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Note 3 - Interest | 9 Months Ended
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Jul. 31, 2017
Notes to Financial Statements |
Home Building Interest [Text Block] |
3. | Interest
Interest costs incurred, expensed and capitalized were:
|  | Three Months Ended July 31, |  |  | Nine Months Ended July 31, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Interest capitalized at beginning of period |  | $ | 90,960 |  |  | $ | 115,809 |  |  | $ | 96,688 |  |  | $ | 123,898 |
Plus interest incurred (1) |  |  | 39,089 |  |  |  | 40,300 |  |  |  | 116,944 |  |  |  | 126,483 |
Less cost of sales interest expensed |  |  | 19,371 |  |  |  | 28,406 |  |  |  | 58,030 |  |  |  | 66,693 |
Less other interest expensed (2)(3) |  |  | 23,559 |  |  |  | 23,159 |  |  |  | 68,483 |  |  |  | 68,468 |
Less interest contributed to unconsolidated joint venture (4) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,676 |
Interest capitalized at end of period (5) |  | $ | 87,119 |  |  | $ | 104,544 |  |  | $ | 87,119 |  |  | $ | 104,544 |
( 1 ) | Data does not include interest incurred by our mortgage and finance subsidiaries.
( 2 ) | Other interest expensed includes interest that does not qualify for interest capitalization because our assets that qualify for interest capitalization (inventory under development) do not exceed our debt, which amounted to $17.2 million and $10.1 million for the three months ended July 31, 2017 and 2016, respectively, and $46.5 million and $36.8 million for the nine months ended July 31, 2017 and 2016, respectively. Other interest also includes interest on completed homes, land in planning and fully developed lots without homes under construction, which does not qualify for capitalization, and therefore, is expensed. This component of other interest was $6.4 million and $13.1 million for the three months ended July 31, 2017 and 2016, respectively, and $22.0 million and $31.6 million for the nine months ended July 31, 2017 and 2016, respectively.
( 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 on notes payable, which is calculated as follows:
|  | Three Months Ended July 31, |  |  | Nine Months Ended July 31, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Other interest expensed |  | $ | 23,559 |  |  | $ | 23,159 |  |  | $ | 68,483 |  |  | $ | 68,468 |
Interest paid by our mortgage and finance subsidiaries |  |  | 465 |  |  |  | 706 |  |  |  | 1,549 |  |  |  | 2,116 |
Decrease in accrued interest |  |  | 17,528 |  |  |  | 8,641 |  |  |  | 18,882 |  |  |  | 9,909 |
Cash paid for interest, net of capitalized interest |  | $ | 41,552 |  |  | $ | 32,506 |  |  | $ | 88,914 |  |  | $ | 80,493 |
( 4 ) | Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in November 2015, as discussed in Note 17. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.
( 5 ) | Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.

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