million . hpp segment revenue change by product line for the twelve months ended september 30 was as follows : replace_table_token_4_th the hpp segment revenue increase of $ 2.4 million is attributed to : ( i ) $ 0.8 million in royalties on high-speed processing boards related to production of aircraft ; ( ii ) $ 1.1 million of additional part shipments to support the production of high-speed processing boards ; and ( iii ) $ 0.5 million of additional myricom product revenue . 14 ts segment revenue change by product line for the twelve months ended september 30 was as follows : replace_table_token_5_th the ts segment revenue increases in our u.s. and u.k. divisions of $ 11.7 million and $ 2.5 million , respectively , were partially offset by a $ 2.5 million decrease in revenue in our german division . the u.s. division product and service revenues increased by $ 10.0 million and $ 1.7 million , respectively , and the increase of 2.5 million in u.k. revenues is primarily attributed to product revenues . the german division revenue decrease is the result of lower product revenues . our total revenues by geographic area based on the location to which the products were shipped or services rendered was as follows : replace_table_token_6_th gross margins our gross margins increased by $ 5.9 million , or 3 % of revenues , to $ 25.0 million in fiscal year 2016 as compared to gross margins of $ 19.2 million in fiscal year 2015. the following table summarizes gross margin ( `` gm `` ) changes by segment for fiscal years 2016 and 2015 : replace_table_token_7_th the impact of product mix on gross margins within our hpp segment for the twelve months ended september 30 was as follows : replace_table_token_8_th 15 the increase in our hpp segment gross margins is primarily attributed to the impact of $ 4.3 million of royalties on high-speed processing boards for the equivalent of seven planes at approximately 100 % gross margin in fiscal year 2016 as compared to $ 3.5 million of royalties on high-speed processing boards for the equivalent of six planes in fiscal year 2015 , an increase of $ 1.1million in revenue at approximately 65 % gross margin on product shipments and a gross margin increase of $ 0.7 million attributed to a favorable mix of myricom product sales for the comparative period . the impact of product mix within our ts segment on gross margins for the twelve months ended september 30 was as follows : replace_table_token_9_th for fiscal year 2016 compared to fiscal year 2015 , the increase in our ts segment gross margins of $ 3.7 million resulted from a $ 3.7 million increase in our u.s. division that was the result of a favorable product mix and an increase in high gross margin service revenues . an increase in product revenues recognized by our u.k. division was mostly offset by an unfavorable product mix and a decrease in product revenues recognized by our german division mostly was offset by an increase in service revenue margins , which is primarily attributed to a favorable mix of service engagements that enabled higher utilization of internal resources , creating a net neutral effect on gross margins from the foreign divisions . engineering and development expenses the following table details our engineering and development expenses by operating segment for the fiscal years ended september 30 , 2016 and 2015 : replace_table_token_10_th the increase in engineering and development expenses in the hpp segment resulted from the timing of expenditures and increases in payroll related to hiring additional engineers . the fiscal year 2016 expenses are primarily for myricom engineering expenses incurred in connection with the development of new products . selling , general and administrative the following table details our selling , general and administrative ( “ sg & a ” ) expense by operating segment for the years ended september 30 , 2016 and 2015 : replace_table_token_11_th 16 for fiscal year 2016 compared to fiscal year 2015 , the hpp segment sg & a spending increase of $ 1.0 million is primarily attributed to increases of : $ 0.7 million in management bonuses , $ 0.2 million for salaries , wages and employee benefits , and $ 0.2 million of outside consulting expenses , partially offset by a net gain of $ 0.4 million on insurance proceeds from an officer life insurance policy and a $ 0.3 million decrease in the cash surrender value of the underlying officers life insurance policies . for fiscal year 2016 compared to fiscal year 2015 , the ts segment sg & a spending increase of approximately $ 1.2 million is substantially the result of an increase in our u.s. division of $ 1.6 million primarily attributed to variable selling expenses and management bonuses , partially offset by spending decreases of $ 0.4 million and $ 0.1 million in our u.k. and german divisions , respectively . the spending decrease in germany is primarily attributed to lower selling expenses and the decrease in the u.k. is attributed to lower administrative costs . other income/expenses the following table details our other income/expenses for the years ended september 30 , 2016 and 2015 : replace_table_token_12_th income taxes the company recorded an income tax expense of approximately $ 1.0 million , which reflected an effective tax expense rate of 27.7 % for the year ended september 30 , 2016 , which was lower than the statutory rate due in part to the tax benefit from research and development credits . for the year ended september 30 , 2015 , the income tax expense was approximately $ 0.2 million , which reflected an effective tax rate of 1,414 % . story_separator_special_tag engineering and development expenses engineering and development expenses include payroll , employee benefits , stock-based compensation and other headcount-related expenses associated with product development . engineering and development expenses also include third-party development and programming costs . we consider technological feasibility for our software products to be reached upon the release of the software , accordingly , no internal software development costs have been capitalized . 20 income taxes we use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . we also reduce deferred tax assets by a valuation allowance if , based on the weight of available evidence , it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods . this methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities . valuation allowances are recorded against the gross deferred tax assets that management believes , after considering all available positive and negative objective evidence , historical and prospective , with greater weight given to historical evidence , that it is more likely than not that these assets will not be realized . in addition , we are required to recognize in the consolidated financial statements , those tax positions determined to be more-likely-than-not of being sustained upon examination , based on the technical merits of the positions as of the reporting date . if a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits , no benefits of the position are recognized . in addition , the calculation of the company 's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions . the company records liabilities for estimated tax obligations in the u.s. and other tax jurisdictions . these estimated tax liabilities include the provision for taxes that may become payable in the future . i ntangible assets intangible assets that are not subject to amortization are also required to be tested annually , or more frequently if events or circumstances indicate that the asset may be impaired . we did not have intangible assets with indefinite lives other than goodwill at any time during the two years ended september 30 , 2016 . intangible assets subject to amortization are amortized over their estimated useful lives , generally three to ten years , and are carried at net book value . the remaining useful lives of intangible assets are evaluated on an annual basis . intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable . if the fair value of an intangible asset subject to amortization is determined to be less than its carrying value , then an impairment charge is recorded to write down that asset to its fair value . inventories inventories are stated at the lower of cost or market , with cost determined using the first-in , first-out method . the recoverability of inventories is based upon the types and levels of inventories held , forecasted demand , pricing , competition and changes in technology . we write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions . if actual market conditions are less favorable than those projected by management , additional inventory write-downs may be required . pension and retirement plans the funded status of pension and other post-retirement benefit plans is recognized prospectively on the balance sheet . gains and losses , prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income , net of tax , until they are amortized as a component of net periodic pension/post-retirement benefits expense . additionally , plan assets and obligations are measured as of our fiscal year-end balance sheet date ( september 30 ) . we have defined benefit and defined contribution plans in the u.k. , germany and in the u.s. in the u.k. and germany , the company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees . the defined benefit plans in both the u.k. and germany are closed to newly hired employees and have been for the two years ended september 30 , 2016 . in the u.s. , the company provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired . these supplementary retirement plans are also closed to newly hired employees and have been for the two years ended september 30 , 2016 . these supplementary plans are funded through whole life insurance policies . the company expects to recover all insurance premiums paid under these policies in the future , through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant . these whole life insurance policies are carried on 21 the balance sheet at their cash surrender values as they are owned by the company and not assets of the defined benefit plans . in the u.s. , the company also

liquidity and capital resources our primary source of liquidity is our cash and cash equivalents , which increased by approximately $ 1.9 million to $ 13.1 million as of september 30 , 2016 from $ 11.2 million as of september 30 , 2015 . at september 30 , 2016 , cash equivalents totaled $ 0.5 million of this amount . 17 significant sources of cash for the year ended september 30 , 2016 included net income of approximately $ 2.6 million , an increase in deferred revenues of approximately $ 1.8 million , an increase in pension and retirement plans liabilities of $ 0.6 million , depreciation of approximately $ 0.6 million , and an increase in other assets of approximately 0.6 million . partially offsetting these sources of cash were a decrease in accounts payable and accrued expenses of approximately $ 1.6 million , payment of dividends of approximately $ 1.7 million , purchases of property and equipment of approximately $ 0.7 million and unfavorable currency exchange fluctuation of approximately $ 0.8 million . cash held by our foreign subsidiaries located in germany and the u.k. totaled approximately $ 6.4 million as of september 30 , 2016 and $ 3.3 million as of september 30 , 2015 . this cash is included in our total cash and cash equivalents reported above . we consider this cash to be permanently reinvested into these foreign locations because repatriating it would result in unfavorable tax consequences .


 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 primary source of liquidity is our cash and cash equivalents , which increased by approximately $ 1.9 million to $ 13.1 million as of september 30 , 2016 from $ 11.2 million as of september 30 , 2015 . at september 30 , 2016 , cash equivalents totaled $ 0.5 million of this amount . 17 significant sources of cash for the year ended september 30 , 2016 included net income of approximately $ 2.6 million , an increase in deferred revenues of approximately $ 1.8 million , an increase in pension and retirement plans liabilities of $ 0.6 million , depreciation of approximately $ 0.6 million , and an increase in other assets of approximately 0.6 million . partially offsetting these sources of cash were a decrease in accounts payable and accrued expenses of approximately $ 1.6 million , payment of dividends of approximately $ 1.7 million , purchases of property and equipment of approximately $ 0.7 million and unfavorable currency exchange fluctuation of approximately $ 0.8 million . cash held by our foreign subsidiaries located in germany and the u.k. totaled approximately $ 6.4 million as of september 30 , 2016 and $ 3.3 million as of september 30 , 2015 . this cash is included in our total cash and cash equivalents reported above . we consider this cash to be permanently reinvested into these foreign locations because repatriating it would result in unfavorable tax consequences .
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 Suspicious Activity Report : million . hpp segment revenue change by product line for the twelve months ended september 30 was as follows : replace_table_token_4_th the hpp segment revenue increase of $ 2.4 million is attributed to : ( i ) $ 0.8 million in royalties on high-speed processing boards related to production of aircraft ; ( ii ) $ 1.1 million of additional part shipments to support the production of high-speed processing boards ; and ( iii ) $ 0.5 million of additional myricom product revenue . 14 ts segment revenue change by product line for the twelve months ended september 30 was as follows : replace_table_token_5_th the ts segment revenue increases in our u.s. and u.k. divisions of $ 11.7 million and $ 2.5 million , respectively , were partially offset by a $ 2.5 million decrease in revenue in our german division . the u.s. division product and service revenues increased by $ 10.0 million and $ 1.7 million , respectively , and the increase of 2.5 million in u.k. revenues is primarily attributed to product revenues . the german division revenue decrease is the result of lower product revenues . our total revenues by geographic area based on the location to which the products were shipped or services rendered was as follows : replace_table_token_6_th gross margins our gross margins increased by $ 5.9 million , or 3 % of revenues , to $ 25.0 million in fiscal year 2016 as compared to gross margins of $ 19.2 million in fiscal year 2015. the following table summarizes gross margin ( `` gm `` ) changes by segment for fiscal years 2016 and 2015 : replace_table_token_7_th the impact of product mix on gross margins within our hpp segment for the twelve months ended september 30 was as follows : replace_table_token_8_th 15 the increase in our hpp segment gross margins is primarily attributed to the impact of $ 4.3 million of royalties on high-speed processing boards for the equivalent of seven planes at approximately 100 % gross margin in fiscal year 2016 as compared to $ 3.5 million of royalties on high-speed processing boards for the equivalent of six planes in fiscal year 2015 , an increase of $ 1.1million in revenue at approximately 65 % gross margin on product shipments and a gross margin increase of $ 0.7 million attributed to a favorable mix of myricom product sales for the comparative period . the impact of product mix within our ts segment on gross margins for the twelve months ended september 30 was as follows : replace_table_token_9_th for fiscal year 2016 compared to fiscal year 2015 , the increase in our ts segment gross margins of $ 3.7 million resulted from a $ 3.7 million increase in our u.s. division that was the result of a favorable product mix and an increase in high gross margin service revenues . an increase in product revenues recognized by our u.k. division was mostly offset by an unfavorable product mix and a decrease in product revenues recognized by our german division mostly was offset by an increase in service revenue margins , which is primarily attributed to a favorable mix of service engagements that enabled higher utilization of internal resources , creating a net neutral effect on gross margins from the foreign divisions . engineering and development expenses the following table details our engineering and development expenses by operating segment for the fiscal years ended september 30 , 2016 and 2015 : replace_table_token_10_th the increase in engineering and development expenses in the hpp segment resulted from the timing of expenditures and increases in payroll related to hiring additional engineers . the fiscal year 2016 expenses are primarily for myricom engineering expenses incurred in connection with the development of new products . selling , general and administrative the following table details our selling , general and administrative ( “ sg & a ” ) expense by operating segment for the years ended september 30 , 2016 and 2015 : replace_table_token_11_th 16 for fiscal year 2016 compared to fiscal year 2015 , the hpp segment sg & a spending increase of $ 1.0 million is primarily attributed to increases of : $ 0.7 million in management bonuses , $ 0.2 million for salaries , wages and employee benefits , and $ 0.2 million of outside consulting expenses , partially offset by a net gain of $ 0.4 million on insurance proceeds from an officer life insurance policy and a $ 0.3 million decrease in the cash surrender value of the underlying officers life insurance policies . for fiscal year 2016 compared to fiscal year 2015 , the ts segment sg & a spending increase of approximately $ 1.2 million is substantially the result of an increase in our u.s. division of $ 1.6 million primarily attributed to variable selling expenses and management bonuses , partially offset by spending decreases of $ 0.4 million and $ 0.1 million in our u.k. and german divisions , respectively . the spending decrease in germany is primarily attributed to lower selling expenses and the decrease in the u.k. is attributed to lower administrative costs . other income/expenses the following table details our other income/expenses for the years ended september 30 , 2016 and 2015 : replace_table_token_12_th income taxes the company recorded an income tax expense of approximately $ 1.0 million , which reflected an effective tax expense rate of 27.7 % for the year ended september 30 , 2016 , which was lower than the statutory rate due in part to the tax benefit from research and development credits . for the year ended september 30 , 2015 , the income tax expense was approximately $ 0.2 million , which reflected an effective tax rate of 1,414 % . story_separator_special_tag engineering and development expenses engineering and development expenses include payroll , employee benefits , stock-based compensation and other headcount-related expenses associated with product development . engineering and development expenses also include third-party development and programming costs . we consider technological feasibility for our software products to be reached upon the release of the software , accordingly , no internal software development costs have been capitalized . 20 income taxes we use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . we also reduce deferred tax assets by a valuation allowance if , based on the weight of available evidence , it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods . this methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities . valuation allowances are recorded against the gross deferred tax assets that management believes , after considering all available positive and negative objective evidence , historical and prospective , with greater weight given to historical evidence , that it is more likely than not that these assets will not be realized . in addition , we are required to recognize in the consolidated financial statements , those tax positions determined to be more-likely-than-not of being sustained upon examination , based on the technical merits of the positions as of the reporting date . if a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits , no benefits of the position are recognized . in addition , the calculation of the company 's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions . the company records liabilities for estimated tax obligations in the u.s. and other tax jurisdictions . these estimated tax liabilities include the provision for taxes that may become payable in the future . i ntangible assets intangible assets that are not subject to amortization are also required to be tested annually , or more frequently if events or circumstances indicate that the asset may be impaired . we did not have intangible assets with indefinite lives other than goodwill at any time during the two years ended september 30 , 2016 . intangible assets subject to amortization are amortized over their estimated useful lives , generally three to ten years , and are carried at net book value . the remaining useful lives of intangible assets are evaluated on an annual basis . intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable . if the fair value of an intangible asset subject to amortization is determined to be less than its carrying value , then an impairment charge is recorded to write down that asset to its fair value . inventories inventories are stated at the lower of cost or market , with cost determined using the first-in , first-out method . the recoverability of inventories is based upon the types and levels of inventories held , forecasted demand , pricing , competition and changes in technology . we write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions . if actual market conditions are less favorable than those projected by management , additional inventory write-downs may be required . pension and retirement plans the funded status of pension and other post-retirement benefit plans is recognized prospectively on the balance sheet . gains and losses , prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income , net of tax , until they are amortized as a component of net periodic pension/post-retirement benefits expense . additionally , plan assets and obligations are measured as of our fiscal year-end balance sheet date ( september 30 ) . we have defined benefit and defined contribution plans in the u.k. , germany and in the u.s. in the u.k. and germany , the company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees . the defined benefit plans in both the u.k. and germany are closed to newly hired employees and have been for the two years ended september 30 , 2016 . in the u.s. , the company provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired . these supplementary retirement plans are also closed to newly hired employees and have been for the two years ended september 30 , 2016 . these supplementary plans are funded through whole life insurance policies . the company expects to recover all insurance premiums paid under these policies in the future , through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant . these whole life insurance policies are carried on 21 the balance sheet at their cash surrender values as they are owned by the company and not assets of the defined benefit plans . in the u.s. , the company also

