(Source: PrimeNewswire)
HORSHAM, Pa., June 18, 2009 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, announced today that its board of directors adopted a shareholder rights plan to help preserve the value of the Company's net deferred tax assets, by reducing the risk of limitation of net operating loss carryforwards and certain other tax benefits under Section 382 of the Internal Revenue Code. The Company intends to seek shareholder approval of the rights plan at its next annual meeting.
Toll Brothers' ability to realize its net deferred tax assets would be substantially limited by Section 382 if an "ownership change" occurred - generally, a greater than 50-percentage point change in ownership of stock by shareholders owning (or deemed to own under Section 382) 5% or more of a corporation's stock over a defined period of time. The shareholder rights plan is intended to reduce the likelihood of an "ownership change" occurring as a result of the buying and selling of Toll Brothers common stock.
In connection with the rights plan, Toll Brothers has declared a dividend of one right for each share of common stock outstanding as of the close of business on July 17, 2009. After the rights plan takes effect today, any shareholder or group that acquires beneficial ownership of 4.95 percent or more of Toll Brothers' outstanding stock (an "acquiring person") without the approval of the Company's board of directors could be subject to significant dilution in its holdings. Existing shareholders holding 4.95 percent or more of the Company's common stock will not be considered acquiring persons unless they acquire additional shares, subject to certain exceptions described in the rights plan. In addition, in its discretion, the board of directors may exempt certain transactions and certain persons whose acquisition of securities is determined by the board not to jeopardize the Company's net deferred tax assets.
The rights will expire on July 16, 2019 or earlier if (i) the board of directors determines the rights plan is no longer needed to preserve the deferred tax assets due to the implementation of legislative changes, (ii) the board of directors determines, at the beginning of a specified period, that no tax benefits may be carried forward, (iii) the rights plan is not approved by the Company's stockholders by June 17, 2010, or (iv) certain other events occur as described in the rights plan. Upon approval of this rights plan by the Company's shareholders, the board of directors intends to take action to redeem the Company's pre-existing shareholder rights plan, which was adopted in 2007.
