Good afternoon, my name is Heather and I will be your conference operator today. At this time, I would like to welcome everyone to the Toll Brothers second quarter outlook conference call. (Operator instructions) Thank you Mr. Toll, you may begin your conference.

Thank you Heather, welcome and thank you for joining us everybody. With me today are Joel Rassman, Chief Financial Officer, Fred Cooper, Senior Vice President of Finance and Investor Relations, Joe Sicree, Chief Accounting Officer, Kira McCarron, Chief Marketing Officer, Don Salmon, President of TBI, our mortgage company, Greg Ziegler, Vice President of Finance and Mark Kessler, our General Counsel. Before I begin, I ask you to read the statement on forward-looking information in today’s release and on our website. I caution you that many statements on this call are based on assumptions about the economy, world events, housing and financial markets and many other factors beyond our control that could significantly affect future results. Those listening on the web can email questions to rtoll@tollbrothersinc.com. We’ll try to answer as many as possible. Today we announce preliminary results for revenues, backlogs and contracts for our second quarter ending April 30, 08. I assume you’ve seen the release which we put out this morning and is on our website at tollbrothers.com. Therefore, I’ll try to high the highlights, make a few comments and then go to Q&A session. These results are preliminary and unaudited. We will announce final results when we announce second quarter and six month earnings on June 3, 2008. Fiscal year 08 second quarter home building revenues of approximately $817.9 million were 30% lower than fiscal year 07’s second quarter total. Fiscal year 08’s backlog at second quarter end of approximately $2.08 billion was 50% lower than fiscal year 07’s and 13% lower than fiscal year 08’s first quarter end backlog. Fiscal year 08 second quarter gross contracts of approximately $730.5 million and 1,237 homes were 49% and 39% lower respectively than fiscal year 07’s second quarter totals. In fiscal year 08 second quarter we had 308 cancellations…

(Operator instructions) Your first question comes from David Goldberg – UBS. David Goldberg – UBS: I was wondering if you could talk about this idea of pent up demand and how high quality you think the traffic is that’s out there. And I guess I’m thinking about it relative to the availability of mortgages and whether these buyers are going to be able to qualify under tighter mortgage standards.

Understand, I think the quality of the traffic is excellent and the reason is, is there’s so little of it. We are looking at traffic numbers on a per community basis that, for almost every week, going back for a long time now, are the worst that we’ve ever seen. So once again I reiterate, those that are out there have pretty good quality. With respect to qualification for mortgages, our LTV dropped to 67% for the past quarter, so we’ve got excellent quality and high net worth. The rating for our average mortgage out of TBI Mortgage was 747 for our clients. What was the first part of the question which was more important? David Goldberg – UBS: The first part was about if there’s pent up demand out there. If it’s not coming through in the traffic numbers, how do you know it’s there I guess?

The reason we know is when we hold a special, any gag will do as long as we can work the phones, bring project managers, assistance vice presidents to make phone calls to the backlog of people to the list of people that have visited a community, we can bring them out in tremendous number and we can sell a great number of homes. The problem as I said in the monologue is that they go home, they think about it. Our guess was that in top management, we thought most of them were electing not to go further, they cancelled the deposit and get their money back because they go to their friends and neighbors and say we just bought a new home and everybody says what are you crazy, prices are dropping. But I’m advised by my regionals who read the release and called me and said you know, as big a problem if not a bigger problem is the fear of selling because we’re a luxury move up provider. Their fear of selling their existing home, and that’s causing them to have second thoughts and cancel. So to get back to the question, the reason we think there’s strong pent up demand and that it’s growing is that we hold a kind of sale, a special incentive, but work the phones hard to bring out the people, we get tremendous numbers. So we did this a couple of weeks ago for instance in Maryland and DC and we had like five, six times the ordinary turnout that we would get and they deposited. And we got a tremendous number of deposits. So that’s an indication that they’re there but they’re scared for either reason, falling prices or inability to sell their old home.

Your next question comes from Megan McGrath – Lehman Brothers. Megan McGrath – Lehman Brothers: I wanted to follow up on your comments around potential land purchases that nothing has excited you yet. Is that more of a function of price or location?

More a function of location, we haven’t seen the locations that interest us. The prices are pretty interesting. You can buy stuff for less than the cost of the improvements, but that stuff is pretty far out there and isn’t what we’re looking for. Megan McGrath – Lehman Brothers: On your ASPs, are you still comfortable given what you saw this quarter with your guidance ranges, $630-$650 for the year?

We’ll update it in June but I would think the thing that’s made me change my opinion, that was the deliveries.

I think we are comfortable with respect to deposits and sale prices when we bring on the new Manhattan building for instance, that may impact sales prices.

Average sales price, new contracts signed this quarter was much lower and will it affect my guidance and the answer is probably not.

Your next question comes from Nishu Sood – Deutsche Bank Securities. Nishu Sood – Deutsche Bank Securities: Last time we spoke on your conference call it was right before the increased limits on the FHA and the conforming stuff, so I just wanted to get an update on that, has that product worked its way into your portfolio, your customer base and what types of rates are you offering or are you seeing on that product?

In the past few weeks, that product has really come in much closer to the regular conforming. Right now it’s about three-eighths of a point in rate over a normal conforming loan. And the great thing is, just yesterday Fannie Mae did its first security of the jumbo conforming loans which we think is really going to help liquidity. Put that in contrast to normal jumbo spreads which are five-eighths of a point, it really brings that down one-quarter of a point for those buyers and we think that’s terrific. Nishu Sood – Deutsche Bank Securities: So it’s at about a 50, 75 basis point premium to the regular conforming stuff?

About three-eighths of a point premium to the regular conforming. Nishu Sood – Deutsche Bank Securities: You’re talking about looking at opportunities land wise, I’m sure you’re also seeing a lot of deals, a lot of potential transactions in terms of builders overall, so my question was as you kind of look across the landscape, are your potential acquisition candidates, which would obviously be the luxury private builders, are they in the same sort of shape that we’re hearing about private builders in general, are they better shape, worse shape, how do they look relative to the industry?

I don’t know is the honest answer and the only answer I can give you. Logically they should be in worse shape, they’re almost all community financed on a secured basis and when the banks shut them off or slow them down, they run the risk of losing the whole ballgame. We are looking not at private builders as much as we’re looking at private builder’s assets but we’re also looking at some of the larger builders as well.

Your next question comes from Michael Rehaut – J.P. Morgan. Analyst for Michael Rehaut – J.P. Morgan: This is Ray filling in for Mike. Question on your current pricing strategies given your order ASPs were down pretty substantially year over year and sequentially, largely due to mix but also I think you mentioned incentives which I think probably triggers some of the large impairment charges this quarter versus some prior quarters. I was just wondering about the shift in strategy or are you trying to get more aggressive on price as we go through a more slower period on sales for the rest of the year.

To a certain extent, as we hold the specs that we got by accident, people not completing the sale, we keep the deposit but we’re stuck with their home, we complete the home. As we hold that for a longer period of time, we will increase incentives in order to get rid of it. We don’t mind holding land, but we don’t want to hold the specs and that’s what increases the incentives and that probably had quite a bit to do with the price change. Our specs have decreased tremendously, in terms of a single family and multi-family low rise specs, we have about 2 per community on average now. So we’re in pretty good shape. That should work its way through in our system to being able to recover with higher prices. For instance in Naples, Florida market, West Coast, Gold Cost of Florida, we are now primarily once again selling to-be-builts as opposed to spec inventory. I don’t know how many we had when the market dropped precipitously but I’ll be it was well over 100, but I’m not certain. You’d have to go back and look at some of the sales reports if you have that Greg to find out how high the specs were in West Coast Florida, but we’re down now to onesies twosies, so we’re primarily going to-be-builts, we’re seeing some action, enough so that this was the first time in a long time we raised prices which was a huge event made everybody feel good around here. It’s just one market, it’s not a huge market. But it gave us some happy times especially considering that Naples was one of the worst markets that we had. A year ago you couldn’t give a house away in Naples, it seemed. And so we practically did give some homes away I guess in order to get rid of our specs. Analyst for Michael Rehaut – J.P. Morgan: So aside from the specs in terms of your other locations outside of Naples, would you say the built-to-order stuff is stabilizing in price or is it still kind of?

Build-to-order is not stabilizing, it is stabilized. We haven’t been dropping the build-to-order because we rather not build than waste a good lot. We’re not interested in just churning and turning. So I don’t think that to-be-builts are suffering the way the specs had to suffer I guess in order to get rid of them. Analyst for Michael Rehaut – J.P. Morgan: I was wondering if you could go over some of the trends throughout the quarter, pricing, orders, traffic and then possibly if you can give your typical market color commentary?

Pricing for the quarter is in the release. For the market ratings, Massachusetts is now a D minus, Connecticut is a B plus. And the New York suburbs, actually they’re ex-urbs, they’re up in the Fishkill Putnam and Duchess County, those territories are at a B plus. City living in New York has now been reduced to 1.5 offerings in Brooklyn and right now they are an F, so the Brooklyn market has faded for us. We’re sold out of our Manhattan stuff and we sold out of apparently our best Brooklyn project because it sold out. The urban in New Jersey, in Hoboken, Jersey City is a B market. New Jersey is a C market but that’s on average. There’s a lot of variety in New Jersey. If you go out 78, Western New Jersey is a bust, is an F, whereas the Princeton area is an A and some of the other territories are B’s in New Jersey. Michigan is an F. Illinois is an F minus. Minnesota is an F minus. In the Mid-Atlantic states, Pennsylvania, Philadelphia suburbs are now a C minus. Poconos are an F minus. Delaware is a D. Maryland shore, the beaches, still an F minus. Washington DC, Maryland, we rate now at a B plus. Virginia at a C plus, but you need to produce apparent bargains to bring them out to make Northern Virginia work. West Virginia, just in the last four weeks has been a B minus but I wouldn’t go invest in West Virginia just yet. North Carolina, Raleigh, in the South, Raleigh is a C minus, Charlotte recently has turned into an F minus. Hilton Head still running at an F minus but we did get lucky this week, at least it feels as though and took some. Atlanta, Georgia, F minus for us. Florida Central, F plus, Florida East, F minus, Florida North, F. So you have to understand the F soup in order to judge how we’re doing. Florida, Tampa, is an F minus minus. Florida West Coast, the Naples area, A minus, which was a shock for us and a lovely one. Austen, Texas an F now for us at least. Dallas, Texas, C plus. San Antonio, Texas an F. Northern California on the West Coast, B minus to a D. Southern California F minus. Palm Springs D plus. Arizona which is all of our Scottsdale and Phoenix operations are an F. Vegas is an F minus minus, just put your money on double zero. Reno is an F minus and Colorado is an F. I’ve been handed a note by Kira as I reviewed New York, she says please mention, I thought I already did, we have a Manhattan building that we’re in foundation on now and we’ll be coming to market soon, as soon as we clear the DCA office or the attorney, I think they call it the attorney general’s office for the offering in New York.

Your next question comes from Alan Ratner – Zelman & Associates. Alan Ratner – Zelman & Associates: Quick question, do you have any tax refunds received during the quarter?

No we have still been profitable and so we did not yet have a tax loss year. Alan Ratner – Zelman & Associates: So the roughly $275 million increase in cash was pretty much all driven by the inventory reduction?

Inventory revenues coming from houses and earnings and other income and those items and you’ll get color on that in the conference call on June 3. Alan Ratner – Zelman & Associates: You mentioned that you’re looking for deals in most markets and then later went on to say that you already own several years’ supply, so you don’t have to keep buying land to maintain it. So my take away from that is that it would have to be an absolute blow away deal for you to considering something, either a great location or a great price. So I’m curious if you could try and break out.

You are right, we are looking at, as you characterize it, the blow away deal. Alan Ratner – Zelman & Associates: And could you potentially list a couple of markets that maybe you are shorter on land or might be looking for that particular deal that you would be willing to pull the trigger on?

I would say as I said in the monologue, pretty much any one of our territories, it’s just go to do with the deal itself. We don’t believe this will last forever, although I can give you no indication that the end is in sight or that the light at the end of the tunnel is not the train coming toward you. You know we read with alarm the predictions of the markets. Some, I think it was [Al Ableson] this week quoted Stephanie [Palmboy] of Macro [Maven] who pointed out the Case-Shiller says that things are going down at an annual rate of 32%. We looked into that because we found that number alarming and found out that Case-Shiller for the month, the switch from January to February showed that the average existing home sales price went from $180-$175. Stephanie then multiplied that by 12 and came out with the percentage drop for the month, multiplied it by 12 and came out with a market falling at 32%. If you listen to that you’d be in a deep foxhole and we’re not going to go that deep. But on the other hand, we can’t predict that the recovery is around the corner. But we’re not averse to buying stuff that we think is a tremendous bargain, even if we think it’ll be a couple of years before we can bring it to market. Alan Ratner – Zelman & Associates: And you’re only looking in markets you’re currently in as opposed to potential new markets?

No, we would look at a new market too, though there’s not a lot that we’ve got on our radar screen. But if we can run up to Jolly Roger and take out the Senator and throw the grappling hooks onto a ship in a territory that we’re not sailing in right now, we’re not adverse to expanding on that basis. After all, that is how we got into California back in 93-94.

Your next question comes from Joel Locker – FBN Securities. Joel Locker – FBN Securities: On the 51,800 lots, how many of those are owned?

65%. Joel Locker – FBN Securities: And then I saw the impairments are in a ballpark, $225-$375 million, do you have a range for the actual JV impairments?

We’re not going to give color on that yet, we’re still working on numbers and so we just included a range of estimates which include our JV portion.

Your next question comes from Alex Barron - Agency Trading Group.

So I know that generally when you report average, when you compute the average sales prices you have a distorting affect when the cancellations are factored in with the new orders, so I was wondering if you could give us kind of a more apples to apples, how much have the house prices come down by region this quarter on the orders?

It’s not same store, that’s one of the problems we have in analyzing the data. You can do the mathematical numbers by looking by region of the number of units we’ve done divided by the total contracts we’ve signed in dollars. But when you look at it, it’s really not that easy to do because you have smaller communities, lower price communities that have opened up compared to last year, you have changes in the number of homes sold in active adult communities etc. So I don’t have an answer for you and the reason is it’s just very complicated to do on a same store basis.

I was trying to see if you guys had a more realistic apples-to-apples comparison.

We spent a couple of hours yesterday trying to figure out how to answer that question that was asked and couldn’t come up with an easy way.

Do you guys have any remaining obligations to take down land in either Inspirado or Kyle Canyon?

Yes, we’ve got remaining obligations. Whether the obligations are enforceable and whether we’ll take down land is debatable.

Your next question comes from Timothy Jones – Wasserman & Associates. Timothy Jones - Wasserman & Associates: Just Joel a question, what do you have with two weeks to go such a wide range on your projected write offs given the fact I mean you’ve only got two weeks to go, you know most of the data by now.

I think that Joel didn’t want to give you any better information than he gave.

We still have a lot of deals to [inaudible]. Timothy Jones - Wasserman & Associates: Joel I can call you when you know something that’s tenth degree.

Well, we’re happy for that. Timothy Jones - Wasserman & Associates: I know, you’re not going to answer the question then?

That is correct. Timothy Jones - Wasserman & Associates: Anyway I’m interested that your average gross price went from $711 to $790 and we know the reason, write downs and different things and different products, my concern is, why is it a cancellation rate of 760 almost $200,000 higher? I would think that the cancellation rate might be in the lower priced ones rather than the higher priced units.

It has to do with the age of the communities and what’s being cancelled. They come out of the sales that we did basically nine months plus ago and those communities were higher priced communities, look at the average sales price that we sold nine months ago. So we had a switch in community, type of community over the last year.

It’s territory also Tim. People are more likely to be cancelling in California where you’ve had dropping prices to a greater extent than you’ve had in Philadelphia suburbs. So California product, a lot of single family homes at $1 million that cancelled affects that average pretty greatly. Timothy Jones - Wasserman & Associates: Did you get your 7%-10% down payment or do you have to go with the 3.5% that they allow you to keep in California?

We take both in California. Right now I think it’s 5% plus 20% on options and it averages out to about 7% for us. And we keep it. California has a law that says you’re not allowed to keep liquidated damages in excess of 3%. But that doesn’t mean you’re not allowed to take more than 3% and be, if you can show that it’s not liquidated damage but actual damage of more than 3% to 7%, let us say, and you’re allowed to keep the money and no problem today showing that you’re damaged by more than 7%, so you can keep the dough. Timothy Jones - Wasserman & Associates: I don’t know what the difference of liquidated value and actual damage is.

Liquidated damages just means a number that the two of you have picked. As the damage irrespective of what the market really is. It means the picked number, the agreed upon number.

Your next question comes from Doug Kass – Seabreeze. Doug Kass – Seabreeze: You’ve talked about doing only the most opportunistic land deals and or acquisitions of other private luxury builders in the conference call. I’m wondering, have you considered or would you consider a merger of equals with another public entity? Are there enough benefits for example, financial benefits, product mix benefits, scale benefits in a merger of equals, particularly based on reduced company sizes and if you haven’t considered a merger of equals, why not?

We have. We haven’t spent a lot of time on it. Dipped our toes in the water, chatted it up a little bit. So far we’re very happy where we are but it’s not ruled out.

Your next question comes from J. McCanless – FTN Midwest. J. McCanless – FTN Midwest: First on the increased limits for the GSEs that we have in 08, what is your alls take on whether those will be in place for 09, have you heard anything you can relate?

Don have you heard anything about them staying in place, I know there’s something in the hopper already from Congress that they shall stay in place forever more. I would doubt very much just on a political logic basis that there’s little likelihood that with a down housing market that the Congress would ask the GSEs to go back to $417. So I’m not too worried about that. Even our Congress would be able to get its act together long enough to extend that if our housing market is still down when the year is up. And I would say that that all will probably be happening. J. McCanless – FTN Midwest: I was wondering if you could dig a little bit deeper into Florida, is it still an insurance and contingency issue there or are there other factors we need to be looking at?

I don’t think it’s an insurance issue for us. And I don’t know what you mean by continuing to see unless it’s selling their old home. J. McCanless – FTN Midwest: Exactly, people not able to sell their old home.

Yes, that’s a major in Florida for us. The insurance is not a major, we’re a luxury provider, they can afford the insurance.

Maybe it’s a lack of insurance in certain locations. There are geographic locations within Florida where it’s difficult to get any insurance.

But we haven’t had that problem.

Hasn’t affected us.

Your next question comes from Alex Barron – Agency Trading Group.

What do you think is the difference between a market like Vegas that you’re calling an F minus minus and Virginia that you’re calling C plus where you said if you offer buyers some incentives they come out? I mean I’ve been to Vegas and your prices are down quite a bit, what do you think is the difference?

We can’t sell them in Vegas and we can sell them in Virginia. For me it’s pretty simple. An F minus minus market is when you just don’t seem to be able to sell any homes. There’s no demand. And a C plus market is where you can sell them, sometimes at the regular price, sometimes you have to raise the price and then offer a special incentive in order to bring them in. So it’s working in Virginia.

Joel I was wondering do you have a count of the total homes under construction and what amount your percent of unsold versus sold and finished specs?

We don’t have a breakout of what’s finished, but we have less than normal. And in single family we have 335 homes for 210 communities and a multi-family, we have 297 homes at 74 communities. Those are the ones we think that are most likely to be of interest.

That’s the unsold count at any stage of construction?

In those two product lines, yes.

Heather, I’ve got a question from Michael Steinberg of [CC Quest]. “When is Toll Brothers going to start exiting geographies such as Florida?” We don’t have any plans to exit any market that we are currently in Michael. So I can’t give you any answer other than that. Heather.

Your ext question comes from Shawn [Apacelo] – National City Bank. Shawn [Apacelo] – National City Bank: I was wondering if you guys could give a little color as to how the mortgage company is doing and the success with selling off the loans. I know you guys had mentioned a big Fannie Mae deal, can you give a little detail around that also?

We think we’re really well positioned for the market. We’ve just done or are about to announce deals with six separate banks that will improve our position reasonably well we think and those deals include improved LTV, product offerings, some soft market relief, better jumbo offerings. We have right now, we’re negotiating, we’re about to announce, we hope very shortly, a second mortgage product that will take us up over $1.25 million with high LTV. We just announced a deal with a small community bank that is offering a terrific product of our New York and New Jersey condominiums, the high rises. So we think we’re doing reasonably well. The liquidity is good, we’re showing a small profit for the quarter so that’s a good thing.

Your final question comes from Chris Hussey – Goldman Sachs. Chris Hussey – Goldman Sachs: You said fewer specs coming on, maybe you would be selling fewer specs, does that mean less cash flow in the future as you will be having to put more into your houses that you do sell?

I don’t think we said we’d sell fewer specs, I said I think that we’ve reduced, we have fewer specs to sell. Chris Hussey – Goldman Sachs: When you have a lot of specs to sell, it’s about that story, the good thing about that is when you sell it you get a whole lot of cash flow coming in because there’s no cost to that product that you are selling.

I think we’re doing very well on the distribution of cash and I don’t think it’s just from selling specs. We’ve not had to expend for land and improvements to the same extend in prior years, we’re not growing our land inventory in the same way. We are still selling we believe at a profit, a gross margin profit in general and so I think that all of those things add together have helped to improve [dock positions].

Heather, we might be done with questions?

Yes sir, there are no further question sat this time.

Well that’s great. Thank you everybody and have a good day, bye.