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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☑ |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January 31, 2021
or

☐ |  | 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 001-09186
Toll Brothers, Inc.
(Exact name of registrant as specified in its charter)

Delaware |  |  | 23-2416878
(State or other jurisdiction of incorporation or organization) |  |  | (I.R.S. Employer Identification No.)
1140 Virginia Drive | Fort Washington | Pennsylvania | 19034
(Address of principal executive offices) |  |  | (Zip Code)

(215) 938-8000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.01 per share | TOL | New York Stock Exchange
Guarantee of Toll Brothers Finance Corp. 5.625% Senior Notes due 2024 | TOL/24 | New York Stock Exchange

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 every Interactive Data File required to be submitted 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 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐
Smaller reporting company | ☐ | Emerging growth company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
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, 2021, there were approximately 123,124,000 shares of Common Stock, par value $0.01 per share, outstanding.

TOLL BROTHERS, INC.
TABLE OF CONTENTS

| Page No.
Statement on Forward-Looking Information | 1
PART I. Financial Information |
Item 1. Financial Statements |
Condensed Consolidated Balance Sheets (Unaudited) | 2
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) | 3
Condensed Consolidated Statements of Changes in Equity (Unaudited) | 4
Condensed Consolidated Statements of Cash Flows (Unaudited) | 5
Notes to Condensed Consolidated Financial Statements (Unaudited) | 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 40
Item 4. Controls and Procedures | 40
PART II. Other Information |
Item 1. Legal Proceedings | 41
Item 1A. Risk Factors | 41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 42
Item 6. Exhibits | 43
SIGNATURES | 44

STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). One can identify these statements by the fact that they do not relate to matters of a strictly historical or factual nature and generally discuss or relate to future events. These statements contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should,” “likely”, “will” and other words or phrases of similar meaning. Such statements may include, but are not limited to, information and statements regarding: the impact of the novel coronavirus (“COVID-19”) on the U.S. economy, the markets in which we operate or may operate, and on our business; our strategic objectives and priorities; our land acquisition, land development and capital allocation plans and priorities; market conditions; demand for our homes; anticipated operating results and guidance; home deliveries; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues, including expected labor and material costs; selling, general, and administrative expenses; interest expense; inventory write-downs; home warranty and construction defect claims; unrecognized tax benefits; anticipated tax refunds; sales paces and prices; effects of home buyer cancellations; growth and expansion; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; our ability to acquire or dispose of land and pursue real estate opportunities; our ability to gain approvals and open new communities; our ability to market, construct and sell homes and properties; our ability to deliver homes from backlog; our ability to secure materials and subcontractors; our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; and the outcome of legal proceedings, investigations, and claims.
From time to time, forward-looking statements also are included in other reports on Forms 10-K, 10-Q, and 8-K; in press releases; in presentations; on our website; and in other materials released to the public. Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Therefore, we caution you not to place undue reliance on our forward-looking statements. The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
•the effects of the COVID-19 pandemic, which are highly uncertain, cannot be predicted and will depend upon future developments, including the severity of the pandemic and its duration, the duration of social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability and effectiveness of vaccines, adequate testing and therapeutic treatments and the prevalence of widespread immunity to COVID-19;
•the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar;
•market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;
•the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels;
•access to adequate capital on acceptable terms;
•geographic concentration of our operations;
•levels of competition;
•the price and availability of lumber, other raw materials and labor;
•the effect of U.S. trade policies, including the imposition of tariffs and duties on home building products and retaliatory measures taken by other countries;
•the effects of weather and the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters;
•the risk of loss from acts of war, terrorism or outbreaks of contagious diseases, such as COVID-19;
•federal and state tax policies;
•transportation costs;
•the effect of land use, environmental and other governmental laws and regulations;
•legal proceedings or disputes and the adequacy of reserves;
•risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, indebtedness, financial condition, losses and future prospects;
•the effect of potential loss of key management personnel;
•changes in accounting principles; and
•risks related to unauthorized access to our computer systems, theft of our and our homebuyers’ confidential information or other forms of cyber-attack.
Many of the factors mentioned above, elsewhere in this report or in other reports or public statements made by us will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.
Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
For a further discussion of factors that we believe could cause our actual results to differ materially from expected and historical results, see “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 filed with the SEC and in this report.
When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires. References herein to fiscal year refer to our fiscal years ended or ending October 31.
1

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

| January 31, 2021 |  | October 31, 2020
| (unaudited) |  |
ASSETS |  |  |
Cash and cash equivalents | $ | 949,696 |  |  | $ | 1,370,944 |
Inventory | 7,923,635 |  |  | 7,658,906 |
Property, construction, and office equipment, net | 277,696 |  |  | 316,125 |
Receivables, prepaid expenses, and other assets (1) | 907,775 |  |  | 956,294 |
Mortgage loans held for sale, at fair value | 125,475 |  |  | 231,797 |
Customer deposits held in escrow | 80,889 |  |  | 77,291 |
Investments in unconsolidated entities | 571,632 |  |  | 430,701 |
Income taxes receivable | 27,195 |  |  | 23,675 |
| $ | 10,863,993 |  |  | $ | 11,065,733 |
LIABILITIES AND EQUITY |  |  |
Liabilities |  |  |
Loans payable | $ | 971,504 |  |  | $ | 1,147,955 |
Senior notes | 2,652,162 |  |  | 2,661,718 |
Mortgage company loan facility | 112,619 |  |  | 148,611 |
Customer deposits | 523,584 |  |  | 459,406 |
Accounts payable | 460,113 |  |  | 411,397 |
Accrued expenses | 1,109,129 |  |  | 1,110,196 |
Income taxes payable | 200,390 |  |  | 198,974 |
Total liabilities | 6,029,501 |  |  | 6,138,257 |
Equity |  |  |
Stockholders’ equity |  |  |
Preferred stock, none issued | — |  |  | — |
Common stock, 152,937 shares issued at January 31, 2021 and October 31, 2020 | 1,529 |  |  | 1,529 |
Additional paid-in capital | 708,668 |  |  | 717,272 |
Retained earnings | 5,245,935 |  |  | 5,164,086 |
Treasury stock, at cost — 29,981 and 26,410 shares at January 31, 2021 and October 31, 2020, respectively | (1,162,811) |  |  | (1,000,454) |
Accumulated other comprehensive loss | (6,486) |  |  | (7,198) |
Total stockholders’ equity | 4,786,835 |  |  | 4,875,235 |
Noncontrolling interest | 47,657 |  |  | 52,241 |
Total equity | 4,834,492 |  |  | 4,927,476 |
| $ | 10,863,993 |  |  | $ | 11,065,733 |

(1) As of January 31, 2021 and October 31, 2020, receivables, prepaid expenses, and other assets include $113.3 million and $163.0 million, respectively, of assets related to consolidated variable interest entities ("VIEs"). See Note 4, “Investments in Unconsolidated Entities” for additional information regarding VIEs.
See accompanying notes.
2

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

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Revenues: |  |  |  |  |  |  |
Home sales | $ | 1,410,704 |  |  | $ | 1,297,337 |  |  |  |  |
Land sales and other | 152,672 |  |  | 34,094 |  |  |  |  |
| 1,563,376 |  |  | 1,331,431 |  |  |  |  |
Cost of revenues: |  |  |  |  |  |  |
Home sales | 1,121,793 |  |  | 1,033,122 |  |  |  |  |
Land sales and other | 111,734 |  |  | 32,282 |  |  |  |  |
| 1,233,527 |  |  | 1,065,404 |  |  |  |  |
Selling, general and administrative | 210,739 |  |  | 218,531 |  |  |  |  |
Income from operations | 119,110 |  |  | 47,496 |  |  |  |  |
Other: |  |  |  |  |  |  |
Income from unconsolidated entities | 1,194 |  |  | 12,141 |  |  |  |  |
Other income – net | 7,101 |  |  | 6,295 |  |  |  |  |
Income before income taxes | 127,405 |  |  | 65,932 |  |  |  |  |
Income tax provision | 30,906 |  |  | 9,056 |  |  |  |  |
Net income | $ | 96,499 |  |  | $ | 56,876 |  |  |  |  |
Other comprehensive income, net of tax | 713 |  |  | 278 |  |  |  |  |
Total comprehensive income | $ | 97,212 |  |  | $ | 57,154 |  |  |  |  |
Per share: |  |  |  |  |  |  |
Basic earnings | $ | 0.77 |  |  | $ | 0.41 |  |  |  |  |
Diluted earnings | $ | 0.76 |  |  | $ | 0.41 |  |  |  |  |
Weighted-average number of shares: |  |  |  |  |  |  |
Basic | 126,060 |  |  | 138,145 |  |  |  |  |
Diluted | 127,562 |  |  | 139,889 |  |  |  |  |

See accompanying notes.
3

TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)
For the three months ended January 31, 2021 and 2020:

| Common Stock |  | Addi- tional Paid-in Capital |  | Retained Earnings |  | Treasury Stock |  | Accum- ulated Other Compre- hensive Loss |  | Non-controlling Interest |  | Total Equity
| $ |  | $ |  | $ |  | $ |  | $ |  | $ |  | $
Balance, October 31, 2020 | 1,529 |  |  | 717,272 |  |  | 5,164,086 |  |  | (1,000,454) |  |  | (7,198) |  |  | 52,241 |  |  | 4,927,476 |
Cumulative effect adjustment upon adoption of ASC 326, net of tax |  |  |  |  | (595) |  |  |  |  |  |  |  |  | (595) |
Net income |  |  |  |  | 96,499 |  |  |  |  |  |  |  |  | 96,499 |
Purchase of treasury stock |  |  |  |  |  |  | (179,395) |  |  |  |  |  |  | (179,395) |
Exercise of stock options and stock based compensation issuances |  |  | (21,445) |  |  |  |  | 16,676 |  |  |  |  |  |  | (4,769) |
Employee stock purchase plan issuances |  |  | 7 |  |  |  |  | 362 |  |  |  |  |  |  | 369 |
Stock-based compensation |  |  | 12,834 |  |  |  |  |  |  |  |  |  |  | 12,834 |
Dividends declared |  |  |  |  | (14,055) |  |  |  |  |  |  |  |  | (14,055) |
Other comprehensive income |  |  |  |  |  |  |  |  | 712 |  |  |  |  | 712 |
Loss attributable to non-controlling interest |  |  |  |  |  |  |  |  |  |  | (21) |  |  | (21) |
Capital distributions, net |  |  |  |  |  |  |  |  |  |  | (4,563) |  |  | (4,563) |
Balance, January 31, 2021 | 1,529 |  |  | 708,668 |  |  | 5,245,935 |  |  | (1,162,811) |  |  | (6,486) |  |  | 47,657 |  |  | 4,834,492 |
Balance, October 31, 2019 | 1,529 |  |  | 726,879 |  |  | 4,774,422 |  |  | (425,183) |  |  | (5,831) |  |  | 46,877 |  |  | 5,118,693 |
Net income |  |  |  |  | 56,876 |  |  |  |  |  |  |  |  | 56,876 |
Purchase of treasury stock |  |  |  |  |  |  | (476,024) |  |  |  |  |  |  | (476,024) |
Exercise of stock options and stock based compensation issuances |  |  | (17,112) |  |  |  |  | 21,042 |  |  |  |  |  |  | 3,930 |
Employee stock purchase plan issuances |  |  | (41) |  |  |  |  | 345 |  |  |  |  |  |  | 304 |
Stock-based compensation |  |  | 13,383 |  |  |  |  |  |  |  |  |  |  | 13,383 |
Dividends declared |  |  |  |  | (15,012) |  |  |  |  |  |  |  |  | (15,012) |
Other comprehensive income |  |  |  |  |  |  |  |  | 278 |  |  |  |  | 278 |
Loss attributable to non-controlling interest |  |  |  |  |  |  |  |  |  |  | (1) |  |  | (1) |
Capital contributions |  |  |  |  |  |  |  |  |  |  | 2,653 |  |  | 2,653 |
Balance, January 31, 2020 | 1,529 |  |  | 723,109 |  |  | 4,816,286 |  |  | (879,820) |  |  | (5,553) |  |  | 49,529 |  |  | 4,705,080 |

See accompanying notes.
4

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

| Three months ended January 31,
| 2021 |  | 2020
Cash flow provided by (used in) operating activities: |  |  |
Net income | $ | 96,499 |  |  | $ | 56,876 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
Depreciation and amortization | 16,876 |  |  | 14,667 |
Stock-based compensation | 12,834 |  |  | 13,383 |
Income from unconsolidated entities | (1,194) |  |  | (12,141) |
Distributions of earnings from unconsolidated entities | 1,080 |  |  | 14,703 |
Deferred tax provision | 1,277 |  |  | 751 |
Inventory impairments and write-offs | 1,267 |  |  | 1,031 |
Gain on sale of assets | (38,279) |  |  |
Other | 3,617 |  |  | 1,091 |
Changes in operating assets and liabilities: |  |  |
Inventory | (274,327) |  |  | (303,384) |
Origination of mortgage loans | (376,036) |  |  | (316,852) |
Sale of mortgage loans | 478,982 |  |  | 422,376 |
Receivables, prepaid expenses, and other assets | 34,733 |  |  | (172,153) |
Income taxes receivable | (3,520) |  |  | (36,131) |
Customer deposits – net | 60,580 |  |  | 34,058 |
Accounts payable and accrued expenses | 40,835 |  |  | (84,691) |
Income taxes payable | 99 |  |  |
Net cash provided by (used in) operating activities | 55,323 |  |  | (366,416) |
Cash flow used in investing activities: |  |  |
Purchase of property, construction, and office equipment – net | (14,496) |  |  | (26,839) |
Investments in unconsolidated entities | (112,828) |  |  | (4,909) |
Return of investments in unconsolidated entities | 37,853 |  |  | 28,983 |
Proceeds from the sale of assets | 79,356 |  |  |
Other | 334 |  |  | 649 |
Net cash used in investing activities | (9,781) |  |  | (2,116) |
Cash flow used in financing activities: |  |  |
Proceeds from loans payable | 597,973 |  |  | 702,729 |
Principal payments of loans payable | (847,415) |  |  | (608,481) |
Redemption of senior notes | (10,020) |  |  |
(Payments) proceeds from stock-based benefit plans, net | (4,397) |  |  | 4,235 |
Purchase of treasury stock | (179,395) |  |  | (476,024) |
Dividends paid | (14,285) |  |  | (14,956) |
(Payments) receipts related to noncontrolling interest, net | (4,728) |  |  | 44 |
Net cash used in financing activities | (462,267) |  |  | (392,453) |
Net decrease in cash, cash equivalents, and restricted cash | (416,725) |  |  | (760,985) |
Cash, cash equivalents, and restricted cash, beginning of period | 1,396,604 |  |  | 1,319,643 |
Cash, cash equivalents, and restricted cash, end of period | $ | 979,879 |  |  | $ | 558,658 |

See accompanying notes.
5

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,” “we,” “us,” or “our”), a Delaware corporation, and its majority owned subsidiaries. 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 we have effective control of the entity, in which case we would consolidate the entity.
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, 2020 balance sheet amounts and disclosures included herein have been derived from our October 31, 2020 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, they should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020 (“2020 Form 10-K”). 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 our financial position as of January 31, 2021; the results of our operations and changes in equity for the three-month periods ended January 31, 2021 and 2020; and our cash flows for the three-month periods ended January 31, 2021 and 2020. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. In times of economic disruption when uncertainty regarding future economic conditions is heightened, these estimates and assumptions are subject to greater variability. The Company is currently subject to risks and uncertainties resulting from the COVID-19 pandemic, which continues to impact our results of operations as well as our business operations. As a result, actual results could differ from the estimates and assumptions we make that affect the amounts reported in the condensed consolidated financial statements and accompanying notes, and such differences may be material.
Reclassifications
As discussed in our 2020 Form 10-K, effective October 31, 2020, we reclassified sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense in our Consolidated Statements of Operations and Comprehensive Income. The reclassification aligns the treatment of sales commissions paid to third-party brokers with the treatment of sales commissions paid to in-house salespersons, and is consistent with the manner in which the majority of the Company’s peers treat such commissions. The reclassification had the effect of lowering home sales cost of revenues (and increasing home sales gross margin) and increasing selling, general and administrative expense by the amount of third-party broker commissions, which totaled $26.8 million, or 2.1% of home sales revenues for the three months ended January 31, 2020. All prior period amounts have been reclassified to conform to the 2021 presentation.
Revenue Recognition
Home sales revenues: Revenues and cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer. For the majority of our home closings, our performance obligation to deliver a home is satisfied in less than one year from the date a binding sale agreement is signed. In certain states where we build, we are not able to complete certain outdoor features prior to the closing of the home. To the extent these separate performance obligations are not complete upon the home closing, we defer a portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations. As of January 31, 2021, the home sales revenues and related costs we deferred related to these obligations were immaterial. Our contract liabilities, consisting of deposits received from customers for sold but undelivered homes, totaled $523.6 million and $459.4 million at January 31, 2021 and October 31, 2020, respectively. Of the outstanding customer deposits held as of October 31, 2020, we recognized $94.0 million in home sales revenues during the three months ended January 31, 2021.
Land sales and other revenues: Our revenues from land sales and other generally consist of: (1) lot sales to third-party builders within our master planned communities; (2) land sales to joint ventures in which we retain an interest; (3) bulk sales to third
6

parties of land we have decided no longer meets our development criteria and (4) sales of commercial and retail properties generally located at our City Living buildings. In general, our performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration from the counterparty. For land sale transactions that contain repurchase options, revenues and related costs are not recognized until the repurchase option expires. In addition, when we sell land to a joint venture in which we retain an interest, we do not recognize revenue or gains on the sale to the extent of our retained interest in such joint venture.
Forfeited Customer Deposits: Forfeited customer deposits are recognized in “Home sales revenues” in our Condensed Consolidated Statements of Operations and Comprehensive Income in the period in which we determine that the customer will not complete the purchase of the home and we have the right to retain the deposit.
Sales Incentives: In order to promote sales of our homes, we may offer our home buyers sales incentives. These incentives vary by type and amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sales revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds.
Derivative Instruments and Hedging Activities
Our objective in entering into derivative transactions is to manage our exposure to interest rate movements associated with certain variable rate debt. We recognize derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value.
Since all of our derivatives are designated as cash flow hedges, the entire change in the fair value of the derivative included in the assessment of hedge effectiveness is initially reported in accumulated other comprehensive loss and subsequently reclassified to home sales cost of revenues in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income when the hedged transaction affects earnings. If it is determined that a derivative is not highly effective as a hedge, or if the hedged forecasted transaction is no longer probable of occurring, the amount recognized in Accumulated other comprehensive loss is released to earnings. See Note 12 “Fair Value Disclosures” for more information.
Recent Accounting Pronouncements
In June 2016, the FASB created ASC 326 with the issuance of ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses. ASU 2016-13 became effective for our fiscal year beginning November 1, 2020, and we adopted the new standard under the modified retrospective transition method. As a result of the adoption, we recognized a cumulative effect adjustment, net of tax, of $0.6 million to the opening balance of retained earnings. The adoption of ASU 2016-13 did not have a material impact on our Condensed Consolidated Balance Sheet or Condensed Consolidated Statement of Operations or Comprehensive Income, and there have been no significant changes to our internal controls, processes, or systems as a result of implementing this new standard.
2. Acquisitions
In fiscal 2020, we acquired substantially all of the assets and operations of The Thrive Group, LLC (“Thrive”), an urban infill builder with operations in Atlanta, Georgia and Nashville, Tennessee, and Keller Homes, Inc. (“Keller”), a builder with operations in Colorado Springs, Colorado. The aggregate purchase price for these acquisitions was approximately $79.2 million in cash. The assets acquired were primarily inventory, including approximately 1,100 home sites owned or controlled through land purchase agreements. One of these acquisitions was accounted for as a business combination and neither were material to our results of operations or financial condition.
3. Inventory
Inventory at January 31, 2021 and October 31, 2020 consisted of the following (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Land controlled for future communities | $ | 207,383 |  |  | $ | 223,525 |
Land owned for future communities | 996,420 |  |  | 1,036,843 |
Operating communities | 6,719,832 |  |  | 6,398,538 |
| $ | 7,923,635 |  |  | $ | 7,658,906 |

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 12 months of the
7

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, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on are included in land owned for future communities.
Information regarding the classification, number, and carrying value of these temporarily closed communities, as of the dates indicated, is provided in the table below:

| January 31, 2021 |  | October 31, 2020
Land owned for future communities: |  |  |
Number of communities | 8 |  |  | 10 |
Carrying value (in thousands) | $ | 41,231 |  |  | $ | 68,064 |
Operating communities: |  |  |
Number of communities | 4 |  |  | 4 |
Carrying value (in thousands) | $ | 54,040 |  |  | $ | 32,112 |

The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, for the periods indicated, are shown in the table below (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Land controlled for future communities | $ | 167 |  |  | $ | 1,031 |  |  |  |  |
Operating communities | 1,100 |  |  |  |  |  |  |
| $ | 1,267 |  |  | $ | 1,031 |  |  |  |  |

See Note 12, “Fair Value Disclosures,” for information regarding the number of operating communities that we tested for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and the fair values of those communities, net of impairment charges.
See Note 14, “Commitments and Contingencies,” for information regarding land purchase commitments.
At January 31, 2021, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEs and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our risk is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At January 31, 2021, we determined that 218 land purchase contracts, with an aggregate purchase price of $2.31 billion, on which we had made aggregate deposits totaling $193.0 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2020, we determined that 207 land purchase contracts, with an aggregate purchase price of $2.31 billion, on which we had made aggregate deposits totaling $208.7 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.
Interest incurred, capitalized, and expensed, for the periods indicated, was as follows (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Interest capitalized, beginning of period | $ | 297,975 |  |  | $ | 311,323 |  |  |  |  |
Interest incurred | 41,268 |  |  | 43,650 |  |  |  |  |
Interest expensed to home sales cost of revenues | (33,325) |  |  | (32,774) |  |  |  |  |
Interest expensed to land sales and other cost of revenues | (1,838) |  |  | (567) |  |  |  |  |
Interest capitalized on investments in unconsolidated entities | (1,134) |  |  | (881) |  |  |  |  |
Previously capitalized interest on investments in unconsolidated entities transferred to inventory | 15 |  |  |  |  |  |  |
Interest capitalized, end of period | $ | 302,961 |  |  | $ | 320,751 |  |  |  |  |

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During the three months ended January 31, 2021, we incurred $154,000 of interest related to our interest rate swaps which is included in accumulated other comprehensive loss, of which approximately $10,000 was expensed to home sales cost of revenues. No similar amounts were incurred during the three months ended January 31, 2020.
4. Investments in Unconsolidated Entities
We have investments in various unconsolidated entities and our ownership interest in these investments ranges from 15.8% to 50%. These entities, which are structured as joint ventures, (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); (iii) develop luxury for-rent residential apartments, commercial space, and a hotel (“Rental Property Joint Ventures”); and (iv) invest in distressed loans and real estate and provide financing and land banking to residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).
The table below provides information as of January 31, 2021, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):

| Land Development Joint Ventures |  | Home Building Joint Ventures |  | Rental Property Joint Ventures |  | Gibraltar Joint Ventures |  | Total
Number of unconsolidated entities | 12 |  | 4 |  | 28 |  | 7 |  | 51
Investment in unconsolidated entities | $ | 264,274 |  |  | $ | 26,191 |  |  | $ | 263,280 |  |  | $ | 17,887 |  |  | $ | 571,632 |
Number of unconsolidated entities with funding commitments by the Company | 3 |  | — |  | 8 |  | 1 |  |  | 12
Company’s remaining funding commitment to unconsolidated entities | $ | 33,518 |  |  | $ | — |  |  | $ | 30,491 |  |  | $ | 25,649 |  |  | $ | 89,658 |

Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at January 31, 2021, regarding the debt financing obtained by category ($ amounts in thousands):

| Land Development Joint Ventures |  | Home Building Joint Ventures |  | Rental Property Joint Ventures |  |  |  | Total
Number of joint ventures with debt financing | 4 |  | 1 |  | 25 |  |  |  | 30
Aggregate loan commitments | $ | 158,805 |  |  | $ | 29,786 |  |  | $ | 2,010,544 |  |  |  |  | $ | 2,199,135 |
Amounts borrowed under loan commitments | $ | 107,551 |  |  | $ | 29,786 |  |  | $ | 1,312,325 |  |  |  |  | $ | 1,449,662 |

More specific and/or recent information regarding our investments in, advances to, and future commitments to these entities is provided below.
New Joint Ventures
The table below provides information on joint ventures entered into during our first quarter of fiscal 2021 ($ amounts in thousands):

| Land Development Joint Ventures | Rental Property Joint Ventures
Number of unconsolidated joint ventures entered into during the period | 3 | 2
Investment balance at January 31, 2021 | $ | 139,033 |  | $ | 14,932 |

The table below provides information on joint ventures entered into during our first quarter of fiscal 2020 ($ amounts in thousands):

| Land Development Joint Ventures | Rental Property Joint Ventures
Number of unconsolidated joint ventures entered into during the period | — |  | 2 |
Investment balance at January 31, 2020 | $ | — |  | $ | 24,900 |

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Results of Operations and Intra-entity Transactions
In our first quarters of fiscal 2021 and 2020, certain of our land development and rental property joint ventures sold their underlying assets to unrelated parties or to our joint venture partner. In connection with these sales, we recognized gains of $5.9 million and $10.7 million, respectively, which is included in “Income from unconsolidated entities” in our Condensed Consolidated Statements of Operations and Comprehensive Income.
In our first quarter of fiscal 2021, we recognized other-than-temporary impairment charges on certain Home Building Joint Ventures of $2.1 million. No similar charges were incurred in our first quarter of fiscal 2020.
In our first quarters of fiscal 2021 and 2020, purchases from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, were $4.3 million and $3.5 million, respectively. Our share of income from the lots we acquired was insignificant in each period. Sales to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, were $57.3 million and $26.4 million in our first quarters of fiscal 2021 and 2020, respectively. These amounts are included in “Land sales and other revenue” on our Condensed Consolidated Statement of Operations and Comprehensive Income. Gains related to these sales were immaterial in both periods.
Guarantees
The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we have guaranteed debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity.
In some instances, we and our joint venture partner have provided joint and several guarantees in connection with loans to unconsolidated entities. In these situations, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate share.
We believe that, as of January 31, 2021, in the event we become legally obligated to perform under a guarantee of an obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the venture.
Information with respect to certain of the Company’s unconsolidated entities’ outstanding debt obligations, loan commitments and our guarantees thereon are as follows ($ amounts in thousands):

| January 31, 2021 |  |  |
Loan commitments in the aggregate | $ | 1,858,000 |  |  |  |
Our maximum estimated exposure under repayment and carry cost guarantees if the full amount of the debt obligations were borrowed | $ | 327,500 |  |  |  |
Debt obligations borrowed in the aggregate | $ | 1,108,500 |  |  |  |
Our maximum estimated exposure under repayment and carry cost guarantees of the debt obligations borrowed | $ | 236,700 |  |  |  |
Estimated fair value of guarantees provided by us related to debt and other obligations | $ | 8,800 |  |  |  |
Terms of guarantees | 1 month - 3.8 years |  |  |

The maximum exposure estimates presented above do not take into account any recoveries from the underlying collateral or any reimbursement from our partners. We have not made payments under any of the outstanding guarantees, nor have we been called upon to do so.
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Variable Interest Entities
The table below provide information as of January 31, 2021 and October 31, 2020, regarding our unconsolidated joint venture-related variable interests in VIEs ($ amounts in thousands):

| January 31, 2021 | October 31, 2020
Number of Joint Venture VIEs that the Company is not the Primary Beneficiary (“PB”) | 12 |  | 12 |
Investment balance in unconsolidated Joint Venture VIEs included in Investments in unconsolidated entities in our Consolidated Balance Sheets | $ | 55,300 |  | $ | 63,100 |
Our maximum exposure to losses related to loan guarantees and additional commitments provided to unconsolidated Joint Venture VIEs | $ | 282,700 |  | $ | 122,100 |

Our ownership interest in the above unconsolidated Joint Venture VIEs ranges from 20% to 50%.
The table below provide information as of January 31, 2021 and October 31, 2020, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands):

| Balance Sheet Classification | January 31, 2021 | October 31, 2020
Number of Joint Venture VIEs that the Company is the PB and consolidates |  | 5 |  | 5 |
Carrying value of consolidated VIEs assets | Receivables prepaid expenses, and other assets | $ | 113,300 |  | $ | 163,000 |
Our partners’ interests in consolidated VIEs | Noncontrolling interest | $ | 41,700 |  | $ | 46,200 |

Our ownership interest in the above consolidated Joint Venture VIEs ranges from 50% to 98%.
As shown above, we have concluded we are the PB of certain VIEs due to our controlling financial interest in such ventures as we have the power to direct the activities that most significantly impact the joint ventures’ performance and the obligation to absorb expected losses or receive benefits from the joint ventures. The assets of these VIEs can only be used to settle the obligations of the VIEs. In addition, in certain of the joint ventures, in the event additional contributions are required to be funded to the joint ventures prior to the admission of any additional investor at a future date, we will fund 100% of such contributions, including our partner’s pro rata share, which we expect would be funded through an interest-bearing loan. For other VIEs, we have concluded that we are not the PB because the power to direct the activities of such VIEs that most significantly impact their performance was either shared by us and such VIEs’ other partners or such activities were controlled by our partner. For VIEs where the power to direct significant activities is shared, business plans, budgets, and other major decisions are required to be unanimously approved by all members. Management and other fees earned by us are nominal and believed to be at market rates, and there is no significant economic disproportionality between us and other members.
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Joint Venture Condensed Financial Information
The Condensed Balance Sheets, as of the dates indicated, and the Condensed Statements of Operations, for the periods indicated, for the unconsolidated entities in which we have an investment are included below (in thousands):
Condensed Balance Sheets:

| January 31, 2021 |  | October 31, 2020
Cash and cash equivalents | $ | 98,195 |  |  | $ | 109,478 |
Inventory | 736,821 |  |  | 511,000 |
Loans receivable, net | 66,974 |  |  | 78,576 |
Rental properties | 1,428,734 |  |  | 1,244,911 |
Rental properties under development | 700,218 |  |  | 666,386 |
Real estate owned | 6,818 |  |  | 6,752 |
Other assets | 170,708 |  |  | 169,368 |
Total assets | $ | 3,208,468 |  |  | $ | 2,786,471 |
Debt, net of deferred financing costs | $ | 1,443,949 |  |  | $ | 1,368,065 |
Other liabilities | 211,245 |  |  | 186,817 |
Members’ equity | 1,544,803 |  |  | 1,231,173 |
Noncontrolling interest | 8,471 |  |  | 416 |
Total liabilities and equity | $ | 3,208,468 |  |  | $ | 2,786,471 |
Company’s net investment in unconsolidated entities (1) | $ | 571,632 |  |  | $ | 430,701 |

(1) Differences between our net investment in unconsolidated entities and our underlying equity in the net assets of the entities amounted to $34.3 million and $29.4 million as of January 31, 2021 and October 31, 2020, respectively, and are primarily a result of the deferred recognition of a sale of assets to a joint venture; other than temporary impairments related to our investments in unconsolidated entities; interest capitalized on our investments; the estimated fair value of the guarantees provided to the joint ventures; unrealized gains on our retained joint venture interests; gains recognized from the sale of our ownership interests; and distributions from entities in excess of the carrying amount of our net investment.
Condensed Statements of Operations:

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Revenues | $ | 92,530 |  |  | $ | 133,170 |  |  |  |  |
Cost of revenues (3) | 96,723 |  |  | 95,308 |  |  |  |  |
Other expenses (3) | 35,390 |  |  | 41,183 |  |  |  |  |
Total expenses | 132,113 |  |  | 136,491 |  |  |  |  |
Loss from operations | (39,583) |  |  | (3,321) |  |  |  |  |
Other income | 948 |  |  | 612 |  |  |  |  |
Loss before income taxes | (38,635) |  |  | (2,709) |  |  |  |  |
Income tax (benefit) provision | (1,506) |  |  | 140 |  |  |  |  |
Net loss including earnings from noncontrolling interests | (37,129) |  |  | (2,849) |  |  |  |  |
Less: loss attributable to noncontrolling interest | (174) |  |  | — |  |  |  |  |
Net loss attributable to controlling interest | $ | (37,303) |  |  | $ | (2,849) |  |  |  |  |
Company’s equity in earnings of unconsolidated entities (2) | $ | 1,194 |  |  | $ | 12,141 |  |  |  |  |

(2) Differences between our equity in earnings of unconsolidated entities and the underlying net income (loss) of the entities are primarily a result of distributions from entities in excess of the carrying amount of our investment; other than temporary impairments related to our investments in unconsolidated entities; recoveries of previously incurred charges; unrealized gains on our retained joint venture interests; gains recognized from the sale of our investment to our joint venture partner; and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired.
(3) Effective October 31, 2020, we reclassified sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense. Prior year periods have been reclassified to conform to the 2021 presentation.
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5. Receivables, Prepaid Expenses, and Other Assets
Receivables, prepaid expenses, and other assets at January 31, 2021 and October 31, 2020, consisted of the following (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Expected recoveries from insurance carriers and others | $ | 77,180 |  |  | $ | 79,269 |
Improvement cost receivable | 85,539 |  |  | 86,116 |
Escrow cash held by our captive title company | 28,540 |  |  | 24,712 |
Properties held for rental apartment and commercial development | 504,580 |  |  | 542,796 |
Prepaid expenses | 29,472 |  |  | 28,104 |
Right-of-use asset | 101,495 |  |  | 105,004 |
Other | 80,969 |  |  | 90,293 |
| $ | 907,775 |  |  | $ | 956,294 |

See Note 7, “Accrued Expenses,” for additional information regarding the expected recoveries from insurance carriers and others.
As of January 31, 2021 and October 31, 2020, properties held for rental apartment and commercial development include $113.3 million and $163.0 million, respectively, of assets related to consolidated VIEs. See Note 4, “Investments in Unconsolidated Entities” for additional information regarding VIEs.
6. Loans Payable, Senior Notes, and Mortgage Company Loan Facility
Loans Payable
At January 31, 2021 and October 31, 2020, loans payable consisted of the following (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Senior unsecured term loan | $ | 650,000 |  |  | $ | 800,000 |
Loans payable – other | 324,140 |  |  | 351,257 |
Deferred issuance costs | (2,636) |  |  | (3,302) |
| $ | 971,504 |  |  | $ | 1,147,955 |

Senior Unsecured Term Loan
We have a five-year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks that is scheduled to expire on November 1, 2025. Prior to January 28, 2021, the principal amount outstanding under the Term Loan Facility was $800.0 million. On January 28, 2021, we voluntarily repaid $150.0 million of the Term Loan Facility, and the remaining $650.0 million principal amount outstanding will become due and payable at maturity on November 1, 2025. No prepayment charges were incurred in connection with the repayment. At January 31, 2021, the interest rate on borrowings was 1.18% per annum. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Term Loan Facility. The Term Loan Facility contains substantially the same financial covenants as the Revolving Credit Facility described below.
In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility through October 2025. The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility, which was 1.05% as of January 31, 2021. These interest rate swaps were designated as cash flow hedges.
Revolving Credit Facility
We have a $1.905 billion, five-year senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. On October 31, 2020, we entered into extension letter agreements which extended the maturity date of $1.85 billion of the revolving loans and commitments under the Revolving Credit Facility from November 1, 2024 to November 1, 2025, with the remainder of the revolving loans and commitments continuing to terminate on November 1, 2024. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Revolving Credit Facility.
Under the terms of the Revolving Credit Facility, at January 31, 2021, our maximum leverage ratio, as defined, may not exceed 1.75 to 1.00, and we are required to maintain a minimum tangible net worth, as defined, of no less than approximately $2.10 billion. Under the terms of the Revolving Credit Facility, at January 31, 2021, our leverage ratio was approximately 0.57 to
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1.00, and our tangible net worth was approximately $4.72 billion. Based upon the limitations related to our repurchase of common stock in the Revolving Credit Facility, our ability to repurchase our common stock was limited to approximately $3.66 billion as of January 31, 2021. In addition, under the provisions of the Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $2.62 billion as of January 31, 2021.
At January 31, 2021, we had no outstanding borrowings under the Revolving Credit Facility and had approximately $120.2 million of outstanding letters of credit that were issued under the Revolving Credit Facility. At January 31, 2021, the interest rate on borrowings under the Revolving Credit Facility would have been 1.32% per annum.
Loans Payable – Other
“Loans payable – other” primarily represents purchase money mortgages on properties we acquired that the seller had financed and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure and our manufacturing facilities. At January 31, 2021, the weighted-average interest rate on “Loans payable – other” was 4.35% per annum.
Senior Notes
At January 31, 2021, we had seven issues of senior notes outstanding with an aggregate principal amount of $2.66 billion.
In our first quarter of fiscal 2021, we redeemed, prior to maturity, approximately $10.0 million of the $419.9 million then-outstanding principal amount of 5.875% Senior Notes due February 15, 2022, at par, plus accrued interest.
Subsequent event
In February 2021, we delivered notice to the holders of our outstanding 5.625% Senior Notes due 2024 that we intend to redeem, prior to maturity, all $250.0 million aggregate principal amount of such notes on March 15, 2021. In connection with this redemption, we expect to incur a pre-tax charge of approximately $34.0 million in our second quarter of fiscal 2021.
Mortgage Company Loan Facility
In October 2017, TBI Mortgage® Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, entered into a mortgage warehousing agreement (the “Warehousing Agreement”) with a bank to finance the origination of mortgage loans by TBI Mortgage. The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” In December 2018, the Warehousing Agreement was amended to provide for loan purchases up to $75.0 million, subject to certain sublimits. In addition, the Warehousing Agreement, as amended, provides for an accordion feature under which TBI Mortgage may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $150.0 million for a short period of time. The Warehousing Agreement, as amended, expired on March 4, 2021, and borrowings thereunder bore interest at LIBOR plus 1.90% per annum. At January 31, 2021, the interest rate on the Warehousing Agreement, as amended, was 2.02% per annum. In March 2021, the Warehousing Agreement was amended and restated to extend the expiration date to March 3, 2022 and borrowings thereunder will bear interest at LIBOR (with a LIBOR floor of 0.75%) plus 1.75% per annum.
7. Accrued Expenses
Accrued expenses at January 31, 2021 and October 31, 2020 consisted of the following (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Land, land development, and construction | $ | 219,033 |  |  | $ | 233,783 |
Compensation and employee benefits | 183,795 |  |  | 219,965 |
Escrow liability | 27,047 |  |  | 23,067 |
Self-insurance | 222,809 |  |  | 215,884 |
Warranty | 150,877 |  |  | 157,351 |
Lease liabilities | 121,246 |  |  | 124,756 |
Deferred income | 80,253 |  |  | 34,096 |
Interest | 47,607 |  |  | 38,446 |
Commitments to unconsolidated entities | 11,584 |  |  | 8,928 |
Other | 44,878 |  |  | 53,920 |
| $ | 1,109,129 |  |  | $ | 1,110,196 |

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The table below provides, for the periods indicated, a reconciliation of the changes in our warranty accrual (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Balance, beginning of period | $ | 157,351 |  |  | $ | 201,886 |  |  |  |  |
Additions – homes closed during the period | 7,402 |  |  | 7,024 |  |  |  |  |
Increase in accruals for homes closed in prior years | 1,194 |  |  | 1,218 |  |  |  |  |
Charges incurred | (15,070) |  |  | (21,212) |  |  |  |  |
Balance, end of period | $ | 150,877 |  |  | $ | 188,916 |  |  |  |  |

Since fiscal 2014, we have received water intrusion claims from owners of homes built since 2002 in communities located in Pennsylvania and Delaware (which are in our North region). During fiscal 2021, we continued to receive water intrusion claims from homeowners in this region, mostly related to older homes, and we continue to perform review procedures to assess, among other things, the number of affected homes, whether repairs are likely to be required, and the extent of such repairs.
Our review process, conducted quarterly, includes an analysis of many factors applicable to these communities to determine whether a claim is likely to be received and the estimated costs to resolve any such claim, including: the closing dates of the homes; the number of claims received; our inspection of homes; an estimate of the number of homes we expect to repair; the type and cost of repairs that have been performed in each community; the estimated costs to remediate pending and future claims; the expected recovery from our insurance carriers and suppliers; and the previously recorded amounts related to these claims. We also monitor legal developments relating to these types of claims and review the volume, relative merits and adjudication of claims in litigation or arbitration.
From October 31, 2016 through the second quarter of fiscal 2020, our recorded aggregate estimated repair costs to be incurred for known and unknown water intrusion claims was $324.4 million and our recorded aggregate expected recoveries from insurance carriers and suppliers were approximately $152.6 million. Based on trends in claims experience over several years and lower than anticipated repair costs, in the second fiscal quarter of 2020, we reduced the estimate of the aggregate estimated repair costs to be incurred for known and unknown water intrusion claims by $24.4 million. Because this reduction was associated with periods in which we expect our insurance deductibles and self-insured retentions to be exhausted, we reduced our aggregate expected recoveries from insurance carriers and suppliers by a corresponding $24.4 million. Our recorded remaining estimated repair costs, which reflects a reduction for the aggregate amount expended to resolve claims, were approximately $75.2 million at January 31, 2021 and $79.5 million at October 31, 2020. Our recorded remaining expected recoveries from insurance carriers and suppliers were approximately $67.3 million at January 31, 2021 and $68.4 million at October 31, 2020.
As noted above, our review process includes a number of estimates that are based on assumptions with uncertain outcomes, including, but not limited to, the number of homes to be repaired, the extent of repairs needed, the repair procedures employed, the cost of those repairs, outcomes of litigation or arbitration, and expected recoveries from insurance carriers and suppliers. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that our actual costs and recoveries could differ from those recorded and such differences could be material. In addition, due to such uncertainty, we are unable to estimate the range of any such differences. With respect to our insurance receivables, disputes between home builders and carriers over coverage positions relating to construction defect claims are common, and resolution of claims with carriers involves the exchange of significant amounts of information and frequently involves legal action. While our primary insurance carrier has funded substantially all of the water intrusion claims that we have submitted to it to date, other insurance carriers have disputed coverage for the same claims under policies that are substantially the same. As a result, we entered arbitration proceedings during the third quarter of fiscal 2019 with these carriers. Based on the legal merits that support our pending insurance claims, review by legal counsel, our history of collecting significant amounts funded by our primary carrier under policies that are substantially the same, and the high credit ratings of our insurance carriers, we believe collection of our remaining recorded insurance receivables is probable. However, due to the complexity of the underlying claims and the variability of the other factors described above, it is reasonably possible that our actual insurance recoveries could materially differ from those recorded. Resolution of these known and unknown claims is expected to take several years.
8. Income Taxes
We recorded income tax provisions of $30.9 million and $9.1 million for the three months ended January 31, 2021 and 2020, respectively. The effective tax rate was 24.3% for the three months ended January 31, 2021, compared to 13.7% for the three months ended January 31, 2020. The higher effective tax rate for the three months ended January 31, 2021 was primarily due to a benefit recognized of $6.9 million in the fiscal 2020 period from the retroactive extension of the federal energy efficient home
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credit, which was enacted into law on December 20, 2019. The income tax provisions for all periods included the provision for state income taxes, interest accrued on anticipated tax assessments, excess tax benefits related to stock-based compensation, and other permanent differences.
We are subject to state tax in the jurisdictions in which we operate. We estimate our state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction, and our ability to utilize certain tax-saving strategies. Based on our estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on our tax strategies, we estimate that our state income tax rate for the full fiscal year 2021 will be approximately 6.0%. Our state income tax rate for the full fiscal year 2020 was 5.6%.
At January 31, 2021, we had $6.7 million of gross unrecognized tax benefits, including interest and penalties. If these unrecognized tax benefits were to reverse in the future, they would have a beneficial impact on our effective tax rate at that time. During the next 12 months, it is reasonably possible that our unrecognized tax benefits will change, but we are not able to provide a range of such change. The possible changes would be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken, and the accrual of estimated interest and penalties.
9. Stock-Based Benefit Plans
We grant stock options and various types of restricted stock units to our employees and our non-employee directors. Additionally, we have an employee stock purchase plan that allows employees to purchase our stock at a discount. Information regarding the amount of total stock-based compensation expense and tax benefit recognized by us, for the periods indicated, is as follows (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Total stock-based compensation expense recognized | $ | 12,834 |  |  | $ | 13,383 |  |  |  |  |
Income tax benefit recognized | $ | 3,289 |  |  | $ | 3,407 |  |  |  |  |

At January 31, 2021 and October 31, 2020, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $26.0 million and $15.9 million, respectively.
10. Stock Repurchase Program and Cash Dividends
Stock Repurchase Program
On March 10, 2020, our Board of Directors terminated our existing 20 million share repurchase program, which was authorized in December 2019, and authorized, under a new repurchase program, the repurchase of 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions, in each case for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans. Our Board of Directors did not fix any expiration date for this repurchase program.
The table below provides, for the periods indicated, information about our share repurchase programs:

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Number of shares purchased (in thousands) | 4,027 |  |  | 11,686 |  |  |  |  |
Average price per share | $ | 44.54 |  |  | $ | 40.73 |  |  |  |  |
Remaining authorization at January 31 (in thousands) | 15,957 |  |  | 8,314 |  |  |  |  |

Cash Dividends
During the three months ended January 31, 2021 and 2020, we declared and paid cash dividends of $0.11 per share to our shareholders.
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11. Earnings per Share Information
The table below provides, for the periods indicated, information pertaining to the calculation of earnings per share, common stock equivalents, weighted-average number of antidilutive options, and shares issued (amounts in thousands):

|  | Three months ended January 31, |  |
|  | 2021 |  | 2020 |  |  |  |
Numerator: |  |  |  |  |  |  |  |
Net income as reported |  | $ | 96,499 |  |  | $ | 56,876 |  |  |  |  |
Denominator: |  |  |  |  |  |  |  |
Basic weighted-average shares |  | 126,060 |  |  | 138,145 |  |  |  |  |
Common stock equivalents (1) |  | 1,502 |  |  | 1,744 |  |  |  |  |
Diluted weighted-average shares |  | 127,562 |  |  | 139,889 |  |  |  |  |
Other information: |  |  |  |  |  |  |  |
Weighted-average number of antidilutive options and restricted stock units (2) |  | 589 |  |  | 675 |  |  |  |  |
Shares issued under stock incentive and employee stock purchase plans |  | 456 |  |  | 547 |  |  |  |  |

(1) Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method and shares expected to be issued upon the conversion of restricted stock units under our equity award programs.
(2) Weighted-average number of antidilutive options and restricted stock units are based upon the average closing price of our common stock on the New York Stock Exchange for the period.
12. Fair Value Disclosures
Financial Instruments
The table below provides, as of the dates indicated, a summary of assets/(liabilities) related to our financial instruments, measured at fair value on a recurring basis (amounts in thousands):

|  |  |  | Fair value
Financial Instrument |  | Fair value hierarchy |  | January 31, 2021 |  | October 31, 2020
Residential Mortgage Loans Held for Sale |  | Level 2 |  | $ | 125,475 |  |  | $ | 231,797 |
Forward Loan Commitments — Residential Mortgage Loans Held for Sale |  | Level 2 |  | $ | 52 |  |  | $ | (31) |
Interest Rate Lock Commitments (“IRLCs”) |  | Level 2 |  | $ | (358) |  |  | $ | 628 |
Forward Loan Commitments — IRLCs |  | Level 2 |  | $ | 358 |  |  | $ | (628) |
Interest Rate Swap Contracts |  | Level 2 |  | $ | 652 |  |  | $ | — |

At January 31, 2021 and October 31, 2020, the carrying value of cash and cash equivalents and customer deposits held in escrow approximated fair value.
The fair values of the interest rate swap contracts are determined using widely accepted valuation techniques including discounted cash flow analysis based on the expected cash flows of each swap contract. Although the Company has determined that the significant inputs, such as interest yield curve and discount rate, used to value its interest rate swap contracts fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of January 31, 2021, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our interest rate swap contract positions and have determined that the credit valuation adjustments were not significant to the overall valuation of our interest rate swap contracts. As a result, we have determined that our interest rate swap contracts valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Mortgage Loans Held for Sale
At the end of the reporting period, we determine the fair value of our mortgage loans held for sale and the forward loan commitments we have entered into as a hedge against the interest rate risk of our mortgage loans and commitments using the market approach to determine fair value.
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The table below provides, as of the dates 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, 2021 | $ | 122,879 |  |  | $ | 125,475 |  |  | $ | 2,596 |
At October 31, 2020 | $ | 225,826 |  |  | $ | 231,797 |  |  | $ | 5,971 |

Inventory
We recognize 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 inventory was determined using Level 3 criteria. See Note 1, “Significant Accounting Policies – Inventory,” in our 2020 Form 10-K for information regarding our methodology for determining fair value. The table below summarizes, for the periods indicated, the ranges of certain quantitative unobservable inputs utilized in determining the fair value of impaired operating communities:

Three months ended: | Selling price per unit ($ in thousands) |  | Sales pace per year (in units) |  | Discount rate
Fiscal 2021: |  |  |  |  |
January 31 | 2,003 |  | 2 |  | 14.3%
Fiscal 2020: |  |  |  |  |
January 31 | — |  | — |  | —%
April 30 | 613 - 789 |  | 9 |  | 14.3%
July 31 | — |  | — |  | —%
October 31 | — |  | — |  | —%

In fiscal 2020, we recognized $31.7 million of impairment charges on land owned for future communities relating to nine communities. As of the period the impairment charges were recognized, the estimated fair value of these communities in the aggregate, net of impairment charges, was $21.8 million. For the majority of these communities, the estimated fair values were determined based upon the expected sales price per lot in a community sale to another builder. The range of sales price per lot utilized in determining fair values in fiscal 2020 was approximately $33,000 - $180,000 per lot.
The table below provides, for the periods indicated, the number of operating communities that we reviewed for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and, as of the end of the period indicated, the fair value of those communities, net of impairment charges ($ 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 recognized
Fiscal 2021: |  |  |  |  |  |  |
January 31 | 53 |  | 1 |  | $ | 419 |  |  | $ | 1,100 |
|  |  |  |  |  |  | $ | 1,100 |
Fiscal 2020: |  |  |  |  |  |  |
January 31 | 65 |  | — |  | $ | — |  |  | $ | — |
April 30 | 80 |  | 1 |  | $ | 2,754 |  |  | 300 |
July 31 | 66 |  | — |  | $ | — |  |  | — |
October 31 | 53 |  | 1 |  | $ | 1,113 |  |  | 375 |
|  |  |  |  |  |  | $ | 675 |

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Debt
The table below provides, as of the dates indicated, the book value and estimated fair value of our debt (amounts in thousands):

|  |  | January 31, 2021 |  | October 31, 2020
| Fair value hierarchy |  | Book value |  | Estimated fair value |  | Book value |  | Estimated fair value
Loans payable (1) | Level 2 |  | $ | 974,139 |  |  | $ | 979,592 |  |  | $ | 1,151,257 |  |  | $ | 1,157,315 |
Senior notes (2) | Level 1 |  | 2,659,856 |  |  | 2,914,484 |  |  | 2,669,876 |  |  | 2,888,822 |
Mortgage company loan facility (3) | Level 2 |  | 112,619 |  |  | 112,619 |  |  | 148,611 |  |  | 148,611 |
|  |  | $ | 3,746,614 |  |  | $ | 4,006,695 |  |  | $ | 3,969,744 |  |  | $ | 4,194,748 |

(1) The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.
(2) The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.
(3) We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.
13. Other Income – Net
The table below provides the significant components of other income – net (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Interest income | $ | 1,455 |  |  | $ | 4,902 |  |  |  |  |
Income from ancillary businesses | 6,859 |  |  | 522 |  |  |  |  |
Management fee income from Home Building Joint Ventures, net | 117 |  |  | 1,346 |  |  |  |  |
Other | (1,330) |  |  | (475) |  |  |  |  |
Total other income – net | $ | 7,101 |  |  | $ | 6,295 |  |  |  |  |

Management fee income from home building unconsolidated entities presented above primarily represents fees earned by Toll Brothers City Living® (“City Living”) and traditional home building operations. In addition, in the three-month periods ended January 31, 2021 and 2020, our apartment living operations earned fees from unconsolidated entities of $4.8 million and $3.8 million, respectively. Fees earned by our apartment living operations are included in income from ancillary businesses.
Income from ancillary businesses is generated by our mortgage, title, landscaping, security monitoring, Gibraltar, apartment living and golf course and country club operations. The table below provides, for the periods indicated, revenues and expenses for our ancillary businesses (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Revenues | $ | 29,101 |  |  | $ | 26,410 |  |  |  |  |
Expenses | $ | 22,242 |  |  | $ | 25,888 |  |  |  |  |

14. Commitments and Contingencies
Legal Proceedings
We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.
In March 2018, the Pennsylvania Attorney General informed the Company that it was conducting a review of our construction of stucco homes in Pennsylvania after January 1, 2005 and requested that we voluntarily produce documents and information. The Company has produced documents and information in response to this request and, in addition, has produced requested information and documents in response to a subpoena issued in the second quarter of fiscal 2019. Management cannot at this time predict the eventual scope or outcome of this matter.
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Land Purchase Commitments
Generally, our agreements to acquire land parcels do not require us to purchase those land parcels, although we, in some cases, forfeit any deposit balance outstanding if and when we terminate an agreement. Information regarding our land purchase commitments, as of the dates indicated, is provided in the table below (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Aggregate purchase commitments: |  |  |
Unrelated parties | $ | 2,744,059 |  |  | $ | 2,630,128 |
Unconsolidated entities that the Company has investments in | 8,787 |  |  | 10,097 |
Total | $ | 2,752,846 |  |  | $ | 2,640,225 |
Deposits against aggregate purchase commitments | $ | 207,600 |  |  | $ | 223,571 |
Additional cash required to acquire land | 2,545,246 |  |  | 2,416,654 |
Total | $ | 2,752,846 |  |  | $ | 2,640,225 |
Amount of additional cash required to acquire land included in accrued expenses | $ | 18,092 |  |  | $ | 19,590 |

In addition, we expect to purchase approximately 3,900 additional home sites over a number of years from several joint ventures in which we have interests; the purchase prices of these home sites will be determined at a future date.
At January 31, 2021, we also had similar purchase commitments to acquire land for apartment developments of approximately $121.5 million, of which we had outstanding deposits in the amount of $6.5 million. We intend to develop these projects in joint ventures with unrelated parties in the future.
We have additional land parcels under option that have been excluded from the aggregate purchase commitments since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.
Investments in Unconsolidated Entities
At January 31, 2021, we had investments in a number of unconsolidated entities, were committed to invest or advance additional funds, and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 4, “Investments in Unconsolidated Entities,” for more information regarding our commitments to these entities.
Surety Bonds and Letters of Credit
At January 31, 2021, we had outstanding surety bonds amounting to $800.4 million, primarily related to our obligations to governmental entities to construct improvements in our communities. We estimate that approximately $383.6 million of work remains on these improvements. We have an additional $188.5 million of surety bonds outstanding that guarantee other obligations. We do not believe that it is probable that any outstanding bonds will be drawn upon.
At January 31, 2021, we had outstanding letters of credit of $120.2 million under our Revolving Credit Facility. These letters of credit were issued to secure various financial obligations, including insurance policy deductibles and other claims, land deposits, and security to complete improvements in communities in which we are operating. We do not believe that it is probable that any outstanding letters of credit will be drawn upon.
Backlog
At January 31, 2021, we had agreements of sale outstanding to deliver 8,888 homes with an aggregate sales value of $7.47 billion.
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Mortgage Commitments
Our mortgage subsidiary provides mortgage financing for a portion of our home closings. For those home buyers to whom our mortgage subsidiary provides mortgages, we determine whether the home buyer qualifies for the mortgage based upon information provided by the home buyer and other sources. For those home buyers who qualify, our 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, our 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. We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary.
Mortgage loans are sold to investors with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements. These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower. The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market.
Information regarding our mortgage commitments, as of the dates indicated, is provided in the table below (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Aggregate mortgage loan commitments: |  |  |
IRLCs | $ | 521,022 |  |  | $ | 381,116 |
Non-IRLCs | 2,280,509 |  |  | 1,688,801 |
Total | $ | 2,801,531 |  |  | $ | 2,069,917 |
Investor commitments to purchase: |  |  |
IRLCs | $ | 521,022 |  |  | $ | 381,116 |
Mortgage loans held for sale | 117,309 |  |  | 217,876 |
Total | $ | 638,331 |  |  | $ | 598,992 |

15. Information on Segments
We operate in two segments: traditional home building and urban infill. We build and sell detached and attached homes in luxury residential communities located in affluent suburban markets that cater to move-up, empty-nester, active-adult, affordable luxury, age-qualified, and second-home buyers in the United States (“Traditional Home Building”). We also build and sell homes in urban infill markets through City Living.
Our Traditional Home Building segment operates in the following five geographic segments, wtih current operations in the states listed below:
•The North region: Connecticut, Delaware, Illinois, Massachusetts, Michigan, Pennsylvania, New Jersey and New York;
•The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia;
•The South region: Florida, South Carolina and Texas;
•The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah; and
•The Pacific region: California, Oregon and Washington.
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Revenues and income (loss) before income taxes for each of our segments, for the periods indicated, were as follows (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Revenues: |  |  |  |  |  |  |
Traditional Home Building: |  |  |  |  |  |  |
North | $ | 312,639 |  |  | $ | 254,059 |  |  |  |  |
Mid-Atlantic | 163,984 |  |  | 162,476 |  |  |  |  |
South | 216,884 |  |  | 183,630 |  |  |  |  |
Mountain | 377,977 |  |  | 263,096 |  |  |  |  |
Pacific | 331,158 |  |  | 395,356 |  |  |  |  |
Traditional Home Building | 1,402,642 |  |  | 1,258,617 |  |  |  |  |
City Living | 7,793 |  |  | 39,835 |  |  |  |  |
Corporate and other | 269 |  |  | (1,115) |  |  |  |  |
Total home sales revenues | 1,410,704 |  |  | 1,297,337 |  |  |  |  |
Land sales and other revenues | 152,672 |  |  | 34,094 |  |  |  |  |
Total revenues | $ | 1,563,376 |  |  | $ | 1,331,431 |  |  |  |  |
Income (loss) before income taxes: |  |  |  |  |  |  |
Traditional Home Building: |  |  |  |  |  |  |
North | $ | 18,882 |  |  | $ | 2,531 |  |  |  |  |
Mid-Atlantic | 18,813 |  |  | 6,988 |  |  |  |  |
South | 21,483 |  |  | 9,077 |  |  |  |  |
Mountain | 36,013 |  |  | 17,585 |  |  |  |  |
Pacific | 47,554 |  |  | 63,322 |  |  |  |  |
Traditional Home Building | 142,745 |  |  | 99,503 |  |  |  |  |
City Living (1) | 32,692 |  |  | 9,549 |  |  |  |  |
Corporate and other | (48,032) |  |  | (43,120) |  |  |  |  |
Total | $ | 127,405 |  |  | $ | 65,932 |  |  |  |  |

(1) In the first quarter of fiscal 2021, we sold certain commercial assets associated with our Hoboken, New Jersey condominium projects for $82.4 million which is included in Land sales and other revenues above. City Living recognized net gains of $38.3 million from these sales.
“Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including Gibraltar; and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.
Total assets for each of our segments, as of the dates indicated, are shown in the table below (amounts in thousands):

| January 31, 2021 |  | October 31, 2020
Traditional Home Building: |  |  |
North | $ | 1,415,114 |  |  | $ | 1,427,523 |
Mid-Atlantic | 984,134 |  |  | 918,641 |
South | 1,289,620 |  |  | 1,176,962 |
Mountain | 2,053,597 |  |  | 1,961,348 |
Pacific | 2,343,787 |  |  | 2,226,685 |
Traditional Home Building | 8,086,252 |  |  | 7,711,159 |
City Living | 542,763 |  |  | 539,750 |
Corporate and other | 2,234,978 |  |  | 2,814,824 |
Total | $ | 10,863,993 |  |  | $ | 11,065,733 |

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“Corporate and other” is comprised principally of cash and cash equivalents, restricted cash, deferred tax assets, investments in our Rental Property Joint Ventures, expected recoveries from insurance carriers and suppliers, our Gibraltar investments and operations, manufacturing facilities, and our mortgage and title subsidiaries.
The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable for each of our segments, for the periods indicated, were as follows (amounts in thousands):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  |  |  |
Traditional Home Building: |  |  |  |  |  |  |
North | $ | 35 |  |  | $ | 94 |  |  |  |  |
Mid-Atlantic | 32 |  |  | 1 |  |  |  |  |
South | 25 |  |  | 747 |  |  |  |  |
Mountain | 9 |  |  | 178 |  |  |  |  |
Pacific | 66 |  |  | 11 |  |  |  |  |
Total | 167 |  |  | 1,031 |  |  |  |  |
City Living | 1,100 |  |  | — |  |  |  |  |
| $ | 1,267 |  |  | $ | 1,031 |  |  |  |  |

16. Supplemental Disclosure to Condensed Consolidated Statements of Cash Flows
The following are supplemental disclosures to the Condensed Consolidated Statements of Cash Flows, for the periods indicated (amounts in thousands):

|  | Three months ended January 31,
|  | 2021 |  | 2020
Cash flow information: |  |  |  |
Interest capitalized, net of amount paid |  | $ | 3,733 |  |  | $ | 11,686 |
Income tax payments |  | $ | 34,427 |  |  | $ | 45,752 |
Income tax refunds |  | $ | 1,377 |  |  | $ | 1,315 |
Noncash activity: |  |  |  |
Cost of inventory acquired through seller financing, municipal bonds, or included in accrued expenses, net |  | $ | 40,511 |  |  | $ | 21,827 |
Increase in receivables, prepaid expenses, and other assets and accrued expenses related to the adoption of ASU 2016-02 and other lease activity |  | $ | — |  |  | $ | 108,769 |
Net decrease in other assets and retained earnings due to the adoption of ASC 326 |  | $ | 595 |  |  | $ | — |
Noncontrolling interest |  | $ | 144 |  |  | $ | 2,610 |
Transfer of inventory to investment in unconsolidated entities |  | $ | 49,979 |  |  | $ | — |
Transfer of other assets to investment in unconsolidated entities, net |  | $ | 13,228 |  |  | $ | 24,736 |
Unrealized gain on derivatives |  | $ | 522 |  |  | $ | — |
Increase in investments in unconsolidated entities for change in the fair value of debt guarantees |  | $ | 2,656 |  |  | $ | — |
|  | At January 31,
|  | 2021 |  | 2020
Cash, cash equivalents, and restricted cash |  |  |  |
Cash and cash equivalents |  | $ | 949,696 |  |  | $ | 519,793 |
Restricted cash included in receivables, prepaid expenses, and other assets |  | 30,183 |  |  | 38,865 |
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows |  | $ | 979,879 |  |  | $ | 558,658 |

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)
This discussion and analysis is based on, should be read together with, and is qualified in its entirety by, the accompanying unaudited condensed consolidated financial statements and related notes, as well as our consolidated financial statements, notes thereto, and the related MD&A contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020 (“2020 Form 10-K”). It also should be read in conjunction with the disclosure under “Statement on Forward-Looking Information” and “Risk Factors” in this report and in our 2020 Form 10-K.
Unless otherwise stated in this report, net contracts signed represents a number or value equal to the gross number or value of contracts signed during the relevant period, less the number or value of contracts canceled during the relevant period, which includes contracts that were signed during the relevant period and in prior periods. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”). Backlog conversion represents the percentage of homes delivered in the period from backlog at the beginning of the period (“backlog conversion”).
We operate in two segments: Traditional Home Building and Urban Infill (“City Living”). Within Traditional Home Building, we operate in the following five geographic segments, with current operations in the states listed below:
•The North region: Connecticut, Delaware, Illinois, Massachusetts, Michigan, Pennsylvania, New Jersey and New York;
•The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia;
•The South region: Florida, South Carolina and Texas
•The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah; and
•The Pacific region: California, Oregon and Washington.
OVERVIEW
Our Business Environment and Current Outlook
We continue to experience very strong demand for our homes. This resurgence in demand began for us in mid-May 2020, following the significant drop in sales we experienced in our fiscal second quarter of 2020 as the initial impact of the COVID-19 pandemic was felt in the United States. In the three months ended January 31, 2021, we signed 2,874 net contracts for the sale of Traditional Home Building products and City Living homes with an aggregate value of $2.51 billion, compared to 1,806 net contracts with an aggregate value of $1.49 billion in the three months ended January 31, 2020, representing increases of 59% and 68% in units and dollars, respectively. Our backlog at January 31, 2021 was 8,888 homes and $7.47 billion, up 38% in units and 37% in dollars as compared to our backlog at January 31, 2020. In response to the strong demand and in an effort to drive profitability and manage growth, we continued to raise sales prices in substantially all of our communities during our fiscal first quarter of 2021. We have also continued to limit lot releases in some communities. We expect to continue these pricing and lot-release measures during the remainder of fiscal 2021 assuming the strong demand environment continues.
We attribute the strong demand to a number of factors, including favorable demographic trends, a very tight supply of for-sale homes stemming from a decade of underproduction, low mortgage rates, and a renewed appreciation for the importance of home. We believe these factors will continue to support demand through fiscal 2021.
Although housing market demand has recently been very strong, future economic conditions in the United States and the demand for homes remain uncertain due to continuing pandemic-related disruptions, government directives, actions and economic relief efforts related thereto, and the impact of these actions on the economy, mortgage rates and markets, employment levels, consumer confidence, and financial markets, among other things. The potential effect of these factors on our future operational and financial performance is highly uncertain, unpredictable and outside our control. As a result, our past performance may not be indicative of future results.
Financial and Operational Highlights
In the three-month period ended January 31, 2021, we recognized $1.56 billion of revenues, consisting of $1.41 billion of home sales revenue and $152.7 million of land sales and other revenue, and net income of $96.5 million, as compared to $1.33 billion of revenues, consisting of $1.30 billion of home sales revenue and $34.1 million of land sales and other revenue, and $56.9 million of net income in the three-month period ended January 31, 2020.
In the three-month periods ended January 31, 2021 and 2020, the value of net contracts signed was $2.51 billion (2,874 homes) and $1.49 billion (1,806 homes), respectively.
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The value of our backlog at January 31, 2021 was $7.47 billion (8,888 homes), as compared to our backlog at January 31, 2020 of $5.45 billion (6,461 homes). Our backlog at October 31, 2020 was $6.37 billion (7,791 homes), as compared to backlog of $5.26 billion (6,266 homes) at October 31, 2019.
At January 31, 2021, we had $949.7 million of cash and cash equivalents on hand and approximately $1.785 billion available under our $1.905 billion revolving credit facility (the “Revolving Credit Facility”), substantially all of which matures in November 2025. At January 31, 2021, we had no borrowings and we had approximately $120.2 million of outstanding letters of credit under the Revolving Credit Facility.
At January 31, 2021, we owned or controlled through options approximately 67,700 home sites, as compared to approximately 63,200 at October 31, 2020; and approximately 53,400 at October 31, 2019. Of the approximately 67,700 total home sites that we owned or controlled through options at January 31, 2021, we owned approximately 36,400 and controlled approximately 31,300 through options. Of the 36,400 home sites owned, approximately 17,400 were substantially improved. In addition, as of January 31, 2021, we expect to purchase approximately 3,900 additional home sites over several years from certain of the joint ventures in which we have interests, at prices to be determined.
At January 31, 2021, we were selling from 309 communities, compared to 317 at October 31, 2020; and 333 at October 31, 2019.
At January 31, 2021, our total stockholders’ equity and our debt to total capitalization ratio were $4.79 billion and 0.44 to 1.00, respectively.
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RESULTS OF OPERATIONS – OVERVIEW
The following table compares certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income and other supplemental information for the three months ended January 31, 2021 and 2020 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by segment, see “Segments” in this MD&A.

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | % Change |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales | $ | 1,410.7 |  |  | $ | 1,297.3 |  |  | 9 | % |  |  |  |  |  |
Land sales and other | 152.7 |  |  | 34.1 |  |  |  |  |  |  |  |  |
| 1,563.4 |  |  | 1,331.4 |  |  | 17 | % |  |  |  |  |  |
Cost of revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales (1) | 1,121.8 |  |  | 1,033.1 |  |  | 9 | % |  |  |  |  |  |
Land sales and other | 111.7 |  |  | 32.3 |  |  |  |  |  |  |  |  |
| 1,233.5 |  |  | 1,065.4 |  |  | 16 | % |  |  |  |  |  |
Selling, general and administrative (1) | 210.7 |  |  | 218.5 |  |  | (4) | % |  |  |  |  |  |
Income from operations | 119.1 |  |  | 47.5 |  |  | 151 | % |  |  |  |  |  |
Other |  |  |  |  |  |  |  |  |  |  |
Income from unconsolidated entities | 1.2 |  |  | 12.1 |  |  | (90) | % |  |  |  |  |  |
Other income – net | 7.1 |  |  | 6.3 |  |  | 13 | % |  |  |  |  |  |
Income before income taxes | 127.4 |  |  | 65.9 |  |  | 93 | % |  |  |  |  |  |
Income tax provision | 30.9 |  |  | 9.1 |  |  | 240 | % |  |  |  |  |  |
Net income | $ | 96.5 |  |  | $ | 56.9 |  |  | 70 | % |  |  |  |  |  |
Supplemental information: |  |  |  |  |  |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sales revenues (1) | 79.5 | % |  | 79.6 | % |  |  |  |  |  |  |  |
Land sales and other cost of revenues as a percentage of land sales and other revenues | 73.2 | % |  | 94.7 | % |  |  |  |  |  |  |  |
SG&A as a percentage of home sale revenues (1) | 14.9 | % |  | 16.8 | % |  |  |  |  |  |  |  |
Effective tax rate | 24.3 | % |  | 13.7 | % |  |  |  |  |  |  |  |
Deliveries – units | 1,777 |  |  | 1,611 |  |  | 10 | % |  |  |  |  |  |
Deliveries – average delivered price (in ‘000s) | $ | 793.9 |  |  | $ | 805.3 |  |  | (1) | % |  |  |  |  |  |
Net contracts signed – value | $ | 2,508.0 |  |  | $ | 1,489.3 |  |  | 68 | % |  |  |  |  |  |
Net contracts signed – units | 2,874 |  |  | 1,806 |  |  | 59 | % |  |  |  |  |  |
Net contracts signed – average selling price (in ‘000s) | $ | 872.7 |  |  | $ | 824.6 |  |  | 6 | % |  |  |  |  |  |
| At January 31, |  |  |  |  |  |
| 2021 |  | 2020 |  | % Change |  |  |  |  |  |
Backlog – value | $ | 7,473.5 |  |  | $ | 5,450.2 |  |  | 37 | % |  |  |  |  |  |
Backlog – units | 8,888 |  |  | 6,461 |  |  | 38 | % |  |  |  |  |  |
Backlog – average selling price (in ‘000s) | $ | 840.9 |  |  | $ | 843.6 |  |  | — | % |  |  |  |  |  |

Note: Due to rounding, amounts may not add.
(1) As previously disclosed in our 2020 Form 10-K, effective October 31, 2020, we reclassified sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense in our Consolidated Statements of Operations and Comprehensive Income. The reclassification had the effect of lowering home sales cost of revenues (and increasing home sales gross margin) and increasing selling, general and administrative expense by the amount of third-party broker commissions, which totaled $26.8 million, or 2.1% of home sales revenues for the three months ended January 31, 2020. All prior period amounts have been reclassified.
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Home Sales Revenues and Home Sales Cost of Revenues
The increase in home sale revenues for the three months ended January 31, 2021, as compared to the three months ended January 31, 2020, was attributable to a 10% increase in the number of homes delivered, offset, in part, by a 1% decrease in the average price of homes delivered. The increase in the number of homes delivered in the three months ended January 31, 2021 was primarily due to higher backlog at October 31, 2020, as compared to October 31, 2019, partially offset by lower backlog conversion in the fiscal 2021 period. The decrease in the average delivered home price was mainly due to a shift in the number of homes delivered to less expensive areas and/or products, offset, in part, by sales price increases. The shift in the number of homes delivered to less expensive areas and/or products in the fiscal 2021 period was primarily related to a decrease in the number of homes closed in City Living and California where the average prices are higher than the Company average. The shift was also the result of our strategic expansion into more affordable luxury home and attractive high-growth markets.
The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2021 period, as compared to the fiscal 2020 period, was principally due to higher sales prices, the impact of purchase accounting for homes delivered in the fiscal 2020 period from businesses acquired in fiscal 2019, and lower interest expense as a percentage of home sales revenues. These decreases were partially offset by a shift in the mix of revenues to lower margin products/areas. In the three months ended January 31, 2021 and 2020, interest expense, as a percentage of home sales revenues, was 2.4% and 2.5%, respectively.
Land Sales and Other Revenues and Land Sales and Other Cost of Revenues
Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master planned communities; (3) bulk sales to third parties of land we have decided no longer meets our development criteria; and (4) sales of commercial and retail properties generally located at our City Living buildings. In the first quarter of fiscal 2021, we sold a parking garage and retail space associated with our Hoboken, New Jersey condominium projects for $82.4 million and we recognized gains of $38.3 million.
Selling, General and Administrative Expenses (“SG&A”)
SG&A spending decreased by $7.8 million in the fiscal 2021 period, as compared to the fiscal 2020 period. As a percentage of home sales revenues, SG&A was 14.9% in the fiscal 2021 period, as compared to 16.8% in the fiscal 2020 period. The dollar decrease in SG&A was due primarily to the implementation, commencing in fiscal 2020’s second quarter, of a number of cost reduction initiatives to improve efficiencies and rationalize overhead expenses, including workforce reductions and reduced advertising and broker commission spend. The decrease in SG&A as a percentage of revenues was due to revenues increasing 9% as compared to the fiscal 2020 period, while SG&A spending decreased 4%.
Income (loss) from Unconsolidated Entities
We have investments in joint ventures to (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); (iii) develop luxury for-rent residential apartments, commercial space, and a hotel (“Rental Property Joint Ventures”); and (iv) invest in distressed loans and real estate and provide financing and land banking to residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).
We recognize our proportionate share of the earnings and losses from these various unconsolidated entities. Many of our unconsolidated entities are land development projects, high-rise/mid-rise condominium construction projects, or for-rent apartment and single-family home projects, which do not generate revenues and earnings for a number of years during the development of the properties. Once development is complete for land development projects and high-rise/mid-rise condominium construction projects, these unconsolidated entities will generally, over a relatively short period of time, generate revenues and earnings until all of the assets of the entity are sold. Further, once for-rent apartments and single-family home projects are complete and stabilized, we may monetize a portion of these projects through a recapitalization or a sale of all or a portion of our ownership interest in the joint venture, generally resulting in an income producing event. Because of the long development periods associated with these entities, the earnings recognized from these entities may vary significantly from quarter to quarter and year to year.
Income (loss) from unconsolidated entities decreased by $10.9 million in the three-month period ended January 31, 2021, as compared to the three-month period ended January 31, 2020. This decrease was primarily due to a $10.7 million gain recognized in the fiscal 2020 period from the sale of our investment in our of our Rental Property Joint Ventures to our joint venture partner; a decrease in earnings from a Home Building Joint Venture which completed its operations in the prior year; $2.1 million of other-than temporary impairment charges that we recognized on two of our Home Building Joint Ventures in the fiscal 2021 period; losses recognized by a joint venture that owns a hotel that was adversely impacted by COVID-19; and an increase in losses in several Rental Property Joint Ventures related to the commencement of operations and lease up activities in
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the fiscal 2021 period. These decreases were offset, in part, by a $6.0 million gain recognized in the fiscal 2021 period from an asset sale of commercial property by one of our Land Development Joint Ventures.
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, |  |
| 2021 |  | 2020 |  |  |  |
Income from ancillary businesses | $ | 6,859 |  |  | $ | 522 |  |  |  |  |
Management fee income from Home Building Joint Ventures, net | 117 |  |  | 1,346 |  |  |  |  |
Other | 125 |  |  | 4,427 |  |  |  |  |
Total other income – net | $ | 7,101 |  |  | $ | 6,295 |  |  |  |  |

The increase in income from ancillary businesses in the three months ended January 31, 2021 was mainly due to higher earnings from volume increases and wider spreads in our mortgage operations, as well as lower losses incurred in our apartment living operations.
Management fee income from home building unconsolidated entities presented above includes fees earned by our City Living and Traditional Home Building operations. The decrease in income in the three months ended January 31, 2021 was primarily related to a decrease in unconsolidated entities to which we provide services. In addition to the fees earned by our City Living and Traditional Home Building operations, in the three-month periods ended January 31, 2021 and 2020, our apartment living operations earned fees from unconsolidated entities of $4.8 million and $3.8 million, respectively. Fees earned by our apartment living operations are included in income from ancillary businesses.
The decrease in “other” in the three months ended January 31, 2021 was primarily due to lower interest income.
Income Before Income Taxes
For the three-month period ended January 31, 2021, we reported income before income taxes of $127.4 million, as compared to $65.9 million in the three-month period ended January 31, 2020.
Income Tax Provision
We recognized an income tax provision of $30.9 million in the three-month period ended January 31, 2021. Based upon the federal statutory rate of 21.0% for the fiscal 2021 period, our federal tax provision would have been $26.8 million in the three-month period ended January 31, 2021. The difference between the tax provisions recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes, offset, in part, by excess tax benefits related to stock-based compensation.
In the three-month period ended January 31, 2020, we recognized an income tax provision of $9.1 million. Based upon the federal statutory rate of 21.0% for the fiscal 2020 period, our federal tax provision would have been $13.8 million in the three-month period ended January 31, 2020. The difference between the tax provision recognized and the tax provision based on the federal statutory rate was mainly due to the retroactive extension of the federal energy efficient home credit, which was enacted into law on December 20, 2019 and allowed us to recognize energy credits on homes that settled primarily in fiscal 2018 and 2019, and excess tax benefits related to stock-based compensation. These benefits were offset, in part, by the provision for state income taxes.
Contracts
The aggregate value of net contracts signed increased $1.02 billion, or 68%, in the three-month period ended January 31, 2021, as compared to the three-month period ended January 31, 2020. In the three-month periods ended January 31, 2021 and 2020, the value of net contracts signed was $2.51 billion (2,874 homes) and $1.49 billion (1,806 homes), respectively. The increase in the aggregate value of net contracts signed was due to a 59% increase in the number of net contracts signed and a 6% increase in the average value of each signed contract. The increase in the number of net contracts signed reflects an overall increase in demand in the housing market, including a resurgence in demand for our homes that began at the outset of fiscal 2020’s third quarter. We attribute the strong demand to a number of factors, including favorable demographic trends, a very tight supply of for-sale homes stemming from a decade of underproduction, low mortgage rates, and a renewed appreciation for the importance of home. The increase in average price of net contracts signed was principally due to sale price increases partially offset by mix changes. The change in mix was primarily due to our strategic expansion into more affordable luxury home and attractive high-growth markets, resulting in a shift in the number of contracts signed to less expensive areas and/or products.
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Backlog
The value of our backlog at January 31, 2021 increased 37% to $7.47 billion (8,888 homes), as compared to $5.45 billion (6,461 homes) at January 31, 2020. Our backlog at October 31, 2020 and 2019 was $6.37 billion (7,791 homes) and $5.26 billion (6,266 homes), respectively.
The increase in the value of our backlog at January 31, 2021, as compared to the backlog at January 31, 2020, was primarily attributable to an increase in the value of net contracts signed in the three months ended January 31, 2021, as compared to the three-month period ended January 31, 2020, partially offset by higher home sales revenues in the three months ended January 31, 2021.
For more information regarding results of operations by segment, see “Segments” in this MD&A.
CAPITAL RESOURCES AND LIQUIDITY
Funding for our business has been, and continues to be, provided principally by cash flow from operating activities before inventory additions, unsecured bank borrowings, and the public capital markets.
Fiscal 2021
At January 31, 2021 and October 31, 2020, we had $949.7 million and $1.37 billion, respectively, of cash and cash equivalents. Cash provided by operating activities during the three-month period ended January 31, 2021 was $55.3 million. Cash provided by operating activities during the fiscal 2021 period was primarily related to net income (adjusted for stock-based compensation, inventory impairments, depreciation and amortization, gain on sale of assets and deferred taxes); mortgage loans sold, net of mortgage loans originated; increases in customer deposits – net and accounts payable and accrued expenses; and a decrease in receivables, prepaid expenses, and other assets, offset, in part, by an increase in inventory.
In the three-month period ended January 31, 2021, cash used in investing activities was $9.8 million, which was primarily related to $112.8 million used to fund our investments in unconsolidated entities and $14.5 million used for the purchase of property and equipment. This activity was offset, in part, by $79.4 million of cash received from the sale of commercial properties and $37.9 million of cash received as returns from our investments in unconsolidated entities.
We used $462.3 million of cash in financing activities in the three-month period ended January 31, 2021, primarily for the repurchase of $179.4 million of our common stock; the payment of dividends on our common stock of $14.3 million; payments of $249.4 million of loans payable, net of borrowings; and redemption of senior notes of $10.0 million.
Fiscal 2020
At January 31, 2020 and October 31, 2019, we had $519.8 million and $1.29 billion, respectively, of cash and cash equivalents. Cash used in operating activities during the three-month period ended January 31, 2020 was $366.4 million. Cash used in operating activities during the fiscal 2020 period was primarily related to increases in inventory, receivables, prepaid expenses, and other assets, and income taxes receivable, and a decrease in accounts payable and accrued expenses, offset, in part, by mortgages loans sold, net of mortgage loan originated and net income (adjusted for stock-based compensation, inventory impairments, depreciation and amortization, and deferred taxes) and an increase in customer deposits – net.
In the three-month period ended January 31, 2020, cash used in investing activities was $2.1 million, which was primarily related to $26.8 million used for the purchase of property and equipment and $4.9 million used to fund our investments in unconsolidated entities. This activity was offset, in part, by $29.0 million of cash received as returns from our investments in unconsolidated entities.
We used $392.5 million of cash in financing activities in the three-month period ended January 31, 2020, primarily for the repurchase of $476.0 million of our common stock and the payment of dividends on our common stock of $15.0 million, offset, in part, by borrowings of $94.2 million of loans payable, net of repayments, and proceeds of $4.2 million from our stock-based benefit plans.
Other
In general, our cash flow from operating activities assumes that, as each home is delivered, we will purchase a home site to replace it. Because we own a supply of several years of home sites, we do not need to buy home sites immediately to replace those that we deliver. In addition, we generally do not begin construction of our detached homes until we have a signed contract with the home buyer. Should our business decline, we believe that our inventory levels would decrease as we complete and deliver the homes under construction but do not commence construction of as many new homes, as we complete the improvements on the land we already own, and as we sell and deliver quick delivery homes that are then in inventory, resulting in additional cash flow from operations. In addition, we might delay, decrease, or curtail our acquisition of additional land,
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which would further reduce our inventory levels and cash needs. At January 31, 2021, we owned or controlled through options approximately 67,700 home sites, of which we owned approximately 36,400. Of our owned home sites at January 31, 2021, significant improvements were completed on approximately 17,400 of them.
At January 31, 2021, the aggregate purchase price of land parcels under option and purchase agreements was approximately $2.75 billion (including $8.8 million of land to be acquired from joint ventures in which we have invested). Of the $2.75 billion of land purchase commitments, we paid or deposited $207.6 million, and, if we acquire all of these land parcels, we will be required to pay an additional $2.55 billion. The purchases of these land parcels are scheduled to occur over the next several years. In addition, we expect to purchase approximately 3,900 additional home sites over a number of years from several joint ventures in which we have interests. We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.
During the past several years, we have made a number of investments in unconsolidated entities related to the acquisition and development of land for future home sites, the construction of luxury for-sale condominiums, and for-rent apartments. Our investment activities related to investments in, and distributions of investments from, unconsolidated entities are contained in the Condensed Consolidated Statements of Cash Flows under “Net cash used in investing activities.” At January 31, 2021, we had investments in these entities of $571.6 million, and were committed to invest or advance up to an additional $89.7 million to these entities if they require additional funding.At January 31, 2021, we had purchase commitments to acquire land for apartment developments of approximately $121.5 million, of which we had outstanding deposits in the amount of $6.5 million. We generally intend to develop these apartment projects in joint ventures with unrelated parties in the future.
We have a $1.905 billion, unsecured, five-year revolving credit facility (the “Revolving Credit Facility”) substantially all of which matures in November 2025. Under the terms of the Revolving Credit Facility, our maximum leverage ratio (as defined in the credit agreement) may not exceed 1.75 to 1.00, and we are required to maintain a minimum tangible net worth (as defined in the credit agreement) of no less than approximately $2.10 billion. Under the terms of the Revolving Credit Facility, at January 31, 2021, our leverage ratio was approximately 0.57 to 1.00, and our tangible net worth was approximately $4.72 billion. At January 31, 2021, we had no outstanding borrowings under our Revolving Credit Facility and had outstanding letters of credit thereunder of approximately $120.2 million.
We have a five-year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks. Prior to January 28, 2021, the principal amount outstanding under the Term Loan Facility was $800 million. On January 28, 2021 we voluntarily repaid $150.0 million of the Term Loan Facility, and the remaining $650.0 million principal amount outstanding will become due and payable at maturity on November 1, 2025. No prepayment charges were incurred in connection with the repayment.The Term Loan Facility contains substantially the same financial covenants as our Revolving Credit Facility, as described above.
In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility through October 2025. The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility, which was 1.05% as of January 31, 2021. These interest rate swaps were designated as cash flow hedges.
On February 12, 2021, we delivered a notice of optional redemption (the “Redemption Notice”) to the holders of our outstanding 5.625% Senior Notes due 2024 (the “2024 Notes”), pursuant to which the we will redeem all $250.0 million aggregate principal amount of outstanding 2024 Notes. The 2024 Notes will be redeemed on March 15, 2021 (the “Redemption Date”) at a redemption price in cash of the greater of (a) 100% of the principal amount of the Notes being redeemed and (b) the present value of the Remaining Scheduled Payments (as defined in the Indenture) on the 2024 Notes being redeemed on the Redemption Date, discounted to the Redemption Date, on a semiannual basis, at the Treasury Rate (as defined in the Indenture) plus 50 basis points. Accrued and unpaid interest to, but excluding, March 15, 2021 will be paid in accordance with the terms of the Indenture and the Notes. In connection with the redemption, the Company expects to incur a pre-tax charge of approximately $34.0 million in its second fiscal quarter for the early extinguishment of debt.
Under the provisions of the Revolving Credit Facility and Term Loan Facility, our ability to repurchase our common stock was limited to approximately $3.66 billion and our ability to pay cash dividends was limited to approximately $2.62 billion as of January 31, 2021.
While there is significant uncertainty as to general economic conditions for the remainder of fiscal 2021 and potentially beyond, we continue to believe that we will have adequate resources and sufficient access to the capital markets and external financing sources to continue to fund our current operations and meet our contractual obligations. However, due to the inherent difficulty in making long-term predictions about the economy and the capital markets for home builders, which has been exacerbated by COVID-19, we cannot be certain that we will be able to replace existing financing arrangements when they mature or find sources of additional financing in the future.
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OFF-BALANCE SHEET ARRANGEMENTS
We also operate through a number of joint ventures. We earn construction and management fee income from many of these joint ventures. Our investments in these entities are generally accounted for using the equity method of accounting. We are a party to several joint ventures with unrelated parties to develop and sell land that is owned by the joint ventures. We recognize our proportionate share of the earnings from the sale of home sites to other builders, including our joint venture partners. We do not recognize earnings from the home sites we purchase from these ventures at the time of our purchase; instead, our cost basis in the home sites is reduced by our share of the earnings realized by the joint venture from those home sites.
At January 31, 2021, we had investments in these entities of $571.6 million and were committed to invest or advance up to an additional $89.7 million to these entities if they require additional funding. At January 31, 2021, we had agreed to terms for the acquisition of 112 home sites from one joint venture for an estimated aggregate purchase price of $8.8 million. In addition, we expect to purchase approximately 3,900 additional home sites over a number of years from several joint ventures in which we have interests; the purchase price of these home sites will be determined at a future date.
The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we have guaranteed debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity.
In some instances, we and our joint venture partner have provided joint and several guarantees in connection with loans to unconsolidated entities. In these situations, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under the reimbursement agreement, we may be liable for more than our proportionate share.
We believe that, as of January 31, 2021, in the event we become legally obligated to perform under a guarantee of the obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the entity. At January 31, 2021, we had guaranteed the debt of certain unconsolidated entities have loan commitments aggregating $1.86 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $327.5 million to be our maximum exposure related to repayment and carry cost guarantees. At January 31, 2021, the unconsolidated entities had borrowed an aggregate of $1,108.5 million, of which we estimate $236.7 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 3.8 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners.
For more information regarding these joint ventures, see Note 4, “Investments in Unconsolidated Entities,” in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.
CRITICAL ACCOUNTING POLICIES
As disclosed in our 2020 Form 10-K, our most critical accounting policies relate to inventory, revenue and cost recognition, and warranty and self-insurance. Since October 31, 2020, there have been no material changes to those critical accounting policies.
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SUPPLEMENTAL GUARANTOR INFORMATION
At January 31, 2021, our 100%-owned subsidiary, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), had issued and outstanding $2.66 billion aggregate principal amount of senior notes maturing on various dates between February 15, 2022 and November 1, 2029 (the “Senior Notes”). For further information regarding the Senior Notes, see Note 6 to our Consolidated Condensed Financial Statements under the caption “Senior Notes.”
The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest are guaranteed jointly and severally on a senior basis by us and substantially all of our 100%-owned home building subsidiaries (the “Guarantor Subsidiaries” and, together with us, the “Guarantors”). The guarantees are full and unconditional, and the Subsidiary Issuer and each of the Guarantor Subsidiaries are consolidated subsidiaries of Toll Brothers, Inc. Our non-home building subsidiaries and several of our home building subsidiaries (together, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other than the financing of our other subsidiaries by lending the proceeds of its public debt offerings, including the Senior Notes. Our home building operations are conducted almost entirely through the Guarantor Subsidiaries. Accordingly, the Subsidiary Issuer’s cash flow and ability to service the Senior Notes is dependent upon the earnings of the Company’s subsidiaries and the distribution of those earnings to the Subsidiary Issuer, whether by dividends, loans or otherwise. Holders of the Senior Notes have a direct claim only against the Subsidiary Issuer and the Guarantors. The obligations of the Guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference or similar laws affecting the rights of creditors generally) under applicable law.
The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the Revolving Credit Facility will guarantee the Senior Notes. The indentures further provide that any Guarantor Subsidiary may be released from its guarantee so long as (i) no default or event of default exists or would result from release of such guarantee; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (iv) such release would not have a material adverse effect on ours and our subsidiaries’ home building business; and (v) the Guarantor Subsidiary is released from its guaranty under the Revolving Credit Facility. If there are no guarantors under the Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X, under Rule Release No. 33-10762, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities (“Rule 33-10762”), that reduce and simplify the financial disclosure requirements applicable to SEC-registered debt offerings for guarantors and issuers of guaranteed debt securities (which we previously included within the notes to our consolidated financial statements in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q). While amendments under Rule 33-10762 are effective January 4, 2021, voluntary compliance is permitted in advance of the effective date, and we had previously adopted the new disclosure requirements for the period ending October 31, 2020.
The following summarized financial information is presented for Toll Brothers, Inc., the Subsidiary Issuer, and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among Toll Brothers, Inc., the Subsidiary Issuer and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.
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Summarized Balance Sheet Data ($ amounts in millions):

| January 31, 2021
Assets |
Cash | $ | 758.7 |
Inventory | $ | 7,783.9 |
Amount due from Nonguarantor Subsidiaries | $ | 637.6 |
Total assets | $ | 9,935.6 |
Liabilities & Stockholders' Equity |
Loans payable | $ | 951.5 |
Senior notes | $ | 2,652.2 |
Total liabilities | $ | 5,464.6 |
Stockholders' equity | $ | 4,471.0 |

Summarized Statement of Operations Data ($ amounts in millions):

| For the three months ended January 31, 2021
Revenues | $ | 1,500.8 |
Cost of revenues | $ | 1,171.9 |
Selling, general and administrative | $ | 210.1 |
Income before income taxes | $ | 125.5 |
Net income | $ | 93.4 |

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SEGMENTS
The tables below summarize information related to units delivered and revenues, net contracts signed, and income (loss) before income taxes, by segment, for the periods indicated, and information related to backlog, by segment, as of the dates indicated.
Units Delivered and Revenues:

| Three months ended January 31,
| Revenues ($ in millions) |  | Units Delivered |  | Average Delivered Price ($ in thousands)
| 2021 |  | 2020 |  | % Change |  | 2021 |  | 2020 |  | % Change |  | 2021 |  | 2020 |  | % Change
Traditional Home Building: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North | $ | 312.6 |  |  | $ | 254.1 |  |  | 23 | % |  | 451 |  |  | 393 |  |  | 15 | % |  | $ | 693.2 |  |  | $ | 646.5 |  |  | 7 | %
Mid-Atlantic | 164.0 |  |  | 162.5 |  |  | 1 | % |  | 227 |  |  | 240 |  |  | (5) | % |  | $ | 722.4 |  |  | $ | 677.0 |  |  | 7 | %
South | 216.9 |  |  | 183.6 |  |  | 18 | % |  | 341 |  |  | 274 |  |  | 24 | % |  | $ | 636.0 |  |  | $ | 670.2 |  |  | (5) | %
Mountain | 378.0 |  |  | 263.1 |  |  | 44 | % |  | 525 |  |  | 401 |  |  | 31 | % |  | $ | 720.0 |  |  | $ | 656.1 |  |  | 10 | %
Pacific | 331.1 |  |  | 395.3 |  |  | (16) | % |  | 226 |  |  | 267 |  |  | (15) | % |  | $ | 1,465.3 |  |  | $ | 1,480.7 |  |  | (1) | %
Traditional Home Building | 1,402.6 |  |  | 1,258.6 |  |  | 11 | % |  | 1,770 |  |  | 1,575 |  |  | 12 | % |  | $ | 792.5 |  |  | $ | 799.1 |  |  | (1) | %
City Living | 7.8 |  |  | 39.8 |  |  | (80) | % |  | 7 |  |  | 36 |  |  | (81) | % |  | $ | 1,113.4 |  |  | $ | 1,106.5 |  |  | 1 | %
Other | 0.3 |  |  | (1.1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total home sales revenues | 1,410.7 |  |  | 1,297.3 |  |  | 9 | % |  | 1,777 |  |  | 1,611 |  |  | 10 | % |  | $ | 793.9 |  |  | $ | 805.3 |  |  | (1) | %
Land sales revenues | 152.7 |  |  | 34.1 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total revenues | $ | 1,563.4 |  |  | $ | 1,331.4 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

Net Contracts Signed:

| Three months ended January 31,
| Net Contract Value ($ in millions) |  | Net Contracted Units |  | Average Contracted Price ($ in thousands)
| 2021 |  | 2020 |  | % Change |  | 2021 |  | 2020 |  | % Change |  | 2021 |  | 2020 |  | % Change
Traditional Home Building: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North | $ | 356.8 |  |  | $ | 287.2 |  |  | 24 | % |  | 449 |  |  | 400 |  |  | 12 | % |  | $ | 794.6 |  |  | $ | 717.9 |  |  | 11 | %
Mid-Atlantic | 327.5 |  |  | 169.4 |  |  | 93 | % |  | 373 |  |  | 242 |  |  | 54 | % |  | $ | 878.0 |  |  | $ | 700.1 |  |  | 25 | %
South | 388.8 |  |  | 244.4 |  |  | 59 | % |  | 568 |  |  | 353 |  |  | 61 | % |  | $ | 684.5 |  |  | $ | 692.4 |  |  | (1) | %
Mountain | 751.8 |  |  | 357.5 |  |  | 110 | % |  | 978 |  |  | 490 |  |  | 100 | % |  | $ | 768.7 |  |  | $ | 729.5 |  |  | 5 | %
Pacific | 644.1 |  |  | 383.4 |  |  | 68 | % |  | 473 |  |  | 287 |  |  | 65 | % |  | $ | 1,361.8 |  |  | $ | 1,335.8 |  |  | 2 | %
Traditional Home Building | 2,469.0 |  |  | 1,441.9 |  |  | 71 | % |  | 2,841 |  |  | 1,772 |  |  | 60 | % |  | $ | 869.1 |  |  | $ | 813.7 |  |  | 7 | %
City Living | 39.0 |  |  | 47.4 |  |  | (18) | % |  | 33 |  |  | 34 |  |  | (3) | % |  | $ | 1,181.8 |  |  | $ | 1,394.9 |  |  | (15) | %
Total | $ | 2,508.0 |  |  | $ | 1,489.3 |  |  | 68 | % |  | 2,874 |  |  | 1,806 |  |  | 59 | % |  | $ | 872.6 |  |  | $ | 824.6 |  |  | 6 | %

34

Backlog:

| At January 31,
| Backlog Value ($ in millions) |  | Backlog Units |  | Average Backlog Price ($ in thousands)
| 2021 |  | 2020 |  | % Change |  | 2021 |  | 2020 |  | % Change |  | 2021 |  | 2020 |  | % Change
Traditional Home Building: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North | $ | 1,413.5 |  |  | $ | 1,213.1 |  |  | 17 | % |  | 1,904 |  |  | 1,749 |  |  | 9 | % |  | $ | 742.4 |  |  | $ | 693.6 |  |  | 7 | %
Mid-Atlantic | 934.0 |  |  | 542.5 |  |  | 72 | % |  | 1,136 |  |  | 786 |  |  | 45 | % |  | $ | 822.1 |  |  | $ | 690.2 |  |  | 19 | %
South | 1,210.4 |  |  | 818.4 |  |  | 48 | % |  | 1,715 |  |  | 1,127 |  |  | 52 | % |  | $ | 705.8 |  |  | $ | 726.1 |  |  | (3) | %
Mountain | 2,044.8 |  |  | 1,246.4 |  |  | 64 | % |  | 2,727 |  |  | 1,695 |  |  | 61 | % |  | $ | 749.8 |  |  | $ | 735.4 |  |  | 2 | %
Pacific | 1,700.7 |  |  | 1,472.6 |  |  | 15 | % |  | 1,291 |  |  | 994 |  |  | 30 | % |  | $ | 1,317.4 |  |  | $ | 1,481.5 |  |  | (11) | %
Traditional Home Building | 7,303.4 |  |  | 5,293.0 |  |  | 38 | % |  | 8,773 |  |  | 6,351 |  |  | 38 | % |  | $ | 832.5 |  |  | $ | 833.4 |  |  | — | %
City Living | 170.1 |  |  | 157.2 |  |  | 8 | % |  | 115 |  |  | 110 |  |  | 5 | % |  | $ | 1,478.9 |  |  | $ | 1,428.9 |  |  | 3 | %
Total | $ | 7,473.5 |  |  | $ | 5,450.2 |  |  | 37 | % |  | 8,888 |  |  | 6,461 |  |  | 38 | % |  | $ | 840.9 |  |  | $ | 843.5 |  |  | — | %

| At October 31,
| Backlog Value ($ in millions) |  | Backlog Units |  | Average Backlog Price ($ in thousands)
| 2020 |  | 2019 |  | % Change |  | 2020 |  | 2019 |  | % Change |  | 2020 |  | 2019 |  | % Change
Traditional Home Building: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North | $ | 1,369.1 |  |  | $ | 1,179.6 |  |  | 16 | % |  | 1,906 |  |  | 1,742 |  |  | 9 | % |  | $ | 718.3 |  |  | $ | 677.2 |  |  | 6 | %
Mid-Atlantic | 770.4 |  |  | 535.3 |  |  | 44 | % |  | 990 |  |  | 784 |  |  | 26 | % |  | $ | 778.2 |  |  | $ | 682.7 |  |  | 14 | %
South | 1,038.4 |  |  | 757.3 |  |  | 37 | % |  | 1,488 |  |  | 1,048 |  |  | 42 | % |  | $ | 697.9 |  |  | $ | 722.6 |  |  | (3) | %
Mountain | 1,670.7 |  |  | 1,150.9 |  |  | 45 | % |  | 2,274 |  |  | 1,606 |  |  | 42 | % |  | $ | 734.7 |  |  | $ | 716.6 |  |  | 3 | %
Pacific | 1,387.1 |  |  | 1,484.4 |  |  | (7) | % |  | 1,044 |  |  | 974 |  |  | 7 | % |  | $ | 1,328.6 |  |  | $ | 1,524.0 |  |  | (13) | %
Traditional Home Building | 6,235.7 |  |  | 5,107.5 |  |  | 22 | % |  | 7,702 |  |  | 6,154 |  |  | 25 | % |  | $ | 809.6 |  |  | $ | 829.9 |  |  | (2) | %
City Living | 138.9 |  |  | 149.6 |  |  | (7) | % |  | 89 |  |  | 112 |  |  | (21) | % |  | $ | 1,560.3 |  |  | $ | 1,335.6 |  |  | 17 | %
Total | $ | 6,374.6 |  |  | $ | 5,257.1 |  |  | 21 | % |  | 7,791 |  |  | 6,266 |  |  | 24 | % |  | $ | 818.2 |  |  | $ | 839.0 |  |  | (2) | %

Income (Loss) Before Income Taxes ($ amounts in millions):

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | % Change |  |  |  |  |  |
Traditional Home Building: |  |  |  |  |  |  |  |  |  |  |
North | $ | 18.9 |  |  | $ | 2.5 |  |  | 656 | % |  |  |  |  |  |
Mid-Atlantic | 18.8 |  |  | 7.0 |  |  | 169 | % |  |  |  |  |  |
South | 21.5 |  |  | 9.1 |  |  | 136 | % |  |  |  |  |  |
Mountain | 36.0 |  |  | 17.6 |  |  | 105 | % |  |  |  |  |  |
Pacific | 47.5 |  |  | 63.3 |  |  | (25) | % |  |  |  |  |  |
Traditional Home Building | 142.7 |  |  | 99.5 |  |  | 43 | % |  |  |  |  |  |
City Living (1) | 32.7 |  |  | 9.5 |  |  | 244 | % |  |  |  |  |  |
Corporate and other | (48.0) |  |  | (43.1) |  |  | (11) | % |  |  |  |  |  |
Total | $ | 127.4 |  |  | $ | 65.9 |  |  | 93 | % |  |  |  |  |  |

(1) In the first quarter of fiscal 2021, we sold certain commercial assets associated with our Hoboken, New Jersey condominium projects for $82.4 million which is included in Land sales and other revenues. City Living recognized net gains of $38.3 million from these sales.
“Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups;
35

interest income; income from certain of our ancillary businesses, including Gibraltar; and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.
Traditional Home Building
North

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | Change |  |  |  |  |  |
Units Delivered and Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales revenues ($ in millions) | $ | 312.6 |  |  | $ | 254.1 |  |  | 23 | % |  |  |  |  |  |
Units delivered | 451 |  |  | 393 |  |  | 15 | % |  |  |  |  |  |
Average delivered price ($ in thousands) | $ | 693.2 |  |  | $ | 646.5 |  |  | 7 | % |  |  |  |  |  |
Net Contracts Signed: |  |  |  |  |  |  |  |  |  |  |
Net contract value ($ in millions) | $ | 356.8 |  |  | $ | 287.2 |  |  | 24 | % |  |  |  |  |  |
Net contracted units | 449 |  |  | 400 |  |  | 12 | % |  |  |  |  |  |
Average contracted price ($ in thousands) | $ | 794.6 |  |  | $ | 717.9 |  |  | 11 | % |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sale revenues | 84.0 | % |  | 85.4 | % |  |  |  |  |  |  |  |
Income before income taxes ($ in millions) | $ | 18.9 |  |  | $ | 2.5 |  |  | 656 | % |  |  |  |  |  |
Number of selling communities at January 31, | 61 |  |  | 82 |  |  | (26) | % |  |  |  |  |  |

The increase in the number of homes delivered in the fiscal 2021 period was mainly due to an increase in the number of homes in backlog at October 31, 2020, as compared to the number of homes in backlog at October 31, 2019, and higher backlog conversion in the fiscal 2021 period. The increase in the average price of homes delivered in the fiscal 2021 period was due primarily to a shift in the number of homes delivered to more expensive areas and/or products and sales price increases.
The increase in the number of net contracts signed in the fiscal 2021 period was due mainly to increased demand partially offset by a decrease in the number of selling communities. The increase in the average value of each contract signed in the fiscal 2021 period was mainly due to sales price increases and a shift in the number of contracts signed to more expensive areas and/or products.
The increase in income before income taxes in the fiscal 2021 period was principally attributable to higher earnings from increased revenues, lower home sales cost of revenues, as a percentage of home sale revenues, and lower SG&A costs. The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2021 period was primarily due to a shift in product mix/areas to higher-margin areas and sales price increases.
Mid-Atlantic

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | Change |  |  |  |  |  |
Units Delivered and Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales revenues ($ in millions) | $ | 164.0 |  |  | $ | 162.5 |  |  | 1 | % |  |  |  |  |  |
Units delivered | 227 |  |  | 240 |  |  | (5) | % |  |  |  |  |  |
Average delivered price ($ in thousands) | $ | 722.4 |  |  | $ | 677.0 |  |  | 7 | % |  |  |  |  |  |
Net Contracts Signed: |  |  |  |  |  |  |  |  |  |  |
Net contract value ($ in millions) | $ | 327.5 |  |  | $ | 169.4 |  |  | 93 | % |  |  |  |  |  |
Net contracted units | 373 |  |  | 242 |  |  | 54 | % |  |  |  |  |  |
Average contracted price ($ in thousands) | $ | 878.0 |  |  | $ | 700.1 |  |  | 25 | % |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sale revenues | 77.9 | % |  | 82.3 | % |  |  |  |  |  |  |  |
Income before income taxes ($ in millions) | $ | 18.8 |  |  | $ | 7.0 |  |  | 169 | % |  |  |  |  |  |
Number of selling communities at January 31, | 38 |  |  | 40 |  |  | (5) | % |  |  |  |  |  |

The decrease in the number of homes delivered in the fiscal 2021 period was mainly due to lower backlog conversion, offset, in part, by an increase in the number of homes in backlog at October 31, 2020, as compared to the number of homes in backlog at
36

October 31, 2019. The increase in the average price of homes delivered in the fiscal 2021 period was primarily due to a shift in the number of homes delivered to more expensive areas and/or products, primarily in Virginia, and sales price increases in the fiscal 2021 period.
The increase in the number of net contracts signed in the fiscal 2021 period was due mainly to increased demand partially offset by a decrease in the average number of selling communities in the fiscal 2021 period. The increase in the average value of each contract signed in the fiscal 2021 period was mainly due to a shift in the number of contracts signed to more expensive areas and/or products and sales price increases in the fiscal 2021 period.
The increase in income before income taxes in the fiscal 2021 period was mainly due lower home sales cost of revenues, as a percentage of home sale revenues, and higher joint venture income, partially offset by higher SG&A costs in the fiscal 2021 period. The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2021 period was primarily due to a shift in product mix/areas to higher-margin areas in the fiscal 2021 period, the impact of purchase accounting on the fiscal 2020 period related to a builder acquisition in Georgia, which was completed in fiscal 2019, and sales price increases in the fiscal 2021 period. The higher joint venture income in the fiscal 2021 period was due to a $6.0 million gain recognized from an asset sale of commercial property by one of our Land Development Joint Ventures in the fiscal 2021 period.
South

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | Change |  |  |  |  |  |
Units Delivered and Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales revenues ($ in millions) | $ | 216.9 |  |  | $ | 183.6 |  |  | 18 | % |  |  |  |  |  |
Units delivered | 341 |  |  | 274 |  |  | 24 | % |  |  |  |  |  |
Average delivered price ($ in thousands) | $ | 636.0 |  |  | $ | 670.2 |  |  | (5) | % |  |  |  |  |  |
Net Contracts Signed: |  |  |  |  |  |  |  |  |  |  |
Net contract value ($ in millions) | $ | 388.8 |  |  | $ | 244.4 |  |  | 59 | % |  |  |  |  |  |
Net contracted units | 568 |  |  | 353 |  |  | 61 | % |  |  |  |  |  |
Average contracted price ($ in thousands) | $ | 684.5 |  |  | $ | 692.4 |  |  | (1) | % |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sale revenues | 77.5 | % |  | 82.3 | % |  |  |  |  |  |  |  |
Income before income taxes ($ in millions) | $ | 21.5 |  |  | $ | 9.1 |  |  | 136 | % |  |  |  |  |  |
Number of selling communities at January 31, | 73 |  |  | 71 |  |  | 3 | % |  |  |  |  |  |

The increase in the number of homes delivered in the fiscal 2021 period was mainly due to an increase in the number of homes in backlog at October 31, 2020, as compared to the number of homes in backlog at October 31, 2019, partially offset by lower backlog conversion in the fiscal 2021 period. The decrease in the average price of homes delivered in the fiscal 2021 period was primarily due to a shift in the number of homes delivered to less expensive areas and/or products in the fiscal 2021 period.
The increase in the number of net contracts signed in the fiscal 2021 period was due principally to an increase in demand and an increase in the average number of selling communities in the fiscal 2021 period. The decrease in the average value of each contract signed in the fiscal 2021 period was primarily due to a shift in the number of contracts signed to less expensive areas and/or products, primarily in Florida, offset, in part, by sales price increases in the fiscal 2021 period.
The increase in income before income taxes in the fiscal 2021 period was principally due to higher earnings from increased revenues and lower home sales cost of revenues, as a percentage of home sale revenues partially offset by higher SG&A costs in the fiscal 2021 period. The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2021 period was primarily due to a shift in product mix/areas to higher-margin areas and the impact of purchase accounting on the fiscal 2020 period related to a builder acquisition in South Carolina, which was completed in fiscal 2019.
37

Mountain

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | Change |  |  |  |  |  |
Units Delivered and Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales revenues ($ in millions) | $ | 378.0 |  |  | $ | 263.1 |  |  | 44 | % |  |  |  |  |  |
Units delivered | 525 |  |  | 401 |  |  | 31 | % |  |  |  |  |  |
Average delivered price ($ in thousands) | $ | 720.0 |  |  | $ | 656.1 |  |  | 10 | % |  |  |  |  |  |
Net Contracts Signed: |  |  |  |  |  |  |  |  |  |  |
Net contract value ($ in millions) | $ | 751.8 |  |  | $ | 357.5 |  |  | 110 | % |  |  |  |  |  |
Net contracted units | 978 |  |  | 490 |  |  | 100 | % |  |  |  |  |  |
Average contracted price ($ in thousands) | $ | 768.7 |  |  | $ | 729.5 |  |  | 5 | % |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sale revenues | 79.5 | % |  | 79.5 | % |  |  |  |  |  |  |  |
Income before income taxes ($ in millions) | $ | 36.0 |  |  | $ | 17.6 |  |  | 105 | % |  |  |  |  |  |
Number of selling communities at January 31, | 93 |  |  | 83 |  |  | 12 | % |  |  |  |  |  |

The increase in the number of homes delivered in the fiscal 2021 period was mainly due to an increase in the number of homes in backlog at October 31, 2020, as compared to the number of homes in backlog at October 31, 2019, partially offset by lower backlog conversion in the fiscal 2021 period. The increase in the average price of homes delivered in the fiscal 2021 period was primarily due to a shift in the number of homes delivered to more expensive areas and/or products.
The increase in the number of net contracts signed in the fiscal 2021 period was primarily due to increased demand and an increase in the average number of selling communities in the fiscal 2021 period. The increase in the average value of each contract signed in the fiscal 2021 period was mainly due to sales price increases partially offset by a shift in the number of contracts signed to less expensive areas and/or products in the fiscal 2021 period.
The increase in income before income taxes in the fiscal 2021 period was due mainly to higher earnings from increased revenues in the fiscal 2021 period.
Pacific

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | Change |  |  |  |  |  |
Units Delivered and Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales revenues ($ in millions) | $ | 331.1 |  |  | $ | 395.3 |  |  | (16) | % |  |  |  |  |  |
Units delivered | 226 |  |  | 267 |  |  | (15) | % |  |  |  |  |  |
Average delivered price ($ in thousands) | $ | 1,465.3 |  |  | $ | 1,480.7 |  |  | (1) | % |  |  |  |  |  |
Net Contracts Signed: |  |  |  |  |  |  |  |  |  |  |
Net contract value ($ in millions) | $ | 644.1 |  |  | $ | 383.4 |  |  | 68 | % |  |  |  |  |  |
Net contracted units | 473 |  |  | 287 |  |  | 65 | % |  |  |  |  |  |
Average contracted price ($ in thousands) | $ | 1,361.8 |  |  | $ | 1,335.8 |  |  | 2 | % |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sale revenues | 76.3 | % |  | 74.8 | % |  |  |  |  |  |  |  |
Income before income taxes ($ in millions) | $ | 47.5 |  |  | $ | 63.3 |  |  | (25) | % |  |  |  |  |  |
Number of selling communities at January 31, | 41 |  |  | 48 |  |  | (15) | % |  |  |  |  |  |

The decrease in the number of homes delivered in the fiscal 2021 period was mainly due to the decreased number of homes delivered in California as a result the lower number of homes in backlog at October 31, 2020, as compared to the number of homes in backlog at October 31, 2019, and lower backlog conversion in the fiscal 2021 period. The decrease in the average price of homes delivered in fiscal 2021 period was primarily due to a shift in the number of homes delivered to less expensive areas and/or products, offset, in part, by sales price increases in the fiscal 2021 period.
The increase in the number of net contracts signed in the fiscal 2021 period was primarily due to an increase in demand, offset, in part, by a decrease in the average number of selling communities in the fiscal 2021 period. The increase in the average value
38

of each contract signed in the fiscal 2021 period was mainly due to sales price increases, offset, in part, by a shift in the number of contracts signed to less expensive areas and/or products.
The decrease in income before income taxes in the fiscal 2021 period was mainly due to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sales revenues in the fiscal 2021 period. This decrease was partially offset lower SG&A costs. The increase in home sales cost of revenues, as a percentage of home sales revenues, were primarily due to a shift in product mix/areas to lower-margin areas partially offset by sales price increases in the fiscal 2021 period.
City Living

| Three months ended January 31, |  |
| 2021 |  | 2020 |  | Change |  |  |  |  |  |
Units Delivered and Revenues: |  |  |  |  |  |  |  |  |  |  |
Home sales revenues ($ in millions) | $ | 7.8 |  |  | $ | 39.8 |  |  | (80) | % |  |  |  |  |  |
Units delivered | 7 |  |  | 36 |  |  | (81) | % |  |  |  |  |  |
Average delivered price ($ in thousands) | $ | 1,113.4 |  |  | $ | 1,106.5 |  |  | 1 | % |  |  |  |  |  |
Net Contracts Signed: |  |  |  |  |  |  |  |  |  |  |
Net contract value ($ in millions) | $ | 39.0 |  |  | $ | 47.4 |  |  | (18) | % |  |  |  |  |  |
Net contracted units | 33 |  |  | 34 |  |  | (3) | % |  |  |  |  |  |
Average contracted price ($ in thousands) | $ | 1,181.8 |  |  | $ | 1,394.9 |  |  | (15) | % |  |  |  |  |  |
Home sales cost of revenues as a percentage of home sale revenues | 88.2 | % |  | 66.9 | % |  |  |  |  |  |  |  |
Income before income taxes ($ in millions) (1) | $ | 32.7 |  |  | $ | 9.5 |  |  | 244 | % |  |  |  |  |  |
Number of selling communities at January 31, | 3 |  |  | 4 |  |  | (25) | % |  |  |  |  |  |

(1) In the first quarter of fiscal 2021, we sold certain commercial assets associated with our Hoboken, New Jersey condominium projects for $82.4 million which is included in Land sales and other revenues. City Living recognized net gains of $38.3 million from these sales.
The decrease in the number of homes delivered in the fiscal 2021 period was mainly attributable to the decreased number of homes in backlog at October 31, 2020, as compared to the number of homes in backlog at October 31, 2019, and lower backlog conversion in the fiscal 2021 period. The increase in the average price of homes delivered in fiscal 2021 period was primarily due to a shift in the number of homes delivered to more expensive areas and/or products.
The decrease in the average sales price of net contracts signed in the fiscal 2021 period was principally due a shift to less expensive units in the fiscal 2021 period.
The increase in income before income taxes in the fiscal 2021 period was mainly due to gains of $38.3 million recognized from the sales of a parking garage and retail space associated with one of our Hoboken, New Jersey condominium projects, offset, in part, by higher home sales cost of revenues, as a percentage of home sale revenues; lower earnings from decreased revenues; and $2.1 million of other-than temporary impairment charges that we recognized on two of our Home Building Joint Ventures in the fiscal 2021 period. The higher home sales cost of revenues, as a percentage of home sale revenues in the fiscal 2021 period was principally due to a shift in the number of homes delivered to buildings with lower margins and an impairment charge of $1.1 million in the fiscal 2021 period.
Corporate and Other
In the three months ended January 31, 2021 and 2020, loss before income taxes was $48.0 million and $43.1 million, respectively. The increase in the loss before income taxes in the fiscal 2021 period was principally a $10.7 million gain recognized in the fiscal 2020 period from the sale of our investment in our of our Rental Property Joint Ventures to our joint venture partner; lower interest income; losses recognized in the fiscal 2021 period by a joint venture that owns a hotel that was adversely impacted by COVID-19; and an increase in losses in several Rental Property Joint Ventures related to the commencement of operations and lease up activities in the fiscal 2021 period. These increases were partially offset by lower SG&A costs, higher earnings from our mortgage company operations primarily due to increases in volume increases and wider spreads, and lower losses incurred in our apartment living operations, in the fiscal 2021 period. The decrease in SG&A costs in the fiscal 2021 period was primarily due to the implementation, commencing in fiscal 2020’s second quarter, of a number of cost reduction initiatives to improve efficiencies and rationalize overhead expenses, including workforce reductions and reduced advertising spend.
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AVAILABLE INFORMATION
Our principal Internet address is www.tollbrothers.com, and our Investor Relations website is located at investors.tollbrothers.com. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available through our Investor Relations website, free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We provide information about our business and financial performance, including our corporate profile, on our Investor Relations website. Additionally, we webcast our earnings calls and certain events we participate in with members of the investment community on our Investor Relations website. Corporate governance information, including our codes of ethics, corporate governance guidelines, and board committee charters, is also available on our Investor Relations website. The content of our websites is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk primarily due to fluctuations in interest rates. We utilize both fixed-rate and variable-rate debt. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not our earnings or cash flow. Conversely, for variable-rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but do affect our earnings and cash flow. We generally do not have the obligation to prepay fixed-rate debt before maturity, and, as a result, interest rate risk and changes in fair value should not have a significant impact on our fixed-rate debt until we are required or elect to refinance it.
The table below sets forth, at January 31, 2021, our debt obligations by scheduled maturity, weighted-average interest rates, and estimated fair value (amounts in thousands):

|  | Fixed-rate debt |  | Variable-rate debt (a)
Fiscal year of maturity |  | Amount |  | Weighted- average interest rate |  | Amount |  | Weighted- average interest rate
2021 (b) |  | $ | 292,959 |  |  | 5.32% |  | $ | 125,829 |  |  | 1.83%
2022 |  | 453,011 |  |  | 5.71% |  | — |  |  |
2023 |  | 466,323 |  |  | 4.37% |  | — |  |  |
2024 |  | 57,943 |  |  | 3.29% |  | — |  |  |
2025 (b) |  | 61,759 |  |  | 5.66% |  | — |  |  |
Thereafter (c) |  | 1,638,790 |  |  | 4.49% |  | 650,000 |  |  | 1.18%
Bond discounts, premiums and deferred issuance costs, net |  | (7,694) |  |  |  |  | (2,635) |  |  |
Total |  | $ | 2,963,091 |  |  | 4.74% |  | $ | 773,194 |  |  | 1.28%
Fair value at January 31, 2021 |  | $ | 3,230,866 |  |  |  |  | $ | 775,829 |  |  |

(a) Based upon the amount of variable-rate debt outstanding at January 31, 2021, and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $7.8 million per year, without consideration of the interest rate swap transactions described in (c) below.
(b) On February 12, 2021, we delivered a notice of optional redemption to the holders of our outstanding 5.625% Senior Notes due 2024 (the “2024 Notes”), pursuant to which the we will redeem, on March 15, 2021, all $250.0 million aggregate principal amount of outstanding 2024 Notes.
(c) In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility through October 2025, which is included in the variable-rate debt column in the table above. The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility, which was 1.05% as of January 31, 2021. These interest rate swaps were designated as cash flow hedges.
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
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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.
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 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 SEC’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.
We continue to implement a new enterprise resource planning (“ERP”) system that affects many of our financial processes and is expected to improve the efficiency and effectiveness of certain financial and business transaction processes, as well as the underlying systems environment. The new ERP system will be a significant component of our internal control over financial reporting. Other than the ERP system implementation noted above, there has not been any change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our quarter ended January 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.
In March 2018, the Pennsylvania Attorney General informed the Company that it was conducting a review of our construction of stucco homes in Pennsylvania after January 1, 2005 and requested that we voluntarily produce documents and information. The Company has produced documents and information in response to this request and, in addition, has produced requested information and documents in response to a subpoena issued in the second quarter of fiscal 2019. Management cannot at this time predict the eventual scope or outcome of this matter.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors as previously disclosed in Part I, Item 1A., “Risk Factors” in our 2020 Form 10-K.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
During the three-month period ended January 31, 2021, we repurchased the following shares of our common stock:

Period |  | Total number of shares purchased (a) |  | Average price paid per share |  | Total number of shares purchased as part of publicly announced plans or programs (b) |  | Maximum number of shares that may yet be purchased under the plans or programs (b)
|  | (in thousands) |  |  |  | (in thousands) |  | (in thousands)
November 1, 2020 to November 30, 2020 |  | 1 |  |  | $ | 43.94 |  |  | 1 |  |  | 19,983 |
December 1, 2020 to December 31, 2020 |  | 3,373 |  |  | $ | 44.92 |  |  | 3,373 |  |  | 16,610 |
January 1, 2021 to January 31, 2021 |  | 653 |  |  | $ | 42.62 |  |  | 653 |  |  | 15,957 |
Total |  | 4,027 |  |  |  |  | 4,027 |  |  |

(a) Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a performance based restricted stock unit recipient or a restricted stock unit recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the recipient. During the three months ended January 31, 2021, we withheld 153,986 of the shares subject to performance based restricted stock units and restricted stock units to cover approximately $7.2 million of income tax withholdings and we issued the remaining 316,976 shares to the recipients. The shares withheld are not included in the total number of shares purchased in the table above.
Our stock incentive plans also permit participants to exercise non-qualified stock options using a “net exercise” method. In a net exercise, we generally withhold from the total number of shares that otherwise would be issued to the participant upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable income tax withholdings, and remit the remaining shares to the participant. During the three-month period ended January 31, 2021, the net exercise method was not employed to exercise options.
(b) On March 10, 2020, our Board of Directors authorized the repurchase of 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans. This new authorization terminated, effective March 10, 2020, the existing authorization that had been in effect since December 10, 2019. Our Board of Directors did not fix any expiration date for the current share repurchase program.
Except as set forth above, we have not repurchased any of our equity securities during the three-month period ended
January 31, 2021.
Dividends
During the three months ended January 31, 2021, we paid cash dividends of $0.11 per share to our shareholders. The payment of dividends is within the discretion of our Board of Directors and any decision to pay dividends in the future will depend upon an evaluation of a number of factors, including our results of operations, our capital requirements, our operating and financial condition, and any contractual limitations then in effect. Our revolving credit agreement and term loan agreement each require us to maintain a minimum tangible net worth (as defined in the applicable agreement), which restricts the amount of dividends we may pay. At January 31, 2021, under our bank credit agreements, we could have paid up to approximately $2.62 billion of cash dividends.
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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 | The following financial statements from Toll Brothers, Inc. Quarterly Report on Form 10-Q for the quarter ended January 31, 2021, filed on March 8, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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: | March 8, 2021 | By: |  | /s/ Martin P. Connor
|  |  |  | Martin P. Connor Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Date: | March 8, 2021 | By: |  | /s/ Michael J. Grubb
|  |  |  | Michael J. Grubb Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

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