Toll Brothers’ Losses are Less than Expected and Mortgage Rates Drop to Two-year Low

52 cents per share loss was less than the 79 cents per share expected by analysts.

December 7, 2007 – Palm Coast, FL – Yesterday, Toll Brothers, one of the country’s largest builders of upscale homes, announced a loss of $81.8 million for the fourth quarter ended on October 31. This compares with a profit of $173.8 million, or $1.07 per share one year ago. Analysts had expected a loss of 79 cents per share. The loss was the company’s first in its 21 years as a public company.

The announcement included the following highlights:

• Toll has reduced the number of building lots under its control by 35% to 59,300 and the number of developments from 325 to 315. This number is expected to be lowered further to 300 by next October.
• The results included non cash pretax write-downs of $314.9 million for developments open for sale, land, and land options.
• Exclusive of write-downs, Toll posted a profit of 72 cents per share compared with $1.49 a year ago.
• The company has $900 million in cash and more than $1.2 billion under its bank credit facility.
• New home orders were 1,073, off 33% while the value of new contracts fell 38% to $693.7 million.

Toll Brothers’ shares rose 5.8% on the news. Chief Executive, Robert Toll said, “By any measures, fiscal 2007 was the most challenging of the 40 years that Toll Brothers has been in business.”

In other news, the 30-year mortgage dropped sharply again this week to an average rate of 5.96%, the lowest rate in two years. Home-building shares rose 8%, according to the benchmark Dow Jones U.S. Home Construction Index.