Luxury home builder Toll Brothers Inc. (NYSE:TOL) today reported a quarterly net loss of $81.8 million, or 52 cents per share, for the quarter ended Oct. 31.

It was the company’s first quarterly loss in 21 years, though the loss was less than the 77 cents per share expected by Wall Street analysts, according to Thomson Financial Network data. Toll Brothers’ stock was trading at $22.03 per share as of 11:41 a.m. ET today, up $1.31 compared to Wednesday’s closing price of $20.72.

Toll Brothers reported net income of $35.7 million for the full fiscal year ended Oct. 31, which compares to net income of $682.2 million for the 2006 fiscal year.

“By many measures, fiscal 2007 was the most challenging of the 40 years that Toll Brothers has been in business,” said Robert I. Toll, company chairman and CEO, in a statement, and, “This downturn may be our toughest test yet.”

Other large public builders have also taken major hits in the past year, with some companies reporting massive quarterly net losses totaling hundreds of millions of dollars.

The company’s quarterly loss was driven by $315 million of pre-tax inventory-related impairments and related write-downs.

Toll said, “the fact that we took such substantial write-downs this quarter, on top of the nearly $88 million of pre-tax inventory-related write-downs in the previous four quarters, reflects the market’s continued weakness.”

The company had total revenues of $1.17 billion in the fourth quarter, compared to total revenues of $1.81 billion in fourth-quarter 2006. For the full fiscal year the company had total revenues of $4.65 billion, compared to record annual revenue of $6.12 billion the previous fiscal year.

The year-end backlog was $2.85 billion in the latest fiscal year, compared to $4.49 billion at the close of the 2006 fiscal year.

Toll Brothers had net signed contracts of $365.3 million in the fourth quarter, which is down sharply from $706.3 million for the same quarter last year. For the full year, the company had net contracts of $3.01 billion, compared to $4.46 billion for the 2006 fiscal year.

Fourth-quarter fiscal year cancellations totaled 417 units, down from 585 units in the previous year’s fourth quarter. Cancellations rose to 38.9 percent of current-quarter contracts for the fourth-quarter of the 2007 fiscal year, compared to 36.7 percent in the same quarter last year.

As of Oct. 31, the company had $900 million in cash and about $1.2 billion available under its bank credit facility, which matures in 2011.

Its net debt-to-capital ratio at Oct. 31 stood at 26.8 percent, which was its lowest level ever, compared to 31.8 percent on that date last year.

Toll Brothers has worked to renegotiate or reduce its optioned land positions, and ended the fourth quarter of the 2007 fiscal year with about 59,300 lots owned and optioned, compared to a peak of 91,200 at the close of last year’s second quarter. Also, the company reduced its number of selling communities from a peak of 325 in last year’s second quarter to 315 at the close of the 2007 fiscal year.

In the past 18 months, the company has reduced its land position by 35 percent.

Joel H. Rassman, chief financial officer for Toll Brothers, said that the company expects fiscal year 2008 revenue to sink below the 2007 level.

“Given the numerous uncertainties related to sales paces, sales prices, mortgage markets, cancellations, market direction and the potential for and size of future impairments, in the current climate it is particularly difficult to provide guidance for (the current fiscal year),” he said.

He estimated that the company will deliver 3,900 to 5,100 homes in the 2008 fiscal year at an average price of $630,000 to $650,000 per home.

He also reported that continuing incentives and slower sales will likely lead to a higher cost of sales as a percentage of revenues in the 2008 fiscal year.

Weak consumer confidence has impacted the housing market, Toll stated, and “Broader concerns about the nation’s economy have magnified worries about potential price declines.”

Once the oversupply in housing is reduced, Toll said that the market will return to better times. He added, “the biggest hurdle for our clients right now is their concern about their ability to sell their old homes. An inability to obtain mortgages does not appear to be a problem for our buyers, but probably is a problem for our buyers’ buyers.”

Toll Brothers will broadcast an earnings audio conference at 2 p.m. EST today at the investor relations section of its Web site, at www.tollbrothers.com. A replay of this call will be available at the Web site through Jan. 31.

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