due to our vertical integration strategy and ongoing investment in plant and machinery , we maintain a relatively high fixed manufacturing overhead . we may not adjust these fixed costs quickly enough to adapt to rapidly changing market conditions . our gross margin is therefore significantly affected by our sales volume and the corresponding utilization of capacity and absorption of fixed manufacturing overhead expenses . sales and marketing . our sales and marketing expense consists primarily of costs related to compensation , trade shows , professional and technical conferences , travel , facilities , depreciation of equipment used for demonstration purposes and other marketing costs . 34 research and development . our research and development expense consists primarily of compensation , development expenses related to the design of our products and certain components , the cost of materials and components to build prototype devices for testing and facilities costs . costs related to product development are recorded as research and development expenses in the period in which they are incurred . general and administrative . our general and administrative expense consists primarily of compensation and associated costs for executive management , finance , legal and other administrative personnel , outside legal and professional fees , insurance premiums and fees , allocated facilities costs and other corporate expenses such as charges and benefits related to the change in allowance for doubtful debt . factors and trends that affect our operations and financial results in reading our financial statements , you should be aware of the following factors and trends that our management believes are important in understanding our financial performance . net sales . our net sales grew from $ 299.3 million in 2010 to $ 769.8 million in 2014 , representing a compound annual growth rate of approximately 27 % . net sales growth was driven by ( i ) increasing demand for our products , fueled by their superior performance and decreasing average cost per watt of output power which has resulted in a substantial improvement in their cost competitiveness compared to traditional lasers , ( ii ) the introduction of new products , including our high-power lasers with higher output power levels , ( iii ) the growing market acceptance of fiber lasers and ( iv ) the development of new applications for our products and new oem customer relationships . our annual revenue growth rates have varied . net sales increased by 19 % , 15 % , 19 % , 59 % and 61 % in 2014 , 2013 , 2012 , 2011 and 2010 , respectively . our business depends substantially upon capital expenditures by our customers , particularly by manufacturers using our products for materials processing , which includes general manufacturing , automotive , aerospace , heavy industry , consumer , semiconductor and electronics . approximately 95 % of our revenues in 2014 were from customers using our products for materials processing . although applications within materials processing are broad , the capital equipment market in general is cyclical and historically has experienced sudden and severe downturns . for the foreseeable future , our operations will continue to depend upon capital expenditures by customers for materials processing and will be subject to the broader fluctuations of capital equipment spending . our net sales have historically fluctuated from quarter to quarter . the increase or decrease in sales from a prior quarter can be affected by the timing of orders received from customers , the shipment , installation and acceptance of products at our customers ' facilities , the mix of oem orders and one-time orders for products with large purchase prices , and seasonal factors such as the purchasing patterns and levels of activity throughout the year in the regions where we operate . historically , our net sales have been higher in the second half of the year than in the first half of the year . furthermore , net sales can be affected by the time taken to qualify our products for use in new applications in the end markets that we serve . the adoption of our products by a new customer or qualification in a new application can lead to an increase in net sales for a period , which may then slow until we penetrate new markets or obtain new customers . gross margin . our total gross margin in any period can be significantly affected by total net sales in any period , by product mix , that is , the percentage of our revenue in the period that is attributable to higher or lower-power products and the mix of sales between laser and amplifier sources and complete systems , by sales mix between oem customers who purchase devices from us in high unit volumes and other customers , by mix of sales in different geographies and by other factors , some of which are not under our control . our product mix affects our margins because the selling price per watt is generally higher for mid-power devices and certain specialty products than for high-power devices and certain pulsed lasers sold in large volumes . the overall cost of high-power lasers may be partially offset by improved absorption of fixed overhead costs associated with sales of larger volumes of higher-power products because they use a greater number of optical components and drive economies of scale in manufacturing . also , the profit margins on systems can be lower than margins for our laser and amplifier sources , depending on the configuration , volume and competitive forces , among other factors . the mix of sales between oem customers and other customers can affect gross margin because we provide sales price discounts on products based on the number of units ordered . as the number of oem customers increases and the number of units ordered increases , the average sales price per unit will be reduced . story_separator_special_tag sales and marketing expense increased by $ 4.0 million , or 14.8 % , to $ 30.6 million in 2014 from $ 26.7 million in 2013 , primarily as a result of an increase in personnel costs , premises and depreciation expense . as a percentage of sales , sales and marketing expense decreased to 4.0 % in 2014 from 4.1 % in 2013 . as we continue to expand our worldwide sales organization , we expect sales and marketing expenses to increase in the aggregate . research and development expense . research and development expense increased by $ 11.7 million , or 28.2 % , to $ 53.4 million in 2014 from $ 41.7 million in 2013 , primarily as a result of an increase in personnel and consultant costs , expenses related to research and development contracts to develop new laser systems and application processes as well as an increase in materials , premises and depreciation expense . research and development continues to focus on developing new products at different wavelengths including uv , developing end user systems , green and mid-infrared , new pulsed products , improving the electrical efficiency of high power products , enhancing the performance of our internally manufactured components , refining production processes to improve manufacturing yields , developing new accessories and achieving higher output powers . as a percentage of sales , research and development expense increased to 6.9 % in 2014 from 6.4 % in 2013 . we expect to continue to invest in research and development and that research and development expense will increase in the aggregate . general and administrative expense . general and administrative expense increased by $ 4.5 million , or 8.8 % , to $ 55.3 million in 2014 from $ 50.9 million in 2013 , primarily due to increased personnel costs , consultants , bad debt provisions and depreciation and premises expense . as a percentage of sales , general and administrative expense decreased to 7.2 % in 2014 from 7.8 % in 2013 . we expect general and administrative expenses to increase as we invest to support the expected growth in net sales . effect of exchange rates on sales , gross margin and operating expenses . we estimate that if exchange rates had been the same as one year ago , sales in 2014 would have been $ 8.5 million higher , gross margin would have been $ 6.3 million higher and operating expenses in total would have been $ 3.6 million higher . these estimates assume constant exchange rates between fiscal year 2014 and fiscal year 2013 and are calculated using the average exchange rates for the twelve-month period ended december 31 , 2013 for the respective currencies , which were us $ 1=euro 0.75 , us $ 1=japanese yen 97.58 , us $ 1=chinese yuan 6.19 and us $ 1=russian ruble 31.82 . ( gain ) loss on foreign exchange . we incurred a foreign exchange gain of $ 6.6 million in 2014 as compared to a loss of $ 2.5 million in 2013 . the change is primarily attributable to the appreciation of the u.s. dollar compared to the euro and russian ruble , partially off-set by the depreciation of the japanese yen compared to the u.s. dollar and euro . interest ( expense ) income , net . interest ( expense ) income , net was relatively flat at $ 0.1 million of expense in 2014 and 2013 . other income , net . other income , net increased to $ 0.8 million of income in 2014 compared to $ 0.2 million of income in 2013 . included in other income , net for 2014 included insurance rebates and government subsidies as well as a small reduction in contingent consideration related to prior year acquisitions . for 2013 , other expense included $ 2.7 million reduction in contingent consideration related to prior year acquisitions and $ 0.5 million gain on the sale of an investment from our russian subsidiary partially offset by a $ 2.9 million goodwill impairment charge . provision for income taxes . provision for income taxes was $ 84.0 million in 2014 compared to $ 62.5 million in 2013 , representing an effective tax rate of 29.5 % in 2014 and 28.6 % in 2013 . the increase in the provision for income taxes was primarily the result of increased income before provision for income taxes . the increase in effective rate was due primarily to the mix of income earned in various tax jurisdictions partially reduced by the reduced benefit of additional research and development credits claimed in 2014 as compared with 2013. the 2013 research and development credits included the effect of 2012 credits because the legislation authorizing the 2012 credits was not signed into law until 2013. net income . net income attributable to ipg photonics corporation increased by $ 44.7 million to $ 200.4 million in 2014 from $ 155.8 million in 2013 . net income attributable to ipg photonics corporation as a percentage of our net sales increased by 2.0 percentage points to 26.0 % in 2014 from 24.0 % in 2013 due to the factors described above . 40 comparison of year ended december 31 , 2013 to year ended december 31 , 2012 net sales . net sales increased by $ 85.5 million , or 15.2 % , to $ 648.0 million in 2013 from $ 562.5 million in 2012. the table below sets forth sales by application ( in thousands , except for percentages ) : replace_table_token_10_th sales for materials processing applications increased primarily due to higher sales of high-power , medium-power and qcw lasers used in cutting and welding applications , offset by decreased sales of pulsed lasers used in marking and engraving applications . we continue to see increased acceptance of the advantages of fiber laser technology . a growing number of oem customers have developed cutting systems that use our high-power lasers and sales of

liquidity and capital resources our principal sources of liquidity as of december 31 , 2014 consisted of cash and cash equivalents of $ 522.2 million , unused credit lines and overdraft facilities of $ 66.9 million and working capital ( excluding cash and cash equivalents ) of $ 249.6 million . this compares to cash and cash equivalents of $ 448.8 million , unused credit lines and overdraft facilities of $ 61.8 million and working capital ( excluding cash and cash equivalents ) of $ 237.5 million as of december 31 , 2013 . the increase in cash and cash equivalents of $ 73.4 million from $ 448.8 million relates primarily to cash provided by operating activities in 2014 of $ 180.1 million and cash provided by financing activities of $ 11.5 million which was partially offset by cash used in investing activities of $ 90.1 million . cash used in investing activities primarily relates to investments in fixed assets in 2014 and a purchase of certain intellectual property rights including patent rights during the third quarter of 2014 . our long-term debt consists of a $ 11.3 million unsecured variable-rate note . of this amount , the entire balance of $ 11.3 million is the current portion because the note expires in june 2015 , at which time the outstanding debt balance would be$ 10.7 million .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources our principal sources of liquidity as of december 31 , 2014 consisted of cash and cash equivalents of $ 522.2 million , unused credit lines and overdraft facilities of $ 66.9 million and working capital ( excluding cash and cash equivalents ) of $ 249.6 million . this compares to cash and cash equivalents of $ 448.8 million , unused credit lines and overdraft facilities of $ 61.8 million and working capital ( excluding cash and cash equivalents ) of $ 237.5 million as of december 31 , 2013 . the increase in cash and cash equivalents of $ 73.4 million from $ 448.8 million relates primarily to cash provided by operating activities in 2014 of $ 180.1 million and cash provided by financing activities of $ 11.5 million which was partially offset by cash used in investing activities of $ 90.1 million . cash used in investing activities primarily relates to investments in fixed assets in 2014 and a purchase of certain intellectual property rights including patent rights during the third quarter of 2014 . our long-term debt consists of a $ 11.3 million unsecured variable-rate note . of this amount , the entire balance of $ 11.3 million is the current portion because the note expires in june 2015 , at which time the outstanding debt balance would be$ 10.7 million .
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 Suspicious Activity Report : due to our vertical integration strategy and ongoing investment in plant and machinery , we maintain a relatively high fixed manufacturing overhead . we may not adjust these fixed costs quickly enough to adapt to rapidly changing market conditions . our gross margin is therefore significantly affected by our sales volume and the corresponding utilization of capacity and absorption of fixed manufacturing overhead expenses . sales and marketing . our sales and marketing expense consists primarily of costs related to compensation , trade shows , professional and technical conferences , travel , facilities , depreciation of equipment used for demonstration purposes and other marketing costs . 34 research and development . our research and development expense consists primarily of compensation , development expenses related to the design of our products and certain components , the cost of materials and components to build prototype devices for testing and facilities costs . costs related to product development are recorded as research and development expenses in the period in which they are incurred . general and administrative . our general and administrative expense consists primarily of compensation and associated costs for executive management , finance , legal and other administrative personnel , outside legal and professional fees , insurance premiums and fees , allocated facilities costs and other corporate expenses such as charges and benefits related to the change in allowance for doubtful debt . factors and trends that affect our operations and financial results in reading our financial statements , you should be aware of the following factors and trends that our management believes are important in understanding our financial performance . net sales . our net sales grew from $ 299.3 million in 2010 to $ 769.8 million in 2014 , representing a compound annual growth rate of approximately 27 % . net sales growth was driven by ( i ) increasing demand for our products , fueled by their superior performance and decreasing average cost per watt of output power which has resulted in a substantial improvement in their cost competitiveness compared to traditional lasers , ( ii ) the introduction of new products , including our high-power lasers with higher output power levels , ( iii ) the growing market acceptance of fiber lasers and ( iv ) the development of new applications for our products and new oem customer relationships . our annual revenue growth rates have varied . net sales increased by 19 % , 15 % , 19 % , 59 % and 61 % in 2014 , 2013 , 2012 , 2011 and 2010 , respectively . our business depends substantially upon capital expenditures by our customers , particularly by manufacturers using our products for materials processing , which includes general manufacturing , automotive , aerospace , heavy industry , consumer , semiconductor and electronics . approximately 95 % of our revenues in 2014 were from customers using our products for materials processing . although applications within materials processing are broad , the capital equipment market in general is cyclical and historically has experienced sudden and severe downturns . for the foreseeable future , our operations will continue to depend upon capital expenditures by customers for materials processing and will be subject to the broader fluctuations of capital equipment spending . our net sales have historically fluctuated from quarter to quarter . the increase or decrease in sales from a prior quarter can be affected by the timing of orders received from customers , the shipment , installation and acceptance of products at our customers ' facilities , the mix of oem orders and one-time orders for products with large purchase prices , and seasonal factors such as the purchasing patterns and levels of activity throughout the year in the regions where we operate . historically , our net sales have been higher in the second half of the year than in the first half of the year . furthermore , net sales can be affected by the time taken to qualify our products for use in new applications in the end markets that we serve . the adoption of our products by a new customer or qualification in a new application can lead to an increase in net sales for a period , which may then slow until we penetrate new markets or obtain new customers . gross margin . our total gross margin in any period can be significantly affected by total net sales in any period , by product mix , that is , the percentage of our revenue in the period that is attributable to higher or lower-power products and the mix of sales between laser and amplifier sources and complete systems , by sales mix between oem customers who purchase devices from us in high unit volumes and other customers , by mix of sales in different geographies and by other factors , some of which are not under our control . our product mix affects our margins because the selling price per watt is generally higher for mid-power devices and certain specialty products than for high-power devices and certain pulsed lasers sold in large volumes . the overall cost of high-power lasers may be partially offset by improved absorption of fixed overhead costs associated with sales of larger volumes of higher-power products because they use a greater number of optical components and drive economies of scale in manufacturing . also , the profit margins on systems can be lower than margins for our laser and amplifier sources , depending on the configuration , volume and competitive forces , among other factors . the mix of sales between oem customers and other customers can affect gross margin because we provide sales price discounts on products based on the number of units ordered . as the number of oem customers increases and the number of units ordered increases , the average sales price per unit will be reduced . story_separator_special_tag sales and marketing expense increased by $ 4.0 million , or 14.8 % , to $ 30.6 million in 2014 from $ 26.7 million in 2013 , primarily as a result of an increase in personnel costs , premises and depreciation expense . as a percentage of sales , sales and marketing expense decreased to 4.0 % in 2014 from 4.1 % in 2013 . as we continue to expand our worldwide sales organization , we expect sales and marketing expenses to increase in the aggregate . research and development expense . research and development expense increased by $ 11.7 million , or 28.2 % , to $ 53.4 million in 2014 from $ 41.7 million in 2013 , primarily as a result of an increase in personnel and consultant costs , expenses related to research and development contracts to develop new laser systems and application processes as well as an increase in materials , premises and depreciation expense . research and development continues to focus on developing new products at different wavelengths including uv , developing end user systems , green and mid-infrared , new pulsed products , improving the electrical efficiency of high power products , enhancing the performance of our internally manufactured components , refining production processes to improve manufacturing yields , developing new accessories and achieving higher output powers . as a percentage of sales , research and development expense increased to 6.9 % in 2014 from 6.4 % in 2013 . we expect to continue to invest in research and development and that research and development expense will increase in the aggregate . general and administrative expense . general and administrative expense increased by $ 4.5 million , or 8.8 % , to $ 55.3 million in 2014 from $ 50.9 million in 2013 , primarily due to increased personnel costs , consultants , bad debt provisions and depreciation and premises expense . as a percentage of sales , general and administrative expense decreased to 7.2 % in 2014 from 7.8 % in 2013 . we expect general and administrative expenses to increase as we invest to support the expected growth in net sales . effect of exchange rates on sales , gross margin and operating expenses . we estimate that if exchange rates had been the same as one year ago , sales in 2014 would have been $ 8.5 million higher , gross margin would have been $ 6.3 million higher and operating expenses in total would have been $ 3.6 million higher . these estimates assume constant exchange rates between fiscal year 2014 and fiscal year 2013 and are calculated using the average exchange rates for the twelve-month period ended december 31 , 2013 for the respective currencies , which were us $ 1=euro 0.75 , us $ 1=japanese yen 97.58 , us $ 1=chinese yuan 6.19 and us $ 1=russian ruble 31.82 . ( gain ) loss on foreign exchange . we incurred a foreign exchange gain of $ 6.6 million in 2014 as compared to a loss of $ 2.5 million in 2013 . the change is primarily attributable to the appreciation of the u.s. dollar compared to the euro and russian ruble , partially off-set by the depreciation of the japanese yen compared to the u.s. dollar and euro . interest ( expense ) income , net . interest ( expense ) income , net was relatively flat at $ 0.1 million of expense in 2014 and 2013 . other income , net . other income , net increased to $ 0.8 million of income in 2014 compared to $ 0.2 million of income in 2013 . included in other income , net for 2014 included insurance rebates and government subsidies as well as a small reduction in contingent consideration related to prior year acquisitions . for 2013 , other expense included $ 2.7 million reduction in contingent consideration related to prior year acquisitions and $ 0.5 million gain on the sale of an investment from our russian subsidiary partially offset by a $ 2.9 million goodwill impairment charge . provision for income taxes . provision for income taxes was $ 84.0 million in 2014 compared to $ 62.5 million in 2013 , representing an effective tax rate of 29.5 % in 2014 and 28.6 % in 2013 . the increase in the provision for income taxes was primarily the result of increased income before provision for income taxes . the increase in effective rate was due primarily to the mix of income earned in various tax jurisdictions partially reduced by the reduced benefit of additional research and development credits claimed in 2014 as compared with 2013. the 2013 research and development credits included the effect of 2012 credits because the legislation authorizing the 2012 credits was not signed into law until 2013. net income . net income attributable to ipg photonics corporation increased by $ 44.7 million to $ 200.4 million in 2014 from $ 155.8 million in 2013 . net income attributable to ipg photonics corporation as a percentage of our net sales increased by 2.0 percentage points to 26.0 % in 2014 from 24.0 % in 2013 due to the factors described above . 40 comparison of year ended december 31 , 2013 to year ended december 31 , 2012 net sales . net sales increased by $ 85.5 million , or 15.2 % , to $ 648.0 million in 2013 from $ 562.5 million in 2012. the table below sets forth sales by application ( in thousands , except for percentages ) : replace_table_token_10_th sales for materials processing applications increased primarily due to higher sales of high-power , medium-power and qcw lasers used in cutting and welding applications , offset by decreased sales of pulsed lasers used in marking and engraving applications . we continue to see increased acceptance of the advantages of fiber laser technology . a growing number of oem customers have developed cutting systems that use our high-power lasers and sales of

