Toll Brothers, Inc. is the leading luxury home builder in the US. It has grown revenues and earnings at a compound annual growth rate of over 20% for the past 1, 3, 5, 7, and 10 years. For the third quarter of 2002, Toll Brothers reported contracts of $704 million, up 30% from the prior year. Backlog reached a record $1.9 billion, up 21% from the prior year. However, earnings per share of $0.70 were down 9% due to the impact of a slowdown in demand in late 2001 and after 9/11 on home deliveries. For the first nine months of 2002, contracts were $2.09 billion, up 24%,

1. CONSOLIDATED CONDENSED
CORPORATE PROFILE
FIVE-YEAR PERFORMANCE OVERVIEW
STATEMENTS OF INCOME
Toll Brothers, Inc. is the nation’s leading builder of Arizona, California, Colorado, Connecticut, Delaware,
(Amounts in thousands, except per share data)
luxury homes. The Company has produced over Florida, Illinois, Massachusetts, Maryland, Michigan,
20% compound average annual growth in revenues Nevada, New Hampshire, New Jersey, New York,
$584
$.77 $581 (Unaudited) Nine Months Three Months
and earnings for the last one, three, five, seven and ten North Carolina, Ohio, Pennsylvania, Rhode Island,
$.70 Ended July 31 Ended July 31
year periods. South Carolina, Tennessee, Texas, and Virginia.
2002 2001 2002 2001
$465 Revenues:
Toll Brothers began business in 1967 and became a Toll Brothers is the only publicly traded national home Housing sales $1,587,168 $1,529,394 $ 565,355 $ 573,479
$406
public company in 1986. Its common stock is listed builder to have won all three of the industry’s highest
$.50 Land sales 26,519 25,166 12,478 2,749
on the New York Stock Exchange and the Pacific honors: America’s Best Builder from the National
$342
Equity earnings from
Exchange under the symbol “TOL”. The Company Association of Home Builders, the National Housing
$.40
unconsolidated joint ventures 1,743 7,575 246 2,314
$.34 serves luxury move-up, empty-nester, active-adult, Quality Award and Builder of the Year. For more Interest and other 7,952 11,718 2,628 5,526
and second-home buyers and operates in 22 states: information visit www.tollbrothers.com. 1,623,382 1,573,853 580,707 584,068
Costs and Expenses:
Housing sales 1,149,720 1,131,136 409,657 417,756
CONSOLIDATED CONDENSED
Land sales 18,125 19,611 8,947 2,073
BALANCE SHEETS Selling, general and administrative 172,866 152,894 61,874 54,555
July 31, 2002 Oct. 31, 2001
(Amounts in thousands) Interest 45,258 40,506 15,626 15,524
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
(Unaudited) 1,385,969 1,344,147 496,104 489,908
Earnings Per Share (Diluted) Total Revenues (in millions) ASSETS
Three Months Ended July 31 Three Months Ended July 31 Cash and cash equivalents $ 50,744 $ 182,840
Income before income taxes 237,413 229,706 84,603 94,160
Inventories 2,525,660 2,183,541
Income taxes 86,909 84,559 31,103 34,716
Property, construction and office equipment, net 36,917 33,095
$704 $1,905 Net income $ 150,504 $ 145,147 $ 53,500 $ 59,444
Receivables, prepaid expenses and other assets 82,287 74,481
Mortgage loans receivable 31,585 26,758 Earnings per share
$1,579
Customer deposits held in escrow 25,048 17,303 Basic $ 2.13 $ 2.01 $ .76 $ .83
$1,468
$543
$532
Investments in unconsolidated entities 17,692 14,182 Diluted $ 1.99 $ 1.85 $ .70 $ .77
$2,769,933 $2,532,200 Weighted average number of shares
$1,093
$399
Basic 70,562 72,287 70,835 71,677
LIABILITIES AND STOCKHOLDERS’ EQUITY
$333 Diluted 75,722 78,269 76,685 77,413
Liabilities:
$844
Loans payable $ 254,601 $ 362,712 Nine Months Three Months
Subordinated notes 819,643 669,581 Ended July 31 Ended July 31
Housing Data
Mortgage company warehouse loans 26,434 24,754 2002 2001 2002 2001
Customer deposits on sales contracts 137,411 101,778 Number of homes closed 3,158 3,079 1,093 1,129
Accounts payable 130,241 132,970
Sales value of homes closed (in 000’s) $1,587,168 $1,529,394 $ 565,355 $ 573,479
Accrued expenses 253,832 229,671
Number of homes contracted* 3,908 3,396 1,274 1,085
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
Income taxes payable 88,581 98,151
Contracts (in millions) Backlog (in millions) Sales value of homes contracted* (in 000’s) $2,091,593 $1,685,197 $ 704,170 $ 542,792
Total liabilities 1,710,743 1,619,617
Three Months Ended July 31 At July 31 Number of homes in backlog* 3,441 3,055 3,441 3,055
Stockholders’ Equity: Sales value of homes in backlog* (in 000’s) $1,904,539 $1,579,110 $1,904,539 $1,579,110
Common stock 740 369
*Contracts for the three-month and nine-month periods ended July 31, 2002 included $4.2 million (12 homes) and $8.9 mil-
Additional paid-in capital 101,811 107,014
lion (26 homes), respectively, from an unconsolidated 50% owned joint venture. Contracts for the three-month and nine-
Retained earnings 1,032,416 882,281 month periods ended July 31, 2001 included $1.9 million (6 homes) and $11.6 million (41 homes), respectively, from this
Treasury stock (75,777) (77,081) joint venture. Backlog as of July 31, 2002 and 2001 included $5.4 million (15 homes) and $9.1 million (30 homes), respec-
Total stockholders’ equity 1,059,190 912,583 tively, from this joint venture.
$2,769,933 $2,532,200
Statement on Forward-looking Information
Certain information included herein and in other Company reports, SEC filings, statements and presentations is forward-looking within the
3103 Philmont Avenue • Huntingdon Valley • PA 19006
meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning anticipated operating
215-938-8000 • www.tollbrothers.com • NYSE – “TOL”
results, financial resources, changes in revenues, changes in profitability, interest expense, growth and expansion, the ability to acquire land,
the ability to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the ability to secure
Investor Relations materials and subcontractors, and stock market valuations. Such forward-looking information involves important risks and uncertainties that
Frederick N. Cooper, Vice President - Finance – 215-938-8312 could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports,
fcooper@tollbrothersinc.com SEC filings, statements and presentations. These risks and uncertainties include local, regional and national economic conditions, the demand
for homes, domestic and international political events, the effects of governmental regulation, the competitive environment in which the
Joseph R. Sicree, Vice President - Chief Accounting Officer – 215-938-8045 Company operates, fluctuations in interest rates, changes in home prices, the availability and cost of land for future growth, the availability of
jsicree@tollbrothersinc.com capital, uncertainties and fluctuations in capital and securities markets, the availability and cost of labor and materials, and weather conditions.
mkt-573

2. Huntingdon Valley, PA 19006-4298
A LETTER TO OUR SHAREHOLDERS:
T H I R D Q U A RT E R R E P O RT
FOR THE THREE MONTHS
E N D E D J U LY 3 1 , 2 0 0 2
3rd Quarter Report
3103 Philmont Avenue
With demand for new luxury homes outstripping communities by October 31st, our fiscal year-end
supply, we are enjoying strong sales activity at our – an increase of 10% versus FYE 2001 – and
move-up, empty-nester and active-adult commu- approximately 185 by FYE 2003. Based on this
nities. Since February, the start of our second community growth and the strength of current
quarter, our deposits, traffic and contracts have demand, we foresee record deliveries of
substantially exceeded last year’s record results. approximately 5,000 homes in 2003 and
approximately 6,000 homes in 2004. And with
Record third quarter contracts of $704.2 million
nearly 42,000 home sites under control in affluent
grew 30% and record nine month contracts of
markets nationwide, we are well-positioned for
$2.09 billion increased 24% versus 2001. The
further growth in this decade.
Company’s record third quarter backlog of $1.90
billion rose 21% and was the highest backlog for After pursuing approvals for the last ten years, we
any quarter-end in Toll Brothers’ history. recently received a favorable ruling from the New
Jersey Supreme Court allowing us to proceed with
The combination of increasing numbers of affluent
development of 1,165 for-sale homes and rental
households, the maturing of the baby boomers and
units in Princeton Junction. Our decade-long
a shortage of new home sites are fueling this strong
struggle, although extraordinary in time and
demand. We believe the impact of attractive
expense, highlights the difficulty in bringing new
mortgage rates and the appeal of a home as a stable
lots to market in many parts of the United States.
investment in this period of financial uncertainty
Generally, only the large builders, such as Toll
are also contributing to healthy demand.
Brothers, with the expertise, capital and resources
to persevere, can bring projects of this scale to
Because of the lead time from the signing of a
fruition. Increasing regulation and anti-growth
contract to the delivery of a home, our third
politics continue to constrict the pipeline of
quarter revenues and earnings were impacted by
approved home sites. The result is an undersupply
the slowdown in demand in late Summer 2001
of new homes, despite growing demand; this is a
and the further decline in contracts in the
primary reason for rising home prices.
aftermath of the tragedies of September 11th.
Third quarter earnings of $0.70 per share diluted
In its June, 2002 issue, Professional Builder
were down 9% versus 2001 as net income of $53.5
magazine rated Toll Brothers among the top places
million declined 10%. Record nine month
to work in the residential construction industry.
earnings of $1.99 per share diluted rose 8% as
Even though we have grown extremely rapidly in
record nine month net income of $150.5 million
the past decade, we’ve sought to preserve our
rose 4%. Third quarter revenues of $580.7 million
“small company” atmosphere; this is a constant
were 1% below last year’s third quarter record
challenge now that we have over 3,000 employees
while record nine month revenues of $1.62 billion
in 22 states, but it is one we believe is well worth
increased 3% versus 2001.
The Hampton at Brier Creek Country Club, Raleigh, NC
maintaining – the result is greater value created for
our shareholders, our home buyers and our
Third quarter 2002 earnings were also impacted
associates. We wish to thank them all for their
by declines of $2.1 million in joint venture income
continued support.
and $2.9 million in other income versus 2001. In
addition, while the Company’s selling and
administrative costs increased, due primarily to
continued growth in new selling communities,
revenues for the quarter did not rise comparably Robert I. Toll Bruce E. Toll
due to the late Summer 2001 and September 11th Chairman of the Board Vice Chairman
effects on third quarter home deliveries. Even with and Chief Executive Officer of the Board
the Company’s continuing expansion plans, the
relationship between SG&A and revenue growth
should become more balanced as these new
communities start to deliver more homes.
Permit No. 1726
PAID
First-Class Mail
Zvi Barzilay
Brooklyn, NY
U.S. Postage
President and Chief Operating Officer
Our record backlog of 3,441 homes presages
strong results for at least the next nine months. We
August 27, 2002
expect to have open approximately 170 selling