13.	FAIR VALUE

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate fair values due to the short-term nature of these instruments. The Company's current investments as of June 30, 2017 include certificates of deposits and pre-refunded municipal bonds that are classified by management as held-to-maturity as the Company had the positive intent and ability to hold to maturity. The carrying value of these current investments approximate fair values due to the short-term nature of these instruments. The Company has classified these instruments as Level 2 in the fair value hierarchy. Fair value estimates are made at a specific point in time, based on relevant market information.

The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair-value hierarchy:

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Level 1 – quoted prices in active markets for identical assets or liabilities;

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Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

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Level 3 – unobservable inputs based on the Company's own assumptions.

Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):

	Fair Value at June 30, 2017
	Level 1		Level 2		Level 3		Total

Financial assets (liabilities):
Cash equivalents and current investments	$	33,812	$	—	$	—	$	33,812
Other long-term assets		3,463		—		—		3,463
Forward contracts		—		256		—		256
Life insurance contracts		—		—		35,627		35,627
Total	$	37,275	$	256	$	35,627	$	73,158

	Fair Value at December 31, 2016
	Level 1		Level 2		Level 3		Total

Financial assets (liabilities):
Cash equivalents and current investments	$	50,307	$	—	$	—	$	50,307
Other long-term assets		2,782		—		—		2,782
Forward contracts		—		1,371		—		1,371
Life insurance contracts		—		—		32,286		32,286
Total	$	53,089	$	1,371	$	32,286	$	86,746

The following table provides a summary of changes in fair value of the Company's Level 3 marketable securities (U.S. dollars in thousands):

Life Insurance Contracts

Beginning balance at January 1, 2017	$	32,286
Actual return on plan assets:
Relating to assets still held at the reporting date		2,606
Purchases and issuances		895
Sales and settlements		(160	)
Transfers into Level 3		--
Ending balance at June 30, 2017	$	35,627