twenty states , known as adoption states , approve and procure new basal programs usually every five to seven years on a state-wide basis , before individual schools or school districts are permitted to schedule the purchase of materials . in all remaining states , known as open states or open territories , each individual school or school district can procure materials at any time , though usually according to a five to nine year cycle . the student population in adoption states represents over 50 % of the u.s. elementary and secondary school-age population . many adoption states provide categorical funding for instructional materials , which means that state funds can not be used for any other purpose . a significant portion of our education segment net sales is dependent upon our ability to maintain residual sales , which are subsequent sales after the year of the original adoption , and our ability to continue to generate new business . in addition , our market is affected by changes in state curriculum standards , which drive instruction , assessment and accountability in each state . changes in state curriculum standards require that instructional materials be revised or replaced to align to the new standards , which historically has driven demand for basal programs . we also derive our education segment net sales from the sale of summative , formative or in-classroom and diagnostic assessments to districts and schools in all 50 states . summative assessments are concluding or final exams that measure students ' proficiency in a particular academic subject or group of subjects on an aggregate level or against state standards . formative assessments are on-going , in-classroom tests that occur throughout the school year and monitor progress in certain subjects or curriculum units . additionally , our offerings include supplemental products that target struggling learners through comprehensive intervention solutions along with products targeted at assisting english language learners . in international markets , our education segment predominantly exports and sells k-12 books to premium private schools that utilize the u.s. curriculum , which are located primarily in asia , the pacific , the middle east , latin america and the caribbean . our international sales team utilizes a global network of distributors in local markets around the world . our trade publishing segment sells works of fiction and non-fiction for adults and children , dictionaries and other reference works through physical and online retail outlets and book distributors , as well as through our e-commerce platform . factors affecting our net sales include : education state or district per student funding levels ; the cyclicality of the purchasing schedule for adoption states ; student enrollments ; adoption of new education standards ; and technological advancement and the introduction of new content and products that meet the needs of students , teachers and consumers , including through strategic agreements pertaining to content development and distribution . trade publishing consumer spending levels as influenced by various factors , including the u.s. economy and consumer confidence ; 32 the transition to e-books and any resulting impact on market growth ; the publishing of bestsellers along with obtaining recognized authors ; and movie tie-ins to our titles that spur sales of current and backlist titles , which are titles that have been on sale for more than a year . state or district per student funding levels , which closely correlate with state and local receipts from income , sales and property taxes , impact our sales as institutional customers are affected by funding cycles . most public school districts , the primary customers for k-12 products and services , are largely dependent on state and local funding to purchase materials . recently , total educational materials expenditures by institutions in the united states is rebounding in the wake of the economic recovery . globally , education expenditures are projected to grow at 7 % through 2018 , according to gsv asset management . we monitor the purchasing cycles for specific disciplines in the adoption states in order to manage our product development and to plan sales campaigns . our sales may be materially impacted during the years that major adoption states , such as florida , california and texas , are or are not scheduled to make significant purchases . florida , california and texas are all scheduled to adopt educational materials for certain subjects between 2013 and 2016 , with florida adopting reading in 2013 , california having approved funding for a math adoption in 2014 and texas having passed a budget in 2013 for the next two years . other than california and florida in 2008 through 2009 as a result of the u.s. economic recession , each of the states has increased the amount spent on educational materials in prior adoption years , and these states are scheduled to increase the amount spent in the upcoming adoption years . while we do not currently have contracts with these states for future years and there is no guarantee that we will continue to capture the same market share in the future , we have historically captured over 50 % of the market share in these states in the years that they adopt educational materials for various subjects . longer-term growth in the u.s. k-12 market is positively correlated with student enrollments , which is a driver of growth in the educational publishing industry . although economic cycles may affect short-term buying patterns , school enrollments are highly predictable and are expected to trend upward over the longer term . according to nces , student enrollments are expected to increase from 54.7 million in 2010 , to over 58.0 million by the 2020 school year . outside the united states , the global education market continues to demonstrate strong macroeconomic growth characteristics . population growth is a leading indicator for pre-primary school enrollments , which have a subsequent impact on secondary and higher education enrollments . story_separator_special_tag in connection with the chapter 11 filing on may 22 , 2012 , the company entered into a new $ 500.0 million senior secured credit facility , which converted into an exit facility on the effective date of the emergence from chapter 11. this exit facility consists of a $ 250.0 million revolving credit facility , which is secured by the company 's accounts receivable and inventory , and a $ 250.0 million term loan credit facility . the proceeds of the exit facility were used to fund the costs of the reorganization and are providing working capital to the company since its emergence from chapter 11. a summary of the transactions affecting the company 's debt balances is as follows ( in thousands ) : debt balance prior to emergence from bankruptcy ( including accrued interest ) $ ( 3,142,234 ) exchange of debt for new shares of common stock 1,750,000 elimination of debt discount and deferred financing fees 98,352 adequate protection payments 69,701 conversion fees 30,299 professional fees 21,726 ( gain ) loss on extinguishment of debt $ ( 1,172,156 ) 37 results of operations consolidated operating results for the years ended december 31 , 2013 and 2012 replace_table_token_5_th nm = not meaningful net sales for the year ended december 31 , 2013 increased $ 93.0 million , or 7.2 % , from $ 1,285.6 million for the same period in 2012 , to $ 1,378.6 million . the increase was largely driven by $ 34.0 million of increased adoptions sales , primarily in florida and tennessee , due to new adoptions that did not exist in the prior year , together with $ 12.0 million of increased sales in the open territory market driven by a large sale to the new york city school district of our go math ! product . also benefitting sales for the year ended december 31 , 2013 was an incremental $ 37.0 million of sales of intervention and professional development products , $ 12.0 million of higher international , professional services and assessment sales and $ 13.7 million additional net sales from our culinary product line . additionally , we were able to increase sales in the private , parochial and charter school channel through an agreement with a reseller . the private , parochial and charter school channel incremental sales along with the sale of consumable backlist products sold to both other resellers and directly to customers , resulted in an increase of $ 16.0 million in 2013 as compared to 2012. we expect our 2014 sales in the private , parochial and charter school channel to be significantly lower from 2013 levels . however , we believe the increase in the adoption market will entirely offset the decrease in the private , parochial and charter school channel . offsetting the above positive factors were lower residual sales of $ 13.0 million , which are typically lower in years of larger adoption sales ; lower supplemental product sales due to an aging products , and $ 16.0 million of lower sales of learning management systems as we migrate to a new learning management system partner strategy . 38 operating loss for the year ended december 31 , 2013 decreased $ 34.0 million , or 28.2 % , from a loss of $ 120.7 million for the same period in 2012 , to a loss of $ 86.6 million , due primarily to the following : a $ 90.0 million reduction in amortization expense related to publishing rights , pre-publication and other intangible assets due to our use of accelerated amortization methods and lower pre-publication spending over the past several years as compared to previous years . increased sales of $ 93.0 million , however , our cost of sales , excluding pre-publication and publishing rights amortization , as a percent of sales increased to 42.4 % from 40.1 % resulting in an approximate $ 31.7 million adverse impact on profitability . this increase was the result of a shift in our product mix impacting production costs by $ 7.5 million and royalty costs by $ 4.7 million . additionally , our gratis costs were $ 12.1 million higher due to increased sales to adoption states and we incurred $ 10.2 million of higher depreciation on digital platforms . the net effect of the increased sales was an improvement of approximately $ 24 million on the operating loss from the prior year . offsetting the favorable impacts on our operating loss was a $ 47.4 million increase in selling and administrative costs primarily due to approximately $ 20 million of costs associated with our initial public offering in november 2013 and a $ 16.7 million increase in commission expense , a $ 5.3 million increase in stock compensation costs and a $ 8.3 million increase in sampling expenses in advance of the 2014 scheduled adoptions and transportation expenses associated with the increase in sales ; partially offset by a $ 30.8 million gain on bargain purchase in 2012 that did not occur in 2013. interest expense for the year ended december 31 , 2013 decreased $ 101.9 million , or 82.7 % , to $ 21.3 million from $ 123.2 million for the same period in 2012 , primarily as a result of our emergence from bankruptcy with substantially reduced debt . change in fair value of derivative instruments for the year ended december 31 , 2013 unfavorably changed by $ 1.9 million from income of $ 1.7 million to an expense of $ 0.3 million . the loss on change in fair value of derivative instruments was related to unfavorable foreign exchange forward and option contracts executed on the euro . income tax expense for the year ended december 31 , 2013 increased $ 8.3 million from a tax benefit of $ 5.9 million for the year ended december 31 , 2012 , to a tax expense of $ 2.3 million . for both periods , the income tax expense

liquidity and capital resources replace_table_token_12_th on june 22 , 2012 , our creditors converted the first lien credit agreement consisting of the term loan with an aggregate outstanding principal balance of $ 2.6 billion and the revolving loan with an aggregate outstanding principal balance of $ 235.8 million and the outstanding $ 300.0 million principal amount of 10.5 % senior notes to 100 percent pro rata ownership of our common stock . on may 22 , 2012 , we entered into a new $ 500.0 million senior secured credit facility , which was converted into an exit facility on the effective date of the emergence from chapter 11. as a result , our existing senior secured credit facilities consist of a $ 250.0 million asset-based revolving credit facility and a $ 250.0 million term loan facility . the proceeds from the initial borrowings under the senior secured credit facilities were used to fund the costs of the reorganization and provide post-closing working capital to the company . under both the revolving credit facility and the term loan facility , houghton mifflin harcourt publishers inc. , hmh publishers llc and houghton mifflin harcourt publishing company are the borrowers ( the borrowers ) , and citibank , n.a . acts as both the administrative agent and the collateral agent . the obligations under our senior secured credit facilities are guaranteed by the company and each of its direct and indirect for profit domestic subsidiaries ( other than the borrowers ) ( collectively , the guarantors ) and are secured by all capital stock and other equity interests of the borrowers and the guarantors and substantially all of the other tangible and intangible assets of the borrowers and the guarantors , including without limitation , receivables , inventory , equipment , contract rights , securities , patents , trademarks , other intellectual property , cash , bank accounts and securities accounts and owned real estate .


 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 replace_table_token_12_th on june 22 , 2012 , our creditors converted the first lien credit agreement consisting of the term loan with an aggregate outstanding principal balance of $ 2.6 billion and the revolving loan with an aggregate outstanding principal balance of $ 235.8 million and the outstanding $ 300.0 million principal amount of 10.5 % senior notes to 100 percent pro rata ownership of our common stock . on may 22 , 2012 , we entered into a new $ 500.0 million senior secured credit facility , which was converted into an exit facility on the effective date of the emergence from chapter 11. as a result , our existing senior secured credit facilities consist of a $ 250.0 million asset-based revolving credit facility and a $ 250.0 million term loan facility . the proceeds from the initial borrowings under the senior secured credit facilities were used to fund the costs of the reorganization and provide post-closing working capital to the company . under both the revolving credit facility and the term loan facility , houghton mifflin harcourt publishers inc. , hmh publishers llc and houghton mifflin harcourt publishing company are the borrowers ( the borrowers ) , and citibank , n.a . acts as both the administrative agent and the collateral agent . the obligations under our senior secured credit facilities are guaranteed by the company and each of its direct and indirect for profit domestic subsidiaries ( other than the borrowers ) ( collectively , the guarantors ) and are secured by all capital stock and other equity interests of the borrowers and the guarantors and substantially all of the other tangible and intangible assets of the borrowers and the guarantors , including without limitation , receivables , inventory , equipment , contract rights , securities , patents , trademarks , other intellectual property , cash , bank accounts and securities accounts and owned real estate .
```    
 Suspicious Activity Report : twenty states , known as adoption states , approve and procure new basal programs usually every five to seven years on a state-wide basis , before individual schools or school districts are permitted to schedule the purchase of materials . in all remaining states , known as open states or open territories , each individual school or school district can procure materials at any time , though usually according to a five to nine year cycle . the student population in adoption states represents over 50 % of the u.s. elementary and secondary school-age population . many adoption states provide categorical funding for instructional materials , which means that state funds can not be used for any other purpose . a significant portion of our education segment net sales is dependent upon our ability to maintain residual sales , which are subsequent sales after the year of the original adoption , and our ability to continue to generate new business . in addition , our market is affected by changes in state curriculum standards , which drive instruction , assessment and accountability in each state . changes in state curriculum standards require that instructional materials be revised or replaced to align to the new standards , which historically has driven demand for basal programs . we also derive our education segment net sales from the sale of summative , formative or in-classroom and diagnostic assessments to districts and schools in all 50 states . summative assessments are concluding or final exams that measure students ' proficiency in a particular academic subject or group of subjects on an aggregate level or against state standards . formative assessments are on-going , in-classroom tests that occur throughout the school year and monitor progress in certain subjects or curriculum units . additionally , our offerings include supplemental products that target struggling learners through comprehensive intervention solutions along with products targeted at assisting english language learners . in international markets , our education segment predominantly exports and sells k-12 books to premium private schools that utilize the u.s. curriculum , which are located primarily in asia , the pacific , the middle east , latin america and the caribbean . our international sales team utilizes a global network of distributors in local markets around the world . our trade publishing segment sells works of fiction and non-fiction for adults and children , dictionaries and other reference works through physical and online retail outlets and book distributors , as well as through our e-commerce platform . factors affecting our net sales include : education state or district per student funding levels ; the cyclicality of the purchasing schedule for adoption states ; student enrollments ; adoption of new education standards ; and technological advancement and the introduction of new content and products that meet the needs of students , teachers and consumers , including through strategic agreements pertaining to content development and distribution . trade publishing consumer spending levels as influenced by various factors , including the u.s. economy and consumer confidence ; 32 the transition to e-books and any resulting impact on market growth ; the publishing of bestsellers along with obtaining recognized authors ; and movie tie-ins to our titles that spur sales of current and backlist titles , which are titles that have been on sale for more than a year . state or district per student funding levels , which closely correlate with state and local receipts from income , sales and property taxes , impact our sales as institutional customers are affected by funding cycles . most public school districts , the primary customers for k-12 products and services , are largely dependent on state and local funding to purchase materials . recently , total educational materials expenditures by institutions in the united states is rebounding in the wake of the economic recovery . globally , education expenditures are projected to grow at 7 % through 2018 , according to gsv asset management . we monitor the purchasing cycles for specific disciplines in the adoption states in order to manage our product development and to plan sales campaigns . our sales may be materially impacted during the years that major adoption states , such as florida , california and texas , are or are not scheduled to make significant purchases . florida , california and texas are all scheduled to adopt educational materials for certain subjects between 2013 and 2016 , with florida adopting reading in 2013 , california having approved funding for a math adoption in 2014 and texas having passed a budget in 2013 for the next two years . other than california and florida in 2008 through 2009 as a result of the u.s. economic recession , each of the states has increased the amount spent on educational materials in prior adoption years , and these states are scheduled to increase the amount spent in the upcoming adoption years . while we do not currently have contracts with these states for future years and there is no guarantee that we will continue to capture the same market share in the future , we have historically captured over 50 % of the market share in these states in the years that they adopt educational materials for various subjects . longer-term growth in the u.s. k-12 market is positively correlated with student enrollments , which is a driver of growth in the educational publishing industry . although economic cycles may affect short-term buying patterns , school enrollments are highly predictable and are expected to trend upward over the longer term . according to nces , student enrollments are expected to increase from 54.7 million in 2010 , to over 58.0 million by the 2020 school year . outside the united states , the global education market continues to demonstrate strong macroeconomic growth characteristics . population growth is a leading indicator for pre-primary school enrollments , which have a subsequent impact on secondary and higher education enrollments . story_separator_special_tag in connection with the chapter 11 filing on may 22 , 2012 , the company entered into a new $ 500.0 million senior secured credit facility , which converted into an exit facility on the effective date of the emergence from chapter 11. this exit facility consists of a $ 250.0 million revolving credit facility , which is secured by the company 's accounts receivable and inventory , and a $ 250.0 million term loan credit facility . the proceeds of the exit facility were used to fund the costs of the reorganization and are providing working capital to the company since its emergence from chapter 11. a summary of the transactions affecting the company 's debt balances is as follows ( in thousands ) : debt balance prior to emergence from bankruptcy ( including accrued interest ) $ ( 3,142,234 ) exchange of debt for new shares of common stock 1,750,000 elimination of debt discount and deferred financing fees 98,352 adequate protection payments 69,701 conversion fees 30,299 professional fees 21,726 ( gain ) loss on extinguishment of debt $ ( 1,172,156 ) 37 results of operations consolidated operating results for the years ended december 31 , 2013 and 2012 replace_table_token_5_th nm = not meaningful net sales for the year ended december 31 , 2013 increased $ 93.0 million , or 7.2 % , from $ 1,285.6 million for the same period in 2012 , to $ 1,378.6 million . the increase was largely driven by $ 34.0 million of increased adoptions sales , primarily in florida and tennessee , due to new adoptions that did not exist in the prior year , together with $ 12.0 million of increased sales in the open territory market driven by a large sale to the new york city school district of our go math ! product . also benefitting sales for the year ended december 31 , 2013 was an incremental $ 37.0 million of sales of intervention and professional development products , $ 12.0 million of higher international , professional services and assessment sales and $ 13.7 million additional net sales from our culinary product line . additionally , we were able to increase sales in the private , parochial and charter school channel through an agreement with a reseller . the private , parochial and charter school channel incremental sales along with the sale of consumable backlist products sold to both other resellers and directly to customers , resulted in an increase of $ 16.0 million in 2013 as compared to 2012. we expect our 2014 sales in the private , parochial and charter school channel to be significantly lower from 2013 levels . however , we believe the increase in the adoption market will entirely offset the decrease in the private , parochial and charter school channel . offsetting the above positive factors were lower residual sales of $ 13.0 million , which are typically lower in years of larger adoption sales ; lower supplemental product sales due to an aging products , and $ 16.0 million of lower sales of learning management systems as we migrate to a new learning management system partner strategy . 38 operating loss for the year ended december 31 , 2013 decreased $ 34.0 million , or 28.2 % , from a loss of $ 120.7 million for the same period in 2012 , to a loss of $ 86.6 million , due primarily to the following : a $ 90.0 million reduction in amortization expense related to publishing rights , pre-publication and other intangible assets due to our use of accelerated amortization methods and lower pre-publication spending over the past several years as compared to previous years . increased sales of $ 93.0 million , however , our cost of sales , excluding pre-publication and publishing rights amortization , as a percent of sales increased to 42.4 % from 40.1 % resulting in an approximate $ 31.7 million adverse impact on profitability . this increase was the result of a shift in our product mix impacting production costs by $ 7.5 million and royalty costs by $ 4.7 million . additionally , our gratis costs were $ 12.1 million higher due to increased sales to adoption states and we incurred $ 10.2 million of higher depreciation on digital platforms . the net effect of the increased sales was an improvement of approximately $ 24 million on the operating loss from the prior year . offsetting the favorable impacts on our operating loss was a $ 47.4 million increase in selling and administrative costs primarily due to approximately $ 20 million of costs associated with our initial public offering in november 2013 and a $ 16.7 million increase in commission expense , a $ 5.3 million increase in stock compensation costs and a $ 8.3 million increase in sampling expenses in advance of the 2014 scheduled adoptions and transportation expenses associated with the increase in sales ; partially offset by a $ 30.8 million gain on bargain purchase in 2012 that did not occur in 2013. interest expense for the year ended december 31 , 2013 decreased $ 101.9 million , or 82.7 % , to $ 21.3 million from $ 123.2 million for the same period in 2012 , primarily as a result of our emergence from bankruptcy with substantially reduced debt . change in fair value of derivative instruments for the year ended december 31 , 2013 unfavorably changed by $ 1.9 million from income of $ 1.7 million to an expense of $ 0.3 million . the loss on change in fair value of derivative instruments was related to unfavorable foreign exchange forward and option contracts executed on the euro . income tax expense for the year ended december 31 , 2013 increased $ 8.3 million from a tax benefit of $ 5.9 million for the year ended december 31 , 2012 , to a tax expense of $ 2.3 million . for both periods , the income tax expense

