Income taxes (Tables)

12 Months Ended

Dec. 31, 2018

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)	2018			2017		2016
U.S.	$	28,642		$	27,774	$	23,006
Non-U.S.		(5,757	)		8,617		(3,982	)
Income before income taxes	$	22,885		$	36,391	$	19,024

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)	2018			2017		2016
U.S.
Current	$	9,480		$	3,620	$	558
Deferred		(3,430	)		20,222		9,296
		6,050			23,842		9,854
Non-U.S.
Current		2,255			4,062		4,509
Deferred		769			1,196		1,164
		3,024			5,258		5,673
Income tax expense	$	9,074		$	29,100	$	15,527

Schedule of Effective Income Tax Rate Reconciliation for Continuing Operations

The differences between the income tax provision at the U.S. federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2018, 2017, and 2016 consist of the following:

	2018						2017¹						2016¹
(U.S. Dollars, in thousands, except percentages)	Amount			Percent			Amount			Percent			Amount			Percent
Statutory U.S. federal income tax rate	$	4,806			21.0	%	$	12,737			35.0	%	$	6,658			35.0	%
State taxes, net of U.S. federal benefit		1,038			4.5			1,598			4.4			395			2.1
Foreign rate differential, including withholding taxes		784			3.4			(3,849	)		(10.6	)		(805	)		(4.2	)
Charges related to U.S. Government resolutions		—			—			—			—			2,050			10.8
Valuation allowances, net		4,116			18.0			3,548			9.7			6,149			32.3
Change in estimate on compensation expenses		—			—			—			—			(2,151	)		(11.3	)
Italian subsidiary intangible asset		(230	)		(1.0	)		(381	)		(1.0	)		(1,477	)		(7.8	)
Change of intention for foreign earnings		—			—			—			—			1,300			6.8
Domestic manufacturing deduction		—			—			(818	)		(2.2	)		—			—
Unrecognized tax benefits, net of settlements		81			0.4			6,002			16.5			3,049			16.0
Impact of the Tax Act		(560	)		(2.4	)		8,347			22.9			—			—
Equity compensation		(1,646	)		(7.2	)		272			0.7			334			1.8
Contingent consideration		528			2.3			—			—			—			—
Other, net		157			0.7			1,644			4.5			25			0.1
Income tax expense/effective rate	$	9,074			39.7	%	$	29,100			80.0	%	$	15,527			81.6	%

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)	2018			2017
Intangible assets and goodwill	$	1,682		$	2,271
Inventories and related reserves		12,151			11,298
Deferred revenue and cost of goods sold		4,652			6,816
Other accruals and reserves		2,799			2,336
Accrued compensation		8,317			4,054
Allowance for doubtful accounts		2,346			2,617
Net operating loss and tax credit carryforwards		52,664			43,296
Other, net		2,200			1,748
		86,811			74,436
Valuation allowance		(49,014	)		(46,271	)
Deferred tax asset	$	37,797		$	28,165
Withholding taxes		—			(381	)
Property, plant and equipment		(4,569	)		(4,469	)
Deferred tax liability		(4,569	)		(4,850	)
Net deferred tax assets	$	33,228		$	23,315

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, 2018, 2017, and 2016 follows:

(U.S. Dollars, in thousands)	2018			2017
Balance as of January 1,	$	23,676		$	19,400
Additions for current year tax positions		170			787
Increases for prior year tax positions		1,653			3,498
Settlements of prior year tax positions		(1,499	)		—
Expiration of statutes		(2,649	)		(9	)
Balance as of December 31,	$	21,351		$	23,676