Inventory

12 Months Ended

Oct. 31, 2020

Inventory at October 31, 2020 and 2019 consisted of the following (amounts in thousands):


	2020		2019
Land controlled for future communities	$	223,525	$	182,929
Land owned for future communities	1,036,843		868,202
Operating communities	6,398,538		6,821,917
	$	7,658,906	$	7,873,048

Operating communities include communities offering homes for sale, communities that have sold all available home sites but have not completed delivery of the homes, communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within 12 months of the end of the fiscal year being reported on, and communities preparing to open for sale. The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.

Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on have been classified as land owned for future communities. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).

Information regarding the classification, number, and carrying value of these temporarily closed communities at October 31, 2020, 2019, and 2018, is provided in the table below ($ amounts in thousands):


	2020		2019		2018
Land owned for future communities:
Number of communities	10		16		17
Carrying value (in thousands)	$	68,064	$	120,857	$	124,426
Operating communities:
Number of communities	4		1		1
Carrying value (in thousands)	$	32,112	$	2,871	$	2,622

We provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2020, 2019, and 2018, as shown in the table below (amounts in thousands):


Charge:	2020		2019		2018
Land controlled for future communities	$	23,539	$	11,285	$	2,820
Land owned for future communities	31,669		—		2,185
Operating communities	675		31,075		30,151
	$	55,883	$	42,360	$	35,156

See Note 12, “Fair Value Disclosures,” for information regarding (1) the number of operating communities that we tested for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and the fair value of those communities, net of impairment charges. and (2) the number of future communities impaired, the amount of impairment charges recognized, and the fair value of those communities, net of impairment charges.

See Note 15, “Commitments and Contingencies,” for information regarding land purchase commitments.

At October 31, 2020, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEs and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our maximum exposure to loss is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At October 31, 2020, we determined that 207 land purchase contracts, with an aggregate purchase price of $2.31 billion, on which we had made aggregate deposits totaling $208.7 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts. At October 31, 2019, we determined that 127 land purchase contracts, with an aggregate purchase price of $2.00 billion, on which we had made aggregate deposits totaling $149.2 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts.

Interest incurred, capitalized, and expensed in each of the three fiscal years ended October 31, 2020, 2019, and 2018, was as follows (amounts in thousands):


	2020		2019		2018
Interest capitalized, beginning of year	$	311,323	$	319,364	$	352,049
Interest incurred	172,530		178,035		165,977
Interest expensed to home sales cost of revenues	(174,375)		(185,045)		(190,734)
Interest expensed to land sales and other cost of revenues	(5,443)		(1,787)		—
Interest expensed in other income – net	(2,440)		—		(3,760)

Interest capitalized on investments in unconsolidated entities	(3,835)		(4,571)		(7,220)

Previously capitalized interest on investments in unconsolidated entities transferred to inventory	215		5,327		3,052
Interest capitalized, end of year	$	297,975	$	311,323	$	319,364