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Note 3 - Interest

9 Months Ended

Jul. 31, 2020

3.	Interest

Interest costs incurred, expensed and capitalized were:

	Three Months Ended				Nine Months Ended
	July 31,				July 31,
(In thousands)	2020		2019		2020		2019
Interest capitalized at beginning of period	$	67,744	$	79,277	$	71,264	$	68,117
Plus interest incurred(1)		45,140		42,104		134,797		122,340
Less cost of sales interest expensed		21,814		19,029		58,539		43,169
Less other interest expensed(2)(3)		27,072		22,377		78,944		67,313
Less interest contributed to unconsolidated joint venture(4)		-		1,978		4,580		1,978
Interest capitalized at end of period(5)	$	63,998	$	77,997	$	63,998	$	77,997

(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 $15.9 million and $13.7 million for the three months ended July 31, 2020 and 2019, respectively, and $44.6 million and $46.4 million for the nine months ended July 31, 2020 and 2019, 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 $11.2 million and $8.7 million for the three months ended July 31, 2020 and 2019, respectively, and $34.3 million and $21.0 million for the nine months ended July 31, 2020 and 2019, 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					Nine Months Ended
	July 31,					July 31,
(In thousands)	2020			2019		2020			2019
Other interest expensed	$	27,072		$	22,377	$	78,944		$	67,313
Interest paid by our mortgage and finance subsidiaries		419			673		1,698			1,876
(Increase) decrease in accrued interest		(13,876	)		15,404		(31,247	)		13,105
Cash paid for interest, net of capitalized interest	$	13,615		$	38,454	$	49,395		$	82,294

(4)	Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in December 2019, as discussed in Note 18. 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.