Accrued Expenses

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



	2015		2014
Land, land development and construction	$	118,634	$	124,816
Compensation and employee benefits	125,045		118,607
Self-insurance	113,727		100,407
Warranty	93,083		86,282
Interest	26,926		33,993
Commitments to unconsolidated entities	5,534		3,293
Other	125,117		114,079
	$	608,066	$	581,477

In response to an increasing rate of stucco-related claims received in the second half of fiscal 2014 involving homes in certain completed communities located in Pennsylvania and Delaware (which are in our Mid-Atlantic region), at that time we undertook a review of homes in certain completed communities built during fiscal 2003 through fiscal 2009 in Pennsylvania and Delaware to determine whether additional stucco-related repairs would likely be needed in these communities. The review included an analysis of the number of claims received, our inspection of homes, an estimate of the number of homes we expected to repair, the extent and cost estimate of such repairs, the potential insurance recovery, and the amount of warranty and self-insurance reserves already recorded. At the end of fiscal 2014, we estimated our potential liability for known and unknown claims to be approximately $54.0 million, of which we expected 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 charge in the fourth quarter of fiscal 2014 for estimated repair costs in the Mid-Atlantic region.

During our fiscal fourth-quarter 2015 review of the potential liability for this matter, we determined that the average cost of stucco-related repairs had increased based on the actual cost of remediation of homes completed in the second half of fiscal 2015. In addition, we determined that additional stucco-related repairs will likely be needed in certain communities built during fiscal 2010 through fiscal 2013 in Pennsylvania. Based on the revision of our estimated costs of repairs and the inclusion of certain additional communities in our remediation estimates, the potential liability for known and unknown claims increased to approximately $80.3 million, of which we continue to expect to recover approximately 40% from outside insurance. We recognized a $14.7 million additional charge in the fourth quarter of fiscal 2015 for estimated repair costs in the Mid-Atlantic region.

As of October 31, 2014, we had received construction claims from three related multifamily community associations in California alleging issues with design and construction and damage to exterior common area elements. 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. We completed a settlement of one of the claims during fiscal 2015, and subsequently, we reached a settlement agreement on a second in December 2015 (fiscal 2016). Our review of the remaining claim is ongoing. Due to issues related to insurance coverage on all three claims, the degree of judgment required, and the potential for variability in our underlying assumptions, our actual future costs could differ from our estimates. Based on the above settlements and our current evaluation of the remaining claim, we recorded a charge of $6.9 million in fiscal 2015 (including $0.8 million in the fourth quarter), which is included in “Cost of revenues” in our Consolidated Statements of Operations and Comprehensive Income.

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 2015, 2014, and 2013 as follows (amounts in thousands):



	2015			2014			2013
Balance, beginning of year	$	86,282		$	43,819		$	41,706
Additions - homes closed during the year	20,934			18,588			14,652
Addition - liabilities acquired				11,044
Increase (decrease) in accruals for homes closed in prior years	2,661			2,913			(184		)
Reclassification from self-insurance accruals*				7,554
Charge related to stucco-related claims*	14,685			24,950
Charges incurred	(31,479		)	(22,586		)	(12,355		)
Balance, end of year	$	93,083		$	86,282		$	43,819