Luxury homebuilder Toll Brothers ( TOL) recorded a 10% drop in third-quarter earnings Tuesday as a slowdown in orders late last year and a decline in contracts following Sept. 11 hurt profits.

The company, headquartered in Huntingdon Valley, Pa., said it earned $53.5 million, or 70 cents a share, compared with $59.4 million, or 77 cents a share, in the year-ago period. Revenue for the quarter dipped slightly to $580.7 million from $584.1 million last year. Wall Street analysts were expecting the company to post a net profit of 65 cents a share, according to poll conducted by research firm First Call/Thomson Financial.

Toll Brothers said third-quarter contracts grew 30% to $704.2 million and nine-month contracts increased 24% to $2.09 billion vs. 2001. The company's third-quarter homebuilding revenue totaled $565.4 million from 1,093 homes, down 1% vs. third-quarter 2001's record total of $573.5 million from 1,129 homes. Additionally, the homebuilder's record third quarter backlog of $1.90 billion was 21% higher than last year, marking the highest backlog for any quarter-end in its history.

"With demand for new luxury homes outstripping supply, we are enjoying strong sales activity at our move-up, empty-nester and active-adult communities. Since February 2002, the start of our second quarter, our deposits, traffic and contracts have substantially exceeded last year's record results," said Robert I. Toll, chairman and chief executive.

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