The average Garden State resident paid 4 percent less in auto insurance premiums in 2007 than the previous year — and 9 percent less than the peak year of 2004, the National Association of Insurance Commissioners reported this week. Nationally, rates fell by only 5.6 percent between 2004 and 2007.
That's the good news. Despite the downward trend, New Jersey drivers continued to pay the highest premiums of any state in the nation — $1,103 per vehicle.
Part of New Jersey's decline in premiums is attributable to legislative reforms in 2003 that helped lure firms that wouldn't do business here. The state made changes to its assigned risk pool of drivers and allowed companies to offer bare-bones polices.
In 2002 alone, seven auto insurance companies bailed out of New Jersey, bringing the total number of companies that had fled the state in the previous decade to 25. The insurance rules made it impossible for some people to get insurance at all. For those who could, the limited competition resulted in escalating premiums.
Today, eight out of the top 10 largest firms write policies in New Jersey. Unfortunately, the policies aren't cheap. Only three other states had average per-vehicle premium costs in excess of $1,000 in 2007 — Louisiana, New York and Florida. The cheapest rates in the nation were in North Dakota, where the average premium was $511.
Several explanations are offered by auto insurers for why New Jersey has the highest rates: generous medical reimbursements, higher auto repair costs, a higher proportion of luxury cars and heavily congested roads.
Those elements aren't likely to change any time soon.
For now, the best thing to do to keep your premiums down is to shop around, explore the discounts offered by various insurers and keep your driving record clean.
Friday, December 4, 2009
New Jersey Losing $22,000-a-Day With Swap for Bonds Never Sold
New Jersey taxpayers are being saddled with a bill of about $657,000 a month from Bank of Montreal for an interest-rate swap approved by state officials and linked to bonds that were never sold.
The 11th-largest U.S. state by population, which is cutting expenses to close a $1 billion budget deficit, will pay Canada’s oldest lender $23.5 million. The sum, about the same as the salaries for 113 teachers over three years, will allow it to avoid a $50 million penalty for canceling the contract, which was tied to planned sales of school-construction bonds.
The interest rate swap, an agreement between borrowers to exchange fixed and variable-rate payments on a set amount of debt, was arranged in 2004 to protect taxpayers against rising borrowing costs. The strategy backfired after officials decided against issuing the securities.
“This is a classic case of a strategic error,” said Robert Brooks, a finance professor at the University of Alabama- Tuscaloosa and author of a book on derivatives. “It’s arrogant to believe that you have such a command of the future that you know with certainty what is going to happen.”
The payments, which work out to $21,892 a day for three years, show how elected and appointed officials failed taxpayers by agreeing to financial strategies they didn’t fully understand. New Jersey spent $21.3 million in 2008 to exit three contracts signed when James Florio and James McGreevey were governors. The state’s transportation trust fund is giving almost $1 million a month to a Goldman Sachs Group Inc. partnership in an agreement linked to bonds that were redeemed.
Penalties and Losses
New Jersey isn’t alone. Borrowers from Massachusetts to California are struggling with billions of dollars in swap penalties and losses at the same time that budget deficits expand to an estimated $350 billion in 2010 and 2011, according to the Washington, D.C.-based Center on Budget and Policy Priorities.
The derivatives, mostly interest-rate swaps used to exchange fixed payments for variable rates, have grown to as much as $300 billion annually, the Alexandria, Virginia-based Municipal Securities Rulemaking Board said in an April report, citing information from market participants.
Derivatives have created “unprecedented financial stress” for some of the 500 municipal issuers that sold variable-rate debt and purchased swaps from banks to lock in borrowing costs, according to an October report by Moody’s Investors Service. The biggest users of the arrangements are Pennsylvania, California, Texas and Tennessee.
The U.S. Justice Department and Securities and Exchange Commission are investigating whether Wall Street banks conspired with brokers to rig bids on the contracts.
Forward-Starting Agreement
Jefferson County, Alabama, is on the edge of bankruptcy mostly because of a $3 billion sewer project in which fixed-rate bonds were refinanced into floating-rate securities hedged with interest-rate swaps. Larry Langford, the former Democratic mayor of Birmingham, was convicted of federal corruption charges Oct. 29 for accepting bribes in exchange for giving underwriting contracts to a banker friend while he was county commission president.
New Jersey’s 2004 school-bond swap with Bank of Montreal was linked to a $250 million bond originally scheduled to be sold in 2007. The so-called forward-starting agreement was one of 15 such contracts the state set up to help finance construction.
The issue was deferred to 2009 because the school program wasn’t borrowing fast enough to use swaps coming due in 2007, according to treasury spokesman Tom Bell.
Fixed Rate
Under its contract, New Jersey agreed to pay the bank a fixed rate of about 4.6 percent, or $967,000 a month, on the $250 million principal. In return, it would receive unspecified variable-rate payments based on a percentage of the one-month London interbank offered rate, according to Treasury Department spokesman Tom Vincz.
The one-month rate was 0.23 percent on Dec. 3, down from 1.9 percent when the Bank of Montreal swap was set up, according to the British Bankers Association One-Month Libor U.S. Dollar Index. Libor is a benchmark for the cost of loans between banks.
In pushing the swap off to 2009, New Jersey agreed to a 9 basis-point reduction in its fixed interest rate and the bank changed the floating-rate formula to a lower percentage of Libor. A basis point is 0.01 percentage point.
When the revamped agreement took effect on Nov. 1, the state faced payments of $833,000 a month, Vincz said in an e- mail. Treasury officials allowed the bank to suspend floating- rate payments while lowering New Jersey’s fixed-rate cost to 3.1 percent, or $656,770 monthly, through November 2012.
Typical School
The cost would cover the $23.6 million price of a typical elementary school, according to New Jersey Schools Development Authority reports. It would also pay 113 teachers’ salaries for three years, based on data reported by the state Teachers Pension and Annuity Fund.
“It is obscene,” New Jersey Governor-elect Christopher Christie said at a Nov. 16 news conference in Trenton, referring to financial strategies such as swaps pursued largely during McGreevey’s term from 2001 to 2004. “It is extraordinary to me that someone could do that much damage in less than three years.”
McGreevey, who resigned in 2004 after saying he was gay, didn’t respond to phone messages left at his home and the office of his partner, Mark O’Donnell, at real-estate developer Kushner Cos. in New York City. The former governor also didn’t return a message left at the Episcopal All Saints Parish in Hoboken, New Jersey, where he serves as an assistant while seeking a Master of Divinity degree at Manhattan’s General Theological Seminary.
$3.4 Billion
John McCormac, Christie’s transition team economic development and growth adviser who served as state treasurer when most of New Jersey’s swaps were arranged, hung up when asked about them on Nov. 11.
“OK, thanks for calling,” McCormac, mayor of Woodbridge Township, said before disconnecting.
New Jersey refinanced $3.4 billion of debt tied to derivatives last year, according to a report from the state Treasury Department’s Office of Public Finance.
The renegotiated swap lets New Jersey avoid a termination fee, estimated at $50 million in an Oct. 31 state report. It will allow the original swap to be reinstated if officials want to sell school-construction bonds in 2012, Vincz said in the Nov. 16 e-mail.
Diligent Work
“We are working diligently to manage and reduce the cost of the swap portfolio this administration inherited,” he said. “This temporary solution limits swap costs for a three-year period, after which time the state will retain the option of applying the original terms with a future borrowing as a hedge against rising interest rates.”
“We are not in a position to comment, out of an obligation of confidentiality to the client,” Kim Hanson, a spokeswoman for Bank of Montreal, said in a phone interview.
Peter Nissen, a financial adviser in Marlboro, New Jersey, who worked on the swap while at Public Financial Management, the state’s Harrisburg, Pennsylvania-based adviser, declined to comment.
Marty Margolis, managing director at PFM, said in a phone interview that Nissen worked independently on the contract and hasn’t been associated with the company for more than two years.
“That swap was done by someone who hasn’t worked for the company for several years,” Margolis said. “I know nothing about it.”
Except for two deals to stem losses from existing derivative contracts, New Jersey has entered into no new swaps since Governor Jon Corzine, the former co-chairman of Goldman Sachs, took office in 2006, according to Vincz. Christie, a former U.S. prosecutor, defeated Corzine last month and is to be sworn in Jan. 19.
UBS Contract
New Jersey paid $21.3 million last year to end three derivative contracts connected to bonds for business-incentive grants, the River Line Light Rail project from Trenton to Camden and the New Jersey Sports and Exposition Authority. On Nov. 18, the Delaware River Port Authority, a bistate agency that runs toll bridges and a rail line to Pennsylvania, agreed to give Zurich-based UBS AG $111 million if the authority can’t issue variable-rate debt to make use of an existing swap by February.
The state Transportation Trust Fund Authority is paying almost $1 million monthly to Goldman Sachs Mitsui Marine Derivative Products L.P., a partnership of the New York-based bank and Japan’s Mitsui Sumitomo Insurance Group Holdings Inc., under a swap agreement made during McGreevey’s administration in 2003. The derivatives were linked to $345 million in auction- rate bonds sold to finance road and rail projects.
Fixed-Rate Debt
While New Jersey replaced the debt with fixed-rate securities in 2008, the derivative payments aren’t scheduled to expire until 2019. The state plans to sell $150 million in variable-rate bonds on Dec. 7 to make use of part of the swap.
The state treasury “should continue to aggressively manage the termination, conversion and management of swaps that this administration inherited, while dealing with the realities of the most difficult credit conditions in history,” Corzine’s former spokesman, Steve Sigmund, said in an e-mail on Oct. 22.
New Jersey passed up borrowing costs of 4.6 percent to 4.9 percent when it opted to issue variable-rate bonds tied to swaps during McGreevey’s tenure, a 2008 state analysis shows. The net interest cost on the debt was about 4 percent while the original derivative agreements were in effect, according to the report.
Revenue Bonds
The yield on 25-year fixed-rate revenue bonds is now 4.98 percent, up from a yearly low of 4.69 percent in early October, according to a Bond Buyer Index.
Derivatives can save taxpayers money over longer periods if they’re managed properly, said Peter Shapiro, managing director of Swap Financial Group LLC, in South Orange, New Jersey, an adviser to companies and governments.
“Will municipal officers ever take for granted that floating-rate bonds will be dull, boring and predictable means of finance?” he said in a phone interview. “No, and they probably never should have.”
The 11th-largest U.S. state by population, which is cutting expenses to close a $1 billion budget deficit, will pay Canada’s oldest lender $23.5 million. The sum, about the same as the salaries for 113 teachers over three years, will allow it to avoid a $50 million penalty for canceling the contract, which was tied to planned sales of school-construction bonds.
The interest rate swap, an agreement between borrowers to exchange fixed and variable-rate payments on a set amount of debt, was arranged in 2004 to protect taxpayers against rising borrowing costs. The strategy backfired after officials decided against issuing the securities.
“This is a classic case of a strategic error,” said Robert Brooks, a finance professor at the University of Alabama- Tuscaloosa and author of a book on derivatives. “It’s arrogant to believe that you have such a command of the future that you know with certainty what is going to happen.”
The payments, which work out to $21,892 a day for three years, show how elected and appointed officials failed taxpayers by agreeing to financial strategies they didn’t fully understand. New Jersey spent $21.3 million in 2008 to exit three contracts signed when James Florio and James McGreevey were governors. The state’s transportation trust fund is giving almost $1 million a month to a Goldman Sachs Group Inc. partnership in an agreement linked to bonds that were redeemed.
Penalties and Losses
New Jersey isn’t alone. Borrowers from Massachusetts to California are struggling with billions of dollars in swap penalties and losses at the same time that budget deficits expand to an estimated $350 billion in 2010 and 2011, according to the Washington, D.C.-based Center on Budget and Policy Priorities.
The derivatives, mostly interest-rate swaps used to exchange fixed payments for variable rates, have grown to as much as $300 billion annually, the Alexandria, Virginia-based Municipal Securities Rulemaking Board said in an April report, citing information from market participants.
Derivatives have created “unprecedented financial stress” for some of the 500 municipal issuers that sold variable-rate debt and purchased swaps from banks to lock in borrowing costs, according to an October report by Moody’s Investors Service. The biggest users of the arrangements are Pennsylvania, California, Texas and Tennessee.
The U.S. Justice Department and Securities and Exchange Commission are investigating whether Wall Street banks conspired with brokers to rig bids on the contracts.
Forward-Starting Agreement
Jefferson County, Alabama, is on the edge of bankruptcy mostly because of a $3 billion sewer project in which fixed-rate bonds were refinanced into floating-rate securities hedged with interest-rate swaps. Larry Langford, the former Democratic mayor of Birmingham, was convicted of federal corruption charges Oct. 29 for accepting bribes in exchange for giving underwriting contracts to a banker friend while he was county commission president.
New Jersey’s 2004 school-bond swap with Bank of Montreal was linked to a $250 million bond originally scheduled to be sold in 2007. The so-called forward-starting agreement was one of 15 such contracts the state set up to help finance construction.
The issue was deferred to 2009 because the school program wasn’t borrowing fast enough to use swaps coming due in 2007, according to treasury spokesman Tom Bell.
Fixed Rate
Under its contract, New Jersey agreed to pay the bank a fixed rate of about 4.6 percent, or $967,000 a month, on the $250 million principal. In return, it would receive unspecified variable-rate payments based on a percentage of the one-month London interbank offered rate, according to Treasury Department spokesman Tom Vincz.
The one-month rate was 0.23 percent on Dec. 3, down from 1.9 percent when the Bank of Montreal swap was set up, according to the British Bankers Association One-Month Libor U.S. Dollar Index. Libor is a benchmark for the cost of loans between banks.
In pushing the swap off to 2009, New Jersey agreed to a 9 basis-point reduction in its fixed interest rate and the bank changed the floating-rate formula to a lower percentage of Libor. A basis point is 0.01 percentage point.
When the revamped agreement took effect on Nov. 1, the state faced payments of $833,000 a month, Vincz said in an e- mail. Treasury officials allowed the bank to suspend floating- rate payments while lowering New Jersey’s fixed-rate cost to 3.1 percent, or $656,770 monthly, through November 2012.
Typical School
The cost would cover the $23.6 million price of a typical elementary school, according to New Jersey Schools Development Authority reports. It would also pay 113 teachers’ salaries for three years, based on data reported by the state Teachers Pension and Annuity Fund.
“It is obscene,” New Jersey Governor-elect Christopher Christie said at a Nov. 16 news conference in Trenton, referring to financial strategies such as swaps pursued largely during McGreevey’s term from 2001 to 2004. “It is extraordinary to me that someone could do that much damage in less than three years.”
McGreevey, who resigned in 2004 after saying he was gay, didn’t respond to phone messages left at his home and the office of his partner, Mark O’Donnell, at real-estate developer Kushner Cos. in New York City. The former governor also didn’t return a message left at the Episcopal All Saints Parish in Hoboken, New Jersey, where he serves as an assistant while seeking a Master of Divinity degree at Manhattan’s General Theological Seminary.
$3.4 Billion
John McCormac, Christie’s transition team economic development and growth adviser who served as state treasurer when most of New Jersey’s swaps were arranged, hung up when asked about them on Nov. 11.
“OK, thanks for calling,” McCormac, mayor of Woodbridge Township, said before disconnecting.
New Jersey refinanced $3.4 billion of debt tied to derivatives last year, according to a report from the state Treasury Department’s Office of Public Finance.
The renegotiated swap lets New Jersey avoid a termination fee, estimated at $50 million in an Oct. 31 state report. It will allow the original swap to be reinstated if officials want to sell school-construction bonds in 2012, Vincz said in the Nov. 16 e-mail.
Diligent Work
“We are working diligently to manage and reduce the cost of the swap portfolio this administration inherited,” he said. “This temporary solution limits swap costs for a three-year period, after which time the state will retain the option of applying the original terms with a future borrowing as a hedge against rising interest rates.”
“We are not in a position to comment, out of an obligation of confidentiality to the client,” Kim Hanson, a spokeswoman for Bank of Montreal, said in a phone interview.
Peter Nissen, a financial adviser in Marlboro, New Jersey, who worked on the swap while at Public Financial Management, the state’s Harrisburg, Pennsylvania-based adviser, declined to comment.
Marty Margolis, managing director at PFM, said in a phone interview that Nissen worked independently on the contract and hasn’t been associated with the company for more than two years.
“That swap was done by someone who hasn’t worked for the company for several years,” Margolis said. “I know nothing about it.”
Except for two deals to stem losses from existing derivative contracts, New Jersey has entered into no new swaps since Governor Jon Corzine, the former co-chairman of Goldman Sachs, took office in 2006, according to Vincz. Christie, a former U.S. prosecutor, defeated Corzine last month and is to be sworn in Jan. 19.
UBS Contract
New Jersey paid $21.3 million last year to end three derivative contracts connected to bonds for business-incentive grants, the River Line Light Rail project from Trenton to Camden and the New Jersey Sports and Exposition Authority. On Nov. 18, the Delaware River Port Authority, a bistate agency that runs toll bridges and a rail line to Pennsylvania, agreed to give Zurich-based UBS AG $111 million if the authority can’t issue variable-rate debt to make use of an existing swap by February.
The state Transportation Trust Fund Authority is paying almost $1 million monthly to Goldman Sachs Mitsui Marine Derivative Products L.P., a partnership of the New York-based bank and Japan’s Mitsui Sumitomo Insurance Group Holdings Inc., under a swap agreement made during McGreevey’s administration in 2003. The derivatives were linked to $345 million in auction- rate bonds sold to finance road and rail projects.
Fixed-Rate Debt
While New Jersey replaced the debt with fixed-rate securities in 2008, the derivative payments aren’t scheduled to expire until 2019. The state plans to sell $150 million in variable-rate bonds on Dec. 7 to make use of part of the swap.
The state treasury “should continue to aggressively manage the termination, conversion and management of swaps that this administration inherited, while dealing with the realities of the most difficult credit conditions in history,” Corzine’s former spokesman, Steve Sigmund, said in an e-mail on Oct. 22.
New Jersey passed up borrowing costs of 4.6 percent to 4.9 percent when it opted to issue variable-rate bonds tied to swaps during McGreevey’s tenure, a 2008 state analysis shows. The net interest cost on the debt was about 4 percent while the original derivative agreements were in effect, according to the report.
Revenue Bonds
The yield on 25-year fixed-rate revenue bonds is now 4.98 percent, up from a yearly low of 4.69 percent in early October, according to a Bond Buyer Index.
Derivatives can save taxpayers money over longer periods if they’re managed properly, said Peter Shapiro, managing director of Swap Financial Group LLC, in South Orange, New Jersey, an adviser to companies and governments.
“Will municipal officers ever take for granted that floating-rate bonds will be dull, boring and predictable means of finance?” he said in a phone interview. “No, and they probably never should have.”
Probe finds lucrative perks for some in New Jersey
TRENTON, N.J. — The economic downturn hasn't stopped some local governments in New Jersey from paying out generous bonuses and severance packages to employees, including six-figure cash payouts to workers in fiscally distressed cities and towns.
A State Commission of Investigation report released Tuesday concludes the lucrative perks paid to some local government workers are costing New Jersey taxpayers millions of dollars.
The report comes the day Gov. Jon Corzine is expected detail how he intends to close an unanticipated state budget gap, which could include withholding December aid payments to municipalities.
"Enough is enough," Assembly Budget Committee Chairman Lou Greenwald said after reading the report. He said it's time for towns to stop blaming the state for rising property taxes and make some tough budgetary decisions.
The SCI spent nearly a year examining the compensation and benefits paid to public employees in 75 towns, counties and local authorities.
The panel found examples of waste, excess and abuse in 80 percent of the entities it investigated, and sometimes found the hidden perks tucked into complex contract language and difficult to detect. It estimated the cash benefit payouts at $39 million in the municipalities it examined.
For example, 20 workers in Camden cashed in unused time and left their jobs with $115,000 each. New Jersey's most impoverished city has received $258 million in distressed cities aid in the past six years.
Five employees got $780,000 in unused leave in Rockaway Township in Morris County, even after budget cuts forced the elimination of a police department position.
And, in Edison, where six firefighters were laid off to help close a $8 million budget deficit in the current fiscal year, the municipality paid out $3.9 million in lump-sum payments for unused leave over the five previous years.
Corzine's office did not immediately return a call for comment.
"I've been around this state for my entire life, I had no idea, no idea that they were permitted to do that," Gov.-elect Chris Christie said of buyouts of unused sick time. "They should give it back. It's not right. This is the stuff that drives the voters crazy."
The more egregious examples cited in the report include employees who are paid to take time off for weddings and baptisms (West New York) — or to go Christmas shopping (Union City). Police in Hoboken can qualify for up to five days off for donating blood while those in Fort Lee can earn two days off for demonstrating marksmanship on the firing range.
The independent SCI, chaired by former Attorney General W. Cary Edwards, has looked into public employee abuses periodically over the past 15 years, and has recommended reforms. A similar investigation in 2006 focusing on excessive compensation for public school administrators, yielded a legislative change that brought administrators under the same restrictions as state workers, who can cash in a maximum of $15,000 in sick leave at retirement.
Aside from such incremental steps, however, "there has been no concerted effort to rein in lavish, unreasonable and excessive public employee benefit costs in a comprehensive fashion," the report concludes.
A State Commission of Investigation report released Tuesday concludes the lucrative perks paid to some local government workers are costing New Jersey taxpayers millions of dollars.
The report comes the day Gov. Jon Corzine is expected detail how he intends to close an unanticipated state budget gap, which could include withholding December aid payments to municipalities.
"Enough is enough," Assembly Budget Committee Chairman Lou Greenwald said after reading the report. He said it's time for towns to stop blaming the state for rising property taxes and make some tough budgetary decisions.
The SCI spent nearly a year examining the compensation and benefits paid to public employees in 75 towns, counties and local authorities.
The panel found examples of waste, excess and abuse in 80 percent of the entities it investigated, and sometimes found the hidden perks tucked into complex contract language and difficult to detect. It estimated the cash benefit payouts at $39 million in the municipalities it examined.
For example, 20 workers in Camden cashed in unused time and left their jobs with $115,000 each. New Jersey's most impoverished city has received $258 million in distressed cities aid in the past six years.
Five employees got $780,000 in unused leave in Rockaway Township in Morris County, even after budget cuts forced the elimination of a police department position.
And, in Edison, where six firefighters were laid off to help close a $8 million budget deficit in the current fiscal year, the municipality paid out $3.9 million in lump-sum payments for unused leave over the five previous years.
Corzine's office did not immediately return a call for comment.
"I've been around this state for my entire life, I had no idea, no idea that they were permitted to do that," Gov.-elect Chris Christie said of buyouts of unused sick time. "They should give it back. It's not right. This is the stuff that drives the voters crazy."
The more egregious examples cited in the report include employees who are paid to take time off for weddings and baptisms (West New York) — or to go Christmas shopping (Union City). Police in Hoboken can qualify for up to five days off for donating blood while those in Fort Lee can earn two days off for demonstrating marksmanship on the firing range.
The independent SCI, chaired by former Attorney General W. Cary Edwards, has looked into public employee abuses periodically over the past 15 years, and has recommended reforms. A similar investigation in 2006 focusing on excessive compensation for public school administrators, yielded a legislative change that brought administrators under the same restrictions as state workers, who can cash in a maximum of $15,000 in sick leave at retirement.
Aside from such incremental steps, however, "there has been no concerted effort to rein in lavish, unreasonable and excessive public employee benefit costs in a comprehensive fashion," the report concludes.
Thursday, December 3, 2009
Toll Bros. loses $111 million in Q4
Toll Brothers Inc.'s stock tumbled Thursday after the luxury homebuilder reported a disappointing year-end loss and said it expects its sales in fiscal 2010 to decline at least 7 percent.
Toll's stock fell more than 7 percent, or $1.47 a share, to $18.02.
CEO Robert Toll said homebuyer demand was strong from March through August, but has been "choppy" since then. He also said he expects to see the usual holiday slowdown in prospective shoppers, and little help from the expanded federal tax credit for homebuyers.
"You just have to bite the finger, be patient, and wait until you see what comes out in the latter part of January, all of February and in the early part of March," he said.
The cautious outlook from Toll, which builds in 21 states, runs counter to wider industry trends. Sales of new homes have increased six out of the past seven months, according to government data. They dipped in September, but surged in October to the highest level in more than a year.
The industry has been buoyed by an $8,000 federal tax credit for first-time homebuyers, which was extended last month and expanded to include $6,500 for existing homeowners.
But Toll said he didn't expect to see much of a boost in business from that.
The builder did have some good news, however. The company posted a 42 percent jump in new sales contracts and a healthy cancellation rate of just 7 percent.
Toll said the company has been able to trim incentives and even raise prices slightly in several Northeast markets, including Massachusetts, New Jersey, Maryland, Connecticut, and parts of New York City.
"We've had some pretty good action recently in Florida, but we're still a little slow to pull that gun from the holster," Toll said.
Incentives have helped the builder drum up sales in the San Francisco Bay area, but business remains sluggish elsewhere in California and other markets such as Las Vegas, Phoenix and Chicago, Toll said.
And that ate into profits. The Horsham, Pa.-based builder's lost $111.4 million, or 68 cents a share, between August and October, largely due to continued write downs on the value of its land holdings and staff reductions. Excluding those charges, the builder almost broke even. In the year-ago quarter, which included a larger amount of write downs, Toll lost $78.8 million, or 49 cents a share.
Revenue for the quarter fell 30 percent to $486.6 million.
Analysts polled by Thomson Reuters were expecting a loss of 46 cents a share on revenue of about $450.1 million.
For Toll Brothers' full fiscal year, the net loss was $755.8 million, or $4.68 per share, which included write downs of $848.9 million. For fiscal 2008, the builder lost $297.8 million, or $1.88 per share.
Total revenue dropped to $1.76 billion from $3.15 billion.
Toll's stock fell more than 7 percent, or $1.47 a share, to $18.02.
CEO Robert Toll said homebuyer demand was strong from March through August, but has been "choppy" since then. He also said he expects to see the usual holiday slowdown in prospective shoppers, and little help from the expanded federal tax credit for homebuyers.
"You just have to bite the finger, be patient, and wait until you see what comes out in the latter part of January, all of February and in the early part of March," he said.
The cautious outlook from Toll, which builds in 21 states, runs counter to wider industry trends. Sales of new homes have increased six out of the past seven months, according to government data. They dipped in September, but surged in October to the highest level in more than a year.
The industry has been buoyed by an $8,000 federal tax credit for first-time homebuyers, which was extended last month and expanded to include $6,500 for existing homeowners.
But Toll said he didn't expect to see much of a boost in business from that.
The builder did have some good news, however. The company posted a 42 percent jump in new sales contracts and a healthy cancellation rate of just 7 percent.
Toll said the company has been able to trim incentives and even raise prices slightly in several Northeast markets, including Massachusetts, New Jersey, Maryland, Connecticut, and parts of New York City.
"We've had some pretty good action recently in Florida, but we're still a little slow to pull that gun from the holster," Toll said.
Incentives have helped the builder drum up sales in the San Francisco Bay area, but business remains sluggish elsewhere in California and other markets such as Las Vegas, Phoenix and Chicago, Toll said.
And that ate into profits. The Horsham, Pa.-based builder's lost $111.4 million, or 68 cents a share, between August and October, largely due to continued write downs on the value of its land holdings and staff reductions. Excluding those charges, the builder almost broke even. In the year-ago quarter, which included a larger amount of write downs, Toll lost $78.8 million, or 49 cents a share.
Revenue for the quarter fell 30 percent to $486.6 million.
Analysts polled by Thomson Reuters were expecting a loss of 46 cents a share on revenue of about $450.1 million.
For Toll Brothers' full fiscal year, the net loss was $755.8 million, or $4.68 per share, which included write downs of $848.9 million. For fiscal 2008, the builder lost $297.8 million, or $1.88 per share.
Total revenue dropped to $1.76 billion from $3.15 billion.
Nothing but Nets! NJ’s worst ever
The New Jersey Nets were pounded into NBA infamy last night in East Rutherford, N.J., falling 117-101 to the Dallas Mavericks for their 18th straight loss to start the season.
The Nets passed the 1988-89 Miami Heat and 1999 Los Angeles Clippers, who both dropped their first 17 games. New Jersey’s next chance to end the streak comes tomorrow night at home against the Charlotte Bobcats.
“At this point, I feel the streak has definitely gotten the best of us. It’s really not starting to get to us now,” guard Chris Douglas-Roberts said. “So when a team goes on a run, we kind of, it’s almost like we give up, which is really unfortunate but that’s what it looks like to me. We kind of give up and just lay down instead of trying to fight.”
Dallas shot 81 percent in the first half, the first NBA team to make 80 percent of its shots in a half since the Denver Nuggets hit 82 percent against the Clippers on April 4, 2006, according to STATS, LLC.
Dirk Nowitzki scored 24 points, and Jason Kidd had 16 points, 10 assists and eight rebounds for the Mavericks. Douglas-Roberts scored 24 points for the Nets.
Interim coach Tom Barrise was at the bench for New Jersey, but eneral manager Kiki Vandeweghe will be taking over the coaching duties for the remainder of the season.
The Nets passed the 1988-89 Miami Heat and 1999 Los Angeles Clippers, who both dropped their first 17 games. New Jersey’s next chance to end the streak comes tomorrow night at home against the Charlotte Bobcats.
“At this point, I feel the streak has definitely gotten the best of us. It’s really not starting to get to us now,” guard Chris Douglas-Roberts said. “So when a team goes on a run, we kind of, it’s almost like we give up, which is really unfortunate but that’s what it looks like to me. We kind of give up and just lay down instead of trying to fight.”
Dallas shot 81 percent in the first half, the first NBA team to make 80 percent of its shots in a half since the Denver Nuggets hit 82 percent against the Clippers on April 4, 2006, according to STATS, LLC.
Dirk Nowitzki scored 24 points, and Jason Kidd had 16 points, 10 assists and eight rebounds for the Mavericks. Douglas-Roberts scored 24 points for the Nets.
Interim coach Tom Barrise was at the bench for New Jersey, but eneral manager Kiki Vandeweghe will be taking over the coaching duties for the remainder of the season.
Subscribe to:
Posts (Atom)