CAPITALIZED INTEREST

The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During the first quarter of fiscal 2016 and in fiscal 2015, the Company's active inventory has exceeded its debt level, and all interest incurred has been capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three months ended December 31, 2015 and 2014:



	Three Months Ended December 31,
	2015			2014
	(In millions)
Capitalized interest, beginning of period	$	208.0		$	198.5
Interest incurred (1)	42.2			40.4
Interest expensed:
Charged to cost of sales	(35.2		)	(33.6		)
Written off with inventory impairments	—			(0.1		)
Capitalized interest, end of period	$	215.0		$	205.2

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(1)	Interest incurred includes interest incurred on the Company's financial services mortgage repurchase facility of $1.6 million in both the three months ended December 31, 2015 and 2014.