10-Q/A 1 tol-2013131x10qa.htm 10-Q/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(Mark One)

þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2013
or

o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission file number 1-9186
TOLL BROTHERS, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) |  | 23-2416878 (I.R.S. Employer Identification No.)
250 Gibraltar Road, Horsham, Pennsylvania (Address of principal executive offices) |  | 19044 (Zip Code)

(215) 938-8000
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “an accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Check one):

Large accelerated filer þ |  | Accelerated filer o |  | Non-accelerated filer o |  | Smaller reporting company o
|  |  |  | (Do not check if a smaller reporting company) |  |

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
At March 4, 2013, there were approximately 169,162,000 shares of Common Stock, $.01 par value, outstanding.

EXPLANATORY NOTE
Toll Brothers, Inc. (the “Company”) is filing this Amendment No.1 on Form 10-Q/A (the “Form 10-Q/A”) to its Quarterly Report on Form 10-Q for the three months ended January 31, 2013, filed with the Securities and Exchange Commission on March 7, 2013 (the “Original Filing”), for the purpose of revising Note 17 - Supplemental Guarantor Information (the “Guarantor Footnote") contained in Part I, Item 1 as described below, making related updates to Part I, Item 4 to address the impact of the revised footnote on the Chief Executive Officer and Chief Financial Officer's original conclusions regarding the effectiveness of the Company's disclosure controls and procedures and internal control over financial reporting, and to make corresponding amendments to the Interactive Data File included in the Original Filing as Exhibit 101. Part II of the Original Filing has also been amended to contain currently dated certifications, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended.
The Guarantor Footnote has been revised in order to (i) retrospectively reflect the transfer of the balance sheet, statements of operations and cash flows of certain non-guarantor subsidiaries to guarantor subsidiaries as a result of such entities becoming guarantor subsidiaries as of April 30, 2013 and the reclassification of guarantor and non-guarantor intercompany advances and equity balances with corresponding offsets in the elimination column and (ii) revise the presentation of cash flows from operating activities, financing activities and investing activities in the condensed consolidating statements of cash flows for the three month periods ended January 31, 2013 and 2012 to reflect intercompany activity, which had previously been included in cash flow from operating activities, as cash flow from investing activities and cash flow from financing activities. See Note 17 in the notes to the consolidated financial statements for more detail.
This revised presentation of the Supplemental Guarantor Information has no impact or effect on Toll Brothers, Inc.'s condensed consolidated financial statements for any period presented, including the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, or Statements of Cash Flows.
Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not changed the disclosures contained therein to reflect any events which occurred at a date subsequent to the date of the Original Filing. Other events that have occurred since the Original Filing or other information necessary to reflect subsequent events have been disclosed in the Company's reports filed with the SEC subsequent to the Original Filing.

PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

| January 31, 2013 |  | October 31, 2012
| (unaudited) |  |
ASSETS |  |  |
Cash and cash equivalents | $ | 368,756 |  |  | $ | 778,824 |
Marketable securities | 424,819 |  |  | 439,068 |
Restricted cash | 33,757 |  |  | 47,276 |
Inventory | 4,155,047 |  |  | 3,761,187 |
Property, construction and office equipment, net | 112,877 |  |  | 109,971 |
Receivables, prepaid expenses and other assets | 152,881 |  |  | 144,558 |
Mortgage loans held for sale | 49,400 |  |  | 86,386 |
Customer deposits held in escrow | 31,301 |  |  | 29,579 |
Investments in and advances to unconsolidated entities | 321,851 |  |  | 330,617 |
Investments in distressed loans | 42,832 |  |  | 37,169 |
Investments in foreclosed real estate | 68,764 |  |  | 58,353 |
Deferred tax assets, net of valuation allowances | 355,966 |  |  | 358,056 |
| $ | 6,118,251 |  |  | $ | 6,181,044 |
LIABILITIES AND EQUITY |  |  |
Liabilities |  |  |
Loans payable | $ | 93,314 |  |  | $ | 99,817 |
Senior notes | 2,021,897 |  |  | 2,080,463 |
Mortgage company warehouse loan | 43,464 |  |  | 72,664 |
Customer deposits | 156,758 |  |  | 142,977 |
Accounts payable | 110,791 |  |  | 99,911 |
Accrued expenses | 467,652 |  |  | 476,350 |
Income taxes payable | 83,265 |  |  | 80,991 |
Total liabilities | 2,977,141 |  |  | 3,053,173 |
Equity |  |  |
Stockholders’ equity |  |  |
Preferred stock, none issued |  |  |
Common stock, 169,159 and 168,690 shares issued at January 31, 2013 and October 31, 2012, respectively | 1,692 |  |  | 1,687 |
Additional paid-in capital | 412,242 |  |  | 404,418 |
Retained earnings | 2,725,829 |  |  | 2,721,397 |
Treasury stock, at cost — 1 and 53 shares at January 31, 2013 and October 31, 2012, respectively | (38 | ) |  | (983 | )
Accumulated other comprehensive loss | (4,803 | ) |  | (4,819 | )
Total stockholders’ equity | 3,134,922 |  |  | 3,121,700 |
Noncontrolling interest | 6,188 |  |  | 6,171 |
Total equity | 3,141,110 |  |  | 3,127,871 |
| $ | 6,118,251 |  |  | $ | 6,181,044 |

See accompanying notes
2

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

| Three months ended January 31,
| 2013 |  | 2012
Revenues | $ | 424,601 |  |  | $ | 321,955 |
Cost of revenues | 345,937 |  |  | 271,608 |
Selling, general and administrative | 78,047 |  |  | 69,637 |
| 423,984 |  |  | 341,245 |
Income (loss) from operations | 617 |  |  | (19,290 | )
Other: |  |  |
Income from unconsolidated entities | 3,083 |  |  | 6,687 |
Other income - net | 4,626 |  |  | 6,195 |
Income (loss) before income taxes | 8,326 |  |  | (6,408 | )
Income tax provision (benefit) | 3,894 |  |  | (3,622 | )
Net income (loss) | $ | 4,432 |  |  | $ | (2,786 | )
Income (loss) per share: |  |  |
Basic | $ | 0.03 |  |  | $ | (0.02 | )
Diluted | $ | 0.03 |  |  | $ | (0.02 | )
Weighted average number of shares: |  |  |
Basic | 169,064 |  |  | 166,311 |
Diluted | 171,903 |  |  | 166,311 |

See accompanying notes
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands)
(Unaudited)

| Three months ended January 31,
| 2013 |  | 2012
Net income (loss) | $ | 4,432 |  |  | $ | (2,786 | )
Other comprehensive income (loss), net of tax: |  |  |
Change in pension liability | (173 | ) |  | (109 | )
Change in fair value of available-for-sale securities | 96 |  |  | 243 |
Unrealized income (loss) on derivative held by equity investee | 93 |  |  | (795 | )
Other comprehensive income (loss) | 16 |  |  | (661 | )
Total comprehensive income (loss) | $ | 4,448 |  |  | $ | (3,447 | )

See accompanying notes
3

TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

| Three months ended January 31,
| 2013 |  | 2012
Cash flow used in operating activities: |  |  |
Net income (loss) | $ | 4,432 |  |  | $ | (2,786 | )
Adjustments to reconcile net income to net cash used in operating activities: |  |  |
Depreciation and amortization | 6,525 |  |  | 5,229 |
Stock-based compensation | 5,684 |  |  | 5,626 |
Income from unconsolidated entities | (3,083 | ) |  | (6,687 | )
Distributions of earnings from unconsolidated entities | 2,413 |  |  | 872 |
Income from distressed loans and foreclosed real estate | (3,011 | ) |  | (4,138 | )
Deferred tax provision (benefit) | 2,306 |  |  | (1,246 | )
Deferred tax valuation allowances | (216 | ) |  | 1,246 |
Inventory impairments and write-offs | 709 |  |  | 8,120 |
Change in fair value of mortgage loans receivable and derivative instruments | 554 |  |  | 346 |
Gain on marketable securities |  |  | (39 | )
Changes in operating assets and liabilities |  |  |
Increase in inventory | (378,715 | ) |  | (108,468 | )
Origination of mortgage loans | (141,148 | ) |  | (120,662 | )
Sale of mortgage loans | 176,830 |  |  | 146,895 |
Decrease (increase) in restricted cash | 13,519 |  |  | (28,481 | )
(Increase) decrease in receivables, prepaid expenses and other assets | (8,256 | ) |  | 11,781 |
Increase in customer deposits | 12,059 |  |  | 3,230 |
Increase (decrease) in accounts payable and accrued expenses | 1,302 |  |  | (67,127 | )
Increase (decrease) in income taxes payable | 2,274 |  |  | (5,790 | )
Net cash used in operating activities | (305,822 | ) |  | (162,079 | )
Cash flow provided by (used in) investing activities: |  |  |
Purchase of property and equipment — net | (5,391 | ) |  | (3,392 | )
Purchase of marketable securities | (26,019 | ) |  |  |
Sale and redemption of marketable securities | 38,775 |  |  | 88,217 |
Investments in and advances to unconsolidated entities | (7,614 | ) |  | (71,784 | )
Return of investments in unconsolidated entities | 17,311 |  |  | 15,333 |
Investments in distressed loans and foreclosed real estate | (16,252 | ) |  | (26,410 | )
Return of investments in distressed loans and foreclosed real estate | 3,015 |  |  | 3,702 |
Acquisition of a business |  |  |  | (144,746 | )
Net cash provided by (used in) investing activities | 3,825 |  |  | (139,080 | )
Cash flow used in financing activities: |  |  |
Proceeds from loans payable | 244,830 |  |  | 199,139 |
Principal payments of loans payable | (299,862 | ) |  | (237,896 | )
Redemption of senior notes | (59,068 | ) |  |  |
Proceeds from stock-based benefit plans | 6,108 |  |  | 9,334 |
Purchase of treasury stock | (79 | ) |  | (64 | )
Net cash used in financing activities | (108,071 | ) |  | (29,487 | )
Net decrease in cash and cash equivalents | (410,068 | ) |  | (330,646 | )
Cash and cash equivalents, beginning of period | 778,824 |  |  | 906,340 |
Cash and cash equivalents, end of period | $ | 368,756 |  |  | $ | 575,694 |

See accompanying notes
4

TOLL BROTHERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company”), a Delaware corporation, and those majority-owned subsidiaries it controls. 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 the Company has effective control of the entity, in which case the entity would be consolidated.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The October 31, 2012 balance sheet amounts and disclosures included herein have been derived from the Company’s October 31, 2012 audited financial statements. Since the accompanying condensed consolidated financial statements do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements, the Company suggests that they be read in conjunction with the consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the fiscal year ended October 31, 2012. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position as of January 31, 2013, the results of its operations for the three-month periods ended January 31, 2013 and 2012, and its cash flows for the three-month periods ended January 31, 2013 and 2012. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.
Recent Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-05, “Statement of Comprehensive Income” (“ASU 2011-05”), which requires entities to present comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 was effective for our fiscal year beginning November 1, 2012. The adoption of this guidance, which related to presentation only, did not have an impact on the Company’s consolidated financial position, results of operations or cash flows but did require a change in the presentation of the Company’s comprehensive income from the notes of the condensed consolidated financial statements to the face of the condensed consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-02, "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income" ("ASU 2013-02"). ASU 2013-02 requires entities to present information about reclassification adjustments from accumulated other comprehensive income in their financial statements in a single note or on the face of the financial statements. The adoption of this guidance, which relates to presentation only, is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. ASU 2013-02 will be effective for the Company’s fiscal quarter beginning February 1, 2013.
Reclassification
Certain prior year amounts have been reclassified to conform to the fiscal 2013 presentation.
2. Inventory
Inventory at January 31, 2013 and October 31, 2012 consisted of the following (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Land controlled for future communities | $ | 54,521 |  |  | $ | 56,300 |
Land owned for future communities | 1,253,102 |  |  | 1,040,373 |
Operating communities | 2,847,424 |  |  | 2,664,514 |
| $ | 4,155,047 |  |  | $ | 3,761,187 |

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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 twelve 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 that do not have any remaining backlog and are not expected to reopen within twelve months of the end of the fiscal period being reported on have been classified as land owned for future communities.
Information regarding the classification, number and carrying value of these temporarily closed communities, as of the date indicated, is provided in the table below.

| January 31, 2013 |  | October 31, 2012
Land owned for future communities: |  |  |
Number of communities | 24 |  |  | 40 |
Carrying value (in thousands) | $ | 159,931 |  |  | $ | 240,307 |
Operating communities: |  |  |
Number of communities | 21 |  |  | 5 |
Carrying value (in thousands) | $ | 108,143 |  |  | $ | 34,685 |

The Company provided for inventory impairment charges and the expensing of costs that it believed not to be recoverable, for the periods indicated; these are shown in the table below (amounts in thousands).

| Three months ended January 31,
| 2013 |  | 2012
Charge: |  |  |
Land controlled for future communities | $ | 9 |  |  | $ | 777 |
Land owned for future communities | — |  |  | 918 |
Operating communities | 700 |  |  | 6,425 |
| $ | 709 |  |  | $ | 8,120 |

See Note 12, "Fair Value Disclosures", for information regarding the number of operating communities that the Company tested for potential impairment, the number of operating communities in which it recognized impairment charges, the amount of impairment charges recognized, and the fair values of those communities, net of impairment charges.
At January 31, 2013, the Company evaluated its land purchase contracts to determine if any of the selling entities were variable interest entities ("VIEs") and, if they were, whether the Company was the primary beneficiary of any of them. Under these land purchase contracts, the Company does not possess legal title to the land and its risk is generally limited to deposits paid to the sellers and the creditors of the sellers generally have no recourse against the Company. At January 31, 2013, the Company determined that 63 land purchase contracts, with an aggregate purchase price of $750.7 million, on which it had made aggregate deposits totaling $33.9 million, were VIEs, and that it was not the primary beneficiary of any VIE related to its land purchase contracts.
Interest incurred, capitalized and expensed, for the periods indicated, was as follows (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Interest capitalized, beginning of period | $ | 330,581 |  |  | $ | 298,757 |
Interest incurred | 31,748 |  |  | 28,899 |
Interest expensed to cost of revenues | (19,974 | ) |  | (16,321 | )
Write-off against other income | (88 | ) |  |  |
Interest capitalized on investments in unconsolidated entities | (1,363 | ) |  |  |
Interest capitalized, end of period | $ | 340,904 |  |  | $ | 311,335 |

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Inventory impairment charges are recognized against all inventory costs of a community, such as land, land improvements, cost of home construction and capitalized interest. The amounts included in the table directly above reflect the gross amount of capitalized interest without allocation of any impairment charges recognized. The Company estimates that, had inventory impairment charges been allocated on a pro-rata basis to the individual components of inventory, capitalized interest at January 31, 2013 and 2012 would have been reduced by approximately $46.2 million and $53.9 million, respectively.
3. Investments in and Advances to Unconsolidated Entities
The Company has investments in and advances to various unconsolidated entities. At January 31, 2013, the Company had investments in and advances to various unconsolidated entities of $321.9 million, and was committed to invest or advance $91.9 million to these entities if they require additional funding. At January 31, 2013, the Company had accrued $2.2 million of aggregate exposure with respect to its estimated obligations to unconsolidated entities in which it has an investment. More information regarding its investments in, advances to and future commitments to these entities is provided below.
At January 31, 2013, the Company determined that two of its joint ventures were VIEs under the guidance within FASB Accounting Standards Codification ("ASC") 810, "Consolidation". However, the Company concluded that it was not the primary beneficiary of the VIEs because the power to direct the activities of these VIEs that most significantly impact their performance was shared by the Company and the VIEs' other members. Business plans, budgets and other major decisions are required to be unanimously approved by all members. Management and other fees earned by the Company are nominal and believed to be at market rates and there is no significant economic disproportionality between the Company and other members.
The Company’s investments in these entities are accounted for using the equity method of accounting.
Development Joint Ventures
The Company has investments in and advances to a number of joint ventures with unrelated parties to develop land (“Development Joint Ventures”). Some of these Development Joint Ventures develop land for the sole use of the venture participants, including the Company, and others develop land for sale to the joint venture participants and to unrelated builders. The Company recognizes its share of earnings from the sale of home sites by the Development Joint Ventures to other builders. With regard to home sites the Company purchases from the Development Joint Ventures, the Company reduces its cost basis in those home sites by its share of the earnings on the home sites it purchases. At January 31, 2013, the Company had approximately $106.4 million invested in or advanced to the Development Joint Ventures. In addition, at January 31, 2013, the Company had a funding commitment of $13.5 million to two Development Joint Ventures which would be funded if additional investment in the ventures is required.
The Company has a 50% interest in a joint venture that is developing over 2,000 home sites in Orange County, California on land that it owns. Under the terms of the operating agreement, the Company will acquire 266 home sites in the first phase of the property from the joint venture. The Company intends to acquire approximately 545 additional home sites from the joint venture. The Company has a commitment to provide up to $10 million of additional funds to this joint venture, if needed. The joint venture has an $80 million credit facility from a bank to fund the development of the property; at January 31, 2013, the venture had $50.7 million borrowed under the facility. The Company executed a limited completion and a limited repayment guarantee under the loan agreement. The obligations under the guarantees are joint and several and contain a right of contribution agreement of each partner.
Planned Community Joint Venture
The Company entered into a joint venture in October 2008 for the development and sale of homes in a master planned community. At January 31, 2013, the Company had an investment of $31.6 million in this joint venture. At January 31, 2013, the participants agreed to contribute additional funds of up to $8.3 million each, if required.
Other Joint Ventures
At January 31, 2013, the Company had an aggregate of $143.4 million of investments in and advances to various joint ventures with unrelated parties to develop luxury for-sale and rental residential units, commercial space and a hotel. At At January 31, 2013, the Company had $70.1 million of funding commitments to three of these joint ventures. Several of the joint ventures expect to finance future construction with external financing. In addition, the Company has guaranteed approximately $11.9 million of joint venture liabilities, including approximately $9.8 million of payments related to a ground lease.
Toll Brothers Realty Trust and Trust II
In fiscal 2005, the Company, together with the Pennsylvania State Employees Retirement System (“PASERS”), formed Toll Brothers Realty Trust II (“Trust II”) to be in a position to invest in commercial real estate opportunities. Trust II is owned 50%
7

by the Company and 50% by an affiliate of PASERS. At January 31, 2013, the Company had an investment of $3.0 million in Trust II. Prior to the formation of Trust II, the Company formed Toll Brothers Realty Trust (“Trust”) in 1998 to invest in commercial real estate opportunities. The Trust is effectively owned one-third by the Company; one-third by Robert I. Toll, Bruce E. Toll (and members of his family), Douglas C. Yearley, Jr. and former members of the Company’s senior management; and one-third by an affiliate of PASERS (collectively, the “Shareholders”). As of January 31, 2013, the Company had a net investment in the Trust of $20 thousand. The Company provides development, finance and management services to the Trust and recognized fees under the terms of various agreements in the amounts of $0.6 million and $0.5 million in the three-month periods ended January 31, 2013 and 2012, respectively.
Structured Asset Joint Venture
The Company, through Gibraltar Capital and Asset Management LLC (“Gibraltar”), is a 20% participant with two unrelated parties that purchased a 40% interest in an entity that owns and controls a portfolio of loans and real estate (“Structured Asset Joint Venture”). At January 31, 2013, the Company had an investment of $37.5 million in this Structured Asset Joint Venture. At January 31, 2013, the Company did not have any commitments to make additional contributions to this Structured Asset Joint Venture and has not guaranteed any of the joint venture’s liabilities.
The condensed consolidated balance sheets, as of the dates indicated, and the condensed consolidated statements of operations, for the periods indicated, for the Company’s unconsolidated entities in which it has an investment, aggregated by type of business, are included below (in thousands). The column titled "Home Building Joint Ventures" includes the Planned Community and Other Joint Ventures described above.
Condensed Balance Sheets:

| January 31, 2013
| Develop- ment Joint Ventures |  | Home Building Joint Ventures |  | Trust and Trust II |  | Structured Asset Joint Venture |  | Total
Cash and cash equivalents | $ | 21,573 |  |  | $ | 33,450 |  |  | $ | 10,166 |  |  | $ | 63,753 |  |  | $ | 128,942 |
Inventory | 263,743 |  |  | 310,002 |  |  | 5,676 |  |  |  |  |  | 579,421 |
Non-performing loan portfolio |  |  |  |  |  |  | 185,142 |  |  | 185,142 |
Rental properties |  |  |  |  | 170,406 |  |  |  |  |  | 170,406 |
Real estate owned (“REO”) |  |  |  |  | 1,036 |  |  | 261,237 |  |  | 262,273 |
Other assets (1) | 10,389 |  |  | 71,319 |  |  | 9,030 |  |  | 277,305 |  |  | 368,043 |
Total assets | $ | 295,705 |  |  | $ | 414,771 |  |  | $ | 196,314 |  |  | $ | 787,437 |  |  | $ | 1,694,227 |
Debt (1) | $ | 121,435 |  |  | $ | 33,859 |  |  | $ | 194,439 |  |  | $ | 311,801 |  |  | $ | 661,534 |
Other liabilities | 14,174 |  |  | 8,225 |  |  | 5,348 |  |  | 501 |  |  | 28,248 |
Members’ equity (deficit) | 160,096 |  |  | 372,687 |  |  | (3,473 | ) |  | 190,054 |  |  | 719,364 |
Noncontrolling interest |  |  |  |  |  |  |  | 285,081 |  |  | 285,081 |
Total liabilities and equity | $ | 295,705 |  |  | $ | 414,771 |  |  | $ | 196,314 |  |  | $ | 787,437 |  |  | $ | 1,694,227 |
Company’s net investment in unconsolidated entities (2) | $ | 106,368 |  |  | $ | 174,967 |  |  | $ | 2,982 |  |  | $ | 37,534 |  |  | $ | 321,851 |

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| October 31, 2012
| Develop- ment Joint Ventures |  | Home Building Joint Ventures |  | Trust and Trust II |  | Structured Asset Joint Venture |  | Total
Cash and cash equivalents | $ | 17,189 |  |  | $ | 40,126 |  |  | $ | 11,005 |  |  | $ | 44,176 |  |  | $ | 112,496 |
Inventory | 255,561 |  |  | 294,724 |  |  | 5,643 |  |  |  |  |  | 555,928 |
Non-performing loan portfolio |  |  |  |  |  |  |  | 226,315 |  |  | 226,315 |
Rental properties |  |  |  |  | 173,767 |  |  |  |  |  | 173,767 |
Real estate owned (“REO”) |  |  |  |  |  |  | 254,250 |  |  | 254,250 |
Other assets (1) | 12,427 |  |  | 72,301 |  |  | 9,182 |  |  | 237,476 |  |  | 331,386 |
Total assets | $ | 285,177 |  |  | $ | 407,151 |  |  | $ | 199,597 |  |  | $ | 762,217 |  |  | $ | 1,654,142 |
Debt (1) | $ | 96,862 |  |  | $ | 34,184 |  |  | $ | 195,359 |  |  | $ | 311,801 |  |  | $ | 638,206 |
Other liabilities | 13,890 |  |  | 5,707 |  |  | 5,202 |  |  | 561 |  |  | 25,360 |
Members’ equity (deficit) | 174,425 |  |  | 367,260 |  |  | (964 | ) |  | 179,942 |  |  | 720,663 |
Noncontrolling interest |  |  |  |  |  |  |  | 269,913 |  |  | 269,913 |
Total liabilities and equity | $ | 285,177 |  |  | $ | 407,151 |  |  | $ | 199,597 |  |  | $ | 762,217 |  |  | $ | 1,654,142 |
Company’s net investment in unconsolidated entities (2) | $ | 116,452 |  |  | $ | 173,465 |  |  | $ | 3,357 |  |  | $ | 37,343 |  |  | $ | 330,617 |

(1) | Included in other assets of the Structured Asset Joint Venture at January 31, 2013 and October 31, 2012 is $277.3 million and $237.5 million, respectively, of restricted cash held in a defeasance account which will be used to repay debt of the Structured Asset Joint Venture.

(2) | Differences between the Company’s net investment in unconsolidated entities and its underlying equity in the net assets of the entities is primarily a result of the acquisition price of an investment in an entity in fiscal 2012 which was in excess of the Company's pro-rata share of the underlying equity, impairments related to the Company’s investments in unconsolidated entities, a loan made to one of the entities by the Company, and distributions from entities in excess of the carrying amount of the Company’s net investment.

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Condensed Statements of Operations and Comprehensive Income (Loss):

| For the three months ended January 31, 2013
| Develop- ment Joint Ventures |  | Home Building Joint Ventures |  | Trust and Trust II |  | Structured Asset Joint Venture |  | Total
Revenues | $ | 1,627 |  |  | $ | 8,970 |  |  | $ | 9,682 |  |  | $ | 9,705 |  |  | $ | 29,984 |
Cost of revenues | 1,219 |  |  | 7,105 |  |  | 4,293 |  |  | 10,338 |  |  | 22,955 |
Other expenses | 191 |  |  | 193 |  |  | 5,766 |  |  | 1,058 |  |  | 7,208 |
Total expenses—net | 1,410 |  |  | 7,298 |  |  | 10,059 |  |  | 11,396 |  |  | 30,163 |
Gain on disposition of loans and REO |  |  |  |  |  |  |  |  |  | 26,892 |  |  | 26,892 |
Income (loss) from operations | 217 |  |  | 1,672 |  |  | (377 | ) |  | 25,201 |  |  | 26,713 |
Other income | 3 |  |  | 19 |  |  |  |  |  | 79 |  |  | 101 |
Net income (loss) before noncontrolling interest | 220 |  |  | 1,691 |  |  | (377 | ) |  | 25,280 |  |  | 26,814 |
Less: Net income attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (15,168 | ) |  | (15,168 | )
Net income (loss) | 220 |  |  | 1,691 |  |  | (377 | ) |  | 10,112 |  |  | 11,646 |
Other comprehensive income |  |  |  |  | 302 |  |  |  |  | 302 |
Total comprehensive income (loss) | $ | 220 |  |  | $ | 1,691 |  |  | $ | (75 | ) |  | $ | 10,112 |  |  | $ | 11,948 |
Company’s equity in earnings (losses) of unconsolidated entities (3) | $ | (98 | ) |  | $ | 843 |  |  | $ | 425 |  |  | $ | 1,913 |  |  | $ | 3,083 |

| For the three months ended January 31, 2012
| Develop- ment Joint Ventures |  | Home Building Joint Ventures |  | Trust and Trust II |  | Structured Asset Joint Venture |  | Total
Revenues | $ | 33,584 |  |  | $ | 23,430 |  |  | $ | 9,476 |  |  | $ | 8,133 |  |  | $ | 74,623 |
Cost of revenues | 31,771 |  |  | 17,794 |  |  | 3,343 |  |  | 11,067 |  |  | 63,975 |
Other expenses | 225 |  |  | 945 |  |  | 6,785 |  |  | 2,631 |  |  | 10,586 |
Total expenses—net | 31,996 |  |  | 18,739 |  |  | 10,128 |  |  | 13,698 |  |  | 74,561 |
Loss on disposition of loans and REO |  |  |  |  |  |  |  |  |  | (44 | ) |  | (44 | )
Income (loss) from operations | 1,588 |  |  | 4,691 |  |  | (652 | ) |  | (5,609 | ) |  | 18 |
Other income | 2,653 |  |  | 5 |  |  |  |  |  | 137 |  |  | 2,795 |
Net income (loss) before noncontrolling interest | 4,241 |  |  | 4,696 |  |  | (652 | ) |  | (5,472 | ) |  | 2,813 |
Less: Net loss attributable to noncontrolling interest |  |  |  |  |  |  | 3,283 |  |  | 3,283 |
Net income (loss) | 4,241 |  |  | 4,696 |  |  | (652 | ) |  | (2,189 | ) |  | 6,096 |
Other comprehensive loss |  |  |  |  | (447 | ) |  |  |  | (447 | )
Total comprehensive income (loss) | $ | 4,241 |  |  | $ | 4,696 |  |  | $ | (1,099 | ) |  | $ | (2,189 | ) |  | $ | 5,649 |
Company’s equity in earnings (losses) of unconsolidated entities (3) | $ | 1,996 |  |  | $ | 4,520 |  |  | $ | 623 |  |  | $ | (452 | ) |  | $ | 6,687 |

(3) | Differences between the Company’s equity in earnings (losses) of unconsolidated entities and the Company's percentage interest in the underlying net income (loss) of the entities is primarily a result of impairments related to the Company’s investment in unconsolidated entities, distributions from entities in excess of the carrying amount of the Company’s net investment, and the Company’s share of the entities’ profits related to home sites purchased by the Company which reduces the Company’s cost basis of the home sites.

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4. Investments in Distressed Loans and Foreclosed Real Estate
Investments in Distressed Loans
The Company’s investment in distressed loans consisted of the following as of the dates indicated (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Unpaid principal balance | $ | 91,339 |  |  | $ | 99,693 |
Discount on acquired loans | (48,507 | ) |  | (62,524 | )
Carrying value | $ | 42,832 |  |  | $ | 37,169 |

The Company's investment in distressed loans includes performing loans and non-performing loans and also includes investments in loan participations classified as secured borrowings under ASC 860, "Transfers and Servicing".
For acquired distressed loans where it is probable that the Company will collect less than the contractual amounts due under the terms of the loan based, at least in part, on the assessment of the credit quality of the borrowers, the loans are accounted for under ASC Topic 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"). Under ASC 310-30, provided the Company does not presently have the intention to utilize real estate secured by the loans for use in its operations or to significantly improve the collateral for resale, the amount by which the future cash flows expected to be collected at the acquisition date exceeds the estimated fair value of the loan, or accretable yield, is recognized in other income - net over the estimated remaining life of the loan using a level yield methodology . The difference between the contractually required payments of the loan as of the acquisition date and the total cash flows expected to be collected, or nonaccretable difference, is not recognized.
The Company may acquire distressed loans where it has determined that (1) it is possible to collect all contractual amounts due under the terms of the loan, (2) it expects to utilize the real estate secured by the loans in its operations, or (3) forecasted cash flows cannot be reasonably estimated. For non-performing loans acquired meeting these conditions, in accordance with ASC 310-10, "Receivable," the loans are classified as nonaccrual and interest income is not recognized. When a loan is classified as nonaccrual, any subsequent cash receipt is accounted for using the cost recovery method. For performing loans, payments are applied to principal and interest in accordance with the terms of the loan when received. As of January 31, 2013, the Company had investments in performing and non-performing loans, accounted for in accordance with ASC 310-10, of $14.0 million and $6.0 million, respectively. At October 31, 2012, the Company had investments in non-performing loans of $9.2 million. The Company had no investments in performing loans at October 31, 2012.
In the three months ended January 31, 2013, Gibraltar purchased distressed loans for approximately $16.1 million. The purchases included performing and non-performing loans secured by retail shopping centers, residential land and golf courses located in seven states.
The following table summarizes, for the distressed loans acquired in the three months ended January 31, 2012 that were accounted for in accordance with ASC 310-30, the accretable yield and the nonaccretable difference of the Company's investment in these loans as of their acquisition date (amounts in thousands).

| Three months ended January 31,
| 2012
Contractually required payments, including interest | $ | 52,524 |
Nonaccretable difference | (5,125 | )
Cash flows expected to be collected | 47,399 |
Accretable yield | (20,514 | )
Non-performing loans carrying amount | $ | 26,885 |

There were no distressed loans purchased during the three months ended January 31, 2013 that met the requirements of ASC 310-30.
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The accretable yield activity for the Company’s investment in distressed loans accounted for under ASC 310-30 for the three-month periods ended January 31, 2013 and 2012 was as follows (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Balance, beginning of period | $ | 17,196 |  |  | $ | 42,326 |
Loans acquired | — |  |  | 20,514 |
Deletions | (2,387 | ) |  | (1,768 | )
Accretion | (1,403 | ) |  | (3,228 | )
Balance, end of period | $ | 13,406 |  |  | $ | 57,844 |

Deletions primarily represent loan dispositions, which includes foreclosure of the underlying collateral and resulting removal of the loans from the accretable yield portfolios, and reclassifications from accretable yield to nonaccretable yield. The additions to nonaccretable yield and the accretion of interest income are based on various estimates regarding loan performance and the value of the underlying real estate securing the loans. As the Company continues to gather additional information regarding the loans and the underlying collateral, the accretable yield may change. Therefore, the amount of accretable income recorded in the three-month periods ended January 31, 2013 and 2012 is not necessarily indicative of expected future results.
Real Estate Owned (REO)
The following table presents the activity in REO for the three-month periods ended January 31, 2013 and 2012 (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Balance, beginning of period | $ | 58,353 |  |  | $ | 5,939 |
Additions | 11,040 |  |  | 1,164 |
Sales | (439 | ) |  | (615 | )
Impairments | (15 | ) |  |
Depreciation | (175 | ) |  |
Balance, end of period | $ | 68,764 |  |  | $ | 6,488 |

As of January 31, 2013, approximately $5.9 million and $62.8 million of REO was classified as held-for-sale and held-and-used, respectively. As of January 31, 2012, approximately $1.3 million and $5.2 million of REO was classified as held-for-sale and held-and-used, respectively. For the three-month period ended January 31, 2013, the Company recorded gains of $0.6 million from acquisitions of REO through foreclosure. There were no gains or losses recorded in the three-month period ended January 31, 2012 from REO conversions.
General
The Company’s earnings from Gibraltar's operations, excluding its investment in the Structured Asset Joint Venture, are included in other income - net in its Condensed Consolidated Statements of Operations. In the three-month periods ended January 31, 2013 and 2012, the Company recognized $0.2 million and $2.1 million of earnings, respectively, from Gibraltar's operations.
5. Senior Notes and Mortgage Company Loan Facilities
Senior Notes
At January 31, 2013, the Company had 7 issues of its Senior Notes outstanding with an aggregate principal amount of $2.03 billion.
In November 2012, the Company repaid the $59.1 million of its outstanding 6.875% Senior Notes due November 15, 2012.
Mortgage Company Loan Facilities
In July 2012, TBI Mortgage Company (“TBI Mortgage”), the Company's wholly-owned mortgage subsidiary, amended its Master Repurchase Agreement (the “Repurchase Agreement”) with Comerica Bank. The purpose of the Repurchase Agreement is to finance the origination of mortgage loans by TBI Mortgage and it is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” The Repurchase Agreement, as amended, provides for loan purchases of up to $50 million, subject
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to certain sublimits. In addition, the Repurchase Agreement provides for an accordion feature under which TBI Mortgage may request that the aggregate commitments under the Repurchase Agreement be increased to an amount up to $75 million for a short period of time. The Repurchase Agreement, as amended, expires on July 23, 2013 and bears interest at LIBOR plus 2.00% per annum, with a minimum rate of 3.00%.
6. Accrued Expenses
Accrued expenses at January 31, 2013 and October 31, 2012 consisted of the following (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Land, land development and construction | $ | 119,804 |  |  | $ | 124,731 |
Compensation and employee benefit | 94,627 |  |  | 111,093 |
Insurance and litigation | 102,135 |  |  | 101,908 |
Commitments to unconsolidated entities | 2,164 |  |  | 2,135 |
Warranty | 41,241 |  |  | 41,706 |
Interest | 38,366 |  |  | 28,204 |
Other | 69,315 |  |  | 66,573 |
| $ | 467,652 |  |  | $ | 476,350 |

The Company accrues 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. The table below provides, for the periods indicated, a reconciliation of the changes in the Company’s warranty accrual (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Balance, beginning of period | $ | 41,706 |  |  | $ | 42,474 |
Additions – homes closed during the period | 2,289 |  |  | 1,871 |
Addition – liabilities acquired |  |  |  | 731 |
(Decrease) increase in accruals for homes closed in prior periods | (267 | ) |  | 1,783 |
Charges incurred | (2,487 | ) |  | (3,750 | )
Balance, end of period | $ | 41,241 |  |  | $ | 43,109 |

7. Income Taxes
The tables below provide, for the periods indicated, reconciliations of the Company’s effective tax rate from the federal statutory tax rate (amounts in thousands).

| Three months ended January 31,
| 2013 |  | 2012
| $ |  | %* |  | $ |  | %*
Federal tax provision (benefit) at statutory rate | 2,914 |  |  | 35.0 |  |  | (2,243 | ) |  | 35.0 |
State tax provision (benefit), net of federal provision (benefit) | 346 |  |  | 4.2 |  |  | (271 | ) |  | 4.2 |
Increase in unrecognized tax benefits |  |  |  |  |  | 1,500 |  |  | (23.4 | )
Reversal of accrual for uncertain tax positions |  |  |  |  |  |  | (5,279 | ) |  | 82.4 |
Increase in deferred tax assets – net |  |  |  |  |  |  | (525 | ) |  | 8.2 |
Valuation allowance – recognized |  |  |  |  |  |  | 4,089 |  |  | (63.8 | )
Valuation allowance – reversed | (216 | ) |  | (2.6 | ) |  | (2,843 | ) |  | 44.3 |
Accrued interest on anticipated tax assessments | 1,166 |  |  | 14.0 |  |  | 1,950 |  |  | (30.4 | )
Other | (316 | ) |  | (3.8 | ) |  |  |  |  |  |
Income tax provision (benefit) | 3,894 |  |  | 46.8 |  |  | (3,622 | ) |  | 56.5 |

* Due to rounding, amounts may not add.
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The Company currently operates in 19 states and is subject to various state tax jurisdictions. The Company estimates its state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction and the Company’s ability to utilize certain tax-saving strategies. Based on the Company’s estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on the Company’s tax strategies, the Company estimated its rate for state income taxes at 6.4% and 6.5% for fiscal 2013 and 2012, respectively.
At October 31, 2012, the Company evaluated evidence related to the need for its deferred tax asset valuation allowances and determined that the valuation allowance on its federal deferred tax assets and certain state valuation allowances were no longer needed. Accordingly, in the fourth quarter of fiscal 2012, the Company reversed a valuation allowance in the amount of $394.7 million.
For state tax purposes, due to past and projected losses in certain jurisdictions where the Company does not have carryback potential and/or cannot sufficiently forecast future taxable income, the Company has recognized net cumulative valuation allowances against its state deferred tax assets of $56.8 million and $57.0 million as of January 31, 2013 and October 31, 2012, respectively.
8. Stock-Based Benefit Plans
The Company grants stock options, restricted stock and various types of restricted stock units to its employees and its non-employee directors. Beginning in fiscal 2012, the Company changed the mix of stock-based compensation to its employees (other then certain senior executives) by reducing the number of stock options it grants and, in their place, issued non-performance based restricted stock units ("RSUs") as a form of compensation. The Company also replaced its stock price-based restricted stock unit ("Stock Price-Based RSUs") awards for certain senior executives with a performance-based restricted stock (“Performance-Based RSUs”) award program. Additionally, the Company has an employee stock purchase plan that allows employees to purchase Company stock at a discount.
Information regarding the amount of total stock-based compensation expense and tax benefit recognized by the Company, for the periods indicated, is as follows (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Total stock-based compensation expense recognized | $ | 5,684 |  |  | $ | 5,626 |
Income tax benefit recognized | $ | 2,079 |  |  | $ | 2,061 |

At January 31, 2013 and October 31, 2012, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $32.6 million and $14.2 million, respectively.
Information about the Company’s more significant stock-based compensation programs is outlined below.
Stock Options
The fair value of each option award is estimated on the date of grant using a lattice-based option valuation model that uses assumptions noted in the following table. The lattice-based option valuation model incorporates ranges of assumptions for inputs, which are disclosed in the table below. Expected volatilities were based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock and other factors. The expected lives of options granted were derived from the historical exercise patterns and anticipated future patterns and represent the period of time that options granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behaviors. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
The weighted-average assumptions and the fair value used for stock option grants in fiscal 2013 and 2012 were as follows:

| 2013 |  | 2012
Expected volatility | 44.04%-48.13% |  | 44.20% - 50.24%
Weighted-average volatility | 46.70% |  | 46.99%
Risk-free interest rate | 0.64%-1.56% |  | 0.78% - 1.77%
Expected life (years) | 4.48-8.88 |  | 4.59 - 9.06
Dividends | none |  | none
Weighted-average grant date fair value per share of options granted | $13.05 |  | $8.70

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Stock compensation expense, related to stock options, for the periods indicated, was as follows (amounts in thousands):

| 2013 |  | 2012
Three months ended January 31, | $ | 3,475 |  |  | $ | 3,522 |

Performance-Based Restricted Stock Units
In the first quarter of fiscal 2013, the Executive Compensation Committee of the Company’s Board of Directors ("Executive Compensation Committee") approved awards of Performance-Based RSUs relating to shares of the Company’s common stock to certain of its senior management. The Performance-Based RSUs are based on the attainment of certain performance metrics of the Company in fiscal 2013. The number of shares underlying the Performance-Based RSUs that will be issued to the recipients may range from 90% to 110% of the base award depending on actual performance as compared to the target performance goals. The Performance-Based RSUs vest over a four-year period provided the recipients continue to be employed by the Company or serve on the board of directors of the Company (as applicable) as specified in the award document.
The value of the Performance-Based RSUs was determined to be equal to the estimated number of shares of the Company’s common stock to be issued multiplied by the closing price of the Company’s common stock on the NYSE on the date the performance goals were approved by the Executive Compensation Committee. The Company evaluates the performance goals quarterly and estimates the number of shares underlying the Performance-Based RSUs that are probable of being issued. Information regarding the issuance, valuation assumptions and amortization of the Company’s Performance-Based RSUs issued in fiscal 2013 and 2012 is provided below.

| 2013 |  | 2012
Estimated number of shares underlying Performance-Based RSUs to be issued | 289,490 |  |  | 350,000 |
Closing price of the Company’s common stock on date performance goals were approved | $ | 37.78 |  |  | $ | 20.50 |
Estimated aggregate fair value of Performance-Based RSUs to be issued (in thousands) | $ | 10,937 |  |  | $ | 7,185 |
Performance-Based RSU expense recognized in the three months ended January 31, (in thousands): | $ | 514 |  |  | $ | 936 |
Unamortized value of Performance-Based RSUs at January 31, (in thousands): | $ | 14,059 |  |  | $ | 6,249 |

Stock Price-Based Restricted Stock Units
Information regarding the amortization of the Company’s Stock Price-Based RSUs, for the periods indicated, is provided below (amounts in thousands).

| 2013 |  | 2012
Three months ended January 31, | $ | 562 |  |  | $ | 848 |

Information regarding the aggregate number of outstanding Stock Price-Based RSUs and aggregate unamortized value of the outstanding Stock Price-Based RSUs, as of the date indicated, is provided below.

| January 31, 2013 |  | October 31, 2012
Aggregate outstanding Stock Price-Based RSUs | 306,000 |  |  | 506,000 |
Cumulative unamortized value of Stock Price-Based RSUs (in thousands) | $ | 1,480 |  |  | $ | 2,042 |

In December 2012, the Company issued and distributed 200,000 shares of stock pursuant to a Stock Price-Based RSU award.
Non-Performance Based Restricted Stock Units
The Company issued RSUs to various officers, employees and non-employee directors. The value of the RSUs was determined to be equal to the number of shares of the Company’s common stock to be issued pursuant to the RSUs, multiplied by the closing price of the Company’s common stock on the NYSE on the date the RSUs were awarded. Information regarding these RSUs issued in the three months ended January 31, 2013 and 2012 is as follows:
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| 2013 |  | 2012
Number of RSUs issued | 94,080 |  |  | 107,820 |
Closing price of the Company’s common stock on date of issuance | $ | 32.22 |  |  | $ | 20.50 |
Aggregate fair value of RSUs issued (in thousands) | $ | 3,031 |  |  | $ | 2,210 |

Information regarding the amortization of the Company’s RSUs, for the periods indicated, is as follows (amounts in thousands):

| 2013 |  | 2012
Three months ended January 31, | $ | 1,112 |  |  | $ | 314 |

Information regarding the aggregate number of outstanding RSUs and aggregate unamortized value of the outstanding RSUs, as of the date indicated, is as follows:

| January 31, 2013 |  | October 31, 2012
Aggregate outstanding RSUs | 230,214 |  |  | 137,764 |
Cumulative unamortized value of RSUs (in thousands) | $ | 3,209 |  |  | $ | 1,326 |

9. Employee Retirement Plans
The Company has two unfunded supplemental retirement plans (“SERPs”). The table below provides, for the periods indicated, costs recognized and payments made related to its SERPs (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Service cost | $ | 118 |  |  | $ | 97 |
Interest cost | 261 |  |  | 303 |
Amortization of prior service obligation | 210 |  |  | 184 |
Amortization of unrecognized losses | 36 |  |  | 17 |
Total costs | $ | 625 |  |  | $ | 601 |
Benefits paid | $ | 233 |  |  | $ | 115 |

10. Stock Repurchase Program
In March 2003, the Company’s Board of Directors authorized the repurchase of up to 20 million shares of its common stock, par value $.01, from time to time, in open market transactions or otherwise, for the purpose of providing shares for its various employee benefit plans. The table below provides, for the periods indicated, information about the Company’s share repurchase program.

| Three months ended January 31,
| 2013 |  | 2012
Number of shares purchased | 3,000 |  |  | 3,000 |
Average price per share | $ | 32.59 |  |  | $ | 20.61 |
Remaining authorization at January 31 (in thousands): | 8,764 |  |  | 8,783 |

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11. Income (Loss) per Share Information
The table below provides, for the periods indicated, information pertaining to the calculation of income (loss) per share, common stock equivalents, weighted-average number of anti-dilutive options and shares issued (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Basic weighted-average shares (a) | 169,064 |  |  | 166,311 |
Common stock equivalents (b) | 2,839 |  |  |  |
Diluted weighted-average shares | 171,903 |  |  | 166,311 |
Other information: |  |  |
Common stock equivalents excluded from diluted weighted-average shares due to anti-dilutive effect (b) |  |  |  | 796 |
Weighted-average number of anti-dilutive options (c) | 980 |  |  | 6,727 |
Shares issued under stock incentive and employee stock purchase plans | 523 |  |  | 942 |

(a) | Basic weighted-average shares included the weighted-average number of shares outstanding for the period and vested shares issuable under restricted stock unit awards.

(b) | Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options and unvested shares issuable under restricted stock unit awards whose performance criteria, if any, have been met and are expected to be issued, using the treasury stock method. 5.9 million shares issuable upon the conversion of the Company's 0.5% Exchangeable Senior Notes are excluded from the calculation of diluted earnings per share because they are anti-dilutive.

(c) | Based upon the average closing price of the Company’s common stock on the NYSE for the period.

12. Fair Value Disclosures
Fair Value Disclosures
The Company uses 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 which 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.
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.

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Financial Instruments
The table below provides, as of the date indicated, a summary of assets (liabilities) related to the Company’s financial instruments, measured at fair value on a recurring basis (amounts in thousands):

|  |  | Fair value
Financial Instrument | Fair value hierarchy |  | January 31, 2013 |  | October 31, 2012
Corporate Securities | Level 2 |  | $ | 246,487 |  |  | $ | 260,772 |
Certificates of Deposit | Level 2 |  | $ | 148,105 |  |  | $ | 148,112 |
Short-Term Tax-Exempt Bond Fund | Level 1 |  | $ | 30,227 |  |  | $ | 30,184 |
Residential Mortgage Loans Held for Sale | Level 2 |  | $ | 49,400 |  |  | $ | 86,386 |
Forward Loan Commitments—Residential Mortgage Loans Held for Sale | Level 2 |  | $ | 649 |  |  | $ | (102 | )
Interest Rate Lock Commitments (“IRLCs”) | Level 2 |  | $ | (1,345 | ) |  | $ | (202 | )
Forward Loan Commitments—IRLCs | Level 2 |  | $ | 1,345 |  |  | $ | 202 |

At January 31, 2013 and October 31, 2012, the carrying value of cash and cash equivalents and restricted cash approximated fair value.
Mortgage Loans Held for Sale
The table below provides, as of the date indicated, the aggregate unpaid principal and fair value of mortgage loans held for sale (amounts in thousands):

| Aggregate unpaid principal balance |  | Fair value |  | Excess
At January 31, 2013 | $ | 49,304 |  |  | $ | 49,400 |  |  | $ | 96 |
At October 31, 2012 | $ | 84,986 |  |  | $ | 86,386 |  |  | $ | 1,400 |

At the end of the reporting period, the Company determines the fair value of its mortgage loans held for sale and the forward loan commitments it has entered into as a hedge against the interest rate risk of its 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 by applying such pricing to the mortgage loan portfolio. The Company recognizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale as a gain or loss. In addition, the Company recognizes the fair value of its forward loan commitments as a gain or loss. These gains and losses are included in other income - net. Interest income on mortgage loans held for sale is calculated based upon the stated interest rate of each loan and is included in other income - net.
IRLCs represent individual borrower agreements that commit the Company 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. The Company utilizes 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 the Company agrees 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. The Company estimates 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. To manage the risk of non-performance of investors regarding the Forward Commitments, the Company assesses the credit worthiness of the investors on a periodic basis.
18

Marketable Securities
The table below provides, as of the date indicated, the amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of marketable securities (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Amortized cost | $ | 424,387 |  |  | $ | 438,755 |
Gross unrealized holding gains | 552 |  |  | 451 |
Gross unrealized holding losses | (120 | ) |  | (138 | )
Fair value | $ | 424,819 |  |  | $ | 439,068 |

The estimated fair values of corporate securities and certificates of deposit are based on quoted prices provided by brokers. The remaining contractual maturities of marketable securities as of January 31, 2013 ranged from 1 month to 23 months.
Inventory
The Company recognizes inventory 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. See Note 1, “Significant Accounting Policies, Inventory” in the Company's Annual Report on Form 10-K for additional information regarding the Company’s methodology on determining fair value. As further discussed in Note 1 in the Company's Annual Report on Form 10-K, determining the fair value of a community's inventory involves a number of variables, many of which are interrelated. If the Company used a different input for any of the various unobservable inputs used in its impairment analysis, the results of the analysis may have been different, absent any other changes. The table below summarizes, for the periods indicated, the ranges of certain quantitative unobservable inputs utilized in determining the fair value of impaired communities:

| Selling price per unit (in thousands) |  | Sales pace per year (in units) |  | Discount rate
Three months ended January 31, 2013 | $303 - $307 |  | 15 |  | 15.3%
Three months ended October 31, 2012 | $501 - $536 |  | 11 |  | 18.3%
Three months ended July 31, 2012 | $175 - $571 |  | 4 - 12 |  | 14.0% - 17.5%
Three months ended April 30, 2012 | $413 - $472 |  | 6 - 17 |  | 17.5%
Three months ended January 31, 2012 | $344 - $2,287 |  | 1 - 25 |  | 13.0% - 18.8%

The table below provides, for the periods indicated, the fair value of operating communities whose carrying value was adjusted and the amount of impairment charges recognized ($ amounts in thousands):

|  |  | Impaired operating communities
Three months ended: | Number of communities tested |  | Number of communities |  | Fair value of communities, net of impairment charges |  | Impairment charges
Fiscal 2013: |  |  |  |  |  |  |
January 31 | 60 |  | 2 |  | $ | 5,377 |  |  | $ | 700 |
|  |  |  |  |  |  | $ | 700 |
Fiscal 2012: |  |  |  |  |  |  |
January 31 | 113 |  | 8 |  | $ | 49,758 |  |  | $ | 6,425 |
April 30 | 115 |  | 2 |  | $ | 22,962 |  |  | 2,560 |
July 31 | 115 |  | 4 |  | $ | 6,609 |  |  | 2,685 |
October 31 | 108 |  | 3 |  | $ | 9,319 |  |  | 1,400 |
|  |  |  |  |  |  | $ | 13,070 |

19

Investments in Distressed Loans and REO
Gibraltar’s distressed loans were recorded at estimated fair value at inception based on the acquisition price as determined by Level 3 inputs and was based on the estimated future cash flows to be generated by the loans discounted at the rates used to value the loans at the acquisition dates. The table below provides, as of the date indicated, the carrying amount and estimated fair value of distressed loans (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Carrying amount | $ | 42,832 |  |  | $ | 37,169 |
Estimated fair value | $ | 44,065 |  |  | $ | 38,109 |

Gibraltar's REO was recorded at estimated fair value at the time it was acquired through foreclosure or deed in lieu actions using Level 3 inputs. The valuation techniques used to estimate fair value are third-party appraisals, broker opinions of value, or internal valuation methodologies (which may include discounted cash flows, capitalization rate analysis or comparable transactional analysis). Unobservable inputs used in estimating the fair value of REO assets are based upon the best information available under the circumstances and take into consideration the financial condition and operating results of the asset, local market conditions, the availability of capital, interest and inflation rates and other factors deemed appropriate by management.
Debt
The table below provides, as of the date indicated, the book value and estimated fair value of the Company’s debt (amounts in thousands):

|  |  | January 31, 2013 |  | October 31, 2012
| Fair value hierarchy |  | Book value |  | Estimated fair value |  | Book value |  | Estimated fair value
Loans payable (a) | Level 2 |  | $ | 93,314 |  |  | $ | 93,014 |  |  | $ | 99,817 |  |  | $ | 99,093 |
Senior notes (b) | Level 1 |  | 2,030,121 |  |  | 2,272,730 |  |  | 2,089,189 |  |  | 2,340,189 |
Mortgage company warehouse loan (c) | Level 2 |  | 43,464 |  |  | 43,464 |  |  | 72,664 |  |  | 72,664 |
|  |  | $ | 2,166,899 |  |  | $ | 2,409,208 |  |  | $ | 2,261,670 |  |  | $ | 2,511,946 |

(a) | The estimated fair value of loans payable was based upon their indicated market prices or the interest rates that the Company believed were available to it for loans with similar terms and remaining maturities as of the applicable valuation date.

(b) | The estimated fair value of the Company’s senior notes is based upon their indicated market prices.

(c) | The Company believes that the carrying value of its mortgage company warehouse loan borrowings approximates their fair value.

13. Other Income - Net
The table below provides, for the periods indicated, the components of other income - net (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Interest income | $ | 1,475 |  |  | $ | 914 |
Income from ancillary businesses | 1,278 |  |  | 1,083 |
Gibraltar | 151 |  |  | 2,138 |
Management fee income | 327 |  |  | 687 |
Retained customer deposits | 678 |  |  | 654 |
Land sales, net | 145 |  |  |
Other | 572 |  |  | 719 |
Total other income - net | $ | 4,626 |  |  | $ | 6,195 |

20

Income from ancillary businesses includes the activity of the Company’s non-core businesses which include its mortgage, title, landscaping, security monitoring and golf course and country club operations. The table below provides, for the periods indicated, revenues and expenses for the Company’s non-core ancillary businesses (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Revenue | $ | 16,641 |  |  | $ | 13,813 |
Expense | $ | 15,363 |  |  | $ | 12,730 |

14. Commitments and Contingencies
Legal Proceedings
The Company is involved in various claims and litigation arising principally in the ordinary course of business. The Company believes that adequate provision for resolution of all current claims and pending litigation has been made for probable losses and the disposition of these matters will not have a material adverse effect on the Company’s results of operations and liquidity or on its financial condition.
Investments in and Advances to Unconsolidated Entities
See Note 3, “Investments in and Advances to Unconsolidated Entities,” for more information regarding the Company’s commitments to these entities.
Land Purchase Commitments
Generally, the Company’s option and purchase agreements to acquire land parcels do not require the Company to purchase those land parcels, although the Company may, in some cases, forfeit any deposit balance outstanding if and when it terminates an option and purchase agreement. If market conditions are weak, approvals needed to develop the land are uncertain or other factors exist that make the purchase undesirable, the Company may not acquire the land. Whether an option and purchase agreement is legally terminated or not, the Company reviews the amount recorded for the land parcel subject to the option and purchase agreement to determine if the amount is recoverable. While the Company may not formally terminate the option and purchase agreements for those land parcels that it does not expect to acquire, it writes off any non-refundable deposits and costs previously capitalized to such land parcels in the periods that it determines such costs are not recoverable.
Information regarding the Company’s land purchase commitments, as of the date indicated, is provided in the table below (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Aggregate purchase commitments: |  |  |
Unrelated parties | $ | 973,052 |  |  | $ | 742,918 |
Unconsolidated entities that the Company has investments in | 65,805 |  |  | 4,067 |
Total | $ | 1,038,857 |  |  | $ | 746,985 |
Deposits against aggregate purchase commitments | $ | 42,428 |  |  | $ | 42,921 |
Additional cash required to acquire land | 996,429 |  |  | 704,064 |
Total | $ | 1,038,857 |  |  | $ | 746,985 |
Amount of additional cash required to acquire land in accrued expenses | $ | 574 |  |  | $ | 4,328 |

In addition, the Company expects to purchase approximately 545 additional lots from a joint venture in which it has a 50% interest. The purchase price of the lots will be determined at a future date.
At January 31, 2013, the Company also had purchase commitments to acquire land for apartment developments of approximately $93.3 million.
The Company has additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since it does not believe that it will complete the purchase of these land parcels and no additional funds will be required from the Company to terminate these contracts.
21

Surety Bonds and Letters of Credit
At January 31, 2013, the Company had outstanding surety bonds amounting to $375.2 million, primarily related to its obligations to various governmental entities to construct improvements in the Company’s various communities. The Company estimates that $219.4 million of work remains on these improvements. The Company has an additional $61.3 million of surety bonds outstanding that guarantee other obligations of the Company. The Company believes it is not probable that any outstanding bonds will be drawn upon.
At January 31, 2013, the Company had outstanding letters of credit of $78.8 million, including $66.0 million under its credit facility and $12.8 million collateralized by restricted cash. These letters of credit were issued to secure various financial obligations of the Company including insurance policy deductibles and other claims, land deposits and security to complete improvements in communities which it is operating. The Company believes it is not probable that any outstanding letters of credit will be drawn upon.
Backlog
At January 31, 2013, the Company had agreements of sale outstanding to deliver 2,796 homes with an aggregate sales value of $1.86 billion.
Mortgage Commitments
The Company’s mortgage subsidiary provides mortgage financing for a portion of the Company’s home closings. For those home buyers to whom the Company’s mortgage subsidiary provides mortgages, it determines whether the home buyer qualifies for the mortgage he or she is seeking based upon information provided by the home buyer and other sources. For those home buyers that qualify, the Company’s 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, the Company’s 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. The Company believes that these investors have adequate financial resources to honor their commitments to its mortgage subsidiary.
Information regarding the Company’s mortgage commitments, as of the date indicated, is provided in the table below (amounts in thousands):

| January 31, 2013 |  | October 31, 2012
Aggregate mortgage loan commitments: |  |  |
IRLCs | $ | 128,023 |  |  | $ | 111,173 |
Non-IRLCs | 553,392 |  |  | 456,825 |
Total | $ | 681,415 |  |  | $ | 567,998 |
Investor commitments to purchase: |  |  |
IRLCs | $ | 128,023 |  |  | $ | 111,173 |
Mortgage loans receivable | 45,090 |  |  | 80,697 |
Total | $ | 173,113 |  |  | $ | 191,870 |

22

15. Geographic Segments
Revenue and income (loss) before income taxes for each of the Company’s geographic segments, for the periods indicated, were as follows (amounts in thousands):

| Three months ended January 31,
| 2013 |  | 2012
Revenue: |  |  |
North | $ | 92,670 |  |  | $ | 75,580 |
Mid-Atlantic | 132,151 |  |  | 100,799 |
South | 87,185 |  |  | 76,466 |
West | 112,595 |  |  | 69,110 |
Total | $ | 424,601 |  |  | $ | 321,955 |
Income (loss) before income taxes: |  |  |
North | $ | 7,242 |  |  | $ | 1,201 |
Mid-Atlantic | 15,095 |  |  | 10,642 |
South | 2,725 |  |  | (2,077 | )
West | 8,047 |  |  | 5,603 |
Corporate and other | (24,783 | ) |  | (21,777 | )
Total | $ | 8,326 |  |  | $ | (6,408 | )

“Corporate and other” is comprised principally of general corporate expenses such as the offices of the Executive Officers of the Company, and the corporate finance, accounting, audit, tax, human resources, risk management, marketing and legal groups, interest income and income from certain of the Company’s ancillary businesses, Gibraltar and income from a number of the Company's unconsolidated entities.
Total assets for each of the Company’s geographic segments, as of the date indicated, are shown in the table below (amounts in thousands).

| January 31, 2013 |  | October 31, 2012
North | $ | 1,430,831 |  |  | $ | 1,205,900 |
Mid-Atlantic | 1,349,624 |  |  | 1,304,798 |
South | 869,325 |  |  | 821,001 |
West | 959,673 |  |  | 913,699 |
Corporate and other | 1,508,798 |  |  | 1,935,646 |
Total | $ | 6,118,251 |  |  | $ | 6,181,044 |

Corporate and other is comprised principally of cash and cash equivalents, marketable securities, restricted cash, the assets of the Company’s manufacturing facilities and mortgage subsidiary, and its Gibraltar investments.
The Company provided for inventory impairment charges and the expensing of costs that it believed not to be recoverable and write-downs of investments in unconsolidated entities (including the Company's pro-rata share of impairment charges recognized by the unconsolidated entities in which it has an investment) and recoveries of prior charges for the periods indicated, as shown in the table below; the net carrying value of inventory and investments in and advances to unconsolidated entities for each of the Company’s geographic segments, as of the dates indicated, are also shown in the table below (amounts in thousands):
23

| Net Carrying Value |  | Impairments
| At January 31, |  | At October 31, |  | Three months ended January 31,
| 2013 |  | 2012 |  | 2013 |  | 2012
Inventory: |  |  |  |  |  |  |
Land controlled for future communities: |  |  |  |  |  |  |
North | $ | 14,937 |  |  | $ | 13,196 |  |  | $ | 88 |  |  | $ | 24 |
Mid-Atlantic | 26,031 |  |  | 27,249 |  |  | 16 |  |  | 199 |
South | 8,130 |  |  | 7,724 |  |  | 355 |  |  | 555 |
West | 5,423 |  |  | 8,131 |  |  | (450 | ) |  | (1 | )
| 54,521 |  |  | 56,300 |  |  | 9 |  |  | 777 |
Land owned for future communities: |  |  |  |  |  |  |
North | 395,575 |  |  | 226,082 |  |  |  |  |  |  |
Mid-Atlantic | 474,446 |  |  | 431,620 |  |  |  |  |  |  |
South | 163,080 |  |  | 141,644 |  |  |  |  |  | 918 |
West | 220,001 |  |  | 241,027 |  |  |  |  |  |  |
| 1,253,102 |  |  | 1,040,373 |  |  | — |  |  | 918 |
Operating communities: |  |  |  |  |  |  |
North | 855,440 |  |  | 803,085 |  |  | 500 |  |  | 2,265 |
Mid-Atlantic | 739,084 |  |  | 729,739 |  |  |  |  |  |  |
South | 633,822 |  |  | 603,239 |  |  |  |  |  | 4,160 |
West | 619,078 |  |  | 528,451 |  |  | 200 |  |  |  |
| 2,847,424 |  |  | 2,664,514 |  |  | 700 |  |  | 6,425 |
Total | $ | 4,155,047 |  |  | $ | 3,761,187 |  |  | $ | 709 |  |  | $ | 8,120 |
Investments in and advances to unconsolidated entities: |  |  |  |  |  |  |
North | $ | 143,358 |  |  | $ | 142,213 |  |  |  |  |  |  |
South | 31,609 |  |  | 31,252 |  |  |  |  |  |  |
West | 106,368 |  |  | 116,452 |  |  |  |  |  |  |
Corporate | 40,516 |  |  | 40,700 |  |  |  |  |  |  |
Total | $ | 321,851 |  |  | $ | 330,617 |  |  | $ | — |  |  | $ | — |

24

16. Supplemental Disclosure to Statements of Cash Flows
The following are supplemental disclosures to the statements of cash flows for the three months ended January 31, 2013 and 2012 (amounts in thousands):

| 2013 |  | 2012
Cash flow information: |  |  |
Interest capitalized, net of amount paid | $ | 6,801 |  |  | $ | 766 |
Income tax payment |  |  |  | $ | 2,093 |
Income tax refunds | $ | 469 |  |  |  |
Non-cash activity: |  |  |
Cost of inventory acquired through seller financing or municipal bonds, net | $ | 15,998 |  |  | $ | 431 |
Miscellaneous decreases to inventory | $ | (144 | ) |  | $ | (75 | )
Defined benefit plan amendment | $ | 519 |  |  | $ | 310 |
Increase in accrued expenses related to Stock Price-Based RSUs paid | $ | 2,939 |  |  |  |
Increase of investments in unconsolidated entities due to reduction in letters of credit or accrued liabilities | $ | (24 | ) |  | $ | (26 | )
Transfer of inventory to investment in distressed loans and foreclosed real estate |  |  |  | $ | 802 |
Transfer of inventory to investment in unconsolidated entities |  |  |  | $ | 5,793 |
Unrealized gain on derivative held by equity investee | $ | 151 |  |  | $ | 795 |
Miscellaneous increases (decreases) to investments in unconsolidated entities | $ | 86 |  |  | $ | (18 | )
Acquisition of Business: |  |  |
Fair value of assets purchased |  |  |  | $ | 149,959 |
Liabilities assumed |  |  |  | $ | 5,213 |
Cash paid |  |  |  | $ | 144,746 |

17. Revised Supplemental Guarantor Information
A 100% owned subsidiary of the Company, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), has issued the following Senior Notes (amounts in thousands):

|  | Original Amount Issued |  | Amount outstanding at January 31, 2013
| 5.95% Senior Notes due 2013 | $ | 250,000 |  |  | $ | 104,785 |
| 4.95% Senior Notes due 2014 | $ | 300,000 |  |  | $ | 267,960 |
| 5.15% Senior Notes due 2015 | $ | 300,000 |  |  | $ | 300,000 |
| 8.91% Senior Notes due 2017 | $ | 400,000 |  |  | $ | 400,000 |
| 6.75% Senior Notes due 2019 | $ | 250,000 |  |  | $ | 250,000 |
| 5.875% Senior Notes due 2022 | $ | 419,876 |  |  | $ | 419,876 |
| 0.5% Exchangeable Senior Notes due 2032 | $ | 287,500 |  |  | $ | 287,500 |

The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest is guaranteed jointly and severally on a senior basis by the Company and a majority of the Company’s 100% owned home building subsidiaries (the “Guarantor Subsidiaries”). The guarantees are full and unconditional. The Company’s non-home building subsidiaries and several of its home building subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the debt. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other the the financing of other subsidiaries of the Company by lending the proceeds from the above described debt issuances.
As of April 30, 2013, certain Non-Guarantor Subsidiaries became Guarantor Subsidiaries. This change in status has been retrospectively reflected in the accompanying condensed consolidating financial statements.
25

Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management has determined that such disclosures would not be material to investors. Prior to the above described senior debt issuances, the Subsidiary Issuer did not have any operations.
The condensed consolidating financial statements have been revised in order to (i) reflect the transfer of the balance sheet, statements of operations and cash flows of certain non-guarantor subsidiaries to guarantor subsidiaries as a result of such entities becoming guarantor subsidiaries as of April 30, 2013 and the reclassification of guarantor and non-guarantor intercompany advances and equity balances with corresponding offsets in the elimination column and (ii) revise the presentation of cash flows from operating activities, financing activities and investing activities in the condensed consolidating statements of cash flows for the three-month periods ended January 31, 2013 and 2012 to reflect intercompany activity, which had previously been included in cash flow from operating activities, as cash flow from investing activities and cash flow from financing activities.
This revised presentation has no impact or effect on Toll Brothers, Inc.'s condensed consolidated financial statements for any period presented, including the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, or Statements of Cash Flows.
Summary financial information related to the transfer of certain Non-Guarantor Subsidiaries to Guarantor Subsidiaries and the reclassification of guarantor and non-guarantor intercompany advances and equity balances, resulting in a decrease in Non-Guarantor Subsidiaries amounts, is presented below (amounts in thousands).

| January 31, 2013 |  | October 31, 2012
Inventory | $ | 235,490 |  |  | $ | 168,218 |
Investments in and advances to unconsolidated entities | $ | 100,887 |  |  | $ | 110,014 |
Total assets | $ | 341,569 |  |  | $ | 282,638 |
Loans payable | $ | 15,006 |  |  | $ | 30,424 |
Intercompany advances | $ | 306,410 |  |  | $ | 237,298 |
Total liabilities | $ | 333,393 |  |  | $ | 277,738 |
Equity | $ | 8,176 |  |  | $ | 4,900 |

| Three months ended January 31,
| 2013 |  | 2012
Revenue | $ | 10,444 |  |  | $ | — |
Operating income | $ | 3,202 |  |  | $ | 3,393 |
Income (loss) before income taxes | $ | 1,003 |  |  | $ | (395 | )

26

Following are reconciliations of the amounts previously reported to the revised amounts as stated in the following components of the revised condensed consolidating statements of cash flows for the three-month periods ended January 31, 2013 and 2012.
For the three months ended January 31, 2013

| As Previously Reported |  | Reclassification of intercompany activity |  | Change in status from Non-Guarantor to Guarantor |  | As Revised
Cash flow (used in) provided by operating activities: |  |  |  |  |  |  |
Net cash (used in) provided by operating activities |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | (6,029 | ) |  | $ | 30,082 |  |  | $ | — |  |  | $ | 24,053 |
Subsidiary Issuer | $ | 59,068 |  |  | $ | (46,913 | ) |  | $ | — |  |  | $ | 12,155 |
Guarantor Subsidiaries | $ | (421,634 | ) |  | $ | 37,381 |  |  | $ | 6,389 |  |  | $ | (377,864 | )
Non-Guarantor Subsidiaries | $ | 62,773 |  |  | $ | (15,074 | ) |  | $ | (6,389 | ) |  | $ | 41,310 |
Elimination | $ | — |  |  | $ | (5,476 | ) |  | $ | — |  |  | $ | (5,476 | )
Cash flow provided by (used in) investing activities: |  |  |  |  |  |  |
Intercompany advances |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | — |  |  | $ | (30,082 | ) |  | $ | — |  |  | $ | (30,082 | )
Subsidiary Issuer | $ | — |  |  | $ | 46,913 |  |  | $ | — |  |  | $ | 46,913 |
Guarantor Subsidiaries | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Non-Guarantor Subsidiaries | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Elimination | $ | — |  |  | $ | (16,831 | ) |  | $ | — |  |  | $ | (16,831 | )
Net cash provided by (used in) investing activities |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | — |  |  | $ | (30,082 | ) |  | $ | — |  |  | $ | (30,082 | )
Subsidiary Issuer | $ | — |  |  | $ | 46,913 |  |  | $ | — |  |  | $ | 46,913 |
Guarantor Subsidiaries | $ | 13,627 |  |  | $ | — |  |  | $ | 9,104 |  |  | $ | 22,731 |
Non-Guarantor Subsidiaries | $ | (9,802 | ) |  | $ | — |  |  | $ | (9,104 | ) |  | $ | (18,906 | )
Elimination | $ | — |  |  | $ | (16,831 | ) |  | $ | — |  |  | $ | (16,831 | )
Cash flow (used in) provided by financing activities: |  |  |  |  |  |  |
Intercompany advances |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Subsidiary Issuer | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Guarantor Subsidiaries | $ | — |  |  | $ | (37,381 | ) |  | $ | — |  |  | $ | (37,381 | )
Non-Guarantor Subsidiaries | $ | — |  |  | $ | 15,074 |  |  | $ | — |  |  | $ | 15,074 |
Elimination | $ | — |  |  | $ | 22,307 |  |  | $ | — |  |  | $ | 22,307 |
Net cash (used in) provided by financing activities |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | 6,029 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,029 |
Subsidiary Issuer | $ | (59,068 | ) |  | $ | — |  |  | $ | — |  |  | $ | (59,068 | )
Guarantor Subsidiaries | $ | (10,112 | ) |  | $ | (37,381 | ) |  | $ | (15,720 | ) |  | $ | (63,213 | )
Non-Guarantor Subsidiaries | $ | (44,920 | ) |  | $ | 15,074 |  |  | $ | 15,720 |  |  | $ | (14,126 | )
Elimination | $ | — |  |  | $ | 22,307 |  |  | $ | — |  |  | $ | 22,307 |

27

For the three months ended January 31, 2012

| As Previously Reported |  | Reclassification of intercompany activity |  | Change in status from Non-Guarantor to Guarantor |  | As Revised
Cash flow (used in) provided by operating activities: |  |  |  |  |  |  |
Net cash (used in) provided by operating activities |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | (9,270 | ) |  | $ | (19,315 | ) |  | $ | — |  |  | $ | (28,585 | )
Subsidiary Issuer | $ | — |  |  | $ | 4,793 |  |  | $ | — |  |  | $ | 4,793 |
Guarantor Subsidiaries | $ | (276,849 | ) |  | $ | 71,183 |  |  | $ | (140 | ) |  | $ | (205,806 | )
Non-Guarantor Subsidiaries | $ | 124,040 |  |  | $ | (56,624 | ) |  | $ | 140 |  |  | $ | 67,556 |
Elimination | $ | — |  |  | $ | (37 | ) |  | $ | — |  |  | $ | (37 | )
Cash flow (used in) provided by investing activities: |  |  |  |  |  |  |
Intercompany advances |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | — |  |  | $ | 19,315 |  |  | $ | — |  |  | $ | 19,315 |
Subsidiary Issuer | $ | — |  |  | $ | (4,793 | ) |  | $ | — |  |  | $ | (4,793 | )
Guarantor Subsidiaries | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Non-Guarantor Subsidiaries | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Elimination | $ | — |  |  | $ | (14,522 | ) |  | $ | — |  |  | $ | (14,522 | )
Net cash (used in) provided by investing activities |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | — |  |  | $ | 19,315 |  |  | $ | — |  |  | $ | 19,315 |
Subsidiary Issuer | $ | — |  |  | $ | (4,793 | ) |  | $ | — |  |  | $ | (4,793 | )
Guarantor Subsidiaries | $ | (44,015 | ) |  | $ | — |  |  | $ | (880 | ) |  | $ | (44,895 | )
Non-Guarantor Subsidiaries | $ | (95,065 | ) |  | $ | — |  |  | $ | 880 |  |  | $ | (94,185 | )
Elimination | $ | — |  |  | $ | (14,522 | ) |  | $ | — |  |  | $ | (14,522 | )
Cash flow (used in) provided by financing activities: |  |  |  |  |  |  |
Intercompany advances |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Subsidiary Issuer | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Guarantor Subsidiaries | $ | — |  |  | $ | (71,183 | ) |  | $ | — |  |  | $ | (71,183 | )
Non-Guarantor Subsidiaries | $ | — |  |  | $ | 56,624 |  |  | $ | — |  |  | $ | 56,624 |
Elimination | $ | — |  |  | $ | 14,559 |  |  | $ | — |  |  | $ | 14,559 |
Net cash (used in) provided by financing activities |  |  |  |  |  |  |
Toll Brothers, Inc. | $ | 9,270 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,270 |
Subsidiary Issuer | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Guarantor Subsidiaries | $ | (12,520 | ) |  | $ | (71,183 | ) |  | $ | (692 | ) |  | $ | (84,395 | )
Non-Guarantor Subsidiaries | $ | (26,237 | ) |  | $ | 56,624 |  |  | $ | 692 |  |  | $ | 31,079 |
Elimination | $ | — |  |  | $ | 14,559 |  |  | $ | — |  |  | $ | 14,559 |

28

Supplemental consolidating financial information of Toll Brothers, Inc., the Subsidiary Issuer, the Guarantor Subsidiaries, the Non-Guarantor Subsidiaries and the eliminations to arrive at Toll Brothers, Inc. on a consolidated basis is presented below ($ amounts in thousands).
Condensed Consolidating Balance Sheet at January 31, 2013:

| Toll Brothers, Inc. |  | Subsidiary Issuer |  | Guarantor Subsidiaries |  | Non- Guarantor Subsidiaries |  | Eliminations |  | Consolidated
ASSETS |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | — |  |  | — |  |  | 293,678 |  |  | 75,078 |  |  | — |  |  | 368,756 |
Marketable securities |  |  |  |  | 364,585 |  |  | 60,234 |  |  |  |  | 424,819 |
Restricted cash | 15,060 |  |  |  |  | 17,369 |  |  | 1,328 |  |  |  |  | 33,757 |
Inventory |  |  |  |  | 4,095,454 |  |  | 59,593 |  |  |  |  | 4,155,047 |
Property, construction and office equipment, net |  |  |  |  | 109,618 |  |  | 3,259 |  |  |  |  | 112,877 |
Receivables, prepaid expenses and other assets | 146 |  |  | 14,458 |  |  | 79,443 |  |  | 72,895 |  |  | (14,061 | ) |  | 152,881 |
Mortgage loans held for sale |  |  |  |  |  |  | 49,400 |  |  |  |  | 49,400 |
Customer deposits held in escrow |  |  |  |  | 28,455 |  |  | 2,846 |  |  |  |  | 31,301 |
Investments in and advances to unconsolidated entities |  |  |  |  | 165,818 |  |  | 156,033 |  |  |  |  | 321,851 |
Investments in distressed loans |  |  |  |  |  |  |  | 42,832 |  |  |  |  | 42,832 |
Investments in foreclosed real estate |  |  |  |  |  |  |  | 68,764 |  |  |  |  | 68,764 |
Investments in and advances to consolidated entities | 2,847,200 |  |  | 2,045,897 |  |  | 4,740 |  |  |  |  |  | (4,897,837 | ) |  | — |
Deferred tax assets, net of valuation allowances | 355,966 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 355,966 |
| 3,218,372 |  |  | 2,060,355 |  |  | 5,159,160 |  |  | 592,262 |  |  | (4,911,898 | ) |  | 6,118,251 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Loans payable |  |  |  |  | 93,314 |  |  |  |  |  |  |  | 93,314 |
Senior notes |  |  | 1,976,150 |  |  |  |  |  |  | 45,747 |  |  | 2,021,897 |
Mortgage company warehouse loan |  |  |  |  |  |  | 43,464 |  |  |  |  | 43,464 |
Customer deposits |  |  |  |  | 156,758 |  |  |  |  |  |  |  | 156,758 |
Accounts payable |  |  |  |  | 110,764 |  |  | 27 |  |  |  |  | 110,791 |
Accrued expenses |  |  | 37,526 |  |  | 320,441 |  |  | 123,892 |  |  | (14,207 | ) |  | 467,652 |
Advances from consolidated entities |  |  |  |  |  | 1,302,700 |  |  | 408,269 |  |  | (1,710,969 | ) |  | — |
Income taxes payable | 83,265 |  |  |  |  |  |  |  |  |  |  |  | 83,265 |
Total liabilities | 83,265 |  |  | 2,013,676 |  |  | 1,983,977 |  |  | 575,652 |  |  | (1,679,429 | ) |  | 2,977,141 |
Equity: |  |  |  |  |  |  |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |
Common stock | 1,692 |  |  |  |  | 48 |  |  | 3,006 |  |  | (3,054 | ) |  | 1,692 |
Additional paid-in capital | 412,242 |  |  | 49,400 |  |  |  |  |  | 1,734 |  |  | (51,134 | ) |  | 412,242 |
Retained earnings | 2,725,829 |  |  | (2,721 | ) |  | 3,175,277 |  |  | 5,725 |  |  | (3,178,281 | ) |  | 2,725,829 |
Treasury stock, at cost | (38 | ) |  |  |  |  |  |  |  |  |  | (38 | )
Accumulated other comprehensive loss | (4,618 | ) |  |  |  | (142 | ) |  | (43 | ) |  |  |  |  | (4,803 | )
Total stockholders’ equity | 3,135,107 |  |  | 46,679 |  |  | 3,175,183 |  |  | 10,422 |  |  | (3,232,469 | ) |  | 3,134,922 |
Noncontrolling interest |  |  |  |  |  |  | 6,188 |  |  |  |  | 6,188 |
Total equity | 3,135,107 |  |  | 46,679 |  |  | 3,175,183 |  |  | 16,610 |  |  | (3,232,469 | ) |  | 3,141,110 |
| 3,218,372 |  |  | 2,060,355 |  |  | 5,159,160 |  |  | 592,262 |  |  | (4,911,898 | ) |  | 6,118,251 |

29

Condensed Consolidating Balance Sheet at October 31, 2012:

| Toll Brothers, Inc. |  | Subsidiary Issuer |  | Guarantor Subsidiaries |  | Non- Guarantor Subsidiaries |  | Eliminations |  | Consolidated
ASSETS |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  | 712,024 |  |  | 66,800 |  |  |  |  | 778,824 |
Marketable securities |  |  |  |  | 378,858 |  |  | 60,210 |  |  |  |  | 439,068 |
Restricted cash | 28,268 |  |  |  |  | 17,561 |  |  | 1,447 |  |  |  |  | 47,276 |
Inventory |  |  |  |  | 3,695,895 |  |  | 65,292 |  |  |  |  | 3,761,187 |
Property, construction and office equipment, net |  |  |  |  | 106,963 |  |  | 3,008 |  |  |  |  | 109,971 |
Receivables, prepaid expenses and other assets | 134 |  |  | 15,130 |  |  | 76,192 |  |  | 64,543 |  |  | (11,441 | ) |  | 144,558 |
Mortgage loans held for sale |  |  |  |  |  |  | 86,386 |  |  |  |  | 86,386 |
Customer deposits held in escrow |  |  |  |  | 27,312 |  |  | 2,267 |  |  |  |  | 29,579 |
Investments in and advances to unconsolidated entities |  |  |  |  | 180,159 |  |  | 150,458 |  |  |  |  | 330,617 |
Investments in distressed loans |  |  |  |  |  |  |  | 37,169 |  |  |  |  | 37,169 |
Investments in foreclosed real estate |  |  |  |  |  |  |  |  |  | 58,353 |  |  |  |  |  | 58,353 |
Investments in and advances to consolidated entities | 2,816,607 |  |  | 2,092,810 |  |  | 4,740 |  |  |  |  |  | (4,914,157 | ) |  | — |
Deferred tax assets, net of valuation allowances | 358,056 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 358,056 |
| 3,203,065 |  |  | 2,107,940 |  |  | 5,199,704 |  |  | 595,933 |  |  | (4,925,598 | ) |  | 6,181,044 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Loans payable |  |  |  |  | 99,817 |  |  |  |  |  |  |  | 99,817 |
Senior notes |  |  | 2,032,335 |  |  |  |  |  |  | 48,128 |  |  | 2,080,463 |
Mortgage company warehouse loan |  |  |  |  |  |  | 72,664 |  |  |  |  | 72,664 |
Customer deposits |  |  |  |  | 142,919 |  |  | 58 |  |  |  |  | 142,977 |
Accounts payable |  |  |  |  | 99,889 |  |  | 22 |  |  |  |  | 99,911 |
Accrued expenses |  |  | 27,476 |  |  | 344,555 |  |  | 115,922 |  |  | (11,603 | ) |  | 476,350 |
Advances from consolidated entities |  |  |  |  |  | 1,341,189 |  |  | 393,195 |  |  | (1,734,384 | ) |  | — |
Income taxes payable | 80,991 |  |  |  |  |  |  |  |  |  |  |  | 80,991 |
Total liabilities | 80,991 |  |  | 2,059,811 |  |  | 2,028,369 |  |  | 581,861 |  |  | (1,697,859 | ) |  | 3,053,173 |
Equity: |  |  |  |  |  |  |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |
Common stock | 1,687 |  |  |  |  | 48 |  |  | 3,006 |  |  | (3,054 | ) |  | 1,687 |
Additional paid-in capital | 404,418 |  |  | 49,400 |  |  |  |  |  | 1,734 |  |  | (51,134 | ) |  | 404,418 |
Retained earnings | 2,721,397 |  |  | (1,271 | ) |  | 3,171,654 |  |  | 3,168 |  |  | (3,173,551 | ) |  | 2,721,397 |
Treasury stock, at cost | (983 | ) |  |  |  |  |  |  |  |  |  | (983 | )
Accumulated other comprehensive loss | (4,445 | ) |  |  |  | (367 | ) |  | (7 | ) |  |  |  |  | (4,819 | )
Total stockholders’ equity | 3,122,074 |  |  | 48,129 |  |  | 3,171,335 |  |  | 7,901 |  |  | (3,227,739 | ) |  | 3,121,700 |
Noncontrolling interest |  |  |  |  |  |  | 6,171 |  |  |  |  | 6,171 |
Total equity | 3,122,074 |  |  | 48,129 |  |  | 3,171,335 |  |  | 14,072 |  |  | (3,227,739 | ) |  | 3,127,871 |
| 3,203,065 |  |  | 2,107,940 |  |  | 5,199,704 |  |  | 595,933 |  |  | (4,925,598 | ) |  | 6,181,044 |

30

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the three months ended January 31, 2013 ($ in thousands):

| Toll Brothers, Inc. |  | Subsidiary Issuer |  | Guarantor Subsidiaries |  | Non- Guarantor Subsidiaries |  | Eliminations |  | Consolidated
Revenues |  |  |  |  | 430,222 |  |  | 15,046 |  |  | (20,667 | ) |  | 424,601 |
Cost of revenues |  |  |  |  | 348,703 |  |  | 4,992 |  |  | (7,758 | ) |  | 345,937 |
Selling, general and administrative | 16 |  |  | 687 |  |  | 84,508 |  |  | 10,140 |  |  | (17,304 | ) |  | 78,047 |
| 16 |  |  | 687 |  |  | 433,211 |  |  | 15,132 |  |  | (25,062 | ) |  | 423,984 |
Income (loss) from operations | (16 | ) |  | (687 | ) |  | (2,989 | ) |  | (86 | ) |  | 4,395 |  |  | 617 |
Other: |  |  |  |  |  |  |  |  |  |  |
Income from unconsolidated entities |  |  |  |  | 1,096 |  |  | 1,987 |  |  |  |  | 3,083 |
Other income - net | 2,386 |  |  |  |  |  | 6,027 |  |  | 2,494 |  |  | (6,281 | ) |  | 4,626 |
Intercompany interest income |  |  | 29,727 |  |  |  |  |  |  |  |  | (29,727 | ) |  | — |
Interest expense |  |  | (31,422 | ) |  |  |  |  | (191 | ) |  | 31,613 |  |  | — |
Income from subsidiaries | 5,956 |  |  |  |  | 1,822 |  |  |  |  | (7,778 | ) |  | — |
Income (loss) before income taxes | 8,326 |  |  | (2,382 | ) |  | 5,956 |  |  | 4,204 |  |  | (7,778 | ) |  | 8,326 |
Income tax provision (benefit) | 3,894 |  |  | (933 | ) |  | 2,333 |  |  | 1,647 |  |  | (3,047 | ) |  | 3,894 |
Net income (loss) | 4,432 |  |  | (1,449 | ) |  | 3,623 |  |  | 2,557 |  |  | (4,731 | ) |  | 4,432 |
Other comprehensive income (loss) | (173 | ) |  |  |  |  | 225 |  |  | (36 | ) |  |  |  |  | 16 |
Comprehensive income (loss) | 4,259 |  |  | (1,449 | ) |  | 3,848 |  |  | 2,521 |  |  | (4,731 | ) |  | 4,448 |

Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income for the three months ended January 31, 2012 ($ in thousands):

| Toll Brothers, Inc. |  | Subsidiary Issuer |  | Guarantor Subsidiaries |  | Non- Guarantor Subsidiaries |  | Eliminations |  | Consolidated
Revenues |  |  |  |  | 327,692 |  |  | 12,386 |  |  | (18,123 | ) |  | 321,955 |
Cost of revenues |  |  |  |  | 273,050 |  |  | 4,312 |  |  | (5,754 | ) |  | 271,608 |
Selling, general and administrative | 13 |  |  | 478 |  |  | 73,532 |  |  | 9,274 |  |  | (13,660 | ) |  | 69,637 |
| 13 |  |  | 478 |  |  | 346,582 |  |  | 13,586 |  |  | (19,414 | ) |  | 341,245 |
Loss from operations | (13 | ) |  | (478 | ) |  | (18,890 | ) |  | (1,200 | ) |  | 1,291 |  |  | (19,290 | )
Other: |  |  |  |  |  |  |  |  |  |  |
Income from unconsolidated entities |  |  |  |  | 5,229 |  |  | 1,458 |  |  |  |  | 6,687 |
Other income - net | 5 |  |  |  |  |  | 2,982 |  |  | 4,050 |  |  | (842 | ) |  | 6,195 |
Intercompany interest income |  |  | 25,764 |  |  |  |  |  |  |  |  | (25,764 | ) |  | — |
Interest expense |  |  | (25,286 | ) |  |  |  |  | (29 | ) |  | 25,315 |  |  | — |
(Loss) income from subsidiaries | (6,400 | ) |  |  |  | 4,279 |  |  |  |  | 2,121 |  |  | — |
(Loss) income before income taxes | (6,408 | ) |  | — |  |  | (6,400 | ) |  | 4,279 |  |  | 2,121 |  |  | (6,408 | )
Income tax (benefit) provision | (3,622 | ) |  | — |  |  | (3,618 | ) |  | 2,419 |  |  | 1,199 |  |  | (3,622 | )
Net (loss) income | (2,786 | ) |  | — |  |  | (2,782 | ) |  | 1,860 |  |  | 922 |  |  | (2,786 | )
Other comprehensive loss | (109 | ) |  |  |  |  | (552 | ) |  |  |  |  |  |  |  | (661 | )
Comprehensive (loss) income | (2,895 | ) |  | — |  |  | (3,334 | ) |  | 1,860 |  |  | 922 |  |  | (3,447 | )

31

Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2013 ($ in thousands):

| Toll Brothers, Inc. |  | Subsidiary Issuer |  | Guarantor Subsidiaries |  | Non- Guarantor Subsidiaries |  | Eliminations |  | Consolidated
Net cash (used in) provided by operating activities | 24,053 |  |  | 12,155 |  |  | (377,864 | ) |  | 41,310 |  |  | (5,476 | ) |  | (305,822 | )
Cash flow provided by (used in) investing activities: |  |  |  |  |  |  |  |  |  |  |
Purchase of property and equipment - net |  |  |  |  | (5,123 | ) |  | (268 | ) |  |  |  | (5,391 | )
Purchase of marketable securities |  |  |  |  | (25,938 | ) |  | (81 | ) |  |  |  | (26,019 | )
Sale and redemption of marketable securities |  |  |  |  | 38,775 |  |  |  |  |  |  | 38,775 |
Investments in and advances to unconsolidated entities |  |  |  |  | (2,280 | ) |  | (5,334 | ) |  |  |  | (7,614 | )
Return of investments in unconsolidated entities |  |  |  |  | 17,297 |  |  | 14 |  |  |  |  | 17,311 |
Investments in distressed loans and foreclosed real estate |  |  |  |  |  |  |  | (16,252 | ) |  |  |  | (16,252 | )
Return of investments in distressed loans and foreclosed real estate |  |  |  |  |  |  | 3,015 |  |  |  |  | 3,015 |
Intercompany advances | (30,082 | ) |  | 46,913 |  |  |  |  |  |  |  | (16,831 | ) |  | — |
Net cash provided by (used in) investing activities | (30,082 | ) |  | 46,913 |  |  | 22,731 |  |  | (18,906 | ) |  | (16,831 | ) |  | 3,825 |
Cash flow (used in) provided by financing activities: |  |  |  |  |  |  |  |  |  |  |
Proceeds from loans payable |  |  |  |  |  |  | 244,830 |  |  |  |  | 244,830 |
Principal payments of loans payable |  |  |  |  | (25,832 | ) |  | (274,030 | ) |  |  |  | (299,862 | )
Redemption of senior notes |  |  |  | (59,068 | ) |  |  |  |  |  |  |  | (59,068 | )
Proceeds from stock-based benefit plans | 6,108 |  |  |  |  |  |  |  |  |  |  | 6,108 |
Purchase of treasury stock | (79 | ) |  |  |  |  |  |  |  |  |  | (79 | )
Intercompany advances |  |  |  |  |  | (37,381 | ) |  | 15,074 |  |  | 22,307 |  |  | — |
Net cash (used in) provided by financing activities | 6,029 |  |  | (59,068 | ) |  | (63,213 | ) |  | (14,126 | ) |  | 22,307 |  |  | (108,071 | )
Net (decrease) increase in cash and cash equivalents | — |  |  | — |  |  | (418,346 | ) |  | 8,278 |  |  | — |  |  | (410,068 | )
Cash and cash equivalents, beginning of period |  |  |  |  | 712,024 |  |  | 66,800 |  |  |  |  | 778,824 |
Cash and cash equivalents, end of period | — |  |  | — |  |  | 293,678 |  |  | 75,078 |  |  | — |  |  | 368,756 |

Condensed Consolidating Statement of Cash Flows for the three months ended January 31, 2012 ($ in thousands):

| Toll Brothers, Inc. |  | Subsidiary Issuer |  | Guarantor Subsidiaries |  | Non- Guarantor Subsidiaries |  | Eliminations |  | Consolidated
Net cash (used in) provided by operating activities | (28,585 | ) |  | 4,793 |  |  | (205,806 | ) |  | 67,556 |  |  | (37 | ) |  | (162,079 | )
Cash flow (used in) provided by investing activities: |  |  |  |  |  |  |  |  |  |  |
Purchase of property and equipment — net |  |  |  |  | (3,443 | ) |  | 51 |  |  |  |  | (3,392 | )
Sale and redemption of marketable securities |  |  |  |  | 88,217 |  |  |  |  |  |  |  | 88,217 |
Investments in and advances to unconsolidated entities |  |  |  |  | (256 | ) |  | (71,528 | ) |  |  |  | (71,784 | )
Return of investments in unconsolidated entities |  |  |  |  | 15,333 |  |  |  |  |  |  | 15,333 |
Investments in distressed loans and foreclosed real estate |  |  |  |  |  |  |  | (26,410 | ) |  |  |  | (26,410 | )
Return of investments in distressed loans and foreclosed real estate |  |  |  |  |  |  |  | 3,702 |  |  |  |  | 3,702 |
Acquisition of a business |  |  |  |  | (144,746 | ) |  |  |  |  |  | (144,746 | )
Intercompany advances | 19,315 |  |  | (4,793 | ) |  |  |  |  |  | (14,522 | ) |  | — |
Net cash (used in) provided by investing activities | 19,315 |  |  | (4,793 | ) |  | (44,895 | ) |  | (94,185 | ) |  | (14,522 | ) |  | (139,080 | )
Cash flow (used in) provided by financing activities: |  |  |  |  |  |  |  |  |  |  |
Proceeds from loans payable |  |  |  |  |  |  | 199,139 |  |  |  |  | 199,139 |
Principal payments of loans payable |  |  |  |  | (13,212 | ) |  | (224,684 | ) |  |  |  | (237,896 | )
Proceeds from stock-based benefit plans | 9,334 |  |  |  |  |  |  |  |  |  |  | 9,334 |
Purchase of treasury stock | (64 | ) |  |  |  |  |  |  |  |  |  | (64 | )
Intercompany advances |  |  |  |  |  | (71,183 | ) |  | 56,624 |  |  | 14,559 |  |  | — |
Net cash (used in) provided by financing activities | 9,270 |  |  | — |  |  | (84,395 | ) |  | 31,079 |  |  | 14,559 |  |  | (29,487 | )
Net (decrease) increase in cash and cash equivalents | — |  |  | — |  |  | (335,096 | ) |  | 4,450 |  |  | — |  |  | (330,646 | )
Cash and cash equivalents, beginning of period | — |  |  |  |  | 777,012 |  |  | 129,328 |  |  |  |  | 906,340 |
Cash and cash equivalents, end of period | — |  |  | — |  |  | 441,916 |  |  | 133,778 |  |  | — |  |  | 575,694 |

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ITEM 4. 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.
The condensed consolidating financial statements included in Note 17 of the financial statements ("Guarantor Footnote") included in this Form 10-Q/A have been presented in a format that has been adjusted from prior quarterly reports in order to (i) retrospectively reflect the transfer of the balance sheets, statements of operations and cash flows of certain non-guarantor subsidiaries to guarantor subsidiaries as a result of such entities becoming guarantor subsidiaries as of April 30, 2013 and the reclassification of guarantor and non-guarantor intercompany advances and equity balances with corresponding offsets in the elimination column and (ii) revise the presentation of cash flows from operating activities, financing activities and investing activities in the consolidating statements of cash flows for the three-month periods ended January 31, 2013 and 2012 to reflect intercompany activity, which had previously been included in cash flow from operating activities, as cash flow from investing activities and cash flow from financing activities. See Note 17 in the notes to the condensed consolidated financial statements for more detail.
This revised presentation of the Guarantor Footnote has no impact or effect on Toll Brothers, Inc.'s condensed consolidated financial statements for any period presented, including the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income (Loss) or Statements of Cash Flows. The revised presentation of the Guarantor Footnote has not changed or amended our Chief Executive Officer's and Chief Financial Officer's conclusions regarding the effectiveness of our disclosure controls and procedures.
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 (the “Exchange Act”), as of the end of the period covered by this report (the “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 Securities and Exchange Commission'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.
There has not been any change in internal control over financial reporting during our quarter ended January 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 6. EXHIBITS

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.
101.INS* | XBRL Instance Document
101.SCH* | XBRL Schema Document
101.CAL* | XBRL Calculation Linkbase Document
101.LAB* | XBRL Labels Linkbase Document
101.PRE* | XBRL Presentation Linkbase Document
101.DEF* | XBRL Definition Linkbase Document

* | Filed electronically herewith.

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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 thereunto duly authorized.

|  | TOLL BROTHERS, INC.
|  | (Registrant)
Date: | July 16, 2013 | By: |  | /s/ Martin P. Connor
|  |  |  | Martin P. Connor
|  |  |  | Senior Vice President, Treasurer and Chief
|  |  |  | Financial Officer (Principal Financial Officer)
Date: | July 16, 2013 | By: |  | /s/ Joseph R. Sicree
|  |  |  | Joseph R. Sicree
|  |  |  | Senior Vice President and Chief Accounting
|  |  |  | Officer (Principal Accounting Officer)

35