NOTE G – HOMEBUILDING INTEREST

The Company capitalizes homebuilding interest costs to inventory during active development and construction. Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. Additionally, the Company writes off a portion of the capitalized interest related to communities for which inventory impairments are recorded. The Company’s inventory under active development and construction was lower than its debt level at June 30, 2011 and 2010; therefore, a portion of the interest incurred is reflected as interest expense.

The following table summarizes the Company’s homebuilding interest costs incurred, capitalized, expensed as interest expense, charged to cost of sales and written off during the three and nine-month periods ended June 30, 2011 and 2010:


	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In millions)

Capitalized interest, beginning of period	$	88.6		$	117.2		$	91.5		$	128.8
Interest incurred		31.4			41.3			100.5			136.9
Interest expensed:
Directly to interest expense		(10.1	)		(19.6	)		(41.0	)		(69.3	)
Amortized to cost of sales		(25.3	)		(38.3	)		(65.7	)		(95.6	)
Written off with inventory impairments		(0.2	)		(0.9	)		(0.9	)		(1.1	)

Capitalized interest, end of period	$	84.4		$	99.7		$	84.4		$	99.7