Accrued Expenses

Accrued expenses at July 31, 2016 and October 31, 2015 consisted of the following (amounts in thousands):



	July 31, 2016		October 31, 2015
Land, land development, and construction	$	127,577	$	118,634
Compensation and employee benefits	125,876		125,045
Self-insurance	116,358		113,727
Warranty	91,967		93,083
Interest	39,035		26,926
Commitments to unconsolidated entities	5,260		5,534
Other	122,611		125,117
	$	628,684	$	608,066

As previously disclosed in Note 7, “Accrued Expenses” in our 2015 Form 10-K, we determined that we will need to make stucco-related repairs to homes in certain completed communities located in Pennsylvania and Delaware (which are in our Mid-Atlantic region). At October 31, 2015, we estimated that the gross cost to make these repairs was $80.3 million, of which approximately $32.6 million would be covered by our insurance carrier. Through October 31, 2015, we recorded approximately $47.7 million of expected warranty expense, net of expected insurance recoveries. At October 31, 2015, we had approximately $44.2 million of warranty reserves related to these repairs remaining, which also included a number of claims received related to homes that have limited or no stucco elements in these same completed communities. We will continue to monitor our exposure and evaluate our warranty reserves in the future for these claims.

Each quarter, we review the estimates used in determining the potential liability for these repairs. Based upon our fiscal 2016 reviews, we determined that the actual costs incurred per claim were in excess of our previously estimated costs and therefore future estimated costs needed to be increased. The increase in costs in the nine months of fiscal 2016 resulted in an increase to the gross cost for repairs of $12.6 million. We expect to recover approximately $8.3 million of the increase from our insurance carrier. In the nine months and three months ended July 31, 2016, we recorded additional charges of $4.3 million and $1.9 million, respectively, related to these claims. At July 31, 2016, we had approximately $40.3 million of warranty reserves remaining and our expected recovery from our insurance carrier was $36.6 million. 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.

In addition, also as previously disclosed in Note 7, “Accrued Expenses” in our 2015 Form 10-K, we have 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 that 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. In addition, we completed a settlement on a second claim in December 2015, which was previously accrued for as of October 31, 2015. As of July 31, 2016, we believe that our existing reserves and insurance are sufficient. Due to issues related to insurance coverage on all three construction claims, the degree of judgment required, and the potential for variability in our underlying assumptions, our actual future costs could differ from those estimated.

We do not believe that any resolution of the above matters in excess of the amounts currently accrued would be material to our results of operations, liquidity, or on 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):



	Nine months ended July 31,						Three months ended July 31,
	2016			2015			2016			2015
Balance, beginning of period	$	93,083		$	86,282		$	91,194		$	83,057
Additions – homes closed during the period	18,208			13,200			7,241			4,947
Increase in accruals for homes closed in prior years	11,045			1,763			4,853			454
Charges incurred	(30,369		)	(22,240		)	(11,321		)	(9,453		)
Balance, end of period	$	91,967		$	79,005		$	91,967		$	79,005