8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 22, 2007

Toll Brothers, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-09186	23-2416878
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)
250 Gibraltar Road, Horsham, PA		19044
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (215) 938-8000

(Former Name or Former Address, if Changed Since Last Report)

          Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Press release of Toll Brothers, Inc.

Financial Guidance

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     On February 22, 2007, Toll Brothers, Inc. issued a press release which contained Toll Brothers, Inc.’s results of operations for its three-month period ended January 31, 2007, a copy of which release is attached hereto as Exhibit 99.1 to this report.

     The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 7.01. REGULATION FD DISCLOSURE

     On February 22, 2007, Toll Brothers, Inc. will host a conference call for investors to discuss the results of operations for its three-month period ended January 31, 2007, and to discuss the expected results of operations for the fiscal year ending October 31, 2007.

     A summary of the guidance to be given for its expected results of operations for the fiscal year ending October 31, 2007 is attached hereto as Exhibit 99.2 to this report.

     The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(c). Exhibits.

     The following Exhibits are furnished as part of this Current Report on Form 8-K:

Exhibit
No.	Item
99.1*	Press release of Toll Brothers, Inc. dated February 22, 2007 announcing its financial results for the three-month period ended January 31, 2007.
99.2*	Outline of guidance to be given by Toll Brothers, Inc. on its conference call of February 22, 2007 related to the expected results of operations for the fiscal year ending October 31, 2007.

* Filed electronically herewith.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TOLL BROTHERS, INC.
Dated: February 22, 2007	By:	Joseph R. Sicree
	Joseph R. Sicree
	Senior Vice President, Chief Accounting Officer

3

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE	CONTACT: Frederick N. Cooper (215) 938-8312
February 22, 2007	fcooper@tollbrothersinc.com
	Joseph R. Sicree (215) 938-8045
	jsicree@tollbrothersinc.com

TOLL BROTHERS REPORTS 1ST QTR 2007 EARNINGS RESULTS

Horsham, PA, February 22, 2007 — Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation’s leading builder of luxury homes, today reported results for net income, revenues, backlog and contracts for its first quarter ended January 31, 2007.

FY 2007’s first-quarter net income was $54.3 million, or $0.33 per share diluted, compared to FY 2006’s first-quarter record of $163.9 million, or $0.98 per share diluted. In FY 2007, first-quarter net income was reduced by pre-tax write-downs of $96.9 million ($59.0 million, or $0.36 per share diluted, after tax), plus a pre-tax $9.0 million ($0.03 per share diluted, after tax) goodwill impairment charge related to the Company’s 1999 acquisition of the Silverman Companies in metro Detroit. In FY 2006, first-quarter pre-tax write-downs totaled $1.1 million, or less than $0.01 per share diluted, after tax. FY 2007 first-quarter earnings per share, including write-downs, declined 66% versus FY 2006’s first quarter. Excluding write-downs and the impairment charge, FY 2007’s first-quarter earnings per share were $0.72 diluted, down 27% versus the same period in FY 2006.

FY 2007’s first-quarter total revenues were $1.09 billion, a decline of 19% compared to the first-quarter record of $1.34 billion in revenues in FY 2006. FY 2007’s first-quarter-end backlog was $4.15 billion, a decline of 30% compared to the first-quarter record of $5.95 billion in FY 2006.

FY 2007’s first-quarter net signed contracts were $748.7 million, a decline of 34% compared to FY 2006’s first-quarter total of $1.14 billion. The Company signed 1,463 contracts (before cancellations) in FY 2007’s first quarter, a 14% decline from the 1,695 signed in FY 2006’s first quarter. Net of cancellations, first-quarter contracts totaled 1,027 units, down 33% from 1,544 units in the first quarter of FY 2006. First-quarter FY 2007 cancellations totaled 436 units versus 585 units in fourth-quarter FY 2006; FY 2007’s first-quarter cancellation rate of 29.8% was lower than the 36.9% cancellation rate in fourth-quarter 2006. However, it was still well above the Company’s historical average of about 7%.

In response to current market conditions, the Company continues to reevaluate and, in some cases, renegotiate its optioned land positions. As a result of its ongoing review, the Company ended FY 2007’s first quarter with approximately 67,500 lots under control compared to approximately 73,800 and 83,200 at FYE 2006 and FYE 2005, respectively. The Company’s FY 2007 first-quarter-end total was down 26% from its high of approximately 91,200 lots at FY 2006’s second-quarter-end.

*more*

Projecting revenues and earnings results remains very difficult in the current environment. Based on its current backlog, the impact of lessened first-quarter contracts and the continuing higher-than-normal rate of cancellations, the Company expects to deliver between 6,000 and 7,000 homes in FY 2007, compared to its previous guidance of 6,300 to 7,300 homes, and to produce total home building revenues of between $4.20 billion and $4.96 billion. It projects net income of between $240 million and $305 million, or $1.46 to $1.85 per share diluted, assuming 164.8 million shares outstanding in FY 2007. This projection assumes future write-downs of $60 million in the final three quarters of FY 2007, although the final number could be significantly higher or lower. Prior to its conference call this afternoon at 12:00 Noon (EST), the Company will file a Form 8-K with the Securities and Exchange Commission outlining its guidance assumptions in greater detail.

Robert I. Toll, chairman and chief executive officer, stated: “There are too many soft markets at this stage of the selling season to call a general upturn in the new home market. Demand varies greatly from week to week in individual markets.

“The metro New York City high-rise market offers a glimpse of what one might expect when consumer confidence rebounds. An article in Monday’s New York Times described multiple bids on properties that have been on the market for less than a week. The New York City market is somewhat unique in that it did not markedly decline to the degree most other markets have in the past twelve to eighteen months. It did experience some softness in the second half of 2006 due to consumer concern about the direction of home prices, but this concern appears to have dramatically reversed itself in January of 2007. We believe that pent-up demand is building in many markets as potential buyers bide their time until they are confident prices have firmed.

“Our financial strength was recognized this quarter by all three of the credit rating agencies that monitor our industry as Fitch, Moody’s and Standard and Poors’ each reaffirmed its investment grade credit ratings for Toll Brothers. We ended our first quarter with $1.1 billion unused and available under our bank revolving credit facility, nearly $450 million in cash and a net debt to capital ratio of 33.4%.

“In the current challenging environment, we believe our access to reliable capital and our strong balance sheet give us an important competitive advantage. Based on our experience during past cycles, we have learned that unexpected opportunities may arise in difficult times for those who are well-prepared. We believe that our solid financial base, our broad geographic presence, our diversified product lines and our national brand name all position us well for such opportunities now and in the future.”

*more*

Toll Brothers’ financial highlights for the first quarter ended January 31, 2007 (unaudited):

• FY 2007’s first-quarter net income was $54.3 million, or $0.33 per share diluted, compared to FY 2006’s first-quarter record of $163.9 million, or $0.98 per share diluted. In FY 2007, first-quarter net income included pre-tax write-downs and a goodwill impairment charge totaling $105.9 million, or $0.39 per share diluted, after tax. Approximately $13.9 million of the land-related write-downs were attributable to optioned lots and approximately $83.0 million to operating communities and owned land, while approximately $9 million was attributable to a goodwill impairment charge related to the Company’s 1999 purchase of the Silverman Companies in metro Detroit. In FY 2006, first-quarter pre-tax write-downs totaled $1.1 million. FY 2007 first-quarter earnings per share, including write-downs, declined 66% versus FY 2006; excluding write-downs and the impairment charge, earnings per share were $0.72 diluted, down 27% versus FY 2006.

• FY 2007’s first-quarter revenues of $1.09 billion decreased 19% from FY 2006’s first-quarter revenues of $1.34 billion, the first-quarter record.

• In the Company’s fiscal 2007 first-quarter, unconsolidated entities in which the Company had an interest, had revenues of $20.6 million compared to $52.1 million in the same period of FY 2006. The Company’s share of the profits from the delivery of these homes is included in ‘Equity Earnings from Unconsolidated Entities’ on the Company’s Income Statement.

• The Company’s FY 2007 first-quarter contracts (net of cancellations) of $748.7 million declined by 34% versus FY 2006’s first-quarter contracts of $1.14 billion, the first-quarter record. In addition, in FY 2007’s first quarter, unconsolidated entities in which the Company had an interest signed contracts of $29.2 million.

• First-quarter FY 2007 cancellations totaled 436 versus 585 in fourth quarter FY 2006 and FY 2007’s first-quarter cancellation rate of 29.8% was lower than the 36.9% cancellation rate in FY 2006’s fourth quarter.

• In FY 2007, first-quarter-end backlog of $4.15 billion declined 30% versus FY 2006’s first-quarter-end backlog of $5.95 billion, the first-quarter record. In addition, at January 31, 2007, unconsolidated entities in which the Company had an interest had a backlog of $26.7 million.

• The Company ended its FY 2007 first quarter with a net debt to capital ratio of 33.4%. Net debt to capital is defined and calculated as total debt minus mortgage warehouse loans minus cash divided by total debt minus mortgage warehouse loans minus cash plus stockholders’ equity.

*more*

• In FY 2007, based on its FY 2007 first quarter backlog, the state of current demand and cancellations, the Company projects to deliver between 6,000 and 7,000 homes at an average price of between $670,000 and $680,000. The Company also projects revenues of between $180 million and $195 million in FY 2007 from buildings accounted for under the percentage of completion method.

• Prior to its 12:00 Noon (EST) conference call today, February 22, 2007, to discuss its first-quarter results, the Company will file a Form 8-K with the Securities and Exchange Commission containing detailed guidance for expected results of operations for FY 2007, which will be discussed on the call.

Toll Brothers will be broadcasting live via the Investor Relations section of its website, www.tollbrothers.com, a conference call hosted by chairman and chief executive officer Robert I. Toll at 12:00 p.m. (EST) today, February 22, 2007, to discuss these results and its outlook for the remainder of FY 2007. To access the call, enter the Toll Brothers website, then click on the Investor Relations page, and select “Conference Calls”. Participants are encouraged to log on at least fifteen minutes prior to the start of the presentation to register and download any necessary software. The call can be heard live with an on-line replay which will follow and continue through May 8, 2007.

Toll Brothers, Inc. is the nation’s leading builder of luxury homes. The Company began business in 1967 and became a public company in 1986. Its common stock is listed on the New York Stock Exchange under the symbol “TOL”. The Company serves move-up, empty-nester, active-adult and second-home home buyers and operates in 21 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and West Virginia.

Toll Brothers builds luxury single-family detached and attached home communities, master planned luxury residential resort-style golf communities and urban low-, mid- and high-rise communities, principally on land it develops and improves. The Company operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security and landscape subsidiaries. The Company also operates its own lumber distribution, and house component assembly and manufacturing operations.

Toll Brothers, a FORTUNE 500 Company, is the only publicly traded national home building company to have won all three of the industry’s highest honors: America’s Best Builder from the National Association of Home Builders, the National Housing Quality Award, and Builder of the Year. Toll Brothers proudly supports the communities in which it builds; among other philanthropic pursuits, the Company sponsors the Toll Brothers — Metropolitan Opera International Radio Network, bringing opera to neighborhoods throughout the world. For more information, visit tollbrothers.com.

Certain information included herein and in other Company reports, SEC filings, verbal or written statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, information related to anticipated operating results, financial resources, changes in revenues, changes in profitability, changes in margins, changes in accounting treatment, interest expense, land-related write-downs, effects of home buyer cancellations, growth and expansion, anticipated income to be realized from our investments in unconsolidated entities, the ability to acquire land, the ability to gain approvals and to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the ability to secure materials and subcontractors, the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities in the future, industry trends, and stock market valuations. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports, SEC filings, statements and presentations. These risks and uncertainties include local, regional and national economic conditions, the demand for homes, domestic and international political events, uncertainties created by terrorist attacks, the effects of governmental regulation, the competitive environment in which the Company operates, fluctuations in interest rates, changes in home prices, the availability and cost of land for future growth, the availability of capital, uncertainties and fluctuations in capital and securities markets, changes in tax laws and their interpretation, legal proceedings, the availability of adequate insurance at reasonable cost, the ability of customers to finance the purchase of homes, the availability and cost of labor and materials, and weather conditions.

*more*

TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

	January 31,			October 31,
	2007			2006
	(Unaudited)
ASSETS
Cash and cash equivalents	$	449,249		$	632,524
Inventory		6,182,279			6,095,702
Property, construction and office equipment, net		94,299			99,089
Receivables, prepaid expenses and other assets		144,019			160,446
Contracts receivable		166,887			170,111
Mortgage loans receivable		78,345			130,326
Customer deposits held in escrow		51,008			49,676
Investments in and advances to unconsolidated entities		251,035			245,667
	$	7,417,121		$	7,583,541
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Loans payable	$	710,870		$	736,934
Senior notes		1,141,452			1,141,167
Senior subordinated notes		350,000			350,000
Mortgage company warehouse loan		65,887			119,705
Customer deposits		344,674			360,147
Accounts payable		253,353			292,171
Accrued expenses		759,186			825,288
Income taxes payable		286,128			334,500
Total liabilities		3,911,550			4,159,912
Minority interest		7,763			7,703
Stockholders’ equity:
Preferred stock		—			—
Common stock		1,563			1,563
Additional paid-in capital		225,359			220,783
Retained earnings		3,317,590			3,263,274
Treasury stock		(46,704	)		(69,694	)
Total stockholders’ equity		3,497,808			3,415,926
	$	7,417,121		$	7,583,541

*more*

TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)

	Three months ended
	January 31,
	2007		2006
Revenues:
Traditional home sales	$	1,054,136	$	1,278,709
Percentage of completion		33,085		57,569
Land sales		3,390		4,678
		1,090,611		1,340,956
Costs of revenues:
Traditional home sales		846,403		884,091
Percentage of completion		25,897		47,346
Land sales		1,037		3,836
Interest		22,643		28,754
		895,980		964,027
Selling, general and administrative		134,210		139,178
Goodwill impairment		8,973		—
Income from operations		51,448		237,751
Other:
Equity earnings from unconsolidated entities		6,792		16,569
Interest and other		28,960		11,327
Income before income taxes		87,200		265,647
Income taxes		32,884		101,797
Net income		54,316	$	163,850
Earnings per share:
Basic	$	0.35	$	1.06
Diluted	$	0.33	$	0.98
Weighted average number of shares:
Basic		154,212		155,076
Diluted		164,048		167,027
Additional information:
Interest incurred	$	34,150	$	32,431
Depreciation and amortization	$	8,366	$	7,113
Interest expense by source of revenue
Traditional home sales	$	21,737	$	26,830
Percentage of completion		905		1,417
Land sales		1		507
	$	22,643	$	28,754

*more*

	UNITS				$ (MILL)
	1st Qtr.		1st Qtr.		1st Qtr.		1st Qtr.
HOME BUILDING REVENUES	2007		2006		2007		2006
TRADITIONAL PRODUCT
North		287		417	$	191.6	$	271.6
Mid-Atlantic		512		589		329.1		393.6
South		403		470		233.1		253.7
West		357		403		300.3		359.8
Total		1,559		1,879	$	1,054.1	$	1,278.7
PERCENTAGE OF COMPLETION:
North					$	19.5	$	39.7
South						13.5		17.9
Total		—		—	$	33.0	$	57.6
TOTAL
North		287		417	$	211.1	$	311.3
Mid-Atlantic		512		589		329.1		393.6
South		403		470		246.6		271.6
West		357		403		300.3		359.8
Total consolidated		1,559		1,879		1,087.1		1,336.3
Unconsolidated entities		27		99		20.6		52.1
		1,586		1,978	$	1,107.7	$	1,388.4
CONTRACTS
TRADITIONAL PRODUCT
North		217		265	$	136.3	$	177.4
Mid-Atlantic		328		456		206.8		313.5
South		212		331		118.4		203.5
West		121		343		128.9		315.1
Total		878		1,395	$	590.4	$	1,009.5
NON TRADITIONAL PRODUCT – LONG TERM
North		123		111	$	140.0	$	102.0
Mid-Atlantic		1		13		0.4		5.3
West		1		5		0.4		4.0
Total		125		129	$	140.8	$	111.3
PERCENTAGE OF COMPLETION
North		24		20	$	15.3	$	14.4
South						2.2		4.7
Total		24		20	$	17.5	$	19.1
TOTAL
North		364		396	$	291.6	$	293.8
Mid-Atlantic		329		469		207.2		318.8
South		212		331		120.6		208.2
West		122		348		129.3		319.1
Total consolidated		1,027		1,544		748.7		1,139.9
Unconsolidated entities		45		28		29.2		16.8
		1,072		1,572	$	777.9	$	1,156.7

*more*

	UNITS				$ (MILL)
	1st Qtr.		1st Qtr.		1st Qtr.			1st Qtr.
BACKLOG	2007		2006		2007			2006
TRADITIONAL PRODUCT
North		1,114		1,643	$	737.4		$	1,126.6
Mid-Atlantic		1,363		2,197		918.9			1,486.4
South		1,400		2,179		781.7			1,186.7
West		1,243		2,087		1,146.7			1,774.8
Total		5,120		8,106	$	3,584.7		$	5,574.5
NON TRADITIONAL PRODUCT – LONG TERM
North		379		127	$	383.9		$	117.6
Mid-Atlantic		59		43		24.0			18.3
West		27		12		18.6			9.5
Total		465		182	$	426.5		$	145.4
PERCENTAGE OF COMPLETION
North		288		275	$	189.4		$	181.6
South		76		72		116.2			102.7
Less revenue recognized on units remaining in backlog						(166.9	)		(57.6	)
Total		364		347	$	138.7		$	226.7
TOTAL
North		1,781		2,045	$	1,310.7		$	1,425.8
Mid-Atlantic		1,422		2,240		942.9			1,504.7
South		1,476		2,251		897.9			1,289.4
West		1,270		2,099		1,165.3			1,784.3
Less revenue recognized on units remaining in backlog						(166.9	)		(57.6	)
Total consolidated		5,949		8,635		4,149.9			5,946.6
Unconsolidated entities		43		32		26.7			20.8
		5,992		8,667	$	4,176.6		$	5,967.4

Toll Brothers operates in four geographic segments:

North:	Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio (2006 only) and Rhode Island
Mid-Atlantic:	Delaware, Maryland, Pennsylvania, Virginia and West Virginia
South:	Florida, North Carolina, South Carolina and Texas
West:	Arizona, California, Colorado and Nevada

###

EX-99.2

Exhibit 99.2

FINANCIAL GUIDANCE

In our first quarter 2007 Earnings Conference Call to be held at 12:00 Noon (EST) on February 22, 2007, we will provide the following guidance regarding our expected results of operations for our fiscal year ending October 31, 2007. These forecasts are subject to many risks, uncertainties and assumptions and may vary significantly from the actual results, as further noted below. Information with respect to quarterly data is subject to even greater fluctuation and risk. We undertake no obligation to publicly update the information provided due to changes in economic conditions, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted. We suggest that you listen to the conference call in its entirety. The conference call in its entirety can be heard via the Investor Relations portion of our website, www.tollbrothers.com, until May 8, 2007.

For ease of reference, we have included the actual results for fiscal 2006 and the first quarter of fiscal 2007. The columns designated as “Low” and “High” represents the low and high ends of the ranges for unit deliveries of homes, average delivered price of homes, land sales revenues, percentage of completion revenues, cost of revenue by line as a percentage of the applicable revenue and selling, general and administrative expenses (“SG&A”) as a percentage of total revenues expected for fiscal 2007. We expect that the actual results of operations will be somewhere in between the low end and the high end of the ranges provided.

Unit deliveries of homes, average delivered price of homes, land sales and percentage of completion revenues in fiscal 2007 are expected to be:

Revenues

     Traditional home sales

          Unit deliveries

	2006		2007		2007 Estimated
	Actual		Actual		Low		High
Quarter ended January 31		1,879		1,559
Quarter ending April 30		2,063				1,450		1,750
Quarter ending July 31		2,157				1,450		1,750
Quarter ending October 31		2,502				1,550		1,950
Year		8,601				6,000		7,000

          Average delivered price

	2006		2007		2007 Estimated
	Actual		Actual		Low		High
Quarter ended January 31	$	680,526	$	676,162
Quarter ending April 30	$	678,855			$	670,000	$	680,000
Quarter ending July 31	$	690,267			$	665,000	$	675,000
Quarter ending October 31	$	710,263			$	670,000	$	680,000
Year	$	691,218			$	670,000	$	680,000

     Percentage of completion revenues (in thousands)

	2006		2007		2007 Estimated
	Actual		Actual		Low		High
Quarter ended January 31	$	57,569	$	33,085
Quarter ending April 30	$	39,955			$	70,000	$	75,000
Quarter ending July 31	$	41,163			$	40,000	$	45,000
Quarter ending October 31	$	31,424			$	35,000	$	40,000
Year	$	170,111			$	180,000	$	195,000

1

Land sales (in thousands)

	2006		2007		2007 Estimated
	Actual		Actual		Low		High
Quarter ended January 31	$	4,678	$	3,390
Quarter ending April 30	$	2,100			$	1,250	$	1,250
Quarter ending July 31	$	1,145			$	1,250	$	1,250
Quarter ending October 31	$	250			$	1,250	$	1,250
Year	$	8,173			$	7,000	$	7,000

Cost of revenues for home sales, land sales and percentage of completion revenues as a percentage of the applicable revenues and interest as a percentage of total revenues in fiscal 2007 are expected to be:

Cost of revenues

          Traditional home sales

	2006			2007			2007 Estimated
	Actual			Actual			Low			High
Quarter ended January 31		69.14	%		80.29	%
Quarter ending April 30		69.73	%					76.50	%		75.75	%
Quarter ending July 31		70.66	%					78.25	%		77.50	%
Quarter ending October 31		75.99	%					79.00	%		78.25	%
Year		71.71	%					78.55	%		77.90	%

          Percentage of completion

	2006			2007			2007 Estimated
	Actual			Actual			Low			High
Quarter ended January 31		82.24	%		78.27	%
Quarter ending April 30		78.03	%					75.00	%		75.00	%
Quarter ending July 31		77.73	%					75.00	%		75.00	%
Quarter ending October 31		69.21	%					75.00	%		75.00	%
Year		77.75	%					75.00	%		75.00	%

          Land sales

	2006			2007			2007 Estimated
	Actual			Actual			Low			High
Quarter ended January 31		82.01	%		30.59	%
Quarter ending April 30		100.14	%					80.00	%		80.00	%
Quarter ending July 31		78.86	%					80.00	%		80.00	%
Quarter ending October 31		62.05	%					80.00	%		80.00	%
Year		85.62	%					60.00	%		60.00	%

          Interest

	2006			2007			2007 Estimated
	Actual			Actual			Low			High
Quarter ended January 31		2.14	%		2.08	%
Quarter ending April 30		2.07	%					2.10	%		2.10	%
Quarter ending July 31		1.95	%					2.10	%		2.10	%
Quarter ending October 31		1.85	%					2.10	%		2.10	%
Year		1.99	%					2.10	%		2.10	%

Included in Cost of revenues — traditional home sales is actual inventory write-downs of $96.9 million in the first quarter of fiscal 2007 and estimated inventory write-downs of $20 million in each of the second, third and fourth quarters of fiscal 2007 although we currently do not know of any required write-downs other then those taken in the first quarter of fiscal 2007.

2

Selling, general and administrative expenses as a percentage of total revenues in fiscal 2007 are expected to be:

	2006			2007			2007 Estimated
	Actual			Actual			Low			High
Quarter ended January 31		10.38	%		12.31	%
Quarter ending April 30		9.85	%					11.80	%		11.30	%
Quarter ending July 31		9.67	%					11.80	%		11.40	%
Quarter ending October 31		7.96	%					10.90	%		10.50	%
Year		9.36	%					11.70	%		11.30	%

Income from unconsolidated entities for fiscal 2007 is expected to be approximately (in thousands):

	2006		2007		2007
	Actual		Actual		Estimated
	(in thousands)
Quarter ended January 31	$	16,569	$	6,792
Quarter ending April 30	$	12,824			$	6,000
Quarter ending July 31	$	7,269			$	5,000
Quarter ending October 31	$	11,699			$	5,000
Year	$	48,361			$	22,800

Interest and other income for fiscal 2007 is expected to be approximately (in thousands):

	2006		2007		2007
	Actual		Actual		Estimated
	(in thousands)
Quarter ended January 31	$	11,327	$	28,960
Quarter ending April 30	$	10,966			$	10,000
Quarter ending July 31	$	9,699			$	5,000
Quarter ending October 31	$	20,672			$	5,000
Year	$	52,664			$	49,000

Our effective income tax rate for fiscal 2007 is expected to be approximately:

	2006			2007			2007
	Actual			Actual			Estimated
Quarter ended January 31		38.32	%		37.71	%
Quarter ending April 30		38.53	%					39.00	%
Quarter ending July 31		38.78	%					39.00	%
Quarter ending October 31		40.31	%					39.00	%
Year		39.00	%					38.80	%

Our net income for fiscal 2007 is expected to be approximately (in thousands):

	2006		2007		2007 Estimated
	Actual		Actual		Low		High
	(in thousands)
Quarter ended January 31	$	163,850	$	54,316
Quarter ending April 30	$	174,937			$	71,400	$	93,900
Quarter ending July 31	$	174,632			$	55,000	$	74,200
Quarter ending October 31	$	173,794			$	59,400	$	83,200
Year	$	687,213			$	240,000	$	305,000

3

Diluted earnings per share for fiscal 2007 is expected to be approximately:

	2006		2007		2007 Estimated
	Actual		Actual		Low		High
Quarter ended January 31	$	0.98	$	0.33
Quarter ending April 30	$	1.06			$	0.43	$	0.57
Quarter ending July 31	$	1.07			$	0.33	$	0.45
Quarter ending October 31	$	1.07			$	0.36	$	0.50
Year	$	4.17			$	1.46	$	1.85

We estimate that the share count for determining diluted earnings per share for fiscal 2007 will be approximately (in thousands):

	2006		2007		2007
	Actual		Actual		Estimated
	(in thousands)
Quarter ended January 31		167,027		164,048
Quarter ending April 30		165,727				165,000
Quarter ending July 31		163,514				165,000
Quarter ending October 31		163,139				165,000
Year		164,852				164,750

In-the-money stock options are included in shares outstanding using the “treasury stock method” for calculating common stock equivalents. Because of the uncertainty of what our stock price will average during each quarter of fiscal 2007, for computing earnings per share we have assumed a constant price of $34 for the second, third and fourth quarters of fiscal 2007 which will give us a level number of diluted shares outstanding during the last nine months of fiscal 2007. We have assumed that we will repurchase shares to offset any options that will be exercised and any stock that will be issued under our Cash Bonus Program and Employee Stock Purchase Plan.

FORWARD LOOKING STATEMENT

Certain information included herein and in other Company reports, SEC filings, verbal or written statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, information related to anticipated operating results, financial resources, changes in revenues, changes in profitability, changes in margins, changes in accounting treatment, interest expense, land-related write-downs, effects of home buyer cancellations, growth and expansion, anticipated income to be realized from our investments in unconsolidated entities, the ability to acquire land, the ability to gain approvals and to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the ability to secure materials and subcontractors, the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities in the future, industry trends, and stock market valuations. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports, SEC filings, statements and presentations. These risks and uncertainties include local, regional and national economic conditions, the demand for homes, domestic and international political events, uncertainties created by terrorist attacks, the effects of governmental regulation, the competitive environment in which the Company operates, fluctuations in interest rates, changes in home prices, the availability and cost of land for future growth, the availability of capital, uncertainties and fluctuations in capital and securities markets, changes in tax laws and their interpretation, legal proceedings, the availability of adequate insurance at reasonable cost, the ability of customers to finance the purchase of homes, the availability and cost of labor and materials, and weather conditions.

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