8-K
Toll Brothers, Inc. (TOL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 7, 2020
Toll Brothers, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-09186 | 23-2416878 | |
|---|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) | |
| 1140 Virginia Drive | Fort Washington | PA | 19034 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (215) 938-8000
| 250 Gibraltar Road | Horsham | PA | 19044 |
|---|---|---|---|
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 | The New York Stock Exchange |
| Guarantee of Toll Brothers Finance Corp. <br> 5.625% Senior Notes due 2024 | TOL/24 | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02 Results of Operations and Financial Condition.
Effective October 31, 2020, the Company elected to reclassify sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense in its 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 $138.6 million, $144.7 million and $136.2 million for the years ended October 31, 2020, 2019 and 2018, respectively.
The Company is furnishing this Form 8-K to provide investors with recast historical information that shows the impact of the reclassification in all periods presented. The schedules in Exhibit 99.1 provide unaudited information for the year ended October 31, 2020 and recast unaudited information for the previously reported years ended October 31, 2019 and 2018 and the three month periods ended January 31, April 30, July 31 and October 31 of each of fiscal 2020, 2019 and 2018. The recast financial information contained in Exhibit 99.1 does not represent a restatement or reissuance of previously issued financial statements.
The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following Exhibits are furnished as part of this Current Report on Form 8-K:
Exhibit
No. Item
99.1* Schedules of unauditedinformation for the years ended October 31,2020,2019tol-dec2020commreclass.htmand 2018andtol-dec2020commreclass.htmthe three month periods ended January 31, April 30, July 31 and October 31 of each offiscal2020,2019and 2018
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed electronically herewith
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 hereunto duly authorized.
| TOLL BROTHERS, INC. | |||
|---|---|---|---|
| Dated: | December 7, 2020 | By: | /s/ Michael J. Grubb |
| Michael J. Grubb<br>Senior Vice President,<br>Chief Accounting Officer |
2
Document
EXHIBIT 99.1
The purpose of this schedule is to provide investors with historical information that has been recast to reflect the Company's reclassification of sales commissions paid to third-party brokers from home sales cost of revenues to selling, general and administrative expense ("SG&A") in its Consolidated Statements of Operations and Comprehensive Income. The reclassification aligns the treatment of sale 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 homes sales gross margin) and increasing SG&A by the amount of sale commissions paid to third-party brokers. The tables provide unaudited recast information, on a consolidated basis and for each segment, for the previously reported years ended October 31, 2019 and October 31, 2018; the three month periods ended January 31, April 30, July 31 and October 31 of each fiscal 2019 and 2018; and the three month periods ended January 31, April 30, and July 31 of fiscal 2020 ($ in millions).
Consolidated:
| Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||
| Cost of home sales revenue: | ||||||||||||||||||||||||||||||
| As previously reported | $ | 1,059.9 | $ | 1,250.7 | $ | 1,318.9 | $ | 1,042.2 | $ | 1,374.3 | $ | 1,401.8 | $ | 1,860.6 | $ | 5,678.9 | $ | 934.5 | $ | 1,298.2 | $ | 1,509.6 | $ | 1,930.8 | $ | 5,673.0 | ||||
| Less: Third-party broker commissions reclassed | 26.8 | 29.7 | 32.8 | $ | 49.3 | $ | 138.6 | 26.0 | 35.5 | 36.4 | 46.8 | 144.7 | 23.2 | 28.6 | 37.0 | 47.4 | 136.2 | |||||||||||||
| As restated | $ | 1,033.1 | $ | 1,221.0 | $ | 1,286.1 | $ | 1,993.9 | $ | 5,534.1 | $ | 1,016.2 | $ | 1,338.9 | $ | 1,365.3 | $ | 1,813.8 | $ | 5,534.2 | $ | 911.2 | $ | 1,269.6 | $ | 1,472.7 | $ | 1,883.3 | $ | 5,536.8 |
| Third-party broker comm as % of revenues | 2.1% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.1% | 2.1% | 2.0% | 2.0% | 2.0% | 1.8% | 1.9% | 1.9% | 1.9% | |||||||||||||||
| SG&A: | ||||||||||||||||||||||||||||||
| As previously reported | $ | 191.8 | $ | 179.4 | $ | 160.6 | $ | 162.2 | $ | 178.4 | $ | 186.7 | $ | 207.2 | $ | 734.5 | $ | 157.3 | $ | 166.7 | $ | 174.1 | $ | 186.0 | $ | 684.0 | ||||
| As restated | $ | 218.5 | $ | 209.1 | $ | 193.5 | $ | 246.3 | $ | 867.4 | $ | 188.2 | $ | 213.8 | $ | 223.1 | $ | 254.0 | $ | 879.2 | $ | 180.5 | $ | 195.3 | $ | 211.0 | $ | 233.4 | $ | 820.2 |
Home Sales Cost of Revenues as a Percentage of Home Sales Revenues by Segment:
| Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||
| North | ||||||||||||||||||||||||||||||
| As previously reported | 86.8 | % | 85.3 | % | 87.0 | % | 83.7 | % | 89.5 | % | 84.3 | % | 86.7 | % | 86.2 | % | 86.4 | % | 88.9 | % | 85.0 | % | 84.8 | % | 86.0 | % | ||||
| As restated | 85.4 | % | 84.0 | % | 85.8 | % | 88.3 | % | 86.3 | % | 82.5 | % | 88.2 | % | 82.9 | % | 85.3 | % | 84.9 | % | 85.3 | % | 87.8 | % | 83.8 | % | 83.8 | % | 85.0 | % |
| Mid-Atlantic | ||||||||||||||||||||||||||||||
| As previously reported | 84.5 | % | 91.7 | % | 85.5 | % | 83.9 | % | 85.7 | % | 86.8 | % | 85.7 | % | 85.7 | % | 82.5 | % | 84.3 | % | 86.1 | % | 84.3 | % | 84.5 | % | ||||
| As restated | 82.3 | % | 89.2 | % | 83.1 | % | 81.0 | % | 83.6 | % | 81.6 | % | 83.3 | % | 84.4 | % | 83.5 | % | 83.4 | % | 80.1 | % | 82.1 | % | 83.9 | % | 81.8 | % | 82.2 | % |
| South | ||||||||||||||||||||||||||||||
| As previously reported | 84.7 | % | 82.9 | % | 81.3 | % | 84.1 | % | 82.7 | % | 83.4 | % | 83.4 | % | 83.4 | % | 85.1 | % | 82.2 | % | 81.3 | % | 82.9 | % | 82.7 | % | ||||
| As restated | 82.3 | % | 80.6 | % | 79.1 | % | 78.9 | % | 79.9 | % | 81.8 | % | 80.3 | % | 81.1 | % | 81.1 | % | 81.1 | % | 83.2 | % | 80.1 | % | 79.2 | % | 80.6 | % | 80.5 | % |
| Mountain | ||||||||||||||||||||||||||||||
| As previously reported | 81.6 | % | 81.4 | % | 80.5 | % | 78.8 | % | 81.1 | % | 79.8 | % | 82.5 | % | 80.7 | % | 80.4 | % | 81.0 | % | 79.9 | % | 80.1 | % | 80.3 | % | ||||
| As restated | 79.5 | % | 79.7 | % | 78.8 | % | 79.1 | % | 79.2 | % | 77.0 | % | 79.1 | % | 78.0 | % | 80.7 | % | 78.9 | % | 78.7 | % | 79.3 | % | 78.1 | % | 78.4 | % | 78.6 | % |
| Pacific | ||||||||||||||||||||||||||||||
| As previously reported | 77.0 | % | 78.5 | % | 75.6 | % | 73.2 | % | 73.7 | % | 73.7 | % | 75.0 | % | 74.0 | % | 72.6 | % | 74.2 | % | 72.0 | % | 72.4 | % | 72.7 | % | ||||
| As restated | 74.8 | % | 76.3 | % | 73.1 | % | 75.9 | % | 75.2 | % | 71.0 | % | 71.4 | % | 71.5 | % | 72.6 | % | 71.7 | % | 70.4 | % | 72.1 | % | 69.8 | % | 70.1 | % | 70.5 | % |
| City Living | ||||||||||||||||||||||||||||||
| As previously reported | 69.0 | % | 62.6 | % | 64.0 | % | 76.1 | % | 65.6 | % | 70.6 | % | 72.1 | % | 70.6 | % | 73.2 | % | 81.1 | % | 73.3 | % | 71.9 | % | 75.2 | % | ||||
| As restated | 66.9 | % | 60.8 | % | 62.1 | % | 51.2 | % | 61.7 | % | 73.7 | % | 63.1 | % | 67.0 | % | 69.4 | % | 67.8 | % | 70.5 | % | 79.5 | % | 70.3 | % | 69.1 | % | 72.7 | % |