide general liability insurance for our subcontractors in Arizona, California, Colorado, Nevada, Washington, and certain areas of Texas, where eligible subcontractors are enrolled as insureds under our general liability insurance policies in each community in which they perform work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insured liability. We record expenses and liabilities based on the estimated costs required to cover our self-insured liability and the estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported (“IBNR”). We engage a third-party actuary that uses our historical claim and expense data, input from our internal legal and risk management groups, as well as industry data, to estimate our liabilities, on an undiscounted basis, related to unpaid claims, IBNR associated with the risks that we are assuming for our self-insured liability, and other required costs to administer current and expected claims. 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. Though state regulations vary, construction defect claims may be reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated F-14 liability relates to IBNR. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs. 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 our markets and the types of product we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors. Key assumptions used in these estimates include claim frequencies, severity, and settlement patterns, which can occur over an extended period of time. In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Due to the degree of judgment required, and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements. Stock-Based Compensation We measure compensation cost for share-based compensation on the grant date. Fair value for restricted stock units is determined based on the quoted price of our common shares on the New York Stock Exchange on the grant date, adjusted for post-vesting restrictions applicable to retirement eligible participants. We used a lattice model for the valuation of our stock option grants. 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. Further, such models require the input of highly subjective assumptions, including the expected volatility of the stock price. We recognize compensation expense ratably over the shorter of the vesting period or the period between the grant date and the time the award becomes nonforfeitable by the participant. For shared-based awards containing performance conditions, we estimate the fair value of the award by evaluating the performance conditions quarterly and estimating the number of shares underlying award that are probable of being issued. Based on this estimate, we recognize compensation expense ratably over the vesting period. We record cumulative adjustments in the period in which estimates change. Stock-based compensation expense is generally included in “Selling, general and administrative” expense in our Consolidated Statements of Operations and Comprehensive Income. We recognize forfeitures of stock-based awards as a reduction to compensation expense in the period in which they occur. Legal Expenses Transactional legal expenses for land acquisition and entitlement, and financing are capitalized and expensed over their appropriate life. We expense legal fees related to litigation, warranty and insurance claims when incurred. Income Taxes Deferred tax assets and liabilities are recorded based on temporary differences between the amounts reported for financial reporting purposes and the amounts reported for income tax purposes. A valuation allowance must be established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. See “Income Taxes – Valuation Allowance” below. Federal and state income taxes are calculated on reported pre-tax earnings based on current tax law and also include, in the applicable period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized for financial reporting purposes in different periods than for income tax purposes. Significant judgment is required in determining income tax provisions and evaluating tax positions. ASC 740, “Income Taxes” (“ASC 740”) clarifies the accounting for uncertainty in income taxes recognized and prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 requires a company to recognize the financial statement effect of a tax position when it is “more-likely-than-not” (defined as a substantiated likelihood of more than 50 %), based on the technical merits of the position, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements based upon the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Our inability to determine that a tax position meets the more-likely-than-not recognition threshold does not mean that the Internal Revenue Service (“IRS”) or any other taxing authority will disagree with the position that we have taken. F-15 If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that our filing position is supportable, the benefit of that tax position is not recognized in the Consolidated Statements of Operations and Comprehensive Income and we are required to accrue potential interest and penalties until the uncertainty is resolved. Potential interest and penalties are recognized as a component of the provision for income taxes. Differences between amounts taken in a tax return and amounts recognized in the financial statements are considered unrecognized tax benefits. We believe that we have a reasonable basis for each of our filing positions and intend to defend those positions if challenged by the IRS or other taxing jurisdictions. If the IRS or other taxing authorities do not disagree with our position, and after the statute of limitations expires, we will recognize the unrecognized tax benefit in the period that the uncertainty of the tax position is eliminated. Income Taxes — Valuation Allowance We assess the need for valuation allowances for deferred tax assets in each period based on whether it is more-likely-than-not that some portion of the deferred tax asset would not be realized. 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. 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. This assessment considers, among other matters, the nature, consistency, and magnitude of current and cumulative income and losses; forecasts of future profitability; the duration of statutory carryback or carryforward periods; our experience with operating loss and tax credit carryforwards being used before expiration; tax planning alternatives; and outlooks for the U.S. housing industry and broader economy. Changes in existing tax laws or rates could also affect our actual tax results. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, actual results could differ from the estimates used in our assessment that could have a material impact on our consolidated results of operations or financial position. Segment Reporting During fiscal 2024 and 2023, we operated in the following five geographic segments, with operations generally located in the states listed below: • The North region: Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Jersey, New York and Pennsylvania; • The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia; • The South region: Florida, South Carolina and Texas; • The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah; and • The Pacific region: California, Oregon and Washington. Our geographic reporting segments are consistent with how our chief operating decision makers are assessing operating performance and allocating capital. Recent Accounting Pronouncements In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. ASU 2024-03 will be effective for our fiscal year 2028. The amendments in this update are to be applied on a prospective basis, with the option for retrospective application. Early adoption is permitted. We are currently evaluating the impact this standard will have on our disclosures. In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. ASU 2023-07 will be effective for our fiscal year ending October 31, 2025 and for interim periods starting in our first quarter of fiscal 2026. Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis. We are currently evaluating the impact this standard will have on our disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires expanded disclosure of our income tax rate reconciliation and income taxes paid. ASU 2023-09 will be effective for our fiscal year ending October 31, 2026 and may be applied either retrospectively or prospectively. We are currently evaluating the impact this standard will have on our disclosures. In March 2024, the SEC issued final rules on the enhancement and standardization of climate-related disclosures. The rules require disclosure of material climate-related risks; activities to mitigate or adapt to such risks; governance and management of F-16 such risks; and material greenhouse gas (GHG) emissions from operations owned or controlled (Scope 1) and/or indirect emissions from purchased energy consumed in operations (Scope 2). Additionally, the rules require disclosures in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. On March 15, 2024, a federal appellate court imposed a temporary stay pending judicial review of these new rules and on April 4, 2024, the SEC voluntarily stayed implementation pending completion of the judicial review. We are currently awaiting the outcome of the litigation or other actions the SEC may take with respect to this rule. Reclassification Certain prior period amounts have been reclassified to conform to the fiscal 2024 presentation. 2. Acquisition In fiscal 2022, we acquired substantially all of the assets and operations of a privately-held home builder with operations in San Antonio, Texas for approximately $ 48.1 million in cash. The assets acquired, which consisted of 16 communities, were primarily inventory, including approximately 450 home sites owned or controlled through land purchase agreements. This acquisition was accounted for as an asset acquisition and was not material to our results of operations or financial condition. 3. Inventory Major components of inventory at October 31, 2024 and 2023 consisted of the following (amounts in thousands): October 31, 2024 October 31, 2023 Land deposits and costs of future communities $ 620,040 $ 549,035 Land and land development costs 2,532,221 2,631,147 Land and land development costs associated with homes under construction 3,617,266 2,916,334 Total land and land development costs 6,769,527 6,096,516 Homes under construction 2,458,541 2,515,484 Model homes (1) 484,857 445,578 $ 9,712,925 $ 9,057,578 (1) Includes the allocated land and land development costs associated with each of our model homes in operation. The following table provides a summary of the composition of our inventory based on community status at October 31, 2024 and October 31, 2023 (amounts in thousands): October 31, 2024 October 31, 2023 Land controlled for future communities $ 200,166 $ 173,175 Land owned for future communities 353,030 663,413 Operating communities 9,159,729 8,220,990 $ 9,712,925 $ 9,057,578 Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes; 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. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”). F-17 The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable, included in home sales cost of revenues, in each of the three fiscal years ended October 31, 2024, 2023, and 2022, are shown in the table below (amounts in thousands): 2024 2023 2022 Land controlled for future communities $ 6,676 $ 10,712 $ 13,051 Land owned for future communities — 1,493 19,690 Operating communities 52,765 18,501 — $ 59,441 $ 30,706 $ 32,741 We have also recognized $ 4.4 million, $ 30.6 million, and $ 6.8 million of impairment charges on land held for sale included in land sales and other cost of revenues during the fiscal years ended October 31, 2024, 2023, and 2022, respectively. See Note 14, “Commitments and Contingencies,” for information regarding land purchase contracts. At October 31, 2024, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEs and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our maximum exposure to loss is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At October 31, 2024, we determined that 297 land purchase contracts, with an aggregate purchase price of $ 5.59 billion, on which we had made aggregate deposits totaling $ 522.1 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts. At October 31, 2023, we determined that 251 land purchase contracts, with an aggregate purchase price of $ 3.79 billion, on which we had made aggregate deposits totaling $ 421.4 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts. See Note 7, “Accrued Expenses,” for information regarding liabilities related to consolidated inventory not owned. Interest incurred, capitalized, and expensed in each of the three fiscal years ended October 31, 2024, 2023, and 2022, was as follows (amounts in thousands): 2024 2023 2022 Interest capitalized, beginning of year $ 190,550 $ 209,468 $ 253,938 Interest incurred 128,743 140,426 135,029 Interest expensed to home sales cost of revenues ( 128,962 ) ( 139,410 ) ( 164,831 ) Interest expensed to land sales and other cost of revenues ( 3,142 ) ( 10,787 ) ( 5,788 ) Interest capitalized on investments in unconsolidated entities ( 8,404 ) ( 9,783 ) ( 6,699 ) Previously capitalized interest transferred to investments in unconsolidated entities — ( 244 ) ( 2,412 ) Previously capitalized interest on investments in unconsolidated entities transferred to inventory 1,012 880 231 Interest capitalized, end of year $ 179,797 $ 190,550 $ 209,468 4. Investments in Unconsolidated Entities We have investments in various unconsolidated entities and our ownership interest in these investments range from 2.5 % to 50 %. These entities are structured as joint ventures and either (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); or (iii) develop luxury for-rent residential apartments and single family homes, commercial space, and a hotel (“Rental Property Joint Ventures”). F-18 The table below provides information as of October 31, 2024, regarding active joint ventures that we were invested in, by joint venture category ($ amounts in thousands): Land Development Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Number of unconsolidated entities 16 2 40 2 60 Investment in unconsolidated entities (1) $ 388,550 $ 58,403 $ 549,195 $ 11,269 $ 1,007,417 Number of unconsolidated entities with funding commitments by the Company 6 — 20 1 27 Company’s remaining funding commitment to unconsolidated entities (2) $ 242,966 $ — $ 65,444 $ 4,427 $ 312,837 (1) Our total investment includes $ 158.0 million related to eight unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $ 369.8 million as of October 31, 2024, inclusive of our investment in these joint ventures. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 25 % to 50 % . (2) Our remaining funding commitment includes approximately $ 109.6 million related to our unconsolidated joint venture-related variable interests in VIEs. The table below provides information as of October 31, 2023, regarding active joint ventures that we were invested in, by joint venture category ($ amounts in thousands): Land Development Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Number of unconsolidated entities 16 2 43 3 64 Investment in unconsolidated entities (1) $ 351,154 $ 65,285 $ 531,823 $ 10,779 $ 959,041 Number of unconsolidated entities with funding commitments by the Company 9 — 19 1 29 Company’s remaining funding commitment to unconsolidated entities (2) $ 204,438 $ — $ 184,266 $ 12,066 $ 400,770 (1) Our total investment includes $ 121.6 million related to 11 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $ 329.3 million as of October 31, 2023, inclusive of our investment in joint ventures. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 25 % to 50 % . (2) Our remaining funding commitment includes approximately $ 105.4 million related to our unconsolidated joint venture-related variable interests in VIEs. Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at October 31, 2024, regarding the debt financing obtained by category ($ amounts in thousands): Land Development Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Total Number of joint ventures with debt financing 11 1 38 50 Aggregate loan commitments $ 639,589 $ 98,150 $ 3,538,148 $ 4,275,887 Amounts borrowed under commitments $ 381,614 $ 47,903 $ 2,751,201 $ 3,180,718 The table below provides information at October 31, 2023, regarding the debt financing obtained by category ($ amounts in thousands): Land Development Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Total Number of joint ventures with debt financing 12 2 42 56 Aggregate loan commitments $ 610,758 $ 219,650 $ 3,731,847 $ 4,562,255 Amounts borrowed under commitments $ 445,506 $ 135,723 $ 2,152,872 $ 2,734,101 More specific and/or recent information regarding our investments in and future commitments to these entities is provided below. F-19 New Joint Ventures The table below provides information on joint ventures entered into during fiscal 2024 ($ amounts in thousands): Land Development Joint Ventures Number of unconsolidated joint ventures entered into during the period 1 Investment balance at October 31, 2024 $ 17,956 The table below provides information on joint ventures entered into during fiscal 2023 ($ amounts in thousands): Land Development Joint Ventures Rental Property Joint Ventures Number of unconsolidated joint ventures entered into during the period 1 5 Investment balance at October 31, 2023 $ 14,867 $ 59,567 Number of consolidated joint ventures entered into during the period — 1 Carrying value of consolidated joint ventures’ assets at October 31, 2023 $ — $ 10,600 Noncontrolling interests in consolidated joint ventures at October 31, 2023 $ — $ 2,700 Results of Operations and Intra-entity Transactions From time to time, certain of our rental property joint ventures sell assets to unrelated parties. In fiscal 2024, 2023 and 2022, certain of our Rental Property Joint Ventures sold their underlying assets and we recognized our proportionate share of the gains of $ 24.1 million, $ 50.9 million, and $ 21.0 million, respectively, which is included in “(Loss) income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income. In fiscal 2023, we sold our ownership interest in one of our Rental Property Joint Ventures and recognized a gain of $ 16.0 million, which is included in “Income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income. No similar gains were recognized in fiscal 2024 or 2022. In fiscal 2024, and 2022, we recognized other-than-temporary impairment charges on our investments in certain Rental Property Joint Ventures of $ 6.6 million and $ 8.0 million, respectively. No similar impairments were recognized in fiscal 2023. In fiscal 2024, 2023 and 2022, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $ 139.2 million, $ 110.7 million, and $ 54.8 million, respectively. Our share of income from the lots we acquired was insignificant in each period. In our normal course of business, we may contribute land to certain of our joint ventures in exchange for an ownership interest. In fiscal 2023 and 2022, we sold land to unconsolidated entities, which principally involved land sales to our Home Building and Rental Property Joint Ventures, totaling $ 44.2 million and $ 434.2 million, respectively. 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. No similar land sales to unconsolidated entities occurred in fiscal 2024. At October 31, 2024 and 2023, we had receivables due from joint ventures totaling $ 9.8 million and $ 12.6 million, respectively, primarily related to amounts we funded on behalf of our partners that had not yet been reimbursed and amounts due to us for management fees earned. Guarantees The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we have guaranteed portions of debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity. In some instances, we and our joint venture partner have provided joint and several guarantees in connection with loans to unconsolidated entities. In these situations, we generally seek to implement a reimbursement agreement with our partner that F-20 provides that neither party is responsible for more than its proportionate share or agreed upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate share. We believe that, as of October 31, 2024, in the event we become legally obligated to perform under a guarantee of an obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the venture. Information with respect to certain of the Company’s unconsolidated entities’ outstanding debt obligations, loan commitments and our guarantees thereon are as follows ($ amounts in thousands): October 31, 2024 October 31, 2023 Loan commitments in the aggregate $ 3,031,500 $ 3,341,700 Our maximum estimated exposure under repayment and carry cost guarantees if the full amount of the debt obligations were borrowed (1) $ 646,900 $ 688,000 Debt obligations borrowed in the aggregate $ 2,204,300 $ 1,643,600 Our maximum estimated exposure under repayment and carry cost guarantees of the debt obligations borrowed $ 560,400 $ 544,100 Estimated fair value of guarantees provided by us related to debt and other obligations $ 17,400 $ 19,500 Terms of guarantees 1 month - 3.0 years 1 month - 4.0 years (1) At October 31, 2024 and 2023, our maximum estimated exposure under repayment and carry cost guarantees includes approximately $ 102.3 million, related to our unconsolidated joint venture VIEs. The maximum exposure estimates presented above do not take into account any recoveries from the underlying collateral or any reimbursement from our partners nor do they include any potential exposures related to project completion guarantees or the indemnities noted above, which are not estimable. We have not made payments under any of the outstanding guarantees, nor have we been called upon to do so. Variable Interest Entities We have both unconsolidated and consolidated joint venture-related variable interests in VIEs. Information regarding our involvement in unconsolidated joint-venture related variable interests in VIEs has been disclosed throughout information presented above. The table below provides information as of October 31, 2024 and October 31, 2023, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands): Balance Sheet Classification October 31, 2024 October 31, 2023 Number of Joint Venture VIEs that the Company is the primary beneficiary and consolidates 5 5 Carrying value of consolidated VIEs assets Receivables, prepaid expenses and other assets and Investments in unconsolidated entities $ 105,300 $ 89,600 Our partners’ interests in consolidated VIEs Noncontrolling interest $ 9,800 $ 10,200 Our ownership interest in the above consolidated Joint Venture VIEs ranges from 75 % to 98 %. The income/losses generated from such joint ventures were not material. As shown above, we are the primary beneficiary of certain VIEs due to our controlling financial interest in such ventures as we have the power to direct the activities that most significantly impact the joint ventures’ performance and the obligation to absorb expected losses or receive benefits from the joint ventures. The assets of these VIEs can only be used to settle the obligations of the VIEs. In addition, in certain of the joint ventures, in the event additional contributions are required to be funded to the joint ventures prior to the admission of any additional investor at a future date, we will fund 100% of such contributions, including our partner’s pro rata share, which we expect would be funded through an interest-bearing loan. For other VIEs, we are not the primary beneficiary because the power to direct the activities of such VIEs that most significantly impact their performance was either shared by us and such VIEs’ other partners or such activities were controlled by our F-21 partner. For VIEs where the power to direct significant activities is shared, business plans, budgets, and other major decisions are required to be unanimously approved by all partners. 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 partners. Joint Venture Condensed Combined Financial Information The Condensed Combined Balance Sheets, as of the dates indicated, and the Condensed Combined Statements of Operations, for the periods indicated, for the unconsolidated entities in which we have an investment, aggregated by type, are included below (in thousands). Condensed Combined Balance Sheets: October 31, 2024 Land Develop- ment Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Cash and cash equivalents $ 111,910 $ 34,187 $ 58,925 $ 942 $ 205,964 Inventory 1,082,597 128,913 — 27,164 1,238,674 Loan receivables, net — — — 26,171 26,171 Rental properties — — 2,916,210 — 2,916,210 Rental properties under development — — 1,544,266 — 1,544,266 Other assets 305,844 25,615 203,276 976 535,711 Total assets $ 1,500,351 $ 188,715 $ 4,722,677 $ 55,253 $ 6,466,996 Debt, net of deferred financing costs $ 379,829 $ 47,580 $ 2,735,319 $ — $ 3,162,728 Other liabilities 189,767 12,028 299,201 14,497 515,493 Members’ equity 930,755 129,107 1,688,157 40,756 2,788,775 Total liabilities and equity $ 1,500,351 $ 188,715 $ 4,722,677 $ 55,253 $ 6,466,996 Company’s net investment in unconsolidated entities (1) $ 388,550 $ 58,403 $ 549,195 $ 11,269 $ 1,007,417 October 31, 2023 Land Develop- ment Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Cash and cash equivalents $ 83,330 $ 14,124 $ 62,734 $ 1,086 $ 161,274 Inventory 1,112,382 277,438 — 35,325 1,425,145 Loan receivables, net — — — 17,024 17,024 Rental properties — — 1,907,604 — 1,907,604 Rental properties under development — — 1,804,664 — 1,804,664 Other assets 210,831 15,961 157,481 924 385,197 Total assets $ 1,406,543 $ 307,523 $ 3,932,483 $ 54,359 $ 5,700,908 Debt, net of deferred financing costs $ 445,123 $ 134,427 $ 2,132,436 $ — $ 2,711,986 Other liabilities 131,798 32,625 312,691 21,752 498,866 Members’ equity 829,622 140,471 1,487,356 32,607 2,490,056 Total liabilities and equity $ 1,406,543 $ 307,523 $ 3,932,483 $ 54,359 $ 5,700,908 Company’s net investment in unconsolidated entities (1) $ 351,154 $ 65,285 $ 531,823 $ 10,779 $ 959,041 (1) Our underlying equity in the net assets of the unconsolidated entities was more than our net investment in unconsolidated entities by $ 3.0 million and $ 40.9 million as of October 31, 2024 and 2023, respectively, and these differences are primarily a result of interest capitalized on our investments; the estimated fair value of the guarantees provided to the joint ventures; distributions from entities in excess of the carrying amount of our net investment; unrealized gains on our retained joint venture interests; other than temporary impairments we have recognized; and gains recognized from the sale of our ownership interests. F-22 Condensed Combined Statements of Operations and Comprehensive Income: For the year ended October 31, 2024 Land Develop- ment Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Revenues $ 269,545 $ 252,415 $ 273,353 $ 57,663 $ 852,976 Cost of revenues 200,939 193,533 120,787 51,054 566,313 Other expenses 11,943 11,990 269,785 1,368 295,086 Total expenses 212,882 205,523 390,572 52,422 861,399 Income (loss) from operations 56,663 46,892 ( 117,219 ) 5,241 ( 8,423 ) Other income (loss) (2) 9,478 ( 176 ) 162,885 3,026 175,213 Income before income taxes 66,141 46,716 45,666 8,267 166,790 Income tax provision 268 37 291 — 596 Net income $ 65,873 $ 46,679 $ 45,375 $ 8,267 $ 166,194 Company’s equity in earnings (losses) of unconsolidated entities (3) $ 10,724 $ ( 6,324 ) $ ( 30,339 ) $ 2,096 $ ( 23,843 ) For the year ended October 31, 2023 Land Develop- ment Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Revenues $ 240,365 $ 38,124 $ 238,651 $ 28,221 $ 545,361 Cost of revenues 196,924 26,583 85,328 21,031 329,866 Other expenses 13,261 7,201 233,734 1,053 255,249 Total expenses 210,185 33,784 319,062 22,084 585,115 Income (loss) from operations 30,180 4,340 ( 80,411 ) 6,137 ( 39,754 ) Other income (2) 2,500 205 102,865 241 105,811 Income before income taxes 32,680 4,545 22,454 6,378 66,057 Income tax provision (benefit) 214 367 ( 940 ) — ( 359 ) Net income $ 32,466 $ 4,178 $ 23,394 $ 6,378 $ 66,416 Company’s equity in earnings of unconsolidated entities (3) $ 13,178 $ 972 $ 34,327 $ 1,621 $ 50,098 For the year ended October 31, 2022 Land Develop- ment Joint Ventures Home Building Joint Ventures Rental Property Joint Ventures Other Joint Ventures Total Revenues $ 207,179 $ 60,902 $ 192,901 $ 37,705 $ 498,687 Cost of revenues 172,921 45,087 65,387 26,229 309,624 Other expenses 8,911 4,717 165,447 1,436 180,511 Total expenses 181,832 49,804 230,834 27,665 490,135 Loss on disposition of loans and REO — — — ( 113 ) ( 113 ) Income (loss) from operations 25,347 11,098 ( 37,933 ) 9,927 8,439 Other income (2) 23,292 804 36,805 — 60,901 Income (loss) before income taxes 48,639 11,902 ( 1,128 ) 9,927 69,340 Income tax provision (benefit) 348 508 ( 607 ) — 249 Net income (loss) 48,291 11,394 ( 521 ) 9,927 69,091 Company’s equity in earnings (losses) of unconsolidated entities (3) $ 20,402 $ 1,068 $ ( 335 ) $ 2,588 $ 23,723 F-23 (2) Other income generated by Rental Property Joint Ventures for the years ending October 31, 2024, 2023, and 2022 include gains of $ 176.1 million, $ 106.2 million, and $ 29.9 million related to the sale of assets by multiple Rental Property Joint Ventures. (3) Differences between our income (loss) from unconsolidated entities and our percentage interest in the underlying net income (loss) of the entities are primarily a result of distributions from entities in excess of the carrying amount of our investment; promote earned on the gains recognized by join ventures and those promoted cash flows being distributed; other than temporary impairments we have recognized; recoveries of previously incurred charges; unrealized gains on our retained joint venture interests; gains recognized from the sale of our investment to our joint venture partner; and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired. 5. Receivables, Prepaid Expenses, and Other Assets Receivables, prepaid expenses, and other assets at October 31, 2024 and 2023, consisted of the following (amounts in thousands): 2024 2023 Expected recoveries from insurance carriers and others $ 109,569 $ 94,987 Improvement cost receivable 41,173 40,992 Escrow cash held by our wholly owned captive title company 62,048 44,273 Properties held for rental apartment and commercial development 116,802 225,261 Prepaid expenses 40,432 43,763 Right-of-use asset 108,311 102,787 Derivative assets 18,398 41,612 Other 93,878 97,581 $ 590,611 $ 691,256 6. Loans Payable, Senior Notes, and Mortgage Company Loan Facility Loans Payable At October 31, 2024 and 2023, loans payable consisted of the following (amounts in thousands): 2024 2023 Senior unsecured term loan $ 650,000 $ 650,000 Loans payable – other 437,969 517,378 Deferred issuance costs ( 2,152 ) ( 3,154 ) $ 1,085,817 $ 1,164,224 Senior Unsecured Term Loan We are party to a $ 650.0 million senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks of which $ 487.5 million matures February 14, 2028, $ 101.6 million matures on November 1, 2025 and the remaining $ 60.9 million matures on November 1, 2026. There are no payments required before these stated maturity dates. Under the Term Loan Facility, we may select interest rates equal to (i) SOFR 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. At October 31, 2024, the interest rate on the Term Loan Facility was 5.73 % per annum. Toll Brothers, Inc. and substantially all of its 100 %-owned home building subsidiaries are guarantors under the Term Loan Facility. The Term Loan Facility contains substantially the same financial covenants as the Revolving Credit Facility described below. In November 2020, we entered into five interest rate swap transactions to hedge $ 400.0 million of the Term Loan Facility through October 2025. 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 0.90 % as of October 31, 2024. These interest rate swaps were designated as cash flow hedges. F-24 Revolving Credit Facility At October 31, 2024, we had a $ 1.955 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks that is scheduled to mature on February 14, 2028. The Revolving Credit Facility provides us with a committed borrowing capacity of $ 1.955 billion, which we have the ability to increase up to $ 3.00 billion with the consent of lenders. Under the Revolving Credit Facility, up to 100 % of the commitment is available for letters of credit. Toll Brothers, Inc. and substantially all of its 100 %-owned home building subsidiaries are guarantors of the borrower’s obligations under the Revolving Credit Facility. Both our Revolving Credit Facility and Term Loan Facility require us to maintain certain financial covenants, which include not exceeding a defined maximum leverage ratio and maintaining a minimum tangible net worth. In addition, our ability to repurchase our common stock and pay cash dividends is limited by these agreements. However, during fiscal 2024, these limitations did not meaningfully restrict the amount of cash dividends paid or stock repurchased. We were in compliance with all covenants and requirements as of October 31, 2024. At October 31, 2024, we had no outstanding borrowings under the Revolving Credit Facility and had outstanding letters of credit of $ 180.0 million. At October 31, 2024, the interest rate on outstanding borrowings under the Revolving Credit Facility would have been 6.03 % per annum. Loans Payable – Other “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, 2024 and 2023, is included in the table below ($ amounts in thousands): 2024 2023 Aggregate loans payable at October 31 $ 437,969 $ 517,378 Weighted-average interest rate 5.73 % 5.25 % Interest rate range 1.00% - 9.00% 0.38% - 9.00% Loans secured by assets: Carrying value of loans secured by assets $ 437,256 $ 516,186 Carrying value of assets securing loans $ 1,326,440 $ 1,416,034 The contractual maturities of “Loans payable – other” as of October 31, 2024, ranged from one day to 28.9 years . Senior Notes At October 31, 2024 and 2023, senior notes consisted of the following (amounts in thousands): 2024 2023 4.875% Senior Notes due November 15, 2025 $ 350,000 $ 350,000 4.875% Senior Notes due March 15, 2027 450,000 450,000 4.35% Senior Notes due February 15, 2028 400,000 400,000 3.80% Senior Notes due November 1, 2029 400,000 400,000 Bond discounts, premiums, and deferred issuance costs - net ( 2,898 ) ( 3,815 ) $ 1,597,102 $ 1,596,185 The senior notes are the unsecured obligations of Toll Brothers Finance Corp., our 100 %-owned subsidiary. The payment of principal and interest is fully and unconditionally guaranteed, jointly and severally, by us and substantially all of our 100 %-owned home building subsidiaries (together with Toll Brothers Finance Corp., the “Senior Note Parties”). The senior notes rank equally in right of payment with all the Senior Note Parties’ existing and future unsecured senior indebtedness, including the Revolving Credit Facility and the Term Loan Facility. The senior notes are structurally subordinated to the prior claims of creditors, including trade creditors, of our subsidiaries that are not guarantors of the senior notes. 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. In our second quarter of fiscal 2023, we redeemed all $ 400.0 million principal amount of 4.375 % Senior Notes due April 15, 2023, at par, plus accrued interest. F-25 Mortgage Company Loan Facility During fiscal 2023 and until December 2023, our wholly owned mortgage subsidiary, Toll Brothers Mortgage Company ("TBMC"), was party to a mortgage warehousing facility that contained substantially the same terms as those described in the paragraph below. On December 5, 2023, TBMC executed a new Warehousing Agreement (“New Warehousing Agreement”) with a bank which provides for loan purchases up to $ 75.0 million, subject to certain sublimits. In addition, the New Warehousing Agreement, provides for an accordion feature under which TBMC may request that the aggregate commitments under the New Warehousing Agreement be increased to an amount up to $ 150.0 million for a short period of time. TBMC is also subject to an under usage fee based on outstanding balances, as defined in the New Warehousing Agreement. Prior to its scheduled expiration on December 3, 2024, the New Warehousing Agreement was amended to extend the expiration date to December 2, 2025. No other changes were made to the terms of the New Warehousing Agreement as a result of the amendment. The New Warehousing Agreement bears interest at SOFR plus 1.75 % per annum (with a SOFR floor of 2.50 %). At October 31, 2024, the interest rate on the New Warehousing Agreement was 6.59 % per annum. At October 31, 2024 and 2023, there was $ 150.0 million and $ 100.1 million, respectively, outstanding under the agreements which are included in liabilities in our Consolidated Balance Sheets. At October 31, 2024 and 2023, amounts outstanding under the agreements were collateralized by $ 182.8 million and $ 104.7 million, respectively, of mortgage loans held for sale, which are included in assets in our Consolidated Balance Sheets. As of October 31, 2024, there were no aggregate outstanding purchase price limitations reducing the amount available to TBMC. 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. General As of October 31, 2024, the annual aggregate maturities of our loans and notes during each of the next five fiscal years are as follows (amounts in thousands): Amount 2025 $ 350,496 2026 $ 591,199 2027 $ 554,131 2028 $ 897,988 2029 $ 409,820 7. Accrued Expenses Accrued expenses at October 31, 2024 and 2023, consisted of the following (amounts in thousands): 2024 2023 Land, land development and construction $ 356,613 $ 286,516 Liabilities related to consolidated inventory not owned 388,778 268,630 Compensation and employee benefits 208,394 212,684 Escrow liability associated with our wholly owned captive title company 62,038 42,451 Self-insurance 242,306 230,688 Warranty 189,258 206,171 Lease liabilities 128,588 123,866 Deferred income 51,138 52,907 Interest 29,669 30,044 Commitments to unconsolidated entities 38,661 29,212 Other 57,405 65,612 $ 1,752,848 $ 1,548,781 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. Our initial accrual for expected warranty costs is based upon historical warranty claim experience. Adjustments to our warranty liabilities related to homes delivered in prior periods are recorded in the period in F-26 which a change in our estimate occurs. The table below provides a reconciliation of the changes in our warranty accrual during fiscal 2024, 2023, and 2022 (amounts in thousands): 2024 2023 2022 Balance, beginning of year $ 206,171 $ 164,409 $ 145,062 Additions - homes closed during the year 36,186 44,949 42,423 Addition - liabilities assumed in an asset acquisition — — 150 Increase in accruals for homes closed in prior years - net 3,150 12,739 10,433 (Decrease) increase in accruals expected to be recovered from third parties (1) ( 6,000 ) 58,000 29,000 Reclassification from self-insurance accruals — 696 — Charges incurred ( 50,249 ) ( 74,622 ) ( 62,659 ) Balance, end of year $ 189,258 $ 206,171 $ 164,409 (1) The (decrease) increase in accruals for warranty charges are expected to be recovered from our insurance carriers or suppliers, which are recorded as receivables included in “Receivables, prepaid expenses, and other assets” on our Consolidated Balance Sheets. 8. Income Taxes The following table provides a reconciliation of our effective tax rate from the federal statutory tax rate for the fiscal years ended October 31, 2024, 2023, and 2022 ($ amounts in thousands): 2024 2023 2022 $ %* $ %* $ %* Federal tax provision at statutory rate 437,984 21.0 386,898 21.0 357,782 21.0 State tax provision, net of federal benefit 103,880 5.0 90,698 4.9 75,465 4.4 Other permanent differences 2,737 0.1 ( 2,782 ) ( 0.2 ) 4,386 0.3 Reversal of accrual for uncertain tax positions ( 2,132 ) ( 0.1 ) ( 621 ) — ( 1,690 ) ( 0.1 ) Accrued interest on anticipated tax assessments 1,418 0.1 403 — 234 — Increase in unrecognized tax benefits 2,556 0.1 2,209 0.1 658 — Excess stock compensation benefit ( 17,546 ) ( 0.8 ) ( 7,320 ) ( 0.4 ) ( 3,012 ) ( 0.2 ) Energy tax credits ( 68 ) — ( 2,348 ) ( 0.1 ) ( 22,153 ) ( 1.3 ) Other ( 14,384 ) ( 0.7 ) 3,163 0.2 5,556 0.3 Income tax provision* 514,445 24.7 470,300 25.5 417,226 24.5 * Due to rounding, percentages may not add We are subject to state tax in the jurisdictions in which we operate. We estimate our state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction, and our ability to utilize certain tax-saving strategies. Based on our estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on our tax strategies, we estimated that our rate for state income taxes, before federal benefit, will be 6.3 % in fiscal 2024. Our state income tax rate, before federal benefit, was 6.2 % and 5.6 % in fiscal 2023 and 2022, respectively. The following table provides information regarding the provision (benefit) for income taxes for each of the fiscal years ended October 31, 2024, 2023, and 2022 (amounts in thousands): 2024 2023 2022 Federal $ 425,445 $ 385,650 $ 343,524 State 89,000 84,650 73,702 $ 514,445 $ 470,300 $ 417,226 Current $ 594,775 $ 433,837 $ 513,075 Deferred ( 80,330 ) 36,463 ( 95,849 ) $ 514,445 $ 470,300 $ 417,226 F-27 The components of income taxes payable at October 31, 2024 and 2023 are set forth below (amounts in thousands): 2024 2023 Current $ 37,905 $ 5,978 Deferred 76,642 160,290 $ 114,547 $ 166,268 The following table provides a reconciliation of the change in the unrecognized tax benefits for the years ended October 31, 2024, 2023, and 2022 (amounts in thousands): 2024 2023 2022 Balance, beginning of year $ 10,512 $ 4,922 $ 5,780 Increase in benefit as a result of tax positions taken in prior years 8,650 3,633 296 Increase in benefit as a result of tax positions taken in current year 3,142 2,733 833 Decrease in benefit as a result of settlements ( 1,782 ) — — Decrease in benefit as a result of lapse of statute of limitations ( 493 ) ( 776 ) ( 1,987 ) Balance, end of year $ 20,029 $ 10,512 $ 4,922 The statute of limitations has expired on our federal tax returns for fiscal years through 2020. The statute of limitations for our major state tax jurisdictions remains open for examination for fiscal year 2019 and subsequent years. Our unrecognized tax benefits are included in the current portion of “Income taxes payable” on our Consolidated Balance Sheets. If these unrecognized tax benefits reverse in the future, they would have a beneficial impact on our effective tax rate at that time. During the next 12 months, it is reasonably possible that the amount of unrecognized tax benefits will change, but we are not able to provide a range of such change. The anticipated changes will be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken, and the accrual of estimated interest and penalties. The amounts accrued for interest and penalties are included in the current portion of “Income taxes payable” on our Consolidated Balance Sheets. The following table provides information as to the amounts recognized in our tax provision, before reduction for applicable taxes and reversal of previously accrued interest and penalties, of potential interest and penalties in the fiscal years ended October 31, 2024, 2023, and 2022, and the amounts accrued for potential interest and penalties at October 31, 2024 and 2023 (amounts in thousands): Expense recognized in the Consolidated Statements of Operations and Comprehensive Income Fiscal year 2024 $ 785 2023 $ 332 2022 $ 296 Accrued at: October 31, 2024 $ 1,728 October 31, 2023 $ 1,259 F-28 The components of net deferred tax assets and liabilities at October 31, 2024 and 2023 are set forth below (amounts in thousands): 2024 2023 Deferred tax assets: Accrued expenses $ 61,353 $ 48,088 Impairment charges 23,074 25,005 Inventory valuation differences 44,307 20,690 Stock-based compensation expense 11,966 12,603 Amounts related to unrecognized tax benefits 4,130 1,385 State tax, net operating loss carryforwards 4,285 11,129 Other 117 1,709 Total assets 149,232 120,609 Deferred tax liabilities: Capitalized interest 20,634 22,909 Deferred income 171,954 223,225 Expenses taken for tax purposes not for book 2,304 3,143 Depreciation 13,681 14,484 Deferred marketing 17,301 17,138 Total liabilities 225,874 280,899 Net deferred tax liabilities $ ( 76,642 ) $ ( 160,290 ) In accordance with GAAP, we assess whether a valuation allowance should be established based on our determination of whether it is more-likely-than-not that some portion or all of the deferred tax assets would not be realized. At October 31, 2024 and 2023, we determined that it was more-likely-than-not that our deferred tax assets would be realized. Accordingly, at October 31, 2024 and 2023, we did not have valuation allowances recorded against our federal or state deferred tax assets. We file tax returns in the various states in which we do business. Each state has its own statutes regarding the use of tax loss carryforwards. Some of the states in which we do business do not allow for the carryforward of losses, while others allow for carryforwards ranging from five years to an indefinite carryforward period. 9. Stockholders’ Equity Our authorized capital stock consists of 400 million shares of common stock, $ 0.01 par value per share (“common stock”), and 15 million shares of preferred stock, $ 0.01 par value per share. At October 31, 2024, we had 99.8 million shares of common stock issued and outstanding, 2.4 million shares of common stock reserved for outstanding stock options and restricted stock units, 3.2 million shares of common stock reserved for future stock option and award issuances, and 232,780 shares of common stock reserved for issuance under our employee stock purchase plan. As of October 31, 2024, no shares of preferred stock have been issued. Cash Dividends In March 2024, our Board of Directors approved an increase in the quarterly dividend from $ 0.21 to $ 0.23 per share. During the fiscal years October 31, 2024, 2023 and 2022, we declared and paid aggregate cash dividends of $ 0.90 , $ 0.83 and $ 0.77 per share, respectively, to our shareholders. Stock Repurchase Program From time to time, 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 December 13, 2023, the Board of Directors renewed its authorization to repurchase 20 million shares of our common stock and terminated, effective the same date, the existing authorization that had been in effect since May 17, 2022. The Board of Directors did not fix any expiration date for this repurchase program. F-29 The following table provides information about the share repurchase programs for the fiscal years ended October 31, 2024, 2023, and 2022: 2024 2023 2022 Number of shares purchased (in thousands) 4,914 7,860 11,000 Average price per share (1) $ 127.79 $ 72.00 $ 49.34 Remaining authorization at October 31 (in thousands) 15,087 6,716 14,577 (1) Average price per share includes costs associated with the purchases. For the fiscal 2024 and 2023 periods, it also includes the excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022. Transfer Restriction On March 17, 2010, our Board of Directors adopted a Certificate of Amendment to the Second Restated Certificate of Incorporation of the Company (the “Certificate of Amendment”). The Certificate of Amendment includes an amendment approved by our stockholders at the 2010 Annual Meeting of Stockholders that restricts certain transfers of our common stock. The Certificate of Amendment’s transfer restrictions generally restrict any direct or indirect transfer of our common stock if the effect would be to increase the direct or indirect ownership of any Person (as defined in the Certificate of Amendment) from less than 4.95 % to 4.95 % or more of our common stock or increase the ownership percentage of a Person owning or deemed to own 4.95 % or more of our common stock. 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. Accumulated Other Comprehensive Income (Loss) The changes in each component of accumulated other comprehensive income (loss) (“AOCI”), for fiscal years ended October 31, 2024, 2023, and 2022, were as follows (amounts in thousands): 2024 2023 2022 Employee Retirement Plans Beginning balance $ 3,080 $ 2,475 $ ( 6,024 ) Gains (losses) arising during the period ( 2,314 ) 736 9,573 Less: Tax expense (benefit) 593 ( 199 ) ( 2,424 ) Net gains (losses) arising during the period ( 1,721 ) 537 7,149 Net (gains) losses reclassified from AOCI to net income (1) ( 457 ) 92 1,805 Less: Tax (expense) benefit (2) 116 ( 24 ) ( 455 ) Net (losses) gains reclassified from AOCI to net income ( 341 ) 68 1,350 Other comprehensive (loss) income, net of tax ( 2,062 ) 605 8,499 Ending balance $ 1,018 $ 3,080 $ 2,475 Derivative Instruments Beginning balance $ 37,830 $ 35,143 $ 7,133 Gains on derivative instruments 515 8,369 37,539 Less: Tax expense ( 472 ) ( 2,110 ) ( 9,505 ) Net gains on derivative instruments 43 6,259 28,034 (Losses) gains reclassified from AOCI to net income (3) ( 10,695 ) ( 4,784 ) ( 32 ) Less: Tax benefit (expense) (2) 3,081 1,212 8 Net (losses) gains reclassified from AOCI to net income ( 7,614 ) ( 3,572 ) ( 24 ) Other comprehensive (loss) income, net of tax ( 7,571 ) 2,687 28,010 Ending balance $ 30,259 $ 37,830 $ 35,143 Total AOCI ending balance $ 31,277 $ 40,910 $ 37,618 (1) Reclassified to “Other income – net” (2) Reclassified to “Income tax provision” (3) Reclassified to “Cost of revenues – home sales” F-30 10. Stock-Based Benefit Plans We grant various types of restricted stock units to our employees and our non-employee directors under our stock incentive plans. We also granted stock options to certain of our employees and non-employee directors through fiscal year 2023. 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. 2019 Omnibus Incentive Plan (the “Omnibus Plan”), which succeeded the Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) and the Toll Brothers, Inc. 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 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. 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. Stock options and restricted stock units granted under the Omnibus Plan generally vest over a four-year period for employees and prior to fiscal 2024, a two-year period for non-employee directors. Beginning in fiscal 2024, stock-based compensation awards granted to non-employee directors vest over a one-year period. 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, 2024, 2023, and 2022, we had 3.2 million; 3.7 million; and 5.0 million shares, respectively, available for grant under the plans. The following table provides information regarding the amount of total stock-based compensation expense recognized by us for fiscal year 2024, 2023, and 2022 (amounts in thousands): 2024 2023 2022 Total stock-based compensation expense recognized $ 29,558 $ 24,805 $ 21,095 Income tax benefit recognized $ 7,555 $ 6,291 $ 5,312 At October 31, 2024, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $ 21.8 million and the weighted-average period over which we expect to recognize such compensation costs was approximately 2.5 years. Performance-Based Restricted Stock Units: In fiscal 2024, 2023, and 2022, the Executive Compensation Committee approved awards of performance-based restricted stock units (“Performance-Based RSUs”) relating to shares of our common stock to certain members of our senior management. The number of shares earned for Performance-Based RSUs is based on the attainment of certain operational performance metrics approved by the Executive Compensation Committee in the year of grant. 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. 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 measured from the grant date. Compensation expense related to these grants is based on the Company’s performance against the related performance criteria, the elapsed portion of the performance or vesting period and the grant date fair value of the award. F-31 A summary of the status of our nonvested Performance-Based RSUs as of October 31, 2024, and changes during the year ended October 31, 2024, is presented below: Number of shares (in thousands) Weighted-average grant date fair value Nonvested at November 1, 2023 253 $ 41.60 Granted 67 $ 82.97 Vested ( 114 ) $ 42.70 Nonvested at October 31, 2024 206 $ 54.51 The following table provides information regarding the issuance, valuation assumptions, and amortization of the Performance-Based RSUs issued in fiscal 2024, 2023, and 2022: 2024 2023 2022 Estimated number of shares underlying Performance-Based RSUs to be issued 67,499 126,068 71,576 Aggregate number of Performance-Based RSUs outstanding at October 31 346,630 442,961 507,604 Weighted-average fair value per share of Performance-Based RSUs issued $ 33.98 $ 34.70 $ 45.41 Aggregate grant date fair value of Performance-Based RSUs issued (in thousands) $ 5,795 $ 7,244 $ 6,156 Performance-Based RSU expense recognized (in thousands) $ 6,713 $ 5,838 $ 4,346 Fair market value of Performance-Based RSUs vested (in thousands) $ 4,864 $ 5,595 $ 4,514 Shares earned with respect to Performance-Based RSUs granted in December 2017, 2018, and 2019 were delivered in fiscal 2022, 2023, and 2024, respectively. Time-Based Restricted Stock Units: We issue time-based restricted stock units (“Time-Based RSUs”) to various officers, employees, and non-employee directors on an annual basis. A summary of our nonvested Time-Based RSUs as of October 31, 2024, and changes during the year ended October 31, 2024, is presented below (share amounts in thousands): Number of shares (in thousands) Weighted-average grant date fair value Nonvested at November 1, 2023 1,015 $ 50.64 Granted 240 $ 94.13 Vested ( 374 ) $ 46.47 Forfeited ( 22 ) $ 66.53 Nonvested at October 31, 2024 859 $ 64.20 F-32 The following table provides additional information on the Time-Based RSUs for fiscal 2024, 2023, and 2022: 2024 2023 2022 Time-Based RSUs issued: Number of Time-Based RSUs issued 372,973 324,399 276,421 Weighted-average fair value per share of Time-Based RSUs issued $ 39.58 $ 34.26 $ 45.55 Aggregate fair value of Time-Based RSUs issued (in thousands) $ 14,761 $ 11,114 $ 12,591 Time-Based RSU expense recognized (in thousands): $ 22,365 $ 18,340 $ 15,738 Fair market value of Time-Based RSUs vested (in thousands): $ 17,378 $ 14,592 $ 13,925 2024 2023 2022 At October 31: Aggregate number of Time-Based RSUs outstanding 1,344,851 1,500,097 1,315,303 Cumulative unamortized value of Time-Based RSUs (in thousands) $ 21,587 $ 22,836 $ 14,902 11. Earnings Per Share Information Information pertaining to the calculation of earnings per share for each of the fiscal years ended October 31, 2024, 2023, and 2022, is as follows (amounts in thousands): 2024 2023 2022 Numerator: Net income as reported $ 1,571,195 $ 1,372,071 $ 1,286,500 Denominator: Basic weighted-average shares 103,653 110,020 116,771 Common stock equivalents (1) 1,037 988 1,204 Diluted weighted-average shares 104,690 111,008 117,975 Other information: Weighted-average number of antidilutive options and restricted stock units (2) 39 200 410 Shares issued under stock incentive and employee stock purchase plans 910 2,026 507 (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 upon the conversion of restricted stock units under our equity award programs. (2) Weighted-average number of antidilutive options and restricted stock units are based upon the average closing price of our common stock on the New York Stock Exchange for the period. 12. Fair Value Disclosures Financial Instruments A summary of assets and (liabilities) at October 31, 2024 and 2023, related to our financial instruments, measured at fair value on a recurring basis, is set forth below (amounts in thousands): Fair value Financial Instrument Fair value hierarchy October 31, 2024 October 31, 2023 Mortgage Loans Held for Sale Level 2 $ 191,242 $ 110,555 Forward Loan Commitments – Mortgage Loans Held for Sale Level 2 $ 2,152 $ 2,234 Interest Rate Lock Commitments (“IRLCs”) Level 2 $ ( 962 ) $ ( 4,135 ) Forward Loan Commitments – IRLCs Level 2 $ 962 $ 4,135 Interest Rate Swap Contracts Level 2 $ 15,283 $ 35,243 At October 31, 2024 and 2023, the carrying value of cash and cash equivalents, escrow cash held by our wholly owned captive title company, and customer deposits held in escrow approximated fair value. F-33 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. 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. However, as of October 31, 2024 and 2023, 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. 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 At the end of the reporting period, we determine the fair value of our mortgage loans held for sale and the forward loan commitments we have entered into as a hedge against the interest rate risk of our mortgage loans and commitments using the market approach to determine fair value. The evaluation is based on the current market pricing of mortgage loans with similar terms and values as of the reporting date and the application of such pricing to the mortgage loan portfolio. We recognize the difference between the fair value and the unpaid principal balance of mortgage loans held for sale as a gain or loss. In addition, we recognize the change in fair value of our forward loan commitments as a gain or loss. These gains and losses are included in “Other income – net” in our Consolidated Statements of Operations and Comprehensive Income. Interest income on mortgage loans held for sale is calculated based upon the stated interest rate of each loan and is also included in “Other income – net.” The table below provides, for the periods indicated, the aggregate unpaid principal and fair value of mortgage loans held for sale as of the date indicated (amounts in thousands): At October 31, Aggregate unpaid principal balance Fair value Fair value greater (less) than principal balance 2024 $ 193,333 $ 191,242 $ ( 2,091 ) 2023 $ 114,835 $ 110,555 $ ( 4,280 ) IRLCs represent individual borrower agreements that commit us to lend at a specified price for a specified period as long as there is no violation of any condition established in the commitment contract. These commitments have varying degrees of interest rate risk. We utilize best-efforts forward loan commitments (“Forward Commitments”) to hedge the interest rate risk of the IRLCs and residential mortgage loans held for sale. Forward Commitments represent contracts with third-party investors for the future delivery of loans whereby we agree to make delivery at a specified future date at a specified price. The IRLCs and Forward Commitments are considered derivative financial instruments under ASC 815, “Derivatives and Hedging,” which requires derivative financial instruments to be recorded at fair value. We estimate the fair value of such commitments based on the estimated fair value of the underlying mortgage loan and, in the case of IRLCs, the probability that the mortgage loan will fund within the terms of the IRLC. 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. To manage the risk of non-performance of investors regarding the Forward Commitments, we assess the creditworthiness of the investors on a periodic basis. Inventory We recognize inventory impairment and land impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. The fair value of the aforementioned inventory was determined using Level 3 criteria. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. In determining the fair value related to land impairments, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. We record land impairments related to land parcels we plan to sell to third parties within land sales and other cost of revenues. See Note 1, “Significant Accounting Policies - Inventory,” for additional information regarding our methodology on determining fair value. As further discussed in Note 1, determining the fair value of a community’s inventory involves a number of variables, many of which are interrelated. 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. Impairments on operating communities were not significant in each of the three fiscal years ended October 31, 2024, 2023, and 2022 and, accordingly, we did not disclose the ranges of certain quantitative unobservable inputs utilized in determining the fair value of such impaired operating communities. F-34 Debt The table below provides, as of the dates indicated, the book value, excluding any bond discounts, premiums, and deferred issuance costs, and estimated fair value of our debt at October 31, 2024 and 2023 (amounts in thousands): 2024 2023 Fair value hierarchy Book value Estimated fair value Book value Estimated fair value Loans payable (1) Level 2 $ 1,087,969 $ 1,069,577 $ 1,167,378 $ 1,150,704 Senior notes (2) Level 1 1,600,000 1,572,580 1,600,000 1,481,220 Mortgage company loan facility (3) Level 2 150,000 150,000 100,058 100,058 $ 2,837,969 $ 2,792,157 $ 2,867,436 $ 2,731,982 (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. (2) The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date. (3) We believe that the carrying value of our mortgage company loan borrowings approximates their fair value. 13. Employee Retirement and Deferred Compensation Plans Salary Deferral Savings Plans We maintain salary deferral savings plans covering substantially all employees. We recognized an expense, net of plan forfeitures, with respect to the plans of $ 19.2 million, $ 17.1 million, and $ 17.1 million for the fiscal years ended October 31, 2024, 2023, and 2022, respectively, which is included in “Selling, general and administrative” expense in the Consolidated Statements of Operations and Comprehensive Income. Deferred Compensation Plan We have an unfunded, nonqualified deferred compensation plan that permits eligible employees to defer a portion of their compensation. The deferred compensation, together with certain of our contributions, earns various rates of return depending upon when the compensation was deferred. 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 $ 36.6 million and $ 35.6 million at October 31, 2024 and 2023, respectively, for our obligations under the plan, which is included in “Accrued expenses” in the Consolidated Balance Sheets. Defined Benefit Retirement Plans We have two unfunded defined benefit retirement plans. Retirement benefits generally vest when the participant reaches normal retirement age. Unrecognized prior service costs are being amortized over the period from the date participants enter the plans until their interests are fully vested. We used a 4.98 %, 5.83 %, and 5.26 % discount rate in our calculation of the present value of our projected benefit obligations at October 31, 2024, 2023, and 2022, respectively. The rates represent the approximate long-term investment rate at October 31 of the fiscal year for which the present value was calculated. Information related to the plans is based on actuarial information calculated as of October 31, 2024, 2023 and 2022. F-35 Information related to our retirement plans for each of the fiscal years ended October 31, 2024, 2023, and 2022, is as follows (amounts in thousands): 2024 2023 2022 Plan costs: Service cost $ 179 $ 137 $ 261 Interest cost 1,982 1,869 1,055 Amortization of prior service cost 1,182 1,407 1,806 Amortization of unrecognized losses ( 1,638 ) ( 1,316 ) — $ 1,705 $ 2,097 $ 3,122 Projected benefit obligation: Beginning of year $ 35,376 $ 36,904 $ 47,705 Plan amendments adopted during year 405 1,171 — Service cost 179 137 261 Interest cost 1,982 1,869 1,055 Benefit payments ( 2,818 ) ( 2,748 ) ( 2,544 ) Change in unrecognized loss (gain) 1,910 ( 1,957 ) ( 9,573 ) Projected benefit obligation, end of year $ 37,034 $ 35,376 $ 36,904 Unamortized prior service cost: Beginning of year $ 3,442 $ 3,678 $ 5,484 Plan amendments adopted during year 405 1,171 — Amortization of prior service cost ( 1,182 ) ( 1,407 ) ( 1,806 ) Unamortized prior service cost, end of year $ 2,665 $ 3,442 $ 3,678 Accumulated unrecognized gain, October 31 $ 4,378 $ 7,926 $ 7,285 Accumulated benefit obligation, October 31 $ 37,034 $ 35,376 $ 36,904 Accrued benefit obligation, October 31 $ 37,034 $ 35,376 $ 36,904 The accrued benefit obligation is included in accrued expenses on our Consolidated Balance Sheets. The table below provides, based upon the estimated retirement dates of the participants in the retirement plans, the amounts of benefits we would be required to pay in each of the next five fiscal years and for the five fiscal years ended October 31, 2034 in the aggregate (in thousands): Year ending October 31, Amount 2025 $ 2,858 2026 $ 3,469 2027 $ 3,668 2028 $ 3,647 2029 $ 3,685 November 1, 2029 – October 31, 2034 $ 16,336 14. Commitments and Contingencies Legal Proceedings We are involved in various claims and litigation arising principally in the ordinary course of business. 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. F-36 Land Purchase Contracts Generally, our agreements to acquire land parcels do not require us to purchase those land parcels, although we, in some cases, forfeit any deposit balance outstanding if and when we terminate an agreement. If market conditions are weak, approvals needed to develop the land are uncertain, or other factors exist that make the purchase undesirable, we may choose not to acquire the land. Whether a purchase agreement is legally terminated or not, we review the amount recorded for the land parcel subject to the purchase agreement to determine whether the amount is recoverable. While we may not have formally terminated the purchase agreements for those land parcels that we do not expect to acquire, we write off any nonrefundable deposits and costs previously capitalized to such land parcels in the periods that we determine such costs are not recoverable. Information regarding our land purchase contracts at October 31, 2024 and 2023, is provided in the table below (amounts in thousands): 2024 2023 Aggregate purchase price: Unrelated parties $ 6,073,847 $ 4,191,160 Unconsolidated entities that the Company has investments in 26,783 31,477 Total $ 6,100,630 $ 4,222,637 Deposits against aggregate purchase price $ 549,195 $ 449,925 Additional cash required to acquire land 5,551,435 3,772,712 Total $ 6,100,630 $ 4,222,637 Amount of additional cash required to acquire land included in accrued expenses $ 382,277 $ 254,030 In addition, we expect to purchase approximately 9,000 additional home sites over a number of years from several joint ventures in which we have investments; the purchase prices of these home sites will be determined at a future date. At October 31, 2024, we also had similar purchase contracts to acquire land for apartment developments of approximately $ 209.3 million, of which we had outstanding deposits in the amount of $ 9.8 million. 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. Investments in Unconsolidated Entities At October 31, 2024, we had investments in a number of unconsolidated entities, were committed to invest or advance additional funds, and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 4, “Investments in Unconsolidated Entities,” for more information regarding our commitments to these entities. Surety Bonds and Letters of Credit At October 31, 2024, we had outstanding surety bonds amounting to $ 820.2 million, primarily related to our obligations to governmental entities to construct improvements in our communities. We have an additional $ 337.3 million of surety bonds outstanding that guarantee other obligations. Although significant construction and development activities have been completed related to these improvements, the bonds are generally not released until all construction and development activities are completed and acceptance by the counterparty is received. The aggregate amount of surety bonds outstanding is in excess of the estimated cost of the remaining work to be performed. We do not believe that it is probable that any outstanding bonds will be drawn upon. At October 31, 2024, we had outstanding letters of credit of $ 180.0 million under our Revolving Credit Facility. These letters of credit were issued to secure our various financial obligations, including insurance policy deductibles and other claims, land deposits, and security to complete improvements in communities in which we are operating. We do not believe that it is probable that any outstanding letters of credit will be drawn upon. At October 31, 2024, we had provided financial guarantees of $ 28.5 million related to fronted letters of credit to secure obligations related to certain of our insurance policy deductibles and other claims. F-37 Backlog At October 31, 2024, we had agreements of sale outstanding to deliver 5,996 homes with an aggregate sales value of $ 6.47 billion. Mortgage Commitments Our mortgage subsidiary provides mortgage financing for a portion of our home closings. For those home buyers to whom our mortgage subsidiary provides mortgages, we determine whether the home buyer qualifies for the mortgage based upon information provided by the home buyer and other sources. For those home buyers who qualify, our mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”) that is willing to honor the terms and conditions, including interest rate, committed to the home buyer. We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary. Mortgage loans are sold to investors with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements. These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower. The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market. Information regarding our mortgage commitments at October 31, 2024 and 2023, is provided in the table below (amounts in thousands): 2024 2023 Aggregate mortgage loan commitments: IRLCs $ 168,829 $ 354,716 Non-IRLCs 1,668,455 1,818,486 Total $ 1,837,284 $ 2,173,202 Investor commitments to purchase: IRLCs $ 168,829 $ 354,716 Mortgage loans receivable 182,834 104,703 Total $ 351,663 $ 459,419 Lease Commitments We lease certain facilities, equipment, and properties held for rental apartment operation or development under non-cancelable operating leases which, in the case of certain rental properties, have an initial term of 99 years. We recognize lease expense for these leases on a straight-line basis over the lease term. 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. 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. For such leases, we do not recognize ROU assets or lease liabilities and instead recognize lease payments in our Consolidated Statements of Operations and Comprehensive Income on a straight-line basis. At October 31, 2024, ROU assets and lease liabilities were $ 108.3 million and $ 128.6 million, respectively. At October 31, 2023, ROU assets and lease liabilities were $ 102.8 million and $ 123.9 million, respectively. Payments on lease liabilities totaled $ 22.5 million and $ 20.2 million, and $ 17.7 million for the years ending October 31, 2024, 2023, and 2022 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. For the fiscal years ending October 31, 2024, 2023, and 2022, our total lease expense was $ 24.3 million, $ 27.1 million, and $ 25.6 million, respectively, inclusive of variable lease costs of approximately $ 4.1 million, $ 4.2 million, and $ 3.3 million, respectively. Short-term lease costs and sublease income was de minimis. F-38 Information regarding our remaining lease payments as of October 31, 2024 is provided in the table below (amounts in thousands): Year ended October 31, 2025 $ 25,000 2026 23,100 2027 19,400 2028 16,100 2029 11,800 Thereafter 138,600 Total lease payments (1) 234,000 Less: Interest (2) 105,400 Present value of lease liabilities $ 128,600 (1) Lease payments include options to extend lease terms that are reasonably certain of being exercised. (2) Our leases do not provide a readily determinable implicit rate. Therefore, we estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date. The majority of our facility leases give us the option to extend the lease term. The exercise of lease renewal options is at our discretion. 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. The weighted average remaining lease term and weighted average discount rate used in calculating these facility lease liabilities, excluding our land leases, were 7.2 years and 5.9 %, respectively, at October 31, 2024 and 7.2 years and 5.8 %, respectively, at October 31, 2023. We have a small number of land leases with initial terms of 99 years. We are not reasonably certain that, if given the option, we would extend these leases. We have therefore excluded the renewal terms from our ROU asset and lease liability for these leases. 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, 2024 and 94.4 years and 4.5 %, respectively, at October 31, 2023. 15. Other Income – Net The table below provides the significant components of “Other income – net” for the years ended October 31, 2024, 2023, and 2022 (amounts in thousands): 2024 2023 2022 Interest income $ 38,497 $ 35,133 $ 6,180 Income from ancillary businesses 19,534 2,846 24,668 Management fee income earned by home building operations 4,297 4,462 7,968 Gain on litigation settlements – net — 27,683 141,234 Other 6,968 ( 2,606 ) ( 8,673 ) Total other income – net $ 69,296 $ 67,518 $ 171,377 In fiscal 2022, we entered into a $ 192.5 million settlement agreement with Southern California Gas Company to resolve our claims associated with a natural gas leak that occurred from October 2015 through February 2016 at the Aliso Canyon underground storage facility located near certain of our communities in southern California. As a result, net of legal fees and expenses, we recorded a pre-tax gain of $ 148.4 million, of which $ 141.2 million was recorded in Other Income - net in our Consolidated Statements of Operations and Comprehensive Income in fiscal 2022. The remainder was recorded as an offset to previously incurred expenses. Coincident with this settlement, we seeded a new Toll Brothers charitable foundation with $ 10.0 million which was recorded in Selling, general and administrative in our Consolidated Statements of Operations and Comprehensive Income in fiscal 2022. F-39 Income from ancillary businesses is generated by our mortgage, title, landscaping, smart home technology, apartment living, city 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, 2024, 2023, and 2022 (amounts in thousands): 2024 2023 2022 Revenues $ 165,615 $ 140,272 $ 135,510 Expenses $ 146,081 $ 137,426 $ 110,842 In fiscal 2024 and 2022, our smart home technology business recognized gains of $ 4.4 million and $ 9.0 million, respectively, from bulk sales of security monitoring accounts, which is included in income from ancillary businesses above. No similar gains were recognized in fiscal 2023. In fiscal 2024, 2023 and 2022, we recognized $ 8.9 million and $ 8.4 million, and $ 0.3 million, of write-offs related to previously incurred costs that we believed not to be recoverable in our apartment rental development business operations, respectively. In fiscal 2024 and 2023, income from ancillary businesses included management fees earned on our apartment rental development, high-rise urban luxury condominium, and other unconsolidated entities and operations totaling $ 35.7 million and $ 34.7 million, respectively. In fiscal 2022, income from ancillary businesses included management fees earned on our apartment rental development and other unconsolidated entities and operations totaling $ 25.9 million. Prior to fiscal 2023, management fees earned on our high-rise luxury condominium unconsolidated entities were included in “Management fees earned by home building operations” above. 16. 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, 2024, 2023, and 2022 (amounts in thousands): Revenue Income (loss) before income taxes 2024 2023 2022 2024 2023 2022 North $ 1,484,267 $ 1,494,127 $ 1,853,720 $ 252,739 $ 197,414 $ 280,829 Mid-Atlantic 1,422,018 1,175,348 1,148,966 471,478 243,464 189,485 South 2,787,459 2,204,763 1,519,600 578,022 416,711 249,665 Mountain 2,590,445 2,660,746 2,747,783 446,168 517,080 509,512 Pacific 2,279,083 2,329,365 2,441,959 541,789 610,126 572,844 Total home building 10,563,272 9,864,349 9,712,028 2,290,196 1,984,795 1,802,335 Corporate and other (1) 60 1,677 ( 858 ) ( 204,556 ) ( 142,424 ) ( 98,609 ) 10,563,332 9,866,026 9,711,170 2,085,640 1,842,371 1,703,726 Land sales and other revenue (2) 283,408 128,911 564,388 Total consolidated $ 10,846,740 $ 9,994,937 $ 10,275,558 $ 2,085,640 $ 1,842,371 $ 1,703,726 (1) Included in fiscal 2022 is a $ 141.2 million net gain related to a favorable litigation settlement as further discussed in Note 15, “Other Income - Net”. (2) Land sales and other revenues by segment has been provided in the table below. “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; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Other Joint Ventures. F-40 Land sales and other revenues for each of the fiscal years ended October 31, 2024, 2023, and 2022 are shown in the table below (amounts in thousands): 2024 2023 2022 North $ 4,486 $ 32,620 $ 139,439 Mid-Atlantic (1) 208,436 13,169 38,423 South 25,930 19,014 24,415 Mountain 28,277 1,140 8,897 Pacific 1,365 8,705 30,900 Total home building 268,494 74,648 242,074 Corporate and other 14,914 54,263 322,314 Total consolidated $ 283,408 $ 128,911 $ 564,388 (1) Included in the year ended October 31, 2024 is a $ 185.0 million land sale to a commercial developer in February 2024, which is further discussed in Note 1, “Significant Accounting Policies”. “Corporate and other” is comprised principally of activities from our apartment rental development business. Total assets for each of our segments at October 31, 2024 and 2023, are shown in the table below (amounts in thousands): 2024 2023 North $ 1,425,738 $ 1,281,479 Mid-Atlantic 1,444,951 1,323,381 South 2,514,446 2,399,055 Mountain 2,950,806 2,666,874 Pacific 2,266,829 2,175,776 Total home building 10,602,770 9,846,565 Corporate and other 2,765,162 2,680,453 Total consolidated $ 13,367,932 $ 12,527,018 “Corporate and other” is comprised principally of cash and cash equivalents, restricted cash, investments in our Rental Property Joint Ventures, expected recoveries from insurance carriers and suppliers, manufacturing facilities, our apartment rental development operations, and our mortgage and title subsidiaries. F-41 Inventory for each of our segments, as of the dates indicated, is shown in the table below (amounts in thousands): Land controlled for future communities Land owned for future communities Operating communities Total Balances at October 31, 2024 North $ 30,597 $ 38,920 $ 1,169,490 $ 1,239,007 Mid-Atlantic 51,400 50,762 1,297,021 1,399,183 South 43,571 89,145 2,100,079 2,232,795 Mountain 10,868 94,103 2,705,213 2,810,184 Pacific 63,730 80,100 1,887,926 2,031,756 Total consolidated $ 200,166 $ 353,030 $ 9,159,729 $ 9,712,925 Balances at October 31, 2023 North $ 32,762 $ 31,253 $ 1,031,625 $ 1,095,640 Mid-Atlantic 34,175 135,042 1,089,270 1,258,487 South 40,335 198,467 1,908,468 2,147,270 Mountain 12,443 129,326 2,426,113 2,567,882 Pacific 53,460 169,325 1,765,514 1,988,299 Total consolidated $ 173,175 $ 663,413 $ 8,220,990 $ 9,057,578 The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable for each of our segments, for the years ended October 31, 2024, 2023, and 2022, are shown in the table below (amounts in thousands): 2024 2023 2022 North $ 1,098 $ 677 $ 11,860 Mid-Atlantic 15,214 15,898 3,369 South 3,404 1,766 3,391 Mountain 26,032 5,662 4,091 Pacific 13,693 6,703 10,030 Total consolidated $ 59,441 $ 30,706 $ 32,741 In the year ended October 31, 2024, we recognized $ 4.4 million of land impairment charges included in land sales and other cost of revenues, of which $ 0.6 million and $ 3.8 million were in our Mid-Atlantic and Corporate and other segments, respectively. In the year ended October 31, 2023 we recognized $ 30.6 million of land impairment charges included in land sales and other cost of revenues, of which $ 15.6 million, $ 10.3 million, $ 2.2 million, and $ 2.5 million were in our North, Mid-Atlantic, Pacific and Corporate and other segments, respectively. In the year ended October 31, 2022 we recognized $ 6.8 million of land impairment charges included in land sales and other cost of revenues in our North segment. F-42 The net carrying value of our investments in unconsolidated entities and our equity in earnings (losses) from such investments, for each of our segments, as of the dates indicated, are shown in the table below (amounts in thousands): Investments in unconsolidated entities Equity in earnings (losses) from unconsolidated entities At October 31, Year ended October 31, 2024 2023 2024 2023 2022 North $ 58,403 $ 65,285 $ ( 6,324 ) $ 972 $ 1,068 Mid-Atlantic 12,647 19,807 ( 243 ) 283 ( 405 ) South 168,042 169,004 10,590 13,520 20,065 Mountain 74,909 61,363 688 ( 211 ) 494 Pacific 132,952 100,980 ( 311 ) ( 414 ) 248 Total home building 446,953 416,439 4,400 14,150 21,470 Corporate and other 560,464 542,602 ( 28,243 ) 35,948 2,253 Total consolidated $ 1,007,417 $ 959,041 $ ( 23,843 ) $ 50,098 $ 23,723 “Corporate and other” is comprised of our investments in the Rental Property Joint Ventures and Other Joint Ventures. 17. Supplemental Disclosure to Consolidated Statements of Cash Flows The following are supplemental disclosures to the Consolidated Statements of Cash Flows for each of the fiscal years ended October 31, 2024, 2023 and 2022 (amounts in thousands): 2024 2023 2022 Cash flow information: Income tax paid - net $ 550,077 $ 584,695 $ 350,650 Noncash activity: Cost of inventory acquired through seller financing, municipal bonds, or included in accrued expenses - net $ 186,714 $ 359,042 $ 273,893 Transfer of inventory to investment in unconsolidated entities $ 4,167 $ 1,000 $ 46,019 Transfer of investment in unconsolidated entities to inventory $ 9,049 $ 1,675 $ 474 Transfer of other assets to investment in unconsolidated entities, net $ — $ 47,780 $ 100,123 Transfer of other assets to property, construction, and office equipment - net $ 133,020 $ 47,280 $ 16,168 Income tax expense recognized in total comprehensive income $ 6,197 $ 6,710 $ 11,519 Unrealized (loss) gain on derivatives $ ( 19,959 ) $ ( 9,767 ) $ 34,680 Accrued excise tax and other share repurchases $ 5,213 $ 4,355 $ — Miscellaneous increases (decreases) to investments in unconsolidated entities $ 7,468 $ ( 5,917 ) $ 797 At October 31, 2024 2023 2022 Cash, cash equivalents, and restricted cash Cash and cash equivalents $ 1,303,039 $ 1,300,068 $ 1,346,754 Restricted cash included in receivables, prepaid expenses, and other assets $ 67,396 $ 44,273 $ 51,796 Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows $ 1,370,435 $ 1,344,341 $ 1,398,550 F-43 18. Summary Consolidated Quarterly Financial Data (Unaudited) The table below provides summary income statement data for each quarter of fiscal 2024 and 2023 (amounts in thousands, except per share data): Three Months Ended October 31 July 31 April 30 January 31 Fiscal 2024: Revenue: Home sales $ 3,260,004 $ 2,724,472 $ 2,647,020 $ 1,931,836 Land sales and other (1) $ 73,458 $ 3,472 $ 190,466 $ 16,012 Gross profit (loss): Home sales $ 846,324 $ 747,310 $ 683,737 $ 532,610 Land sales and other (1) $ 34,465 $ ( 5,306 ) $ 177,487 $ 5,851 Income before income taxes $ 621,073 $ 503,627 $ 649,779 $ 311,161 Net income $ 475,409 $ 374,611 $ 481,617 $ 239,558 Earnings per share (2) Basic $ 4.67 $ 3.64 $ 4.60 $ 2.28 Diluted $ 4.63 $ 3.60 $ 4.55 $ 2.25 Weighted-average number of shares Basic 101,716 102,980 104,794 105,122 Diluted 102,676 104,014 105,803 106,265 Fiscal 2023: Revenue: Home sales $ 2,951,904 $ 2,674,602 $ 2,490,098 $ 1,749,422 Land sales and other $ 68,243 $ 13,040 $ 16,881 $ 30,747 Gross profit (loss): Home sales $ 810,375 $ 742,653 $ 657,220 $ 448,499 Land sales and other $ ( 10,351 ) $ 1,462 $ ( 3,969 ) $ ( 11,688 ) Income before income taxes $ 604,966 $ 553,017 $ 430,592 $ 253,796 Net income $ 445,536 $ 414,789 $ 320,216 $ 191,530 Earnings per share (2) Basic $ 4.15 $ 3.77 $ 2.88 $ 1.72 Diluted $ 4.11 $ 3.73 $ 2.85 $ 1.70 Weighted-average number of shares Basic 107,465 110,003 111,214 111,397 Diluted 108,388 111,123 112,184 112,336 (1) Land sales and other revenue and gross profit in the three months ended April 30, 2024 included $ 185.0 million and $ 124.1 million, respectively, related to the sale of a single parcel of land in northern Virginia to a commercial developer. (2) Due to rounding, the sum of the quarterly earnings per share amounts may not equal the reported earnings per share for the year. F-44