EX-99 4 ex99-2.htm EX99-2.HTM

Exhibit 99.2

FINANCIAL GUIDANCE

In our first quarter 2006 Earnings Conference Call to be held at 2:00 P.M. (EDT) on February 23, 2006, we will provide the following guidance regarding our expected results of operations for our fiscal year ending October 31, 2006. 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 1, 2006.

For ease of reference, we have included the actual results for fiscal 2005 and for the quarter ended January 31, 2006. 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 2006. 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 2006 are expected to be:

Revenues

Traditional home sales
   Unit deliveries
  2005   2006     2006 Estimated  
Actual
Actual
Low
High
  
 
 
 
 
 
                         
   Quarter ended January 31   1,590     1,879              
   Quarter ending April 30   1,912           1,950     2,150  
   Quarter ending July 31   2,310           2,350     2,575  
   Quarter ending October 31   2,957           3,000     3,300  
   Year   8,769           9,200     9,900  
                         
   Average delivered price                        
    2005     2006    2006 Estimated  
Actual Actual Low    High
 
 
 
 
 
                         
   Quarter ended January 31 $ 622,074   $ 680,526              
   Quarter ending April 30 $ 641,212         $ 670,000   $ 680,000  
   Quarter ending July 31 $ 665,151         $ 665,000   $ 675,000  
   Quarter ending October 31 $ 678,968         $ 675,000   $ 685,000  
   Year $ 656,780         $ 670,000   $ 680,000  
                         
Percentage of completion (in thousands)                        
       2005      2006     2006 Estimated    
    Actual  Actual  Low   High
   
 
 
 
 
                         
   Quarter ended January 31   N/A   $ 57,569              
   Quarter ending April 30   N/A         $ 55,000   $ 60,000  
   Quarter ending July 31   N/A         $ 65,000   $ 70,000  
   Quarter ending October 31   N/A         $ 100,000   $ 115,000  
   Year   N/A         $ 280,000   $ 300,000  

Land sales (in thousands)            
          2006 Estimated  
  2005   2006  
 
  Actual   Actual    Low    High  
 
 
 
 
 
                         
Quarter ended January 31 $ 1,225   $ 4,677              
Quarter ending April 30 $ 9,800         $ 4,000   $ 4,000  
Quarter ending July 31 $ 10,583         $ 5,000   $ 5,000  
Quarter ending October 31 $ 12,516         $ 7,500   $ 7,500  
Year $ 34,124         $ 21,000   $ 21,000  

Cost of revenues for traditional home sales, percentage of completion and land sales revenues as a percentage of the applicable revenues and interest as a percentage of total revenues in fiscal 2006 are expected to be:

Cost of revenues

Traditional home sales                
              2006 Estimated     
   2005       2006      
  
Actual Actual Low     High
 
   
   
   
 
                       
   Quarter ended January 31 69.30 %   69.14 %            
   Quarter ending April 30 67.75 %         69.10 %   68.90 %
   Quarter ending July 31 66.63 %         69.20 %   69.00 %
   Quarter ending October 31 67.88 %         69.50 %   69.30 %
   Year 67.76 %         69.30 %   69.10 %
                       
Percentage of completion                
              2006 Estimated  
  2005
Actual		     2006
Actual		    
 
          Low     High  
 
   
   
   
 
                       
   Quarter ended January 31 N/A     82.24 %            
   Quarter ending April 30 N/A           81.50 %   81.50 %
   Quarter ending July 31 N/A           80.00 %   80.00 %
   Quarter ending October 31 N/A           80.00 %   80.00 %
   Year N/A           81.00 %   81.00 %
                       
Land sales                
   2005      2006     2006 Estimated  
Actual Actual Low     High
 
   
   
   
 
                       
   Quarter ended January 31 63.59 %   82.01 %            
   Quarter ending April 30 54.24 %         80.00 %   80.00 %
   Quarter ending July 31 90.82 %         80.00 %   80.00 %
   Quarter ending October 31 69.58 %         60.00 %   60.00 %
   Year 71.60 %         75.00 %   75.00 %
                       
Interest                
              2006 Estimated     
   2005      2006    
 
  Actual     Actual     Low     High  
 
   
   
   
 
                       
   Quarter ended January 31 2.20 %   2.14 %            
   Quarter ending April 30 2.28 %         2.20 %   2.20 %
   Quarter ending July 31 2.30 %         2.20 %   2.20 %
   Quarter ending October 31 1.97 %         2.20 %   2.20 %
   Year 2.16 %         2.20 %   2.20 %

Selling, general and administrative expenses as a percentage of total revenues in fiscal 2006 are expected to be:

   2005     2006     2006 Estimated  
 
  Actual     Actual     Low     High  
 
   
   
   
 
Quarter ended January 31 10.81 %   10.38 %            
Quarter ending April 30 9.42 %         10.40 %   10.30 %
Quarter ending July 31 8.16 %         9.30 %   9.20 %
Quarter ending October 31 6.59 %         8.10 %   8.00 %
Year 8.33 %         9.40 %   9.30 %

Income from unconsolidated entities for fiscal 2006 is expected to be approximately:

    2005   2006     2006  
    Actual   Actual     Estimated  
 
 
 
 
          (in thousands)        
Quarter ended January 31 $ 1,935   $ 16,569        
Quarter ending April 30 $ 3,373         $ 6,500  
Quarter ending July 31 $ 4,231         $ 21,000  
Quarter ending October 31 $ 18,205         $ 16,000  
Year $ 27,744         $ 60,000  

Interest and other income for fiscal 2006 is expected to be approximately:

  2005
Actual		    2006
Actual		     2006
Estimated		   
 
 
 
 
        (in thousands)        
Quarter ended January 31 $ 6,883   $ 11,327        
Quarter ending April 30 $ 9,109         $ 5,500  
Quarter ending July 31 $ 10,583         $ 6,500  
Quarter ending October 31 $ 14,622         $ 7,000  
Year $ 41,197         $ 30,000  

Our effective income tax rate is expected to be approximately:

  2005   2006   2006  
  Actual   Actual   Estimated  
 
 
 
 
Quarter ended January 31 40.1 % 38.32 %    
Quarter ending April 30 36.5 %     38.60 %
Quarter ending July 31 40.6 %     38.60 %
Quarter ending October 31 39.0 %     38.60 %
Year 39.1 %     38.60 %

In-the-money stock options are included in shares outstanding using the “treasury stock method” for calculating common stock equivalents. We estimate that the share count for determining diluted earnings per share for fiscal 2006 will be:

   2005
Actual		    2006
Actual		    2006
Estimated		   
 
 
 
 
      (in thousands)      
Quarter ending January 31 166,084   167,027      
Quarter ending April 30 169,352       165,400  
Quarter ending July 31 169,483       165,850  
Quarter ending October 31 168,930       166,300  
Year 168,552       166,000  

FORWARD LOOKING STATEMENT

Certain information included herein and in other Company reports, SEC filings, statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning anticipated operating results, financial resources, changes in revenues, changes in profitability, interest expense, growth and expansion, anticipated income to be realized from our investments in unconsolidated entities, the ability to acquire land, the ability to secure governmental approvals and the ability to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the average delivered price of homes, the ability to secure materials and subcontractors, the ability to maintain the liquidity and capital necessary to expand and take advantage of future opportunities, 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.