NOTE 8: FAIR VALUE

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS – The carrying amounts and estimated fair values of our financial instruments are as follows:



(in 000s)
As of	October 31, 2015				October 31, 2014				April 30, 2015
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	$	360,681	$	360,681	$	627,490	$	627,490	$	2,007,190	$	2,007,190
Cash and cash equivalents - restricted	42,781		42,781		55,543		55,543		91,972		91,972
Receivables, net - short-term	94,760		94,760		107,705		107,705		167,964		167,964
Mortgage loans held for investment, net	220,671		180,437		251,092		192,411		239,338		190,196
Investments in AFS securities	3,173		3,173		390,954		390,954		441,709		441,709
Receivables, net - long-term	75,275		75,275		101,805		101,805		80,867		80,867
Liabilities:
Customer banking deposits	—		—		455,308		452,351		744,699		737,261
Long-term debt	1,502,746		1,553,633		506,360		550,332		506,088		556,769
Contingent consideration payments	11,932		11,932		10,555		10,555		10,667		10,667

Fair value estimates, methods and assumptions are set forth below. The fair value was not estimated for assets and liabilities that are not considered financial instruments.


▪	Cash and cash equivalents, including restricted - Fair value approximates the carrying amount (Level 1).


▪	Receivables, net - short-term - For short-term balances the carrying values reported in the balance sheet approximate fair market value due to the relative short-term nature of the respective instruments (Level 1).

▪

Mortgage loans held for investment, net - The fair value of mortgage loans held for investment is estimated using a third-party pricing service. The fair value is determined using the present value of expected future cash flows at the asset level, assuming future prepayments and using discount factors determined by prices obtained for residential loans with similar characteristics in the secondary market, as discounted for illiquid assets. Quarterly, we perform analytics to assess the reasonableness of the fair value received from the third-party pricing service based on changes in the portfolio and changes in market conditions. We evaluate whether adjustments to third-party pricing is necessary and historically, we have not made adjustments to prices obtained from our third-party pricing service (Level 3).


▪	Investments in AFS securities - For mortgage-backed securities, we historically used a third-party pricing service to determine fair value. The service's pricing model was based on market data and utilizes available trade, bid and other market information for similar securities (Level 2). The fair value of our investment in common stock was determined based on quoted market prices (Level 1).

▪

Receivables, net - long-term - The carrying values for the long-term portion of loans to franchisees approximate fair market value due to variable interest rates, low historical delinquency rates and franchise territories serving as collateral (Level 1). Long-term EA receivables are carried at net realizable value which approximates fair value (Level 3). Net realizable value is determined based on historical collection rates.

▪

Customer banking deposits - The fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, checking, money market and savings accounts, was equal to the amount payable on demand (Level 1). The fair value of IRAs and other time deposits was estimated by discounting the future cash flows using the rates currently offered by HRB Bank for products with similar remaining maturities (Level 3).


▪	Long-term debt - The fair value of our Senior Notes is based on quotes from multiple banks (Level 2).


▪	Contingent consideration payments - Fair value approximates the carrying amount (Level 3).