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Note 3 - Interest

9 Months Ended

Jul. 31, 2023

3.	Interest

Interest costs incurred, expensed and capitalized were as follows:

	Three Months Ended						Nine Months Ended
	July 31,						July 31,
(In thousands)	2023			2022			2023			2022
Interest capitalized at beginning of period	$	60,274		$	63,573		$	59,600		$	58,159
Plus interest incurred(1)		34,214			32,644			103,662			99,299
Less cost of sales interest expensed		(19,272	)		(22,453	)		(55,719	)		(57,876	)
Less other interest expensed(2)(3)		(13,502	)		(9,624	)		(43,096	)		(35,442	)
Less interest contributed to unconsolidated joint venture(4)		(6,440	)		-			(9,456	)		-
Plus interest acquired from unconsolidated joint venture(5)		-			-			283			-
Interest capitalized at end of period(6)	$	55,274		$	64,140		$	55,274		$	64,140

(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 $2.6 million and $5.0 million for the three months ended July 31, 2023 and 2022, respectively, and $14.5 million and $25.5 million for the nine months ended July 31, 2023 and 2022, 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 as incurred. This component of other interest was $10.9 million and $4.6 million for the three months ended July 31, 2023 and 2022, respectively, and $28.6 million and $9.9 million for the nine months ended July 31, 2023 and 2022, 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)	2023			2022			2023			2022
Other interest expensed	$	13,502		$	9,624		$	43,096		$	35,442
Interest paid by our mortgage and finance subsidiaries		723			404			2,032			1,234
Increase in accrued interest		(14,693	)		(19,194	)		(18,498	)		(19,408	)
Cash paid for interest, net of capitalized interest	$	(468	)	$	(9,166	)	$	26,630		$	17,268

(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 a portion of impairments, if any, to capitalized interest.