by 6/29/2018 CORRESP CORRESP ?ienamelhtm April 6, 2016 VIA EDGAR TRANSMISSION Mr. Terence O?Brien Division of Corporation Finance Securities and Exchange Commission 100 Street, NE. Washington, DC. 20549-7010 Re: Toll Brothers, Inc. Fem: 1.9wK for fiscal year October 31, 2015 Filed December .21, 2015 File No. 1-9186 Dear Mr. O?Brien: We have reviewed your letter dated March 17, 2016 regarding the Toll Brothers, inc. (the ?Company?) Annual Report on Form for the ?scal year ended October 3 i 2015 (the ?Form To your review, we have organized our response to include each comment to which we are responding herein prior to the response to that comment. This document is being submitted via EDGAR. We understand that your review and comments are intended to assist us in compliance with applicable disclosure requirements and to enhance the overali quality of the disclosure in our We share these objectives and are responding to your comments with these goals in mind The Company acknowledges that it is responsible for the adeqaacy and accuracy of the disclosares contained in its ?lings; that Securities and Exchange Commission (the ??Commission?) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the and that the Company may not assert the Commission?s staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Form 10?wa theyear ended October 2075 Management ?5 Discussion and 22 Fiscrzi 2025 Compared to Fisca! Homebuilding North and Mz?d?Ailaniichgg?ige 3 9 i. The table on page 26 indicates that most oftlie inventory impairment charges infiscef 205 related in [and ownedjor future and operating communities. We also note/from page 117?438 that most ofthc aggregaie charge of $35. 7 was attributed to the North and arid?A {lactic segments. Picasc expand your segment discussion and treat/visits to adequately describe the reievarzi?zcis and circumstances surrormding each material? component ofilie charge, incIiia?ing changes in year underlining Refer to Sections 50Lf)4 and 50} . I 2114 oft/?18 FRC Response: 90% of the $35.7 million of inventory impairment charges in fiscal 2915 related to four operating communities located in our North and Mid?Atlantic segments and two parcels of land owned for furore communities in our Mid?tlantic segment. As disclosed in Note Za ?Signi?cant i ?in? .ntrn 6/29/2?818 CORRESP Accounting Policies - Inventory? in our Form 10-K (page F-9), we review operating communities for impairment when their pro?tability deteriorates, the sales pace declines signi?cantly, or some other factor indicates a possible impairment in the recoverability of the asset. During ?scal 2915, primarily due to a lack of improvement and/or a decrease in customer demand as a result of weaker than expected market conditions in certain housing markets in the suburbs of New York City and Philadelphia, we determined that the pricing assumptions used in our prior impairment reviews for four operating communities located in these markets needed to be reduced. As a result of these reductions in expected sales prices, we determined that these communities were impaired. Accordingly, the carrying values of these communities were written down to their estimated fair values resulting in charges to income before taxes of $13.9 million and $6.8 million in our North and Mid-Atlantic segments, respectively. With respect to iand owned for future communities, which is also discussed in iote 1 in our Form 10-K (page 9), we evaluate all land held for future communities to determine whether we expect to proceed with the development of the land as originally contemplated. During ?scal 2015, due to the weakness in certain housing markets in Maryland and West Virginia, we decided to sell land at two future communities rather than develop them as previously intended. The carrying values of these communities were written down to their estimated fair values resulting in charges to income before taxes of $11.9 million in our Mid?Atlantic segment. In future ?lings, we will discuss the relevant facts and circumstances in our segment discussion and analysis regarding signi?cant impairment charges, including changes to underlying assumptions, consistent with the information provided above. Note 7, Accrued 11.29 2. We note your discz?osures regarding the .stucco?reiofcd ciaims. With reference to the $54 million and $80.3 m?lz?iou estimate of'your potential [iabiliiyfor known and unkuown claims ofzhe end af?rm! years 2:914 and 2015, respectively, please address thejollzmiug comments: Cfarg'?} whether or not your estimated charges are net ofcxpected recoveriesfrom your outside insurance carriers. In this regard, indicate whether you have recorded receivablesfcr these expected recoveries and, if" so, your basisfor this recognition; Response: The charges we recorded re?ect our expected iiahility, net of expected recoveries and/or direct payments from our insurance carriers. We did not record a receivable from our insurance carriers for these expected recoveries. We wiil clarify this disclosure in future filings. Support your use of?previuusly recognized warranty accruals to cover your potentfo! liabilities these claims. In this regard, it appears that as offize end af?rm! year 2014, your $54 miliiou of potential} claims represented 62.3% (if/war accruolfor expected warranty cost a! the end affirm! 2014 and 93.1% ofyour accrue! a: the end (if/?scal year 202 5. Teil us how your expected warranty; costs are eff your expected warranty costs of the emf of'eachjiscai year; and Response: As disclosed in Note 1, ?Signi?cant Accounting I?olicies Warranty and Self?Insurance? in our Form Iii?K {page F42), we accrue for expected warranty costs at the time each home is closed and title and possession are transferred to the home huyer. Warranty costs are accrued based upon historical experience. Based on our eealuatieu of expected future warranty costs {excluding stucco= related repairs discussed below), we had accruals at $48.9 and $53.8 million at Gcteher he? it}? rate: 31 3% 6129/2818 CORRESP 2015 and 2014, respectively. These amounts are consistent with amounts accrued in prior years without stucco- related claims. As disclosed in Note 7, ?Accrued Expenses? in our Form 10-K (pages and F60), after conducting a review of homes in certain completed communities in and Delaware built during ?scal 2003 through fiscal 2009, we determined that we needed to establish a liability at October 31, 2014 for future stucco-related claims for homes built in these communities. As of October 31, 2014, we estimated that our expected gross exposure for stucco-related claims in these communities was approximately $54.0 million, of which approximately $32.5 million would be incurred by us and approximately $21.4 million would be covered by insurance policies in place at the time the homes were delivered to the home buyers. At October 31, 2014, we recorded a liability of $32.5 million to cover our expected uninsured future costs for stucco-related claims in these communities. This liability included the $7.6 million excess reserve for self-insurance discussed below. As disclosed in Note 7, ?Accrued Expenses? in our Form Ill-K (pages F49 and E30), in the fourth quarter of ?scal 2015, during our review of the potential liability for stucco-related claims, we determined that the average cost of repairs increased based upon the actual costs of remediation of homes completed in the second half of ?scal 2015, and that stucco-related repairs would be needed in certain homes built in communities in during ?scal 2010 through ?scal 2013. We also re?evaluated the amount we expected to be covered by our insurance policies with respect to stucco?related claims. As of October 31, 2015, we estimated that our expected gross exposure for stucco?related claims was approximately $80.3 million, of which approximately $47.7 million would be incurred by us and approximately $32.6 million would be covered by insurance policies in place at the time the homes were delivered to the home buyers. In the fourth quarter of ?scal 2015, we recorded an additional charge for stucco-related repairs of approximately $14.7 million for the increase in our estimate of uninsured future costs for stucce-related claims. At October 31, 2015, our accrual for stucco-related repairs was approximately $44.2 million, consisting of the $32.5 million recorded in ?scal 2014, plus the additional $14.7 million for fiscal 2015, plus approximately $0.5 million ef existing warranty accruals, less appreximately $3.5 miliien expended during fiscal 2015 on remediation of claims. During each ?scal year, we accrue for estimated construction defect claims based on claims experience. This review is performed with the assistance of our independent outside actuaries At October 31, 2014, based on our review, as supplemented by our IOA, it was determined that we had $7.6 million in excess reserves for selfm insurance. This excess was applied to the accrual for the expected costs of stucco repairs at October 31, 2014. You indicate t/zafyoa do not believe that any resolution afyoar stucco-related and construction claims in excess oftke amounts currenily accrued would be materfaf to your?aancial condition. Please tell as sappz?ementaiz?y and expaadyour disclosure to assess materiality as it referees to year results Qfoperazions and iiqnidily. Respense: Based on our extensive review of the stucco?related claims previeusly made, the claims we expect to be made in the future, our estimate of costs to be incurred to complete the remediation ef the claims, and the limited geegraphic area and time frame of the homes built with expected stucco?related claims, we believe that the amounts we have previously recegnized in ear ?nancial statements are suf?cient and we do not believe that we will incur any signi?cant costs in excess of these amounts. lf our estimates of petea?al stuccewrelated ciaims are insuf?cient ta eaver these reassures: 373% tan: 9.) .533?. 6f2912Ce?18 CORRESP costs, we do not believe that any shortfall will be material based on ottr 2015 results of operations, the size and strength of our balance sheet, and our liquidity. At October 31, 2015, factors we considered in determining materiality included the $919.0 million of cash and cash equivalents on our balance sheet, over $565.0 million of available borrowing capacity on our revolving credit facility, $9.2 billion of total assets, $5.0 billion of total liabilities, $4.2 billion of total equity, and ?scal 2015 income before income taxes of $535.6 million. In future ?lings, we will disclose that we believe that any resolution in excess of amounts accrued for stucco- related claims is not expected to have a material adverse effect on our results of operations, liquidity, or on our ?nancial condition. a: a: a: We appreciate your review and comments. Piease do not hesitate to call me at (215) 938~8045 with any questions or further comments you may have regarding this letter or if you wish to discuss our responses to the Comment Letter. Yours truly, Joseph R. Sieree Joseph R. Sicree Senior Vice President and Chief Accounting Of?cer hire i543