Accrued Expenses

Accrued expenses at October 31, 2014 and 2013, consisted of the following (amounts in thousands):



	2014		2013
Land, land development and construction	$	124,816	$	152,674
Compensation and employee benefits	118,607		111,561
Self-insurance	100,407		89,104
Warranty	86,282		43,819
Interest	33,993		25,675
Commitments to unconsolidated entities	3,293		3,804
Other	114,079		96,350
	$	581,477	$	522,987

Prior to the third quarter of fiscal 2014, we received stucco-related claims in certain completed communities located in Pennsylvania and Delaware, which are in our Mid-Atlantic region. During the third quarter of fiscal 2014, the rate of claims increased. Through the third quarter of fiscal 2014, we believed that our warranty accruals, self-insurance accruals, and our liability insurance were adequate to cover our cost of repairs for those claims. The rate of claims continued to increase during the fourth quarter of fiscal 2014. In response, we undertook a comprehensive review of homes in completed communities built during fiscal 2003 through fiscal 2009 in Pennsylvania and Delaware. Our review revealed that additional stucco-related repairs will likely be needed in these communities. As of October 31, 2014, we estimated our potential liability for known and unknown claims to be approximately $54 million, of which we expect to recover approximately 40% from our outside insurance carriers. In addition to previously recognized warranty and self-insurance accruals, we recognized a $25.0 million additional charge in the fourth quarter of fiscal 2014 for estimated repair costs. The review included an analysis of the number of claims received, our inspection to-date of homes, an estimate of the number of homes we expect to repair and the extent of such repairs, and the amount of warranty and self-insurance reserves already recorded. We will continue to review and analyze these claims as they are submitted, and, due to the degree of judgment required and the potential for variability in our underlying assumptions, our actual future costs could differ from those estimated. The above charge is included in “Cost of revenues” in our Consolidated Statements of Operations and Comprehensive Income.

We have received construction claims brought by three related multifamily community associations in the West region alleging issues with design and construction and damage to exterior common area elements. Our investigations of these matters are in the very early stages. We believe we have coverage under multiple owner controlled insurance policies with deductibles or self-insured retention requirements that vary from policy year to policy year. Our review of these matters is ongoing, and, due to the degree of judgment required, the potential for variability in our underlying assumptions, and the availability of insurance coverage, our actual future costs could differ from our estimates.

We do not believe that any resolution of the above matters, in excess of the amounts currently accrued would be material to our financial condition.

We accrue for expected warranty costs at the time each home is closed and title and possession are transferred to the home buyer. Warranty costs are accrued based upon historical experience. The table below provides a reconciliation of the changes in our warranty accrual during fiscal 2014, 2013, and 2012 as follows (amounts in thousands):



	2014			2013			2012
Balance, beginning of year	$	43,819		$	41,706		$	42,474
Additions - homes closed during the year	18,588			14,652			10,560
Addition - liabilities acquired	11,044						731
Increase (decrease) in accruals for homes closed in prior years	2,913			(184		)	479
Reclassification from self-insurance accruals*	7,554
Charge related to stucco-related claims*	24,950
Charges incurred	(22,586		)	(12,355		)	(12,538		)
Balance, end of year	$	86,282		$	43,819		$	41,706