Accrued Expenses

Accrued expenses at July 31, 2017 and October 31, 2016 consisted of the following (amounts in thousands):



	July 31, 2017		October 31, 2016
Land, land development, and construction	$	133,383	$	153,264
Compensation and employee benefits	142,081		138,282
Escrow liability	46,302		137,396
Self-insurance	141,270		126,431
Warranty	344,365		370,992
Deferred income	39,798		43,488
Interest	47,307		34,903
Commitments to unconsolidated entities	8,596		5,637
Other	53,019		61,907
	$	956,121	$	1,072,300

As previously disclosed in Note 6, “Accrued Expenses” in our 2016 Form 10-K, we reviewed communities in Pennsylvania and Delaware (which are in our Mid-Atlantic region) and determined that we needed to make repairs primarily to older homes in certain of these communities relating to stucco and other water intrusion claims. Each quarter, we review and update our assumptions to the estimates used in determining our estimated liability for these claims. This review and update includes an analysis to determine an estimated number of claims likely to be received and the estimated costs to resolve these claims. This analysis involves many factors including: the number of communities involved; the closing dates of the homes in each community; the number of claims received to date; our inspection of homes; an estimate of the number of homes we expect to repair; the type and cost of repairs that have been performed in each community; the estimated costs to remediate pending and future claims in each community; the expected recovery from our insurance carriers and others; and the amount of warranty and self-insurance reserves already recorded. Due to the degree of judgment required and the potential for variability in the underlying assumptions, it is reasonably possible that our actual costs could differ from those estimated, such differences could be material, and, therefore, we are unable to estimate the range of any such differences.

In the quarter ended July 31, 2017, we identified a small number of claims from homes delivered in Delaware after the date parameters disclosed in our 2016 Form 10-K. Based on the limited number of homes delivered by the Company in Delaware, we believe that any accrual for these pending and any future claims would be immaterial to our results of operations, liquidity, or our financial condition.

Based upon our reviews for the nine month and three month periods ended July 31, 2017, we determined that no adjustments to our previous estimates were needed. Based upon our review for the nine month and three month periods ended July 31, 2016, we determined that our estimated costs had increased and we recognized an additional charge of $4.3 million and $1.9 million, respectively, in the nine month and three month periods ended July 31, 2016. As of July 31, 2017, we recognized cumulative charges of approximately $171.8 million for water intrusion claims; the estimated aggregate cost of these claims is $324.4 million, of which we expect to recover approximately $152.6 million from outside insurance carriers and suppliers.

At July 31, 2017 and October 31, 2016, our estimated remaining liability to be expended for the aforementioned known and unknown stucco and other water intrusion claims was $269.3 million and $298.0 million, respectively, of which we expect to recover a total of approximately $122.7 million and $141.7 million, respectively, from outside insurance carriers and others.

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,
	2017			2016			2017			2016
Balance, beginning of period	$	370,992		$	93,083		$	355,934		$	91,194
Additions – homes closed during the period	21,220			18,208			8,519			7,241
Addition – Coleman liabilities acquired	1,111
Increase in accruals for homes closed in prior years	5,539			11,045			2,351			4,853
Reclassification from other accruals	1,082
Charges incurred	(55,579		)	(30,369		)	(22,439		)	(11,321		)
Balance, end of period	$	344,365		$	91,967		$	344,365		$	91,967