Accrued Expenses

Accrued expenses at April 30, 2015 and October 31, 2014 consisted of the following (amounts in thousands):



	April 30, 2015		October 31, 2014
Land, land development and construction	$	107,041	$	124,816
Compensation and employee benefits	125,306		118,607
Self-insurance	108,575		100,407
Warranty	83,057		86,282
Interest	33,436		33,993
Commitments to unconsolidated entities	4,919		3,293
Other	124,077		114,079
	$	586,411	$	581,477

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 certain communities. As of October 31, 2014, we estimated our potential liability for known and unknown claims to be approximately $54.0 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. Our 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 continue to review our potential liability for these claims and at April 30, 2015, we believe that our existing reserves and insurance were sufficient. 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 was included in “Cost of revenues” in our Consolidated Statements of Operations and Comprehensive Income included in our Annual Report on Form 10-K for the year ended October 31, 2014.

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, for the periods indicated, a reconciliation of the changes in our warranty accrual (amounts in thousands):



	Six months ended April 30,						Three months ended April 30,
	2015			2014			2015			2014
Balance, beginning of period	$	86,282		$	43,819		$	84,695		$	42,688
Additions - homes closed during the period	8,253			7,302			4,335			4,205
Addition - Shapell liabilities acquired				9,244						9,244
Increase in accruals for homes closed in prior years	1,309			1,421			441			1,077
Charges incurred	(12,787		)	(9,207		)	(6,414		)	(4,635		)
Balance, end of period	$	83,057		$	52,579		$	83,057		$	52,579