Inventory

12 Months Ended

Oct. 31, 2021

Inventory at October 31, 2021 and 2020 consisted of the following (amounts in thousands):


	2021		2020
Land controlled for future communities	$	185,656	$	223,525
Land owned for future communities	564,737		1,036,843
Operating communities	7,165,491		6,398,538
	$	7,915,884	$	7,658,906

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 are included in 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, 2021, 2020, and 2019, is provided in the table below ($ amounts in thousands):


	2021		2020		2019
Land owned for future communities:
Number of communities	1		10		16
Carrying value (in thousands)	$	15,771	$	68,064	$	120,857
Operating communities:
Number of communities	—		4		1
Carrying value (in thousands)	$	—	$	32,112	$	2,871

The amounts we have 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, 2021, 2020, and 2019, are shown in the table below (amounts in thousands):


Charge:	2021		2020		2019
Land controlled for future communities	$	5,620	$	23,539	$	11,285
Land owned for future communities	19,805		31,669		—
Operating communities	1,110		675		31,075
	$	26,535	$	55,883	$	42,360

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 14, “Commitments and Contingencies,” for information regarding land purchase commitments.

At October 31, 2021, 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, 2021, we determined that 289 land purchase contracts, with an aggregate purchase price of $3.67 billion, on which we had made aggregate deposits totaling $302.4 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts. 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.

Interest incurred, capitalized, and expensed in each of the three fiscal years ended October 31, 2021, 2020, and 2019, was as follows (amounts in thousands):


	2021		2020		2019
Interest capitalized, beginning of year	$	297,975	$	311,323	$	319,364
Interest incurred	152,986		172,530		178,035
Interest expensed to home sales cost of revenues	(187,237)		(174,375)		(185,045)
Interest expensed to land sales and other cost of revenues	(4,372)		(5,443)		(1,787)
Interest expensed in other income – net	—		(2,440)		—
Interest reclassified to property, construction and office equipment	(1,034)		—		—
Interest capitalized on investments in unconsolidated entities	(4,574)		(3,835)		(4,571)

Previously capitalized interest on investments in unconsolidated entities transferred to inventory	194		215		5,327
Interest capitalized, end of year	$	253,938	$	297,975	$	311,323

During the year ended October 31, 2021, we incurred approximately $946,000 of interest related to our interest rate swaps which is included in accumulated other comprehensive income, and approximately $211,000 was reclassified out of accumulated other comprehensive income to home sales cost of revenues. No similar amounts were incurred during the years ended October 31, 2020 and 2019.