Note 3 - Interest

9 Months Ended

Jul. 31, 2022

Notes to Financial Statements

Home Building Interest [Text Block]

3. Interest

Interest costs incurred, expensed and capitalized were:

	Three Months Ended				Nine Months Ended
	July 31,				July 31,
(In thousands)	2022		2021		2022		2021
Interest capitalized at beginning of period	$	63,573	$	59,772	$	58,159	$	65,010
Plus interest incurred(1)		32,644		39,181		99,299		122,508
Less cost of sales interest expensed		22,453		19,240		57,876		58,130
Less other interest expensed(2)(3)		9,624		19,158		35,442		65,166
Less interest contributed to unconsolidated joint venture(4)		-		-		-		3,667
Plus interest acquired from unconsolidated joint venture(5)		-		3,118		-		3,118
Interest capitalized at end of period(6)	$	64,140	$	63,673	$	64,140	$	63,673

(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 $5.0 million and $14.4 million for the three months ended July 31, 2022 and 2021, respectively, and $25.5 million and $48.1 million for the nine months ended July 31, 2022 and 2021, 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 $4.6 million and $4.8 million for the three months ended July 31, 2022 and 2021, respectively, and $9.9 million and $17.1 million for the nine months ended July 31, 2022 and 2021, 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)	2022			2021			2022			2021
Other interest expensed	$	9,624		$	19,158		$	35,442		$	65,166
Interest paid by our mortgage and finance subsidiaries		404			602			1,234			1,554
Increase in accrued interest		(19,194	)		(12,139	)		(19,408	)		(11,897	)
Cash paid for interest, net of capitalized interest	$	(9,166	)	$	7,621		$	17,268		$	54,823

(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.