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Income taxes</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We recorded an income tax provision for the third quarter of 2013 of $434,000 at an effective tax rate of 23.0%, compared to an income tax provision during the third quarter of 2012 of $13,000 at an effective tax rate of 36.1%.&#160;&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">For the nine months ended September 30, 2013, we recorded an income tax provision of $1,300,000 at an effective tax rate of 25.4%, compared to an income tax provision during the nine months ended September 30, 2012 of $979,000 at an effective tax rate of 36.0%.&#160;&#160;</font>Our effective tax rate for the third quarter of 2013 is unusually low due to a $224,000 <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">reduction in tax liabilities for unrecognized tax benefits resulting from the completion of an audit of our 2010 federal income tax return.&#160;&#160;</font>Our effective tax rate for the first nine months of 2013 is unusually low because it includes: 1) the previously discussed reduction in tax liabilities for unrecognized tax benefits recorded in the third quarter of 2013 and 2) the benefit from the 2012 federal research and development credit (&#8220;R&amp;D credit&#8221;) of approximately $220,000 as this credit was not renewed until January 2, 2013 as a component of the American Taxpayer Relief Act of 2012.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We are subject to U.S. federal income tax as well as income tax of certain state and foreign jurisdictions.&#160;&#160;We have substantially concluded all U.S. federal income tax, state and local, and foreign tax matters through 2009.&#160;&#160;During 2008, a limited scope examination of our 2005 and 2006 federal tax returns was completed and during 2013, an examination of our 2010 federal tax return was completed.&#160;&#160;&#160;However, our federal tax returns for the years 2010 through 2012 remain open to examination. Various state and foreign tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements.&#160;&#160;No state or foreign tax jurisdiction income tax returns are currently under examination. As of September 30, 2013, we had $73,000 of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.</font> </div><br/> 7 434000 0.230 13000 0.361 1300000 0.254 979000 0.360 224000 -9 220000 73000 <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8. Business consolidation and restructuring expenses</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As discussed in Note 8, Accrued business consolidation and restructuring expenses, of the Company&#8217;s 2012 Annual Report on Form 10-K for the year ended December 31, 2012, in January 2012, we determined that we no longer needed to maintain the existing Printrex manufacturing facility in San Jose, California, along with certain redundant headcount.&#160;&#160;As a result, we incurred expenses of $23,000 and $140,000, respectively, in the three and nine months ended September 30, 2012 for employee termination benefits related to these employee reductions as well as moving costs related to the closing of the San Jose manufacturing operations.&#160;&#160;This restructuring charge was recorded in accordance with ASC 420-10-25-4 &#8220;Exit or Disposal Cost Obligations&#8221; and cash payments made under this restructuring plan were completed by October 2012.&#160;&#160;</font> </div><br/> 23000 -12 <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9. Commitments and contingencies</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On June 8, 2012, Avery Dennison Corporation (&#8220;AD&#8221;) filed a civil complaint against the Company and a former employee of the Company and of AD, in the Court of Common Pleas (the &#8220;Court&#8221;) in Lake County, Ohio.&#160; The complaint alleges that this former employee and the Company misappropriated unspecified trade secrets and confidential information related to the design of our food safety terminals from AD.&#160; The complaint requests a preliminary and permanent injunction against the Company from manufacturing and selling our Ithaca&#174; 9700 and 9800 food safety terminals.&#160; On July 16, 2012, the Company filed its answer, affirmative defenses and counterclaims, seeking all available damages including legal fees.&#160; A hearing on the plaintiff's motion for preliminary injunction took place in August 2012, and in November 2012, the Court denied this request. 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