Aug. 28--Tax charges and write-downs widened luxury-home builder Toll Bros.' third-quarter loss to almost half a billion dollars, the Horsham company reported yesterday.

For the period ending July 31, Toll reported a loss of $472.3 million, or $2.93 a share, compared with a loss of $29.3 million, or 18 cents a share, for its 2008 third quarter.

Analysts, who exclude these kinds of special items in their forecasts, had predicted a loss of $1.79 a share.

Toll said its third-quarter results were affected by noncash federal and state deferred tax asset valuation allowances of $439.4 million, and noncash, pretax write-downs totaling $115.0 million related to joint ventures that Toll has with other builders on projects around the country. Excluding those write-downs, Toll had pretax earnings of $3.7 million.

Third-quarter total revenue of $461.4 million (792 units) decreased 42 percent from 2008's third-quarter total revenue of $796.7 million (1,244 units). The third-quarter backlog of 1,626 units, or $930.7 million, declined 37 percent and 47 percent, respectively, from 2008's third-quarter backlog of 2,592 units, or $1.75 billion.

Although Toll's results reflect what chairman and chief executive officer Robert I. Toll called "continuing challenging housing market conditions," he repeated what he had said in quarterly reports in the last two years: The company sees "signs for optimism."

Those signs include net signed contracts that were ahead in units compared with a year earlier. Because Toll is selling houses in fewer communities, he said, the number translates into an improvement of 32 percent in per-community net signed contracts in the 2009 third quarter compared with the same period in 2008.

Toll reduced the number of communities in which it builds houses 22 percent since last year.

Only 78 contracts were canceled in the quarter compared with 161 in the 2009 second quarter and 195 in the 2008 third quarter.

Toll said the decline in cancellations appeared to mean that the housing market was stabilizing, echoing some housing economists' observations on growth in new and existing home sales and housing starts in the last three months, as well as an increase in consumer confidence.

Toll's chief financial officer, Joel H. Rassman, said the company had determined during the third quarter that, for accounting purposes, "a noncash federal deferred tax asset valuation allowance of $416.8 million was required, as well as a $22.6 million state deferred tax asset valuation allowance."

For federal income tax purposes, Toll has 20 years to use any losses for such purposes, beginning when the loss is recognized, he said.

"Since the significant majority of this asset was attributed to impairments taken only for book purposes, our 20-year period has not yet commenced," Rassman said.

In the future when Toll reports income, it will reverse the applicable valuation allowances, he said. Toll expects that the remaining federal deferred tax asset of $151.7 million will be recovered in cash when it files its 2009 tax return.

As in the last two quarters, Rassman declined to offer earnings guidance, owing to the unpredictability of the current housing market.

Shares closed down 27 cents at $22.87 yesterday.

Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

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