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Note 3

9 Months Ended

Jul. 31, 2011

3. Interest costs incurred, expensed and capitalized were:

	Three Months Ended July 31,				Nine Months Ended July 31,
(In thousands)	2011		2010		2011		2010

Interest capitalized at beginning of period	$	135,556	$	155,126	$	136,288	$	164,340
Plus interest incurred(1)		40,051		38,107		117,773		116,449
Less cost of sales interest expensed		14,222		22,184		43,804		60,777
Less other interest expensed(2)(3)		25,207		22,671		74,079		71,634
Interest capitalized at end of period(4)	$	136,178	$	148,378	$	136,178	$	148,378

(1)	Data does not include interest incurred by our mortgage and finance subsidiaries.

(2)

Other interest expensed is comprised of interest that does not qualify for capitalization because our assets that qualify for interest capitalization (inventory under development) do not exceed our debt. Interest on completed homes and land in planning, which does not qualify for capitalization is expensed.

(3)	Cash paid for interest, net of capitalized interest, is the sum of other interest expensed, as defined above, and interest paid by our mortgage and finance subsidiaries adjusted for the change in accrued interest, which is calculated as follows:

	Nine Months Ended July 31,
(In thousands)	2011			2010
Other interest expensed	$	74,079		$	71,634
Interest paid by our mortgage and finance subsidiaries		1,523			1,280
Increase in accrued interest		(10,928	)		(7,017	)
Cash paid for interest, net of capitalized interest	$	64,674		$	65,897

(4)	We have incurred significant inventory impairments in recent years, which are determined based on total inventory including capitalized interest. However, the capitalized interest amounts above are shown gross before allocating any portion of the impairments to capitalized interest.