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Note 3 - Interest

9 Months Ended

Jul. 31, 2021

3.	Interest

Interest costs incurred, expensed and capitalized were:

	Three Months Ended				Nine Months Ended
	July 31,				July 31,
(In thousands)	2021		2020		2021		2020
Interest capitalized at beginning of period	$	59,772	$	67,744	$	65,010	$	71,264
Plus interest incurred(1)		39,181		45,140		122,508		134,797
Less cost of sales interest expensed		19,240		21,814		58,130		58,539
Less other interest expensed(2)(3)		19,158		27,072		65,166		78,944
Less interest contributed to unconsolidated joint venture(4)		-		-		3,667		4,580
Plus interest acquired from unconsolidated joint venture(5)		3,118		-		3,118		-
Interest capitalized at end of period(6)	$	63,673	$	63,998	$	63,673	$	63,998

(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 $14.4 million and $15.9 million for the three months ended July 31, 2021 and 2020, respectively, and $48.1 million and $44.6 million for the nine months ended July 31, 2021 and 2020, 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 $4.8 million and $11.2 million for the three months ended July 31, 2021 and 2020, respectively, and $17.1 million and $34.3 million for the nine months ended July 31, 2021 and 2020, 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)	2021			2020			2021			2020
Other interest expensed	$	19,158		$	27,072		$	65,166		$	78,944
Interest paid by our mortgage and finance subsidiaries		602			419			1,554			1,698
Increase in accrued interest		(12,139	)		(13,876	)		(11,897	)		(31,247	)
Cash paid for interest, net of capitalized interest	$	7,621		$	13,615		$	54,823		$	49,395

(4)	Represents capitalized interest which was included as part of the assets contributed to joint ventures, as discussed in Note 18. There was no impact to the Condensed Consolidated Statement of Operations as a result of these transactions.
(5)	Represents capitalized interest which was included as part of the assets purchased from joint ventures, as discussed in Note 18. There was no impact to the Condensed Consolidated Statement of Operations as a result of these transactions.
(6)	Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.