Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). One can identify these statements by the fact that they do not relate to matters of a strictly historical or factual nature and generally discuss or relate to future events. These statements contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should,” “likely”, “will” and other words or phrases of similar meaning. Such statements may include, but are not limited to, information and statements regarding: the impact of the novel coronavirus (“COVID-19”) on the U.S. economy, the markets in which we operate or may operate, and on our business; our strategic objectives and priorities; our land acquisition, land development and capital allocation plans and priorities; market conditions; demand for our homes; anticipated operating results and guidance; home deliveries; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues, including expected labor and material costs; selling, general, and administrative expenses; interest expense; inventory write-downs; home warranty and construction defect claims; unrecognized tax benefits; anticipated tax refunds; sales paces and prices; effects of home buyer cancellations; growth and expansion; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; our ability to acquire or dispose of land and pursue real estate opportunities; our ability to gain approvals and open new communities; our ability to market, construct and sell homes and properties; our ability to deliver homes from backlog; our ability to secure materials and subcontractors; our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; and the outcome of legal proceedings, investigations, and claims.

From time to time, forward-looking statements also are included in other reports on Forms 10-K, 10-Q, and 8-K; in press releases; in presentations; on our website; and in other materials released to the public. Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Therefore, we caution you not to place undue reliance on our forward-looking statements. The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:

Many of the factors mentioned above, elsewhere in this report or in other reports or public statements made by us will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

For a more detailedfurther discussion of these factors that we believe could cause our actual results to differ materially from expected and historical results, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K filed with the SEC and in this report.

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires. References herein to fiscal year refer to our fiscal years ended or ending October 31.

The accompanying condensed 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. 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.

parties of land we have decided no longer meets our development criteria.criteria and (4) sales of commercial and retail properties generally located at our City Living buildings. 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 February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which requires an entityOur objective in entering into derivative transactions is to manage our exposure to interest rate movements associated with certain variable rate debt. We recognize derivatives as either assets andor liabilities on the balance sheet forand measures those instruments at fair value.

Since all of our derivatives are designated as cash flow hedges, the rights and obligations created by leased assets and provide additional disclosures. In July 2018,entire change in the FASB issued ASU No. 2018-11, “Leases: Targeted Improvements” (“ASU 2018-11”), which provides an entity with the option to apply the transition provisionsfair value of the new standard at its adoption date instead of at its earliest comparative period presented. ASU 2018-11 also provides an entity with a practical expedient that permits lessors to not separate non-lease components fromderivative included in the associated lease component if certain conditions are met. ASU 2016-02, as amended by ASU 2018-11, became effective for our fiscal year beginning November 1, 2019, and we adopted the new standard using a modified retrospective approach. The prior year period was not recast and our Condensed Consolidated Balance Sheet as of October 31, 2019 does not reflect any changes resulting from the adoption of the new standard. We elected to apply the transition provisions that allow us to carry forward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification,hedge effectiveness is initially reported in accumulated other comprehensive loss and (3) initial direct costs. In addition, we electedsubsequently reclassified to home sales cost of revenues in the practical expedient that allows lessees the option to account for lease and non-lease components together as a single component for all classes of underlying assets. As a result of the adoption, we recorded a right-of-use (“ROU”) asset and lease liability of $114.5 million and $118.5 million, respectively, as of November 1, 2019. The ROU asset is included in “Receivables, prepaid expenses, and other assets” and the corresponding lease liability is included in “Accrued expenses” in our Condensed Consolidated Balance Sheet. The adoption of ASU 2016-02 had no impact on retained earnings and did not materially impact ouraccompanying Condensed 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 Condensed Consolidated Statementsif the hedged forecasted transaction is no longer probable of Cash Flows.occurring, the amount recognized in Accumulated other comprehensive loss is released to earnings. See Note 12 “Fair Value Disclosures” for more information.

In June 2016, the FASB issuedcreated ASC 326 with the issuance of ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses. ASU 2016-13 will bebecame effective for our fiscal year beginning November 1, 2020, with earlyand we adopted the new standard under the modified retrospective transition method. As a result of the adoption, permitted aswe recognized a cumulative effect adjustment, net of November 1, 2019. We continuetax, of $0.6 million to evaluate the impactopening balance of this standard, however we believe that theretained earnings. The adoption of ASU 2016-13 willdid not have a material impact on our consolidated financial statementsCondensed Consolidated Balance Sheet or disclosures.Condensed Consolidated Statement of Operations or Comprehensive Income, and there have been no significant changes to our internal controls, processes, or systems as a result of implementing this new standard.

In our second quarter of fiscal 2020, we acquired substantially all of the assets and operations of The Thrive ResidentialGroup, LLC (“Thrive”), an urban infill builder with operations in Atlanta, Georgia and Nashville, Tennessee, and Keller Homes, Inc. (“Keller”), a builder with operations in Colorado Springs, Colorado. The aggregate purchase price for these acquisitions was approximately $60.3$79.2 million in cash. The assets acquired based on our preliminary purchase price allocation, were primarily inventory, for future communities, including approximately 6801,100 home sites owned or controlled through land purchase agreements.

Inventory at JulyJanuary 31, 20202021 and October 31, 20192020 consisted of the following (amounts in thousands):

Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes; communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within 12 months of the

end of the fiscal period being reported on; 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.

Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on have been classified asare included in land owned for future communities.

Information regarding the classification, number, and carrying value of these temporarily closed communities, as of the dates indicated, is provided in the table below:

The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, for the periods indicated, are shown in the table below (amounts in thousands):

See Note 14, “Commitments and Contingencies,” for information regarding land purchase commitments.

At JulyJanuary 31, 2020,2021, 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 risk 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 JulyJanuary 31, 2020,2021, we determined that 191218 land purchase contracts, with an aggregate purchase price of $2.17$2.31 billion, on which we had made aggregate deposits totaling $164.2$193.0 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2019,2020, we determined that 127207 land purchase contracts, with an aggregate purchase price of $2.00$2.31 billion, on which we had made aggregate deposits totaling $149.2$208.7 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.

We have investments in various unconsolidated entities.entities and our ownership interest in these investments ranges from 15.8% to 50%. These entities, which are structured as joint ventures, (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”); (iii) develop luxury for-rent residential apartments, commercial space, and a hotel (“Rental Property Joint Ventures”), which includes our investment in Toll Brothers Realty Trust (the “Trust”); and (iv) invest in distressed loans and real estate and provide financing and land banking to residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).

The table below provides information as of JulyJanuary 31, 2020,2021, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):

Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at JulyJanuary 31, 2020,2021, regarding the debt financing obtained by category ($ amounts in thousands):

More specific and/or recent information regarding our investments in, advances to, and future commitments to these entities is provided below.

The table below provides information on joint ventures entered into during our first quarter of fiscal 2020 our Land Development Joint Ventures sold approximately 568 lots and recognized revenues of $59.4 million. We acquired 118 of these lots for $10.5 million. During the nine months ended July 31, 2019, our Land Development Joint Ventures sold approximately 680 lots and recognized revenues of $182.4 million. We acquired 248 of these lots for $116.9 million. Our share of the joint venture income from the lots we acquired was insignificant.($ amounts in thousands):

In our Land Development Joint Venturesfirst quarters of fiscal 2021 and 2020, certain of our land development and rental property joint ventures sold approximately 182 lots and recognized revenues of $43.5 million. We acquired 53 of these lots for $20.4 million. Our share of thetheir underlying assets to unrelated parties or to our joint venture income from the lotspartner. In connection with these sales, we acquired was insignificant.

In the second quarter of fiscal 2020, a joint venture that we had previously consolidated due to our controlling financial interest entered into a separate unconsolidated joint venture to admit an unrelated capital member that acquired a 75% interest for an aggregate amount of $19.1 million. This unconsolidated joint venture purchased the assets of the consolidated joint venture and we recognized a gain on land sale of $0.9 million in the nine months ended July 31, 2020. This unconsolidated joint venture is developing a luxury for-rent residential apartment project located in suburban Boston, Massachusetts. At July 31, 2020, we had an aggregate investment of $9.1 million in the unconsolidated joint venture. Concurrent with its formation, the unconsolidated joint venture entered into a construction loan agreement with an unrelated party for an aggregate amount of $75.4 million to finance the development of this project. At July 31, 2020, the unconsolidated joint venture had 0 outstanding borrowings under this construction loan facility.

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 and our partners have guaranteed debt of certain 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, thewe and our joint venture partner have provided joint and several guarantees provided in connection with loans to an unconsolidated entity are joint and several.entities. In these situations, we generally haveseek to implement a reimbursement agreement with our partner that 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 athe joint venture partner does not have adequate financial resources to meet its obligations under thesuch a reimbursement agreement, we may be liable for more than our proportionate share.

We believe that, as of JulyJanuary 31, 2020,2021, 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 a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the venture. At July 31, 2020,

The table below provide information as of JulyJanuary 31, 20202021 and October 31, 2019, respectively, we concluded that we were not the primary beneficiary of these2020, regarding our consolidated joint venture-related variable interests in VIEs 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 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 members. 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 the other members. The information presented below regarding the investments, commitments, and guarantees($ amounts in unconsolidated entities deemed to be VIEs is also includedthousands):

Our ownership interest in the information provided above.above consolidated Joint Venture VIEs ranges from 50% to 98%.

As of July 31, 2020,shown above, we have consolidated 5 Rental Property Joint Ventures. The carrying value of these joint ventures’ assets totaling $155.0 million is reflected in “Receivables, prepaid expenses, and other assets” in our Condensed Consolidated Balance Sheet as of July 31, 2020. Our partners’ interests aggregating $45.1 million in the joint ventures are reflected as a component of “Noncontrolling interest” in our Condensed Consolidated Balance Sheet as of July 31, 2020. These joint ventures were determined to be VIEs due to their current inability to finance their activities without additional subordinated financial support as well as our partners’ inability to participate in the significant decisions of the joint venture and their lack of substantive kick-out rights. We further concluded that we are the primary beneficiaryPB of thesecertain 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.

The Condensed Balance Sheets, as of the dates indicated, and the Condensed Statements of Operations, for the periods indicated, for the unconsolidated entities in which we have an investment are included below (in thousands):