september 30th , a `` fy `` ) 2013 to $ 495.5 billion , excluding funding for military personnel . the dod budget was approximately $ 496 billion in fy 2014 and remains at a similar level in fy 2015. the dod base budget excludes funding for overseas contingency operations , such as afghanistan , iraq and syria , which are appropriated separately and are not currently subject to the bca . under the bca , funding for the dod base budget is expected to increase very modestly to approximately $ 500 billion for fy 2016. in the years beyond fy 2016 , the bca permits annual increases for dod base budget funding of about 2.4 % with such caps remaining in force through fy 2023. the administration has publicly signaled its intent to submit dod budget requests that are significantly higher than the bca caps , as it did in submitting the fy 2016 budget request and the associated fy 2016 future year defense program ( `` fydp `` ) on february 2 , 2015 with all years exceeding the caps under the bca . such levels of dod budget funding would require the congress to enact legislation to raise the bca caps . in the event dod appropriations exceed the bca caps in any fiscal year through fy 2023 , across-the-board sequestration would go into effect , as occurred in 2013. u.s. government appropriations have and likely will continue to be affected by larger u.s. government budgetary issues and related legislation . when a formal appropriation bill has not been signed into law before the end of the fiscal year , congress may pass a continuing resolution ( `` cr `` ) that authorizes agencies of the u.s. government to continue to operate , generally at the same funding levels from the prior year , but typically does not authorize new spending initiatives during this period . if congress fails to enact a cr , the u.s. government may shut down , which likely would result in the closure of government offices and furlough of government workers , as well as impact the availability of funds to pay its contractors for work performed . in addition , if the national debt reaches the statutory debt ceiling , which is currently expected to occur in the first half of 2015 , the congress must enact legislation to increase the statutory debt ceiling . if the congress fails to do so , then the u.s. government may default on its debts , which would likely have a material adverse effect on the global financial markets . in march 2014 , the pentagon submitted its fy 2015 budget request of approximately $ 496 billion , which was consistent with the bipartisan budget spending authorization . also in march 2014 , the pentagon published the quadrennial defense review ( `` qdr `` ) . both the pentagon 's fy 2015 budget request and the qdr provide important insight for future national security funding priorities and related programs , which include cyber security and warfare , unmanned systems , satellite communications , missile defense and electronic warfare . in september 2014 , the president signed a fy2015 continuing resolution ( `` cr `` ) that funded the government through december 11 , 2014. the bill set the discretionary funding level for the federal government during cr period at an annual rate of $ 1.012 trillion . in december 2014 , the u.s. congress and senate passed the fiscal year 2015 omnibus appropriations bill , consolidated and further continuing appropriations act , 2015 ( the `` 2015 appropriations act `` ) that totals $ 1.014 trillion in discretionary spending in compliance with the bipartisan murray-ryan budget agreement . the bill funds the government through september 30 , 2015. the department of defense appropriations act , 2015 , which is a part of the appropriations act , provides $ 554.2 billion in base and overseas contingency operation funding , compared to $ 572 billion enacted in fiscal year 2014 and $ 554.3 billion in the president 's budget request . the base budget appropriation is $ 496.1 billion with $ 64.2 billion for overseas contingency operations ( `` oco `` ) of the department of defense ( `` dod `` ) , compared to $ 85.2 billion for dod oco enacted in fiscal year 2014. consequently , the dod 's overall future spending levels remain uncertain , and we are unable to specifically predict potential changes to future dod budgets on our programs and the effect that the foregoing would have on our future financial performance and outlook . in the event that bca funding levels continue , or if other actions are taken to significantly reduce the dod budget , it is possible that such reductions and related cancellations or delays affecting our existing contracts or programs could have a significant impact on the operating results of our business . 36 current reporting segments the company historically operated in two reportable segments : kratos government solutions ( “ kgs ” ) and public safety & security ( “ pss ” ) . in the fourth quarter of 2014 , the company expanded the number of reportable segments to three as we separated the kgs segment into two reportable segments : kgs and unmanned systems ( “ us ” ) . as a result , the kgs reportable segment is comprised of an aggregation of kratos ' government solutions operating segments , including our electronic products , satellite communications , modular systems and rocket support operating segments . the new unmanned systems reportable segment consists of our unmanned aerial , ground , seaborne and command , control and communications system business . the kgs and us segments provide products , solutions and services primarily for mission critical national security priorities . story_separator_special_tag cost of revenues decreased from $ 710.6 million for the year ended december 29 , 2013 to $ 649.8 million for the year ended december 28 , 2014 . the $ 60.8 million decrease in cost of revenues was primarily a result of decreased revenue discussed above . gross margin declined from 25.2 % for the year ended december 29 , 2013 compared to 25.1 % for the year ended december 28 , 2014 . margins on services decreased from 24.4 % for the year ended december 29 , 2013 to 22.1 % for the year ended december 28 , 2014 , due primarily to an unfavorable mix of revenues and decreased margins in our pss segment . margins on product sales increased for the year ended december 29 , 2013 as compared to december 28 , 2014 from 26.0 % to 27.7 % , respectively , primarily as a result of a change in mix of products sold . margins in the kgs segment increased from 26.2 % for the year ended december 29 , 2013 to 27.4 % for the year ended december 28 , 2014 , primarily as a result of change in the mix of products sold . margins in the us segment increased from 19.4 % for the year ended december 29 , 2013 to 23.2 % for the year ended december 28 , 2014 , primarily as a result of increased costs recorded of approximately $ 5.5 million on certain aerial target contracts to reflect retrofits necessary to address design changes recorded in the year ended december 29 , 2013 , compared to net increased costs recorded of $ 3.1 million for similar retrofit related matters and a contract conversion adjustment on certain of our unmanned aerial platforms recorded in the year ended december 28 , 2014. margins in the pss segment decreased from 25.8 % for the year ended december 29 , 2013 to 19.3 % for the year ended december 28 , 2014 as a result of decreased service margins and due to costs incurred on two sizable projects , which were completed in 2014 or are near-completion , under which we are in the process of submitting or have submitted change orders to customers to reimburse us for the work we performed at our customers ' request , but for which we have not completed negotiations for such change orders , and therefore have not reflected the estimated value of these change orders in our revenues to date . selling , general and administrative expenses . selling , general and administrative expenses ( “ sg & a ” ) decreased $ 19.6 million from $ 193.0 million for the year ended december 29 , 2013 to $ 173.4 million for the year ended december 28 , 2014 . the decrease was primarily the result of a $ 13.7 million reduction of amortization of intangibles in 2014 , as a result of certain intangible assets being fully amortized , as well as cost reduction actions taken by the company . as a percentage of revenues , sg & a decreased from 20.3 % for fiscal 2013 to 20.0 % for fiscal 2014 . excluding amortization of intangibles of $ 36.2 million for the year ended december 29 , 2013 and amortization of intangibles of $ 22.5 million for the year ended december 28 , 2014 , sg & a increased as a percentage of revenues from 16.5 % to 17.4 % for the year ended december 29 , 2013 and december 28 , 2014 , respectively , primarily as a result of the decline in revenues discussed previously , and increased compliance costs including internal cyber security costs incurred to protect the company 's assets , and sarbanes oxley and audit compliance costs including internal audit and external audit costs . merger and acquisition related items . merger and acquisition expenses increased $ 4.0 million from a benefit of $ 3.8 million to $ 0.2 million expense for the years ended december 29 , 2013 and december 28 , 2014 , respectively . the benefit of $ 3.8 million in 2013 was due to the reduction in a $ 3.1 million liability as a result of our final settlement of our obligations related to former officers and directors of integral systems , inc. ( `` integral `` ) on july 1 , 2013 , as well as a $ 2.7 million settlement , net of associated legal fees , arising from a contract dispute with a former subcontractor of the company pursuant to a settlement agreement executed in december 2013. both of these benefits were offset partially by legal fees and settlements related to prior acquisitions . internal research and development ( ir & d ) expenses . ir & d expenses increased from $ 21.4 million for the year ended december 29 , 2013 to $ 23.0 million for the year ended december 28 , 2014 . as a percentage of revenues , ir & d increased from 2.3 % of revenues for the year ended december 29 , 2013 to 2.6 % of revenues for the year ended december 28 , 2014 as a result of certain investments the company made primarily related to new programs and platforms in the electronic products business , the unmanned systems area , and the satellite communications business . unused office space and other . the benefit of $ 2.4 million for the year ended december 29 , 2013 was due to a reduction in the excess facility accrual of office space at the columbia , maryland administrative facilities , partially offset by expenses related to workforce reductions as a result of cost reduction initiatives we implemented across the company . the expense of $ 1.7 million for the year ended december 28 , 2014 was primarily due to an estimated excess facility accrual of office space at our sacramento , california administrative facilities , as well as due to employee termination costs related

debt acquired in acquisition of herley we assumed a $ 10.0 million ten-year term loan with a bank in israel that herley entered into on september 16 , 2008 in connection with the acquisition of one of its wholly owned subsidiaries . the balance as of december 28 , 2014 was $ 3.8 million , and the loan is payable in quarterly installments of $ 0.3 million plus interest at libor plus a margin of 1.5 % . the loan agreement contains various covenants including a minimum net equity covenant as defined in the loan agreement . we were in compliance with the financial covenants of the loan agreement as of december 28 , 2014 . payments in connection with acquisitions in connection with our business acquisitions , we agreed to make additional future payments to sellers based on final purchase price adjustments and the expiration of certain indemnification obligations . pursuant to the provisions of topic 805 , such amounts are recorded at fair value on the acquisition date . the agreement and plan of merger entered into in connection with our acquisition of secureinfo provided that upon achievement of certain cash receipts , revenue and ebitda in 2011 , we were obligated to pay the former stockholders of secureinfo additional cash contingent consideration . in march 2012 , we paid $ 1.5 million related to this contingent consideration . pursuant to the terms of the agreement and plan of merger with dei services corporation entered into on august 9 , 2010 ( “ the dei agreement ” ) , upon achievement of certain cash receipts , revenue , ebitda and backlog amounts in 2010 , 2011 and 2012 , we were obligated to pay certain additional contingent consideration ( the “ dei contingent consideration ” ) . we have paid $ 5.0 million related to the dei contingent consideration , of which $ 2.5 million and $ 2.1 million was paid in april 2012 and april 2013 , respectively . off balance sheet arrangements we have no off-balance sheet arrangements as defined in regulation s-k , item 303 ( a ) ( 4 ) ( ii ) .


 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.
     ```debt acquired in acquisition of herley we assumed a $ 10.0 million ten-year term loan with a bank in israel that herley entered into on september 16 , 2008 in connection with the acquisition of one of its wholly owned subsidiaries . the balance as of december 28 , 2014 was $ 3.8 million , and the loan is payable in quarterly installments of $ 0.3 million plus interest at libor plus a margin of 1.5 % . the loan agreement contains various covenants including a minimum net equity covenant as defined in the loan agreement . we were in compliance with the financial covenants of the loan agreement as of december 28 , 2014 . payments in connection with acquisitions in connection with our business acquisitions , we agreed to make additional future payments to sellers based on final purchase price adjustments and the expiration of certain indemnification obligations . pursuant to the provisions of topic 805 , such amounts are recorded at fair value on the acquisition date . the agreement and plan of merger entered into in connection with our acquisition of secureinfo provided that upon achievement of certain cash receipts , revenue and ebitda in 2011 , we were obligated to pay the former stockholders of secureinfo additional cash contingent consideration . in march 2012 , we paid $ 1.5 million related to this contingent consideration . pursuant to the terms of the agreement and plan of merger with dei services corporation entered into on august 9 , 2010 ( “ the dei agreement ” ) , upon achievement of certain cash receipts , revenue , ebitda and backlog amounts in 2010 , 2011 and 2012 , we were obligated to pay certain additional contingent consideration ( the “ dei contingent consideration ” ) . we have paid $ 5.0 million related to the dei contingent consideration , of which $ 2.5 million and $ 2.1 million was paid in april 2012 and april 2013 , respectively . off balance sheet arrangements we have no off-balance sheet arrangements as defined in regulation s-k , item 303 ( a ) ( 4 ) ( ii ) .
```    
 Suspicious Activity Report : september 30th , a `` fy `` ) 2013 to $ 495.5 billion , excluding funding for military personnel . the dod budget was approximately $ 496 billion in fy 2014 and remains at a similar level in fy 2015. the dod base budget excludes funding for overseas contingency operations , such as afghanistan , iraq and syria , which are appropriated separately and are not currently subject to the bca . under the bca , funding for the dod base budget is expected to increase very modestly to approximately $ 500 billion for fy 2016. in the years beyond fy 2016 , the bca permits annual increases for dod base budget funding of about 2.4 % with such caps remaining in force through fy 2023. the administration has publicly signaled its intent to submit dod budget requests that are significantly higher than the bca caps , as it did in submitting the fy 2016 budget request and the associated fy 2016 future year defense program ( `` fydp `` ) on february 2 , 2015 with all years exceeding the caps under the bca . such levels of dod budget funding would require the congress to enact legislation to raise the bca caps . in the event dod appropriations exceed the bca caps in any fiscal year through fy 2023 , across-the-board sequestration would go into effect , as occurred in 2013. u.s. government appropriations have and likely will continue to be affected by larger u.s. government budgetary issues and related legislation . when a formal appropriation bill has not been signed into law before the end of the fiscal year , congress may pass a continuing resolution ( `` cr `` ) that authorizes agencies of the u.s. government to continue to operate , generally at the same funding levels from the prior year , but typically does not authorize new spending initiatives during this period . if congress fails to enact a cr , the u.s. government may shut down , which likely would result in the closure of government offices and furlough of government workers , as well as impact the availability of funds to pay its contractors for work performed . in addition , if the national debt reaches the statutory debt ceiling , which is currently expected to occur in the first half of 2015 , the congress must enact legislation to increase the statutory debt ceiling . if the congress fails to do so , then the u.s. government may default on its debts , which would likely have a material adverse effect on the global financial markets . in march 2014 , the pentagon submitted its fy 2015 budget request of approximately $ 496 billion , which was consistent with the bipartisan budget spending authorization . also in march 2014 , the pentagon published the quadrennial defense review ( `` qdr `` ) . both the pentagon 's fy 2015 budget request and the qdr provide important insight for future national security funding priorities and related programs , which include cyber security and warfare , unmanned systems , satellite communications , missile defense and electronic warfare . in september 2014 , the president signed a fy2015 continuing resolution ( `` cr `` ) that funded the government through december 11 , 2014. the bill set the discretionary funding level for the federal government during cr period at an annual rate of $ 1.012 trillion . in december 2014 , the u.s. congress and senate passed the fiscal year 2015 omnibus appropriations bill , consolidated and further continuing appropriations act , 2015 ( the `` 2015 appropriations act `` ) that totals $ 1.014 trillion in discretionary spending in compliance with the bipartisan murray-ryan budget agreement . the bill funds the government through september 30 , 2015. the department of defense appropriations act , 2015 , which is a part of the appropriations act , provides $ 554.2 billion in base and overseas contingency operation funding , compared to $ 572 billion enacted in fiscal year 2014 and $ 554.3 billion in the president 's budget request . the base budget appropriation is $ 496.1 billion with $ 64.2 billion for overseas contingency operations ( `` oco `` ) of the department of defense ( `` dod `` ) , compared to $ 85.2 billion for dod oco enacted in fiscal year 2014. consequently , the dod 's overall future spending levels remain uncertain , and we are unable to specifically predict potential changes to future dod budgets on our programs and the effect that the foregoing would have on our future financial performance and outlook . in the event that bca funding levels continue , or if other actions are taken to significantly reduce the dod budget , it is possible that such reductions and related cancellations or delays affecting our existing contracts or programs could have a significant impact on the operating results of our business . 36 current reporting segments the company historically operated in two reportable segments : kratos government solutions ( “ kgs ” ) and public safety & security ( “ pss ” ) . in the fourth quarter of 2014 , the company expanded the number of reportable segments to three as we separated the kgs segment into two reportable segments : kgs and unmanned systems ( “ us ” ) . as a result , the kgs reportable segment is comprised of an aggregation of kratos ' government solutions operating segments , including our electronic products , satellite communications , modular systems and rocket support operating segments . the new unmanned systems reportable segment consists of our unmanned aerial , ground , seaborne and command , control and communications system business . the kgs and us segments provide products , solutions and services primarily for mission critical national security priorities . story_separator_special_tag cost of revenues decreased from $ 710.6 million for the year ended december 29 , 2013 to $ 649.8 million for the year ended december 28 , 2014 . the $ 60.8 million decrease in cost of revenues was primarily a result of decreased revenue discussed above . gross margin declined from 25.2 % for the year ended december 29 , 2013 compared to 25.1 % for the year ended december 28 , 2014 . margins on services decreased from 24.4 % for the year ended december 29 , 2013 to 22.1 % for the year ended december 28 , 2014 , due primarily to an unfavorable mix of revenues and decreased margins in our pss segment . margins on product sales increased for the year ended december 29 , 2013 as compared to december 28 , 2014 from 26.0 % to 27.7 % , respectively , primarily as a result of a change in mix of products sold . margins in the kgs segment increased from 26.2 % for the year ended december 29 , 2013 to 27.4 % for the year ended december 28 , 2014 , primarily as a result of change in the mix of products sold . margins in the us segment increased from 19.4 % for the year ended december 29 , 2013 to 23.2 % for the year ended december 28 , 2014 , primarily as a result of increased costs recorded of approximately $ 5.5 million on certain aerial target contracts to reflect retrofits necessary to address design changes recorded in the year ended december 29 , 2013 , compared to net increased costs recorded of $ 3.1 million for similar retrofit related matters and a contract conversion adjustment on certain of our unmanned aerial platforms recorded in the year ended december 28 , 2014. margins in the pss segment decreased from 25.8 % for the year ended december 29 , 2013 to 19.3 % for the year ended december 28 , 2014 as a result of decreased service margins and due to costs incurred on two sizable projects , which were completed in 2014 or are near-completion , under which we are in the process of submitting or have submitted change orders to customers to reimburse us for the work we performed at our customers ' request , but for which we have not completed negotiations for such change orders , and therefore have not reflected the estimated value of these change orders in our revenues to date . selling , general and administrative expenses . selling , general and administrative expenses ( “ sg & a ” ) decreased $ 19.6 million from $ 193.0 million for the year ended december 29 , 2013 to $ 173.4 million for the year ended december 28 , 2014 . the decrease was primarily the result of a $ 13.7 million reduction of amortization of intangibles in 2014 , as a result of certain intangible assets being fully amortized , as well as cost reduction actions taken by the company . as a percentage of revenues , sg & a decreased from 20.3 % for fiscal 2013 to 20.0 % for fiscal 2014 . excluding amortization of intangibles of $ 36.2 million for the year ended december 29 , 2013 and amortization of intangibles of $ 22.5 million for the year ended december 28 , 2014 , sg & a increased as a percentage of revenues from 16.5 % to 17.4 % for the year ended december 29 , 2013 and december 28 , 2014 , respectively , primarily as a result of the decline in revenues discussed previously , and increased compliance costs including internal cyber security costs incurred to protect the company 's assets , and sarbanes oxley and audit compliance costs including internal audit and external audit costs . merger and acquisition related items . merger and acquisition expenses increased $ 4.0 million from a benefit of $ 3.8 million to $ 0.2 million expense for the years ended december 29 , 2013 and december 28 , 2014 , respectively . the benefit of $ 3.8 million in 2013 was due to the reduction in a $ 3.1 million liability as a result of our final settlement of our obligations related to former officers and directors of integral systems , inc. ( `` integral `` ) on july 1 , 2013 , as well as a $ 2.7 million settlement , net of associated legal fees , arising from a contract dispute with a former subcontractor of the company pursuant to a settlement agreement executed in december 2013. both of these benefits were offset partially by legal fees and settlements related to prior acquisitions . internal research and development ( ir & d ) expenses . ir & d expenses increased from $ 21.4 million for the year ended december 29 , 2013 to $ 23.0 million for the year ended december 28 , 2014 . as a percentage of revenues , ir & d increased from 2.3 % of revenues for the year ended december 29 , 2013 to 2.6 % of revenues for the year ended december 28 , 2014 as a result of certain investments the company made primarily related to new programs and platforms in the electronic products business , the unmanned systems area , and the satellite communications business . unused office space and other . the benefit of $ 2.4 million for the year ended december 29 , 2013 was due to a reduction in the excess facility accrual of office space at the columbia , maryland administrative facilities , partially offset by expenses related to workforce reductions as a result of cost reduction initiatives we implemented across the company . the expense of $ 1.7 million for the year ended december 28 , 2014 was primarily due to an estimated excess facility accrual of office space at our sacramento , california administrative facilities , as well as due to employee termination costs related

