FWP 1 d624432dfwp.htm FREE WRITING PROSPECTUS

Issuer Free Writing Prospectus, dated November 7, 2013

Filed pursuant to Rule 433 under the Securities Act of 1933

Supplementing the Preliminary Prospectus, dated November 7, 2013

Registration Statement No. 333-178130

At 8:30 a.m. Eastern time, on November 7, 2013, Toll Brothers, Inc. used the following slides in a conference call and live webcast to review the announcement of the proposed acquisition of Shapell Industries, Inc. The presentation slides will be available to the public on the Investor Relations portion of the Toll Brothers’ website, www.tollbrothers.com.

Explanatory Note: This free writing prospectus is being filed to include the following legend.

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you any of those documents upon request by contacting Citigroup Global Markets Inc. c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, Telephone: (800) 831-9146, Deutsche Bank Securities Inc. toll free at (800) 503-4611, SunTrust Robinson Humphrey, Inc. at (404) 926-5744, or RBS Securities Inc. at (866) 884-2071.

Toll Brothers, Inc. Announces the Acquisition of Shapell Industries, Inc. NorCal SoCal Shapell Homes Toll Brothers Toll Brothers, Inc. 1 November 7, 2013 NYSE: TOL

Toll Brothers, Inc. 2 NYSE: TOL Disclaimer Statement of Forward-Looking Information Certain information included in this presentation is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, information related to: anticipated operating results; anticipated financial performance, resources and condition; selling communities; home deliveries; average home prices; consumer demand and confidence; contract pricing; business and investment opportunities; market and industry trends; consummation of the proposed transaction with Shapell Industries, Inc., and the anticipated benefits to be realized therefrom, as the transaction is subject to certain closing conditions; consummation of financing transactions; and post-closing asset sales. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports, SEC filings, statements and presentations. These risks and uncertainties include, among others: local, regional, national and international economic conditions; fluctuating consumer demand and confidence; interest and unemployment rates; changes in sales conditions, including home prices, in the markets where we build homes; conditions in our newly entered markets and newly acquired operations; the competitive environment in which we operate; the availability and cost of land for future growth; conditions that could result in inventory write-downs or write-downs associated with investments in unconsolidated entities; the ability to recover our deferred tax assets; the availability of capital; uncertainties in the capital and securities markets; liquidity in the credit markets; changes in tax laws and their interpretation; effects of governmental legislation and regulation; the outcome of various legal proceedings; the availability of adequate insurance at reasonable cost; the impact of construction defect, product liability and home warranty claims, including the adequacy of self-insurance accruals, and the applicability and sufficiency of our insurance coverage; the ability of customers to obtain financing for the purchase of homes; the ability of home buyers to sell their existing homes; the ability of the participants in various joint ventures to honor their commitments; the availability and cost of labor and building and construction materials; the cost of raw materials; construction delays; domestic and international political events; weather conditions; consummation of the proposed transaction with Shapell Industries, Inc., and the anticipated benefits to be realized therefrom, as the transaction is subject to certain closing conditions; consummation of financing transactions; and post-closing asset sales. For a more detailed discussion of these factors, see the information under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. Any or all of the forward-looking statements included in this presentation are not guarantees of future performance and may turn out to be inaccurate. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. The results for the three months and fiscal year ended October 31, 2013 included in this presentation are preliminary and represent the most current information available to management. Our actual results may differ from these preliminary results due to the completion of our financial closing procedures, final adjustments and other developments that may arise between the date of this presentation and the time that financial results for the three months and fiscal year ended October 31, 2013 are finalized.

Toll Brothers, Inc. 3 NYSE: TOL Today’s Agenda I. Toll Brothers’ Recent Performance II. Shapell Overview III. Toll Brothers’ California Operations IV. Transaction Overview and Rationale

I. Toll Brothers’ Recent Performance

Toll Brothers, Inc. 5 NYSE: TOL Toll Brothers – Preliminary Q4 and FY2013 Results Note: Final results to be announced in December 2013. 3 Months Ended October 31, Fiscal Year Ended October 31, ($ in millions), except Avg Prices 2013 2012 % Change 2013 2012 % Change Contracts Units 1,163 1,098 5.9% 5,294 4,159 27.3% Total $839 $684 22.6% $3,634 $2,558 42.1% Avg Price ($ in 000's) $721 $623 15.8% $686 $615 11.6% Backlog Units 3,679 2,569 43.2% 3,679 2,569 43.2% Total $2,630 $1,670 57.5% $2,630 $1,670 57.5% Avg Price ($ in 000's) $715 $650 10.0% $715 $650 10.0% Deliveries Units 1,485 1,088 36.5% 4,184 3,286 27.3% Total $1,045 $633 65.1% $2,674 $1,883 42.0% Avg Price ($ in 000's) $703 $582 20.9% $639 $573 11.6%

II. Shapell Overview

Toll Brothers, Inc. 7 NYSE: TOL Shapell: 55+ Year History of Land Development & Homebuilding Nathan Shapell was born in Poland and during World War II was a prisoner of the infamous Buchenwald and Auschwitz Concentration Camps where most of his family members, including his mother, were executed. After the war he devoted himself to helping thousands of Holocaust survivors by building housing complexes in Germany for war survivors and representing them before American military panels responsible for ruling on requests to immigrate to America. In 1952, Nathan Shapell immigrated to the United States with his wife and daughter. In 1955 Shapell Industries was founded by Mr. Shapell, his brother David and brother-in-law Max Webb as a home construction company that built custom-quality single- family home communities in Southern California. Since that time the Company has remained family-owned and has expanded its expertise to include virtually every aspect of the real estate development process from land acquisition to design, land development and construction. To date, Shapell Homes has delivered over 70,000 homes, built over 7,000 apartments, and owns and manages more than 2.7 million square feet of commercial space. Toll will acquire the single-family residential real property development business of Shapell. Toll will not acquire Shapell’s commercial and multi-family units, which will be retained by the seller as a separate business. Source: Shapell Industries, Inc.. 1969 / 1971 Shapell listed on the Pacific Stock Exchange and NYSE 1950 1960 1970 1980 1990 2000 2010 1955 Shapell Founded Late 1970s Ground breaks on Porter Ranch master-planned community 2008 Shapell’s Alamo Creek wins MAME’s “Master- Planned Community of the Year” Award Over 5,200 lot / land portfolio in desirable coastal Northern and Southern California locations 1984 Shapell returns to privately-held status

Toll Brothers, Inc. 8 NYSE: TOL Shapell: Leading Coastal California Homebuilder and Developer Opportunity Overview San Diego Orinda Alamo Creek Gale Ranch Evergreen Gilroy Plum Canyon Porter Ranch Thousand Oaks Yorba Linda Carlsbad NorCal SoCal Laguna Niguel One of the largest homebuilders in California and the leading builder in several of the state’s premier, high-growth markets 18 active selling communities and land holdings with over 5,200 concentrated lots in 15 locations Well-known luxury brand with a reputation for delivering high-quality, sought-after home product Sizable amount of lots concentrated in a manageable number of communities Geographic Footprint Highly Attractive and Proven Lot Locations in NorCal and SoCal

Toll Brothers, Inc. 9 NYSE: TOL Shapell: Proven Historical Operating Performance Average Delivered Price ($ in ‘000) Closings (Units) Homebuilding Revenues ($ in millions) Source: Shapell Industries, Inc.. Shapell has consistently delivered high- quality homes in the coastal California markets where they build Through the first 8 months of 2013 – their home prices were up 13% and revenues have already exceeded their 2012 levels $354 $252 $272 $274 2010 2011 2012 8/31 YTD 525 357 389 347 2010 2011 2012 8/31 YTD $675 $706 $699 $791 2010 2011 2012 8/31 YTD

Toll Brothers, Inc. 10 NYSE: TOL Shapell: Overview of Lots and Communities Shapell is an active homebuilder in many of the same markets as Toll and would add immediate scale to Toll’s California Division 97.5% of Shapell’s lots have been entitled Source: Shapell Industries, Inc.. 08/31/13 Lot Breakdown By Status (08/31/13) ($ in 000s) City Metro Area Backlog Raw Graded Finished WIP Models Total Lots Remaining Northern California Gale Ranch San Ramon San Francisco 55 -- 1,217 202 100 19 1,538 Alamo Creek Danville San Francisco 40 -- 159 138 46 10 353 Gilroy Gilroy San Fran - Santa Clara -- -- -- 59 -- 1 60 Evergreen San Jose San Fran - Santa Clara 13 -- -- -- 24 -- 24 Orinda Orinda San Francisco -- -- -- 22 3 -- 25 Northern California Subtotal 108 -- 1,376 421 173 30 2,000 Southern California Porter Ranch Porter Ranch Los Angeles 41 904 746 74 47 15 1,786 Plum Canyon Santa Clarita Los Angeles 34 -- 503 100 45 8 656 Yorba Linda Yorba Linda Orange County 22 288 -- 63 31 15 397 Carlsbad Carlsbad San Diego - Carlsbad -- 305 -- -- -- -- 305 Laguna Niguel Laguna Niguel Orange County 14 -- -- 31 16 4 51 Thousand Oaks Thousand Oaks Los Angeles -- -- -- 24 -- -- 24 Southern California Subtotal 111 1,497 1,249 292 139 42 3,219 Total 219 1,497 2,625 713 312 72 5,219

III. Toll Brothers’ California Performance

Toll Brothers, Inc. 12 NYSE: TOL Toll’s Operating Performance in California Toll Brothers has been successfully operating in California since 1994 In two decades, Toll has delivered 7,750 homes generating approximately $6.5 billion in revenue Historically, California represents ~9% of consolidated annual closings Additional investment in California is justified based on Toll’s proven success in the region and market trends Average Delivered Price (Deliveries: $ in ‘000) Lots Owned and Controlled 2,208 1,802 1,236 1,299 1,286 1,000 1,616 1,398 90 90 229 97 174 2,445 2007 2008 2009 2010 2011 2012 2013E Owned Controlled

Toll Brothers, Inc. 13 NYSE: TOL Case Study: Investment in Shapell Lots – Amalfi Hills In 2012, Toll acquired two Shapell communities (Sorrento & Positano) that consisted of 113 Lots in Yorba Linda’s Amalfi Hills (Orange County) for $47mm Yorba Linda is a highly desirable housing market with median household income of $115k and restricted supply Toll Brothers was able to drive pricing from $1.3 mm to approximately $1.6 mm in Sorrento and from $1.5 mm to approximately $2.3 mm at Positano since the acquisition Toll’s pace is almost 3x as fast as originally underwritten 18 months ago The vast improvement in pace and price should result in meaningful gross margin expansion at these two communities Toll Brothers at Amalfi Hills, Yorba Linda, CA

IV. Transaction Overview and Rationale

Toll Brothers, Inc. 15 NYSE: TOL Overview of Transaction Financing Total purchase price of ~$1.60 billion, all cash, for 5,200 lots plus Shapell’s homebuilding operations The purchase will be financed using a combination of equity and debt: Equity will represent 10 – 15% of the purchase price Debt will represent the remaining 85 – 90% and will be comprised of draws on our existing senior unsecured credit facility and other senior unsecured debt We believe that closing will occur by the end of the first calendar quarter of 2014

Toll Brothers, Inc. 16 NYSE: TOL Key Acquisition Considerations We believe +/- $100 million of cash will be on their balance sheet at closing which we will retain plus another $150 million will be returned in the first 6 months from WIP We believe we will return cash of approximately $500 million from land sales within the first 18 months Strong pro forma free cash flow will quickly reduce incremental leverage We underwrote the transaction based on the underlying value of the land We did not assume any inflation in our underwriting We anticipate very limited goodwill and intangibles as a result of the transaction After the transaction is completed, we still anticipate having more than $1 billion of available liquidity Note: Cash flow and asset sale estimates are management projections that are subject to material revision. We believe it will be accretive to earnings in the first year, excluding transaction costs We believe we will receive a significant return of our investment in the first 18 months Premier coastal California land with a complementary luxury brand Very limited goodwill and other intangibles

Toll Brothers, Inc. 17 NYSE: TOL Competitive Advantages From Shapell Acquisition Bolster footprint in key proven coastal California locations that fit extremely well within Toll’s current divisional operations Toll will own or control approximately 9,200 lots in what we believe are the best locations in California – at the corner of “Main St. and Main St.” Complementary luxury brand with a reputation for delivery of high-quality, sought- after home product and communities Build upon recent success of Toll Amalfi Hills land purchase from Shapell California housing market dynamics support incremental investment with many of Shapell’s markets experiencing double digit price appreciation Shapell’s seasoned management team will add capacity to Toll’s already proven local homebuilding and land development expertise Strategic Rationale Financial Rationale We believe the transaction will be accretive to EPS in the first year of the transaction, excluding transaction costs Toll intends to selectively sell off $500 million of land to de-lever the balance sheet, and reduce California concentration We believe the transaction will return significant cash within 18 months of purchase

Toll Brothers, Inc. 18 NYSE: TOL Augments Toll’s Footprint in Premier Coastal California Locations Property City 1 Orinda Orinda, CA 2 Alamo Creek Danville, CA 3 Gale Ranch San Ramon, CA 4 Evergreen San Jose, CA 5 Almaden Valley San Jose, CA 6 Gilroy Gilroy, CA 7 Moorpark / Chevron Moorpark, CA 8 Thousand Oaks Thousand, Oaks, CA 9 Porter Ranch Porter Ranch, CA 10 Plum Canyon Santa Clarita, CA 11 Yorba Linda Yorba Linda, CA Placentia, CA 12 Laguna Niquel, CA Laguna Niquel, CA 13 Carlsbad Carlsbad, CA Property City 1 Schaefer Ranch Dublin, CA 2 The Reserve at Pleasanton Pleasanton, CA 3 Norris Canyon Estates San Ramon, CA 4 Toll Brothers at Amalfi Hills - Positano Collection Yorba Linda, CA 5 Toll Brothers at Baker Ranch Lake Forest, CA 6 Estilo at Rancho Mirage Rancho Mirage, CA Toll Brothers at Alta Palm Springs, CA 8 Toll Brothers at Escala Rancho Mirage, CA 9 Toll Brothers at Arrowood – Greens Oceanside, CA 10 Toll Brothers at StoneBridge San Diego, CA 11 Toll Brothers at The Ridge Brisbane, CA 12 The Estates at Sunnyvale Sunnyvale, CA 13 The Pinnacle at Moorpark Highlands Moorpark, CA NorCal SoCal Toll will own or control approximately in premier coastal California locations Shapell communities are well located in the same coastal Northern and Southern California markets in which Toll operates today Alamo Creek and Gale Ranch are the two main Shapell properties in Northern California and represent approximately 95% of the acquired lots in that region Plum Canyon and Porter Ranch are the two main Shapell properties in Southern California and represent approximately 75% of the acquired lots in that region 7

Toll Brothers, Inc. 19 NYSE: TOL Complementary Luxury Brand Source: Company filings, TOL management and Shapell Homes Offering Memorandum. (1) Pro Forma ADP calculated based on 4Q 2013 Toll closings and 3 mos. ended 8/31/13 Shapell closings. (2) Pro Forma home closings by delivered price based on FY ended 10/31/13 for Toll and the 10 months ended 8/31/2013 for Shapell. Home Closings (2) PF Consolidated Toll and Shapell Total Closings: 4,184 Total Closings: 461 Total PF Closings: 4,645 (1) Pro Forma ADP vs. Peers Most Recent Quarter; Home Deliveries Toll Standalone Shapell Standalone $1,162 $853 $716 $703 $420 $366 $349 $345 $341 $310 $299 $298 $291 $252 TOL CA Shapell PF TOL TOL SPF TMHC NVR MDC MTH PHM KBH RYL LEN DHI

Toll Brothers, Inc. 20 NYSE: TOL Demographics Support Incremental Investment in California Source: California Building Industry Association, U.S. Census Bureau. From 1970 to 2006, California averaged over 177,000 annual housing starts per year During the downturn from 2007 to 2012, starts plummeted 66% to under 61,000 starts per year California needs to build an additional ~700,000 units, or 4-years worth of supply, just to catch up from the downturn and return to its 35+ year average of annual housing starts Annual California Housing Starts from 1970 – 2012 Distribution of Household Income Based on households with greater than $100,000 in income In 2012, California had 3.45 million households with incomes greater than $100,000, nearly a third of all households 13.2% or 1.65 million California households earn more than $150,000, versus 9.5% of households nationwide $100,000 - $124,999, 32% $125,000 - $149,999, 20% $150,000 - $199,999, 23% $200,000 +, 25% 177,765/yr. 60,990/yr. 700,650 1970-2006 2007-2012 6 Year Shortfall 2007-2012

Toll Brothers, Inc. 21 NYSE: TOL Toll’s Conservative Long Term Leverage Strategy Remains in Place Toll’s conservative long term leverage strategy will remain in place after this transaction We believe our liquidity and balance sheet were helpful in winning this bid While our leverage ratios will rise at closing, we believe the return of cash from Shapell’s operations and from our land sales will help our leverage return to historical levels quickly

Toll Brothers, Inc. 22 NYSE: TOL We are very excited, and honored that the Shapell family has chosen Toll Brothers to continue on with their legacy This is a one-of-a-kind coastal California land portfolio that dovetails perfectly with our own footprint We have proven historical success in California markets We believe the transaction will be accretive to income and operating margins, excluding transaction costs, and we assumed no inflation in our underwriting This is the right acquisition at the right time in the right location for Toll Brothers Conclusion