ASSETSCash and cash equivalents $ 124,054 $ 96,484Residential inventories 1,668,976 1,443,282Property, construction and office equipment 23,377 19,633Receivables, prepaid expenses and other assets 104,133 87,469Investments in unconsolidated entities 27,344 21,194

$1, 947,884 $ 1,668 ,062

LIABILITIES AND STOCKHOLDERS’ EQUITYLiabilities:Loans payable $ 348,622 $ 213,317Subordinated notes 469,479 469,418Customer deposits on sales contracts 112,484 82,495Accounts payable 94,287 84,777Accrued expenses 157,011 141,835Income taxes payable 74,395 59,886

Total liabilities 1,256,278 1,051,728

Stockholders’ equity:Common stock 359 365Additional paid-in capital 105,184 105,239Retained earnings 610,242 522,665Treasury stock (24,179) (11,935)

Total stockholders’ equity 691,606 616,334$1,947,884 $ 1,668 ,062

Revenues:Housing sales $1,160,379 $1,002,883 $ 452,174 $ 392,206Land sales 30,061 10,964 9,544 10,964Equity earnings of unconsolidated

joint venture 3,069Interest and other 6,060 7,384 2,814 2,524

1,199,569 1,021,231 464,532 405,694Costs and expenses:

Housing sales 887,303 781,838 342,030 304,613Land sales 23,266 8,556 7,618 8,556Selling, general and administrative 119,307 92,878 44,177 34,114Interest 31,211 28,128 11,916 10,870

1,061,087 911,400 405,741 358,153

Income before income taxes and extraordinary loss 138,482 109,831 58,791 47,541

Income taxes 50,905 40,240 21,557 17,468Income before extraordinary loss 87,577 69,591 37,234 30,073Extraordinary loss from extinguishment of

debt, net of income taxes of $857 in 1999 1,461Net income $ 87,577 $ 68,130 $ 37,234 $ 30,073

Earnings per shareBasic

Income before extraordinary loss $ 2.41 $ 1.89 $ 1.03 $ .82Extraordinary loss from

extinguishment of debt .04Net income $ 2.41 $ 1.85 $ 1.03 $ .82

DilutedIncome before extraordinary loss $ 2.36 $ 1.85 $ 1.00 $ .80Extraordinary loss from

extinguishment of debt .04Net income $ 2.36 $ 1.81 $ 1.00 $ .80

Weighted average number of sharesBasic 36,338 36,765 36,146 36,614Diluted 37,055 37,591 37,219 37,400

Housing Data2000 1999 2000 1999

Number of homes closed 2,668 2,517 1,011 986Sales value of homes closed (in 000’s) $1,160,379 $1,002,883 $ 452,174 $ 392,206Number of homes contracted* 3,322 2,886 1,060 922Sales value of homes contracted* (in 000’s) $1,573,814 $1,225,142 $ 532,317 $ 398,559Number of homes in backlog* 2,983 2,483 2,983 2,483Sales value of homes in backlog* (in 000’s) $1,468,254 $1,092,660 $1,468,254 $1,092,660Average number of selling communities 147 134 151 133

Consolidated Statements of Income(Amounts in thousands, except per share data) (Unaudited) Nine Months

Ended July 31Three Months Ended July 31

July 31, 2000 Oct. 31, 1999 (Unaudited)

Consolidated Balance Sheets(Amounts in thousands)

Statement on Forward-looking InformationCertain information included herein and in other Company reports and S.E.C. filings is forward-looking within the meaning ofthe Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning anticipated operatingresults, financial resources, increases in revenues, increased profitability, interest expense, growth and expansion, ability toacquire land, Year 2000 readiness, and the effect on the Company if the Company or significant third parties are not compliant.Such forward-looking information involves important risks and uncertainties that could significantly affect actual results andcause them to differ materially from expectations expressed herein and in other Company reports and S.E.C. filings. These risksand uncertainties include local, regional and national economic conditions, the effect of governmental regulation, the competi-tive environment in which the Company operates, fluctuations in interest rates, changes in home prices, the availability and costof land for future growth, the availability of capital, the availability and cost of labor and materials, and weather conditions.

Toll Brothers, Inc. Corporate Headquarters3103 Philmont Avenue

Huntingdon Valley, PA 19006215-938-8000

www.tollbrothers.comNYSE – “TOL”

Investor RelationsFrederick N. Cooper – 215-938-8312

Vice President - Financefcooper@tollbrothersinc.com

Joseph R. Sicree – 215-938-8045Vice President - Chief Accounting Officer

jsicree@tollbrothersinc.com

Corporate Profile

Toll Brothers, Inc. is the nation’s leadingbuilder of luxury homes. With fiscal 1999’searnings of $102 million on revenues of $1.46billion, the Company completed its seventhconsecutive year of record earnings, its eighthconsecutive year of record revenues and year-end backlog, and its ninth consecutive year ofrecord signed contracts.

Toll Brothers began business in 1967 and islisted on the New York Stock Exchange and thePacific Exchange under the symbol “TOL”. TheCompany builds customized single-family andattached homes, principally on land it developsand improves, for move-up and empty-nesterbuyers in six regions of the country. TheCompany is developing master planned countryclub, golf course communities in seven statesand active-adult, age-qualified communities inMichigan, New Jersey, Connecticut and Virginia.The Company operates its own architectural,engineering, mortgage, title, land development

and land sales, security, landscape, lawnmaintenance, insurance brokerage, cable T.V.and broadband Internet delivery service, andhouse component assembly and manufacturingoperations. The Company acquires anddevelops commercial properties through itsaffiliate, Toll Brothers Realty Trust.

Toll Brothers currently operates over 140 sellingcommunities in twenty states: Arizona,California, Connecticut, Delaware, Florida,Illinois, Massachusetts, Maryland, Michigan,Nevada, New Hampshire, New Jersey, NewYork, North Carolina, Ohio, Pennsylvania,Rhode Island, Tennessee, Texas, and Virginia.

Toll Brothers is the only public home builderto have won all three of the industry’s highesthonors: America’s Best Builder from theNational Association of Home Builders, theNational Housing Quality Award and Builder of the Year. For more information visit our website at www.tollbrothers.com.

199819971996 2000

$19.29

$16.01

$13.52

$10.51$8.63

1999Book Value Per Share

At July 31

1999199819971996 2000

$1,468

$1,093

$844

$654$555

Backlog(in millions)At July 31

1999199819971996 2000

$1.00

$.80

$.67

$.45$.43

Income per Share (Diluted)Before extraordinary item

Three Months Ended July 31

199819971996 2000

$532

$399

$333

$251$206

1999Contracts(in millions)

Three Months Ended July 31

*Contracts for the three-month and nine-month periods ended July 31, 2000 include $4,445,000 (15 homes) and $12,339,000(45 homes), respectively, from an unconsolidated 50% owned joint venture. Contracts for the three-month and nine-monthperiods ended July 31, 1999 include $7,552,000 (27 homes) from this joint venture. Backlog as of July 31, 2000 and July 31,1999 includes $13,229,000 (47 homes) and $13,073,000 (58 homes), respectively, from this joint venture.

2000 1999 2000 1999

Nine Months Ended July 31

Three Months Ended July 31

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Your company produced record third quarterearnings, up 24% over fiscal 1999; record ninemonth earnings, up 26% over 1999; recordthird quarter revenues, up 15% and record ninemonth revenues, up 17%. Our earnings,revenues and backlog were the highest for anyquarter in our history and we produced our38th consecutive quarterly year-over-year recordfor new contracts.

Our stock price has risen recently as “themarket” has shown increased interest in ourindustry, and our company in particular. Whilewe welcome this, our price/earnings multiple asof this writing is 8.3 times IBES’ projected fiscalyear-end earnings estimate. Having producedcompound annual growth in excess of 20% onaverage for revenues and earnings over the past10 years, we hope to reach a p/e multiple moreclosely resembling that of other companies withsimilar growth.

Profit margins this quarter continued toimprove as the price increases we put into effectnine to twelve months ago are now impactingour bottom line; with ongoing strong demandfor luxury homes we have continued to raiseprices. The average delivered price of homesthis quarter was $447,000 and the average priceof homes in backlog was $492,000. This wasup approximately $50,000 compared to oneyear ago; in addition to the impact of homeprice increases, it reflects our expandingproduction in California and our increasednumber of large master planned communitiesoffering more expensive homes.

We now have ten master planned communitiesalready open or scheduled to open in thecoming year. These communities, totalingapproximately 10,000 lots, have tremendousrecreational amenities such as championshipgolf courses, country clubs and lakes. Since weoffer multiple products within thesecommunities, they are the ideal way for us toserve both move-up and empty nester luxurybuyers. We will continue to expand productionwithin these master planned communities andintend to open new ones in the future.

The overall strength of the New Englandeconomy has led us to expand into NewHampshire, our 20th state. We believe thismove, coupled with our established presence in

metro Boston and recent expansion into RhodeIsland and Northern Connecticut, will enableus to further benefit from the region’s robusteconomy and demographics.

To fuel our continuing growth, we raised anadditional $170 million from eight of the banksin our credit line through a five-year term loanthat, with their approval, can be extendedannually and can be increased to $250 million.We used $56 million of the proceeds to repaybank term debt due within one year. This newloan, coupled with our $465 million bankrevolving credit facility, of which over $320million is available, gives us access to $635million of bank capital.

In our third quarter we repurchased 557,000shares of our stock, raising to 1.56 million thenumber of shares we have repurchased in fiscalyears 1999 and 2000.

With consumer confidence high, interest ratessteady and unemployment low, it appears asthough we will have a strong luxury housingmarket in the coming year. Due to our record$1.47 billion backlog, which was up 34% overthe previous year, most of our revenues throughthe second quarter of fiscal 2001 are already inour pipeline. Based on this backlog and currenthealthy demand, we believe that fiscal 2001should be another record year.

Given our excellent results, the continuingincrease in affluent U.S. households and thedemographics of the maturing baby boomgeneration, we eagerly anticipate the future.

We greatly appreciate our shareholders’ and ourhome buyers’ support and confidence, andthank the entire Toll Brothers team for anotherextraordinary performance.

Sincerely

Zvi BarzilayPresident and Chief Operating Officer

August 23, 2000

Robert I. Toll Bruce E. TollChairman of the Board Vice Chairman

and Chief Executive Officer of the Board

A Letter to our Shareholders:

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