Income taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Income (Loss) from Continuing Operations Before Provision for Income Taxes

Income (loss) from continuing operations before provision for income taxes consisted of the following:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2017		2016			2015
U.S.	$	27,774	$	23,006		$	15,480
Non-U.S.		8,617		(3,982	)		(6,973	)
Income before income taxes	$	36,391	$	19,024		$	8,507

Schedule of Provision for Income Taxes on Continuing Operations

The provision for income taxes on continuing operations consists of the following:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2017		2016		2015
U.S.
Current	$	3,620	$	558	$	6,792
Deferred		20,222		9,296		(1,146	)
		23,842		9,854		5,646
Non-U.S.
Current		4,062		4,509		3,661
Deferred		1,196		1,164		1,542
		5,258		5,673		5,203
Income tax expense	$	29,100	$	15,527	$	10,849

Schedule of Effective Income Tax Rate Reconciliation for Continuing Operations

The rate reconciliation for continuing operations presented below is based on the U.S. federal income tax rate, rather than the Company’s country of domicile tax rate. The Company believes, given the large proportion of taxable income earned in the United States, such disclosure is more meaningful.

	2017						2016						2015
(U.S. Dollars, in thousands, except percentages)	Amount			Percent			Amount			Percent			Amount			Percent
Statutory U.S. federal income tax rate	$	12,737			35.0	%	$	6,658			35.0	%	$	2,978			35.0	%
State taxes, net of U.S. federal benefit		1,598			4.4			395			2.1			521			6.1
Foreign rate differential, including withholding taxes		(3,849	)		(10.6	)		(805	)		(4.2	)		(1,934	)		(22.7	)
Charges related to U.S. Government resolutions		—			—			2,050			10.8			—			—
Valuation allowances, net		3,548			9.7			6,149			32.3			10,952			128.7
Change in estimate on compensation expenses		—			—			(2,151	)		(11.3	)		—			—
Italian subsidiary intangible asset		(381	)		(1.0	)		(1,477	)		(7.8	)		(2,076	)		(24.4	)
Change of intention for foreign earnings		—			—			1,300			6.8			—			—
Domestic manufacturing deduction		(818	)		(2.2	)		—			—			(469	)		(5.5	)
Unrecognized tax benefits, net of settlements		6,002			16.5			3,049			16.0			406			4.8
Impact of the Tax Act		8,347			22.9			—			—			—			—
Other, net		1,916			5.3			359			1.9			471			5.5
Income tax expense/effective rate	$	29,100			80.0	%	$	15,527			81.6	%	$	10,849			127.5	%

Schedule of Deferred Tax Assets and Liabilities

The Company’s deferred tax assets and liabilities are as follows:

	December 31,
(U.S. Dollars, in thousands)	2017			2016
Intangible assets and goodwill	$	2,271		$	2,628
Inventories and related reserves		11,298			17,665
Deferred revenue and cost of goods sold		6,816			11,263
Other accruals and reserves		2,336			4,066
Accrued compensation		4,054			6,747
Allowance for doubtful accounts		2,617			2,898
Accrued interest		—			4,621
Net operating loss carryforwards		42,675			37,930
Other, net		2,369			3,032
		74,436			90,850
Valuation allowance		(46,271	)		(41,701	)
Deferred tax asset	$	28,165		$	49,149
Withholding taxes		(381	)		(648	)
Property, plant and equipment		(4,469	)		(1,176	)
Deferred tax liability		(4,850	)		(1,824	)
Net deferred tax assets	$	23,315		$	47,325

Schedule of Gross Unrecognized Tax Benefits (Excluding Interest and Penalties)

A reconciliation of the gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2017, 2016, and 2015 follows:

(U.S. Dollars, in thousands)	2017			2016			2015
Balance as of January 1,	$	18,384		$	15,763		$	15,597
Additions for current year tax positions		787			77			332
Increases (decreases) for prior year tax positions		3,361			2,551			(86	)
Settlements of prior year tax positions		—			—			—
Expiration of statutes		(10	)		(7	)		(80	)
Balance as of December 31,	$	22,522		$	18,384		$	15,763