Inventory

6 Months Ended

Apr. 30, 2019

Inventory at April 30, 2019 and October 31, 2018 consisted of the following (amounts in thousands):



	April 30, 2019		October 31, 2018
Land controlled for future communities	$	174,116	$	139,985
Land owned for future communities	934,774		916,616
Operating communities	6,681,950		6,541,618
	$	7,790,840	$	7,598,219

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 period 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 have been classified as land owned for future communities.

Information regarding the classification, number, and carrying value of these temporarily closed communities, as of the dates indicated, is provided in the table below:



	April 30, 2019		October 31, 2018
Land owned for future communities:
Number of communities	15		17
Carrying value (in thousands)	$	105,281	$	124,426
Operating communities:
Number of communities	3		1
Carrying value (in thousands)	$	21,931	$	2,622

The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable, for the periods indicated, are shown in the table below (amounts in thousands):



	Six months ended April 30,				Three months ended April 30,
	2019		2018		2019		2018
Land controlled for future communities	$	3,676	$	377	$	1,899	$	260
Land owned for future communities			247				247
Operating communities	23,280		17,061		17,495		13,325
	$	26,956	$	17,685	$	19,394	$	13,832

See Note 12, “Fair Value Disclosures,” for information regarding 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 values of those communities, net of impairment charges.

At April 30, 2019, 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 risk 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 April 30, 2019, we determined that 130 land purchase contracts, with an aggregate purchase price of $2.00 billion, on which we had made aggregate deposits totaling $130.1 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2018, we determined that 110 land purchase contracts, with an aggregate purchase price of $1.88 billion, on which we had made aggregate deposits totaling $120.5 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.

Interest incurred, capitalized, and expensed, for the periods indicated, was as follows (amounts in thousands):



	Six months ended April 30,						Three months ended April 30,
	2019			2018			2019			2018
Interest capitalized, beginning of period	$	319,364		$	352,049		$	330,167		$	354,496
Interest incurred	87,862			81,269			43,440			42,582
Interest expensed to home sales cost of revenues	(79,227		)	(78,912		)	(44,786		)	(45,027		)
Interest expensed to land sales cost of revenues	(635		)				(283		)
Interest expensed in other income				(1,001		)				(285		)
Interest capitalized on investments in unconsolidated entities	(3,084		)	(3,602		)	(1,270		)	(1,891		)
Previously capitalized interest on investments in unconsolidated entities transferred to inventory	4,303			115			1,315			43
Interest capitalized, end of period	$	328,583		$	349,918		$	328,583		$	349,918