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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 April 30, 2022
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 DriveFort Washington
Pennsylvania
19034
(Address of principal executive offices)(Zip Code)
(215938-8000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTOLNew 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 May 31, 2022, there were approximately 114,977,000 shares of Common Stock, par value $0.01 per share, outstanding.




TOLL BROTHERS, INC.
TABLE OF CONTENTS
 Page No.
  
  
 
  
 
  
  
  
  
  
  
  
 
  
  
  
  
  




STATEMENT ON FORWARD-LOOKING INFORMATION
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 COVID-19 pandemic on the U.S. economy and on our business; expectations regarding interest rates and inflation; the markets in which we operate or may operate; our strategic objectives and priorities; our land acquisition, land development and capital allocation plans and priorities; housing market conditions; demand for our homes; anticipated operating results and guidance; home deliveries; financial resources and condition; changes in revenues, in profitability and 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; the rate at which we 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 ongoing effects of the COVID-19 pandemic, which remain highly uncertain, cannot be predicted and will depend upon future developments, including the duration of the pandemic, the impact of mitigation strategies taken by applicable government authorities, the continued 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, inflation, consumer sentiment, 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 land;
access to adequate capital on acceptable terms;
geographic concentration of our operations;
levels of competition;
the price and availability of lumber, other raw materials, home components 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;
risks arising 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)
April 30,
2022
October 31,
2021
 (unaudited) 
ASSETS
Cash and cash equivalents$535,038 $1,638,494 
Inventory8,978,816 7,915,884 
Property, construction, and office equipment – net310,422 310,455 
Receivables, prepaid expenses, and other assets (1)
722,702 738,078 
Mortgage loans held for sale – at fair value146,865 247,211 
Customer deposits held in escrow154,171 88,627 
Investments in unconsolidated entities684,385 599,101 
Income taxes receivable12,212  
 $11,544,611 $11,537,850 
LIABILITIES AND EQUITY
Liabilities
Loans payable$1,196,415 $1,011,534 
Senior notes1,994,786 2,403,989 
Mortgage company loan facility113,688 147,512 
Customer deposits812,383 636,379 
Accounts payable588,742 562,466 
Accrued expenses1,232,825 1,220,235 
Income taxes payable226,106 215,280 
Total liabilities6,164,945 6,197,395 
Equity
Stockholders’ equity
Preferred stock, none issued  
Common stock, 127,937 shares issued at April 30, 2022 and October 31, 20211,279 1,279 
Additional paid-in capital714,651 714,453 
Retained earnings5,297,939 4,969,839 
Treasury stock, at cost — 12,614 and 7,820 shares at April 30, 2022 and October 31, 2021, respectively(669,396)(391,656)
Accumulated other comprehensive income ("AOCI")19,419 1,109 
Total stockholders’ equity5,363,892 5,295,024 
Noncontrolling interest15,774 45,431 
Total equity5,379,666 5,340,455 
 $11,544,611 $11,537,850 
(1)    As of April 30, 2022 and October 31, 2021, receivables, prepaid expenses, and other assets include $36.0 million and $90.8 million, respectively, of assets related to consolidated variable interest entities (“VIEs”). See Note 3, “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 April 30,Six months ended April 30,
 2022202120222021
Revenues:
Home sales$2,186,529 $1,836,260 $3,873,881 $3,246,964 
Land sales and other91,012 93,864 194,741 246,536 
2,277,541 1,930,124 4,068,622 3,493,500 
Cost of revenues:
Home sales1,659,265 1,434,493 2,948,792 2,556,286 
Land sales and other92,981 92,091 192,598 203,825 
1,752,246 1,526,584 3,141,390 2,760,111 
Selling, general and administrative243,637 219,170 470,507 429,909 
Income from operations281,658 184,370 456,725 303,480 
Other:
Income from unconsolidated entities2,933 10,483 24,970 11,677 
Other income – net11,224 9,213 14,936 17,285 
Expenses related to early retirement of debt (34,240) (35,211)
Income before income taxes295,815 169,826 496,631 297,231 
Income tax provision75,222 41,960 124,134 72,866 
Net income$220,593 $127,866 $372,497 $224,365 
Other comprehensive income – net of tax13,608 4,438 18,310 5,150 
Total comprehensive income$234,201 $132,304 $390,807 $229,515 
Per share:
Basic earnings$1.87 $1.03 $3.12 $1.79 
Diluted earnings$1.85 $1.01 $3.08 $1.77 
Weighted-average number of shares:
Basic117,839 124,295 119,418 125,177 
Diluted118,925 125,999 120,891 126,780 







See accompanying notes.
3


TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)

For the three months ended April 30, 2022 and 2021:
Common
Stock
Addi-
tional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
AOCINon-controlling InterestTotal
Equity
 $$$$$$$
Balance, January 31, 2022$1,279 $711,558 $5,100,841 $(563,618)$5,811 $45,579 $5,301,450 
Net income220,593 220,593 
Purchase of treasury stock
(106,511)(106,511)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(312)733 421 
Stock-based compensation
3,405 3,405 
Dividends declared
(23,495)(23,495)
Other comprehensive income13,608 13,608 
Income attributable to non-controlling interest65 65 
Capital distributions – net(29,870)(29,870)
Balance, April 30, 2022$1,279 $714,651 $5,297,939 $(669,396)$19,419 $15,774 $5,379,666 
Balance, January 31, 2021$1,529 $708,668 $5,245,935 $(1,162,811)$(6,486)$47,657 $4,834,492 
Net income127,866 127,866 
Purchase of treasury stock
(253)(253)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(2,692)14,658 11,966 
Stock-based compensation
3,446 3,446 
Dividends declared
(21,228)(21,228)
Other comprehensive income
4,438 4,438 
Income attributable to non-controlling interest1 1 
Capital contributions – net61 61 
Balance, April 30, 2021$1,529 $709,422 $5,352,573 $(1,148,406)$(2,048)$47,719 $4,960,789 


4


For the six months ended April 30, 2022 and 2021:
Common
Stock
Addi-
tional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
AOCINon-controlling InterestTotal
Equity
Balance, October 31, 2021$1,279 $714,453 $4,969,839 $(391,656)$1,109 $45,431 $5,340,455 
Net income372,497 372,497 
Purchase of treasury stock
(292,279)(292,279)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(16,822)14,539 (2,283)
Stock-based compensation
17,020 17,020 
Dividends declared
(44,397)(44,397)
Other comprehensive income18,310 18,310 
Income attributable to non-controlling interest86 86 
Capital distributions - net(29,743)(29,743)
Balance, April 30, 2022$1,279 $714,651 $5,297,939 $(669,396)$19,419 $15,774 $5,379,666 
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 income224,365 224,365 
Purchase of treasury stock
(179,648)(179,648)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(24,129)31,696 7,567 
Stock-based compensation
16,279 16,279 
Dividends declared
(35,283)(35,283)
Other comprehensive income
5,150 5,150 
Loss attributable to non-controlling interest
(20)(20)
Capital distributions - net(4,502)(4,502)
Balance, April 30, 2021$1,529 $709,422 $5,352,573 $(1,148,406)$(2,048)$47,719 $4,960,789 








See accompanying notes.
5


TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Six months ended April 30,
 20222021
Cash flow (used in) provided by operating activities:
Net income$372,497 $224,365 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization33,536 33,181 
Stock-based compensation17,020 16,279 
Income from unconsolidated entities(24,970)(11,677)
Distributions of earnings from unconsolidated entities29,636 11,464 
Deferred tax provision6,797 3,222 
Inventory impairments and write-offs4,425 2,847 
Property, construction and office equipment impairments6,800  
Gain on sale of assets (38,706)
Expenses related to early retirement of debt 35,211 
Other2,831 1,882 
Changes in operating assets and liabilities: 
Inventory(890,202)(528,048)
Origination of mortgage loans(931,958)(906,251)
Sale of mortgage loans1,027,696 929,763 
Receivables, prepaid expenses, and other assets(239)77,624 
Current income taxes – net(14,321)(17,178)
Customer deposits – net110,460 132,840 
Accounts payable and accrued expenses45,020 60,449 
Net cash (used in) provided by operating activities(204,972)27,267 
Cash flow (used in) provided by investing activities:
Purchase of property, construction, and office equipment – net(39,140)(29,606)
Investments in unconsolidated entities(121,282)(153,828)
Return of investments in unconsolidated entities88,371 144,047 
Proceeds from the sale of assets 80,418 
Other194 579 
Net cash (used in) provided by investing activities(71,857)41,610 
Cash flow used in financing activities:
Proceeds from loans payable1,826,068 1,335,309 
Principal payments of loans payable(1,879,318)(1,548,152)
Redemption of senior notes(409,856)(294,168)
(Payments) proceeds for stock-based benefit plans – net(2,279)7,569 
Purchase of treasury stock(284,276)(179,648)
Dividends paid(44,255)(35,272)
Payments related to noncontrolling interest – net(25,766)(4,718)
Net cash used in financing activities(819,682)(719,080)
Net decrease in cash, cash equivalents, and restricted cash(1,096,511)(650,203)
Cash, cash equivalents, and restricted cash, beginning of period1,684,412 1,396,604 
Cash, cash equivalents, and restricted cash, end of period$587,901 $746,401 



See accompanying notes.
6


TOLL BROTHERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
Basis of Presentation
Our 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.
Our 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, 2021 balance sheet amounts and disclosures have been derived from our October 31, 2021 audited financial statements. Since the 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 included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021 (“2021 Form 10-K”). In the opinion of management, the unaudited condensed consolidated financial statements include all recurring adjustments, necessary to present fairly our financial position as of April 30, 2022; the results of our operations and changes in equity for the three-month and six-month periods ended April 30, 2022 and 2021; and our cash flows for the six-month periods ended April 30, 2022 and 2021. The results of operations for 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 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. We are subject to risks and uncertainties, including risks and uncertainties resulting from the COVID-19 pandemic, and are likely to continue to impact our business operations. As a result, actual results could differ from the estimates and assumptions we make and such differences may be material.
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 April 30, 2022, 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 $812.4 million and $636.4 million at April 30, 2022 and October 31, 2021, respectively. Of the outstanding customer deposits held as of October 31, 2021, we recognized $132.9 million and $243.8 million in home sales revenues during the three months and six months ended April 30, 2022.
Land sales and other revenues: Our revenues from land sales and other generally consist of: (1) land sales to joint ventures in which we retain an interest; (2) bulk sales to third parties of land we have decided no longer meets our development criteria; (3) lot sales to third-party builders within our master planned communities; 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 of incentive and by amount on a community-by-community and home-by-home basis. Incentives are reflected as a
7


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.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848),” as amended by ASU 2021-01 in January 2021, directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the publication of certain LIBOR rates beginning December 31, 2021, with complete elimination of the publication of the LIBOR rates by June 30, 2023. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued. This guidance became effective on March 12, 2020 and can be adopted no later than December 31, 2022, with early adoption permitted. We are currently evaluating the impact, but do not expect that the adoption of ASU 2020-04, as amended by ASU 2021-01, will have a material impact on our consolidated financial statements or disclosures.

Reclassification
Certain prior period amounts have been reclassified to conform to the fiscal 2022 presentation.
2. Inventory
Inventory at April 30, 2022 and October 31, 2021 consisted of the following (amounts in thousands):
April 30,
2022
October 31,
2021
Land controlled for future communities$218,402 $185,656 
Land owned for future communities933,730 564,737 
Operating communities7,826,684 7,165,491 
$8,978,816 $7,915,884 
Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes 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.
Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).
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 April 30,Six months ended April 30,
 2022202120222021
Land controlled for future communities$2,192 $1,581 $2,985 $1,747 
Land owned for future communities  1,440  
Operating communities   1,100 
$2,192 $1,581 $4,425 $2,847 
See Note 13, “Commitments and Contingencies,” for information regarding land purchase commitments.
At April 30, 2022, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were variable interest entities (“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 April 30, 2022, we determined that 235 land purchase contracts, with an aggregate purchase price of $3.91 billion, on which we had made aggregate deposits totaling $356.1 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2021, we determined that 289 land purchase contracts, with an aggregate purchase price of $3.67 billion, on which we had made aggregate deposits totaling $302.4 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.
8


Interest incurred, capitalized, and expensed, for the periods indicated, was as follows (amounts in thousands):
 Three months ended April 30,Six months ended April 30,
 2022202120222021
Interest capitalized, beginning of period$247,942 $302,961 $253,938 $297,975 
Interest incurred31,888 38,047 62,893 79,315 
Interest expensed to home sales cost of revenues(40,822)(44,092)(73,259)(77,417)
Interest expensed to land sales and other cost of revenues(219)(579)(3,628)(2,417)
Interest capitalized on investments in unconsolidated entities(1,516)(1,192)(2,806)(2,326)
Previously capitalized interest on investments in unconsolidated entities transferred to inventory60  195 15 
Interest capitalized, end of period$237,333 $295,145 $237,333 $295,145 
During the three months ended April 30, 2022 and April 30, 2021, we incurred approximately $94,000 and $246,000 of interest related to our interest rate swaps which is included in accumulated other comprehensive income, respectively, and approximately $106,000 and $32,000 was reclassified out of accumulated other comprehensive income to home sales cost of revenues, respectively. During the six months ended April 30, 2022 and April 30, 2021, we incurred approximately $368,000 and $400,000 of interest related to our interest rate swaps which is included in accumulated other comprehensive income, respectively, and approximately $182,000 and $42,000 was reclassified out of accumulated other comprehensive income to home sales cost of revenues, respectively.
3. Investments in Unconsolidated Entities
We have investments in various unconsolidated entities and our ownership interest in these investments ranges from 5.0% to 50%. These entities, which are structured as joint ventures and either: (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); (iii) develop luxury for-rent residential apartments, commercial space, and a hotel (“Rental Property Joint Ventures”); or (iv) provide financing and land banking to residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).
The table below provides information as of April 30, 2022, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):
 Land
Development
Joint Ventures
Home Building
Joint Ventures
Rental Property
Joint Ventures
Gibraltar
Joint Ventures
Total
Number of unconsolidated entities
14238458
Investment in unconsolidated entities (1)
$285,070 $6,676 $383,135 $9,504 $684,385 
Number of unconsolidated entities with funding commitments by the Company
11151 27
Company’s remaining funding commitment to unconsolidated entities (2)
$107,738 $ $132,526 $18,799 $259,063 
(1)    Our total investment includes $84.2 million related to 13 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $263.1 million as of April 30, 2022. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 20% to 50%.
(2)    Our remaining funding commitment includes approximately $168.1 million related to our unconsolidated joint venture-related variable interests in VIEs.
Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at April 30, 2022, regarding the debt financing obtained by category ($ amounts in thousands):
 Land
Development
Joint Ventures
Rental Property
Joint Ventures
Total
Number of joint ventures with debt financing
82937
Aggregate loan commitments$507,427 $2,789,904 $3,297,331 
Amounts borrowed under loan commitments
$375,481 $1,492,027 $1,867,508 
9


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 the six-months ended April 30, 2022 ($ amounts in thousands):
Land Development Joint VenturesRental Property Joint VenturesGibraltar Joint Ventures
Number of unconsolidated joint ventures entered into during the period271 
Investment balance at April 30, 2022$13,816 $69,513 $2,093 
In addition, in the first quarter of fiscal 2022, we entered into a joint venture with an unrelated party to develop a luxury for-rent residential apartment project in Washington, D.C. on land which we contributed to the venture. The land we contributed has a carrying value of $60.1 million and remains on our balance sheet under “Receivables, prepaid expenses, and other assets”. Under the terms of the joint venture agreement, our partner has the right to put their interest back to us if certain conditions are not satisfied. If those conditions are satisfied, we would expect to deconsolidate this land and recognize a land sale at that time. In the second quarter of fiscal 2022, the joint venture entered into a $162.7 million construction loan commitment agreement to finance the development of the project. As of April 30, 2022, no amounts were borrowed under this commitment.
The table below provides information on joint ventures entered into during the six-months ended April 30, 2021 ($ amounts in thousands):
Land Development Joint VenturesRental Property Joint Ventures
Number of unconsolidated joint ventures entered into during the period4 3
Investment balance at April 30, 2021$86,200 $43,700 

Results of Operations and Intra-entity Transactions
From time to time, certain of our land development and rental property joint ventures sell assets to unrelated parties or to our joint venture partner. In connection with these sales, we recognized gains of $11.5 million in the three-month period ended April 30, 2021. No gains were recognized in the three-month period ended April 30, 2022. In the six-month periods ended April 30, 2022 and 2021, we recognized gains of $21.0 million and $17.5 million, respectively. These gains are included in “Income from unconsolidated entities” on our Condensed Consolidated Statements of Operations and Comprehensive Income.
In the six-month period ended April 30, 2021, we recognized other-than-temporary impairment charges on our investments in certain Home Building Joint Ventures of $2.1 million. There were no other-than-temporary impairment charges recognized in the six-month period ended April 30, 2022 or the three-month periods ended April 30, 2022 and 2021.
In the three-month periods ended April 30, 2022 and 2021, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $14.1 million and $3.5 million, respectively. In the six-month periods ended April 30, 2022 and 2021, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $37.9 million and $7.8 million, respectively. Our share of income from the lots we acquired was insignificant in each period. In the three-month periods ended April 30, 2022 and 2021, we sold land to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, totaling $73.9 million and $82.6 million, respectively. In the six-month periods ended April 30, 2022 and 2021, we sold land to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, totaling $151.9 million and $140.0 million, respectively. These amounts are included in “Land sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income and are generally sold at or near our land basis.
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 portions of 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.
10


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 April 30, 2022, 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):
April 30, 2022
Loan commitments in the aggregate$2,789,200 
Our maximum estimated exposure under repayment and carry cost guarantees if the full amount of the debt obligations were borrowed (1)
$481,900 
Debt obligations borrowed in the aggregate$1,359,400 
Our maximum estimated exposure under repayment and carry cost guarantees of the debt obligations borrowed$266,600 
Estimated fair value of guarantees provided by us related to debt and other obligations$12,900 
Terms of guarantees
1 month - 4.0 years
(1)    Our maximum estimated exposure under repayment and carry cost guarantees includes approximately $95.0 million related to our unconsolidated Joint Venture VIEs.

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.
Variable Interest Entities

We have both unconsolidated and consolidated joint venture-related variable interests in VIEs. Information regarding our involvement in unconsolidated joint-venture related variable interests in VIEs has been disclosed throughout information presented above.

The table below provides information as of April 30, 2022 and October 31, 2021, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands):
Balance Sheet ClassificationApril 30,
2022
October 31,
2021
Number of Joint Venture VIEs that the Company is the primary beneficiary and consolidates
5 5 
Carrying value of consolidated VIEs assetsReceivables prepaid expenses, and other assets$36,000 $90,800 
Our partners’ interests in consolidated VIEsNoncontrolling interest$9,700 $39,400 
Our ownership interest in the above consolidated Joint Venture VIEs ranges from 50% to 98%. We are actively looking for additional partners for these investments and to the extent we are able to find such partners, we will reduce our ownership interest in these entities.
As shown above, we are the primary beneficiary 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 are not the primary beneficiary 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
11


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.
Joint Venture Condensed Combined Financial Information
The Condensed Combined Balance Sheets, as of the dates indicated, and the Condensed Combined Statements of Operations, for the periods indicated, for the unconsolidated entities in which we have an investment are included below (in thousands):
Condensed Combined Balance Sheets:
 April 30,
2022
October 31,
2021
Cash and cash equivalents$189,373 $153,582 
Inventory1,037,284 964,962 
Loans receivable – net58,547 86,727 
Rental properties1,447,011 1,496,355 
Rental properties under development1,205,474 697,659 
Other assets250,783 227,579 
Total assets$4,188,472 $3,626,864 
Debt – net of deferred financing costs$1,861,211 $1,677,619 
Other liabilities267,771 248,545 
Members’ equity2,059,490 1,700,700 
Total liabilities and equity$4,188,472 $3,626,864 
Company’s net investment in unconsolidated entities (1)
$684,385 $599,101 
(1)    Our underlying equity in the net assets of the unconsolidated entities exceeded our net investment in unconsolidated entities by $22.1 million and $16.5 million as of April 30, 2022 and October 31, 2021, respectively, and these differences are primarily a result of other than temporary impairments we have recognized; 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 Combined Statements of Operations:
 Three months ended April 30,Six months ended April 30,
 2022202120222021
Revenues$130,771 $86,422 $286,523 $178,952 
Cost of revenues86,219 60,136 194,701 156,859 
Other expenses39,172 35,081 82,776 70,470 
Total expenses125,391 95,217 277,477 227,329 
Loss on disposition of loans and real estate owned (209)(113)(209)
Income (loss) from operations5,380 (9,004)8,933 (48,586)
Other income (2)
7,064 34,385 40,410 35,332 
Income (loss) before income taxes12,444 25,381 49,343 (13,254)
Income tax expense (benefit)74 (152)156 (1,659)
Net income (loss) including earnings from noncontrolling interests12,370 25,533 49,187 (11,595)
Less: income attributable to noncontrolling interest   (174)
Net income (loss) attributable to controlling interest$12,370 $25,533 $49,187 $(11,769)
Company’s equity in earnings of unconsolidated entities (3)
$2,933 $10,483 $24,970 $11,677 
(2)     The six months ended April 30, 2022 includes $29.9 million related to the sale of an asset by one Rental Property Joint Venture. The three months and six months ended April 30, 2021 includes $32.6 million related to the sale of an asset by one Rental Property Joint Venture.
(3)    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; promote earned on the gains recognized by joint ventures and those promoted cash flows being distributed; other than temporary impairments
12


we have recognized; 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.
4. Receivables, Prepaid Expenses, and Other Assets
Receivables, prepaid expenses, and other assets at April 30, 2022 and October 31, 2021, consisted of the following (amounts in thousands):
April 30, 2022October 31, 2021
Expected recoveries from insurance carriers and others$15,960 $