profit margins may also be affected by fluctuations in the costs or availability of materials used to manufacture our products , product warranty costs , the cost of fuel , and changes in costs of other distribution or manufacturing-related services . our operating profits or losses may also be affected by the efficiency and effectiveness of our organization . historically , our operating expenses have been influenced by media costs to produce and distribute advertisements of our products on television , the internet and other media , facility costs , operating costs of our information and communications systems , product supply chain management , customer support and new product development activities . in addition , our operating expenses have been affected from time-to-time by asset impairment charges , restructuring charges and other significant unusual or infrequent expenses . as a result of the above and other factors , our period-to-period operating results may not be indicative of future performance . you should not place undue reliance on our operating results and should consider our prospects in light of the risks , expenses and difficulties typically encountered by us and other companies , both within and outside our industry . we may not be able to successfully address these risks and difficulties and , consequently , we can not assure you any future growth or profitability . for more information , see our discussion of risk factors located at part i , item 1a of this form 10-k. overview we are committed to providing innovative , quality solutions to help people achieve a fit and healthy lifestyle . our principal business activities include designing , developing , sourcing and marketing high-quality cardio and strength fitness products and related accessories for consumer use , primarily in the united states and canada . our products are sold under some of the most-recognized brand names in the fitness industry : nautilus ® , bowflex ® , schwinn ® and universal ® . we market our products through two distinct distribution channels , direct and retail , which we consider to be separate business segments . our direct business offers products directly to consumers through television advertising , catalogs and the internet . our retail business offers our products through a network of independent retail companies with stores and websites located in the united states and internationally . we also derive a portion of our revenue from the licensing of our brands and intellectual property . our net sales in 2014 were $ 274.4 million , an increase of $ 55.6 million , or 25.4 % , compared to net sales of $ 218.8 million in 2013 . net sales of our direct segment increased $ 38.9 million , or 28.5 % , compared to 2013 , primarily due to increased consumer demand for our cardio products , especially the bowflex max trainer ® . net sales of our retail segment increased by $ 16.4 million , or 21.4 % in 2014 , compared to 2013 , primarily due to growth in recently launched cardio products . income from continuing operations was $ 20.4 million , or $ 0.64 per diluted share , in 2014 , compared to $ 48.1 million , or $ 1.53 per diluted share , in 2013 . income from continuing operations in 2014 and 2013 included a $ 1.2 million and a $ 38.9 million credit related to the reversal of our deferred tax asset valuation allowance , respectively . without consideration of the reversal of our deferred tax asset valuation allowance , the improvement in our results from continuing operations in 2014 , compared to 2013 , was driven primarily by higher sales and increased operating income in both our direct and retail segments . net income was $ 18.8 million , or $ 0.59 per diluted share , in 2014 , compared to $ 48.0 million , or $ 1.52 per diluted share , in 2013 . net income in 2014 and 2013 included a $ 1.2 million and a $ 38.9 million credit related to the reversal of our deferred tax asset valuation allowance , respectively . 16 discontinued operations results from discontinued operations relate to the disposal of our former commercial business , which was completed in april 2011. we reached substantial completion of asset liquidation at december 31 , 2012. income from discontinued operations of $ 6.2 million in 2012 primarily represents a currency translation adjustment gain related to the liquidation of european subsidiaries . although there was no revenue related to the commercial business in 2014 , 2013 or 2012 , we continue to have legal and accounting expenses as we work with authorities on final deregistration of each entity , and product liability and other legal expenses associated with product previously sold into the commercial channel . critical accounting policies and estimates the preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities , revenues and expenses , and related disclosures of contingent assets and liabilities in the consolidated financial statements . an accounting estimate is considered to be critical if it meets both of the following criteria : ( i ) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made , and ( ii ) different estimates reasonably could have been used , or changes in the estimate that are reasonably likely to occur from period to period may have a material impact on the presentation of our financial condition , changes in financial condition or results of operations . our critical accounting policies and estimates are discussed below . story_separator_special_tag the increase in general and administrative in 2013 compared to 2012 was primarily due to a $ 0.4 million increase in infrastructure costs and a $ 0.8 million increase in employee-related costs , partially offset by a $ 0.3 million one-time charge in 2012 for lease write-off costs . the decreases in general and administrative as a percentage of net sales in 2014 compared to 2013 and in 2013 compared to 2012 were primarily due to higher net sales . research and development replace_table_token_11_th replace_table_token_12_th the increases in research and development in 2014 compared to 2013 and in 2013 compared to 2012 were primarily due to our continued investment in additional engineering and product development headcount . we expect research and development expense to increase in 2015 compared to 2014 , as we continue to invest in new product development resources . 23 interest expense interest expense in both 2014 and 2013 was less than $ 0.1 million each year , and was for financing costs associated with capital equipment lease payments . negative interest expense of $ 0.1 million in 2012 arose from the early repayment in march 2012 of our increasing-rate senior discount notes . early repayment of the notes resulted in a lower average effective interest rate over the term of the notes than would have applied if the notes had been held to maturity . in prior periods , we used the average effective interest rate as if the notes were held to maturity in determining the amount of interest expense incurred . other income ( expense ) other income ( expense ) primarily relates to the effect of exchange rate fluctuations between the u.s. and canada . however , 2014 and 2013 also included gains of $ 0.1 million and $ 0.3 million , respectively , related to refunds of state sales taxes previously paid by us . income tax expense ( benefit ) dollars in thousands year ended december 31 , change 2014 2013 $ % income tax expense ( benefit ) $ 9,841 $ ( 32,085 ) $ 41,926 n/m dollars in thousands year ended december 31 , change 2013 2012 $ % income tax benefit $ ( 32,085 ) $ ( 226 ) $ ( 31,859 ) n/m n/m - not meaningful . our income tax expense in 2014 was primarily attributable to the income generated domestically and in canada , partially offset by a $ 1.2 million release of our domestic valuation allowance . income tax benefit for 2013 included a $ 38.9 million release of our domestic valuation allowance . income tax benefit for 2012 was primarily related to the expiration of statutes of limitation applicable to our liabilities for uncertain tax positions in certain jurisdictions . generally , we did not recognize u.s. income tax expense associated with our income from continuing operations for 2013 or 2012 due to the valuation allowance against the net deferred tax asset . each quarter , we assess the total weight of positive and negative evidence including cumulative income or loss for the past three years and forecasted taxable income and re-evaluate whether any adjustments or release of all or any portion of valuation allowance is appropriate . as a result of this evaluation , in the second quarter of 2013 , we concluded that a majority of the existing valuation allowance on our domestic deferred income tax assets was no longer required . accordingly , an income tax benefit of $ 38.9 million related to the reduction of our existing valuation allowance was recorded during 2013. further , in the fourth quarter of 2014 , after re-evaluating the potential realization of the remainder of our deferred income tax assets , we concluded that , as of december 31 , 2014 , a portion of the existing valuation allowance against state net operating loss deferred tax assets was no longer necessary . accordingly , an income tax benefit of $ 1.2 million was recorded in the fourth quarter of 2014 related to the reduction of our existing valuation allowance . the amount of valuation allowance offsetting our deferred tax assets was $ 6.2 million as of december 31 , 2014 . of the total remaining valuation allowance , $ 2.9 million primarily relates to domestic credit carryforwards as we currently do not anticipate to generate the income of appropriate character to utilize those credits . should it be determined in the future that it is more likely than not that our domestic deferred income tax assets will be realized , an additional valuation allowance would be released during the period in which such an assessment is made . in addition , $ 3.3 million of the remaining valuation allowance relates to foreign net operating loss carryforwards . there have been no material changes to our foreign operations since december 31 , 2013 and , accordingly , we maintain our existing valuation allowance on foreign deferred income tax assets in such jurisdictions at december 31 , 2014 . refer to note 12 , income taxes , to our consolidated financial statements included in part ii , item 8 of this report for additional information . story_separator_special_tag off-balance sheet arrangements in the ordinary course of business , we enter into agreements that require us to indemnify counterparties against third-party claims . these may include : agreements with vendors and suppliers , under which we may indemnify them against claims arising from our use of their products or services ; agreements with customers , under which we may indemnify them against claims arising from their use or sale of our products ; real estate and equipment leases , under which we may indemnify lessors against third party claims relating to the use of their property ; agreements with licensees or licensors , under which we may indemnify the licensee or licensor against claims arising from their use of our intellectual property or our use of their intellectual property ; and agreements with parties to debt arrangements

liquidity and capital resources as of december 31 , 2014 , we had $ 45.2 million of cash and cash equivalents , compared to $ 41.0 million as of december 31 , 2013 and $ 27.0 million of available-for-sale securities at december 31 , 2014 compared to none at december 31 , 2013 . cash 24 provided by operating activities was $ 34.4 million for 2014 , compared to cash provided by operating activities of $ 21.1 million for 2013 . we expect our cash and cash equivalents and available-for-sale securities at december 31 , 2014 , along with cash expected to be generated from operations , to be sufficient to fund our operating and capital requirements for at least twelve months from december 31 , 2014 . the increase in cash flows from operating activities for 2014 , compared to 2013 , was primarily due to improved operating performance and the changes in our operating assets and liabilities as discussed below . trade receivables increased $ 1.0 million to $ 26.3 million as of december 31 , 2014 , compared to $ 25.3 million as of december 31 , 2013 , due to higher revenue within our retail business . days sales outstanding ( `` dso '' ) at december 31 , 2014 were 17.6 days compared to 19.9 days as of december 31 , 2013 . the decrease in dso at december 31 , 2014 compared to december 31 , 2013 was due to a greater mix of direct revenue along with improved collections . direct sales are generally collected by credit card or funded by third party financing partners , resulting in cash receipt within a few days after product shipment . inventories increased $ 9.1 million to $ 24.9 million as of december 31 , 2014 , compared to $ 15.8 million as of december 31 , 2013 , due to higher revenue , additional products , and the opening of a new distribution center . a significant portion of this inventory was in-transit as of december 31 , 2014 , as the west coast port slowdown has delayed deliveries by 15-25 days .


 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 as of december 31 , 2014 , we had $ 45.2 million of cash and cash equivalents , compared to $ 41.0 million as of december 31 , 2013 and $ 27.0 million of available-for-sale securities at december 31 , 2014 compared to none at december 31 , 2013 . cash 24 provided by operating activities was $ 34.4 million for 2014 , compared to cash provided by operating activities of $ 21.1 million for 2013 . we expect our cash and cash equivalents and available-for-sale securities at december 31 , 2014 , along with cash expected to be generated from operations , to be sufficient to fund our operating and capital requirements for at least twelve months from december 31 , 2014 . the increase in cash flows from operating activities for 2014 , compared to 2013 , was primarily due to improved operating performance and the changes in our operating assets and liabilities as discussed below . trade receivables increased $ 1.0 million to $ 26.3 million as of december 31 , 2014 , compared to $ 25.3 million as of december 31 , 2013 , due to higher revenue within our retail business . days sales outstanding ( `` dso '' ) at december 31 , 2014 were 17.6 days compared to 19.9 days as of december 31 , 2013 . the decrease in dso at december 31 , 2014 compared to december 31 , 2013 was due to a greater mix of direct revenue along with improved collections . direct sales are generally collected by credit card or funded by third party financing partners , resulting in cash receipt within a few days after product shipment . inventories increased $ 9.1 million to $ 24.9 million as of december 31 , 2014 , compared to $ 15.8 million as of december 31 , 2013 , due to higher revenue , additional products , and the opening of a new distribution center . a significant portion of this inventory was in-transit as of december 31 , 2014 , as the west coast port slowdown has delayed deliveries by 15-25 days .
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 Suspicious Activity Report : profit margins may also be affected by fluctuations in the costs or availability of materials used to manufacture our products , product warranty costs , the cost of fuel , and changes in costs of other distribution or manufacturing-related services . our operating profits or losses may also be affected by the efficiency and effectiveness of our organization . historically , our operating expenses have been influenced by media costs to produce and distribute advertisements of our products on television , the internet and other media , facility costs , operating costs of our information and communications systems , product supply chain management , customer support and new product development activities . in addition , our operating expenses have been affected from time-to-time by asset impairment charges , restructuring charges and other significant unusual or infrequent expenses . as a result of the above and other factors , our period-to-period operating results may not be indicative of future performance . you should not place undue reliance on our operating results and should consider our prospects in light of the risks , expenses and difficulties typically encountered by us and other companies , both within and outside our industry . we may not be able to successfully address these risks and difficulties and , consequently , we can not assure you any future growth or profitability . for more information , see our discussion of risk factors located at part i , item 1a of this form 10-k. overview we are committed to providing innovative , quality solutions to help people achieve a fit and healthy lifestyle . our principal business activities include designing , developing , sourcing and marketing high-quality cardio and strength fitness products and related accessories for consumer use , primarily in the united states and canada . our products are sold under some of the most-recognized brand names in the fitness industry : nautilus ® , bowflex ® , schwinn ® and universal ® . we market our products through two distinct distribution channels , direct and retail , which we consider to be separate business segments . our direct business offers products directly to consumers through television advertising , catalogs and the internet . our retail business offers our products through a network of independent retail companies with stores and websites located in the united states and internationally . we also derive a portion of our revenue from the licensing of our brands and intellectual property . our net sales in 2014 were $ 274.4 million , an increase of $ 55.6 million , or 25.4 % , compared to net sales of $ 218.8 million in 2013 . net sales of our direct segment increased $ 38.9 million , or 28.5 % , compared to 2013 , primarily due to increased consumer demand for our cardio products , especially the bowflex max trainer ® . net sales of our retail segment increased by $ 16.4 million , or 21.4 % in 2014 , compared to 2013 , primarily due to growth in recently launched cardio products . income from continuing operations was $ 20.4 million , or $ 0.64 per diluted share , in 2014 , compared to $ 48.1 million , or $ 1.53 per diluted share , in 2013 . income from continuing operations in 2014 and 2013 included a $ 1.2 million and a $ 38.9 million credit related to the reversal of our deferred tax asset valuation allowance , respectively . without consideration of the reversal of our deferred tax asset valuation allowance , the improvement in our results from continuing operations in 2014 , compared to 2013 , was driven primarily by higher sales and increased operating income in both our direct and retail segments . net income was $ 18.8 million , or $ 0.59 per diluted share , in 2014 , compared to $ 48.0 million , or $ 1.52 per diluted share , in 2013 . net income in 2014 and 2013 included a $ 1.2 million and a $ 38.9 million credit related to the reversal of our deferred tax asset valuation allowance , respectively . 16 discontinued operations results from discontinued operations relate to the disposal of our former commercial business , which was completed in april 2011. we reached substantial completion of asset liquidation at december 31 , 2012. income from discontinued operations of $ 6.2 million in 2012 primarily represents a currency translation adjustment gain related to the liquidation of european subsidiaries . although there was no revenue related to the commercial business in 2014 , 2013 or 2012 , we continue to have legal and accounting expenses as we work with authorities on final deregistration of each entity , and product liability and other legal expenses associated with product previously sold into the commercial channel . critical accounting policies and estimates the preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities , revenues and expenses , and related disclosures of contingent assets and liabilities in the consolidated financial statements . an accounting estimate is considered to be critical if it meets both of the following criteria : ( i ) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made , and ( ii ) different estimates reasonably could have been used , or changes in the estimate that are reasonably likely to occur from period to period may have a material impact on the presentation of our financial condition , changes in financial condition or results of operations . our critical accounting policies and estimates are discussed below . story_separator_special_tag the increase in general and administrative in 2013 compared to 2012 was primarily due to a $ 0.4 million increase in infrastructure costs and a $ 0.8 million increase in employee-related costs , partially offset by a $ 0.3 million one-time charge in 2012 for lease write-off costs . the decreases in general and administrative as a percentage of net sales in 2014 compared to 2013 and in 2013 compared to 2012 were primarily due to higher net sales . research and development replace_table_token_11_th replace_table_token_12_th the increases in research and development in 2014 compared to 2013 and in 2013 compared to 2012 were primarily due to our continued investment in additional engineering and product development headcount . we expect research and development expense to increase in 2015 compared to 2014 , as we continue to invest in new product development resources . 23 interest expense interest expense in both 2014 and 2013 was less than $ 0.1 million each year , and was for financing costs associated with capital equipment lease payments . negative interest expense of $ 0.1 million in 2012 arose from the early repayment in march 2012 of our increasing-rate senior discount notes . early repayment of the notes resulted in a lower average effective interest rate over the term of the notes than would have applied if the notes had been held to maturity . in prior periods , we used the average effective interest rate as if the notes were held to maturity in determining the amount of interest expense incurred . other income ( expense ) other income ( expense ) primarily relates to the effect of exchange rate fluctuations between the u.s. and canada . however , 2014 and 2013 also included gains of $ 0.1 million and $ 0.3 million , respectively , related to refunds of state sales taxes previously paid by us . income tax expense ( benefit ) dollars in thousands year ended december 31 , change 2014 2013 $ % income tax expense ( benefit ) $ 9,841 $ ( 32,085 ) $ 41,926 n/m dollars in thousands year ended december 31 , change 2013 2012 $ % income tax benefit $ ( 32,085 ) $ ( 226 ) $ ( 31,859 ) n/m n/m - not meaningful . our income tax expense in 2014 was primarily attributable to the income generated domestically and in canada , partially offset by a $ 1.2 million release of our domestic valuation allowance . income tax benefit for 2013 included a $ 38.9 million release of our domestic valuation allowance . income tax benefit for 2012 was primarily related to the expiration of statutes of limitation applicable to our liabilities for uncertain tax positions in certain jurisdictions . generally , we did not recognize u.s. income tax expense associated with our income from continuing operations for 2013 or 2012 due to the valuation allowance against the net deferred tax asset . each quarter , we assess the total weight of positive and negative evidence including cumulative income or loss for the past three years and forecasted taxable income and re-evaluate whether any adjustments or release of all or any portion of valuation allowance is appropriate . as a result of this evaluation , in the second quarter of 2013 , we concluded that a majority of the existing valuation allowance on our domestic deferred income tax assets was no longer required . accordingly , an income tax benefit of $ 38.9 million related to the reduction of our existing valuation allowance was recorded during 2013. further , in the fourth quarter of 2014 , after re-evaluating the potential realization of the remainder of our deferred income tax assets , we concluded that , as of december 31 , 2014 , a portion of the existing valuation allowance against state net operating loss deferred tax assets was no longer necessary . accordingly , an income tax benefit of $ 1.2 million was recorded in the fourth quarter of 2014 related to the reduction of our existing valuation allowance . the amount of valuation allowance offsetting our deferred tax assets was $ 6.2 million as of december 31 , 2014 . of the total remaining valuation allowance , $ 2.9 million primarily relates to domestic credit carryforwards as we currently do not anticipate to generate the income of appropriate character to utilize those credits . should it be determined in the future that it is more likely than not that our domestic deferred income tax assets will be realized , an additional valuation allowance would be released during the period in which such an assessment is made . in addition , $ 3.3 million of the remaining valuation allowance relates to foreign net operating loss carryforwards . there have been no material changes to our foreign operations since december 31 , 2013 and , accordingly , we maintain our existing valuation allowance on foreign deferred income tax assets in such jurisdictions at december 31 , 2014 . refer to note 12 , income taxes , to our consolidated financial statements included in part ii , item 8 of this report for additional information . story_separator_special_tag off-balance sheet arrangements in the ordinary course of business , we enter into agreements that require us to indemnify counterparties against third-party claims . these may include : agreements with vendors and suppliers , under which we may indemnify them against claims arising from our use of their products or services ; agreements with customers , under which we may indemnify them against claims arising from their use or sale of our products ; real estate and equipment leases , under which we may indemnify lessors against third party claims relating to the use of their property ; agreements with licensees or licensors , under which we may indemnify the licensee or licensor against claims arising from their use of our intellectual property or our use of their intellectual property ; and agreements with parties to debt arrangements

