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 three quarters of fiscal 2016 and in fiscal 2015, the Company’s active inventory exceeded its debt level and all interest incurred was capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and nine months ended June 30, 2016 and 2015:



	Three Months Ended June 30,						Nine Months Ended June 30,
	2016			2015			2016			2015
	(In millions)
Capitalized interest, beginning of period	$	214.5		$	212.2		$	208.0		$	198.5
Interest incurred (1)	35.4			43.2			118.0			126.2
Interest charged to cost of sales	(43.3		)	(42.8		)	(119.4		)	(112.1		)
Capitalized interest, end of period	$	206.6		$	212.6		$	206.6		$	212.6

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(1)	Interest incurred includes interest incurred on the Company's financial services mortgage repurchase facility of $2.4 million and $5.9 million in the three and nine months ended June 30, 2016, respectively, and $2.1 million and $5.2 million in the same periods of 2015.