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

(

)

Data does

not

include interest incurred by our mortgage and finance subsidiaries.

(

)

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.

(

)

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

(

)

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

impact to the Condensed Consolidated Statement of Operations as a result of this transaction.

(

)

Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.