most of the company 's products are manufactured at the company 's exton , pennsylvania facility with a minor amount of manufacturing performed in the united kingdom . a majority of the company 's sales across all industries are generated through independent outside sales organizations such as sales representatives , wholesalers and distributors , or a combination of both . the company has a broad distribution network in north america and to a lesser extent in other global markets . changes in financial condition cash and cash equivalents were $ 939,000 at december 31 , 2012 , compared to $ 3,476,000 at december 31 , 2011. the change is essentially a function of solid earnings from operations , plus insurance legal recovery funds , less a dividend payment . as stated in the company 's statement of operations , the company had net income during 2012 of $ 6,876,000 , which resulted in higher cash . a good portion of the company 's income was generated from ongoing operations . as disclosed in march 2012 , the company also received a $ 4,700,000 insurance legal recovery , which after considering its auxiliary costs such as taxes , served to increase the year 's income and cash by approximately $ 2,530,000. as a result of the strong cash position of the company as of september 2012 , which had a balance of $ 9,206,000 , as well as other factors , the board elected to pay a cash dividend to shareholders during december 2012 , which amounted to $ 10,092,000. it should also be mentioned that the board elected to allow the company to pay the bulk of the year 's earned incentive compensation during december 2012. accounts receivable was $ 12,134,000 at december 31 , 2012 , compared to $ 9,052,000 at december 31 , 2011 , increasing $ 3,082,000 , or 34.0 % . the majority of this increase is the result of higher sales during fourth quarter of 2012 , particularly in december , compared to the fourth quarter and december of 2011. the aging of the company 's receivables appears stable and consistent , and the company is not aware of any deterioration in the viability of its customer base which is regularly monitored . inventory has increased $ 663,000 or 10.3 % from december 31 , 2011. this was largely due to a ramp up in emerging product inventory , such as doubletrac® , to meet the increasing market demand in a timely manner . -12- accounts payable has increased $ 1,718,000 ( 168.6 % ) , ending at $ 2,737,000 at december 31 , 2012 , from a balance of $ 1,019,000 at december 31 , 2011. the company acquired a sizable amount of raw materials during the latter part of december 2012 , and those obligations , as well as a few other large invoices were still unpaid as of the end of the period , but all were still within normal payments terms . the change was therefore largely timing related , as the company typically pays all vendors within discount terms to ensure priority relationships . the line of credit had a balance of $ 324,000 at the end of december 2012 , but had no borrowings against it at the same point in 2011. as noted above , the company paid a significant dividend payment and also incentive compensation at the end of 2012 , which reduced cash and required the company to draw against the line . accrued compensation was $ 349,000 at december 31 , 2012 , decreasing $ 1,121,000 or 76.3 % from its balance of $ 1,470,000 at december 31 , 2011. the majority of this change relates to the incentive compensation payment discussed above , which was made during december 2012 , and was higher than the prior year in general as it changes in correlation with profits . accrued commissions and sales incentives were $ 3,671,000 and $ 2,098,000 at december 31 , 2012 and 2011 , respectively , increasing $ 1,573,000 or 75.0 % . a larger portion of the customer base has achieved growth tiers , which increases the payments due to them related to accrued sales incentives . other accrued liabilities have increased $ 2,071,000 or 96.6 % from december 31 , 2011 , primarily due to an increase in the legal accrual in relation to the legal settlement discussed in note 13 , subsequent events , also due to an increase in legal and product liability accruals , which is described in detail in note 11 , commitments and contingencies . results of operations three-months ended december 31 , 2012 vs. december 31 , 2011 the company reported comparative results from continuing operations for the three-month period ended december 31 , 2012 and 2011 as follows : replace_table_token_1_th net sales . the company 's 2012 fourth quarter sales dollars increased $ 2,808,000 ( 18.0 % ) over the same period in 2011 , ending at $ 18,426,000 , compared to $ 15,618,000 for the same three months in 2011. volume , or units sold , increased approximately 24 % compared to the prior year quarter . pricing related decreases were however required due to the competitive nature of the market place , which lessened the impact of the surge in volume . during the fourth quarter of 2012 , the company had experienced sales growth simultaneously from various product lines . domestically , the company 's gas piping product , tracpipe® counterstrike® , had benefited from the improving construction environment , as everything from single homes to high-rises and hospitals look to install gas piping to keep energy costs down . additionally , the company 's emerging doubletrac® and def-trac® double-containment piping systems have thrived , as the world moves towards more environmentally friendly solutions . story_separator_special_tag from time to time , there may be a shortage of skilled labor , which may make it more difficult and expensive for the company to attract and retain qualified employees . the company is dependent upon the relatively unique talents and managerial skills of a small number of key executives . critical accounting policies and use of estimates financial reporting release no . 60 , released by the securities and exchange commission , requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements . note 2 in the notes to the consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements . the following is a brief discussion of the company 's more significant accounting policies . the preparation of financial statements in conformity with generally accepted accounting principles ( gaap ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods . the most significant estimates and assumptions relate to revenue recognition , inventory valuations , goodwill and intangible asset valuations , product liability costs , phantom stock and accounting for income taxes . actual amounts could differ significantly from these estimates . our critical accounting policies and significant estimates and assumptions are described in more detail as follows : -17- revenue recognition the company 's revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe . under gaap , revenues are considered to have been earned when the company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues . the following criteria represent preconditions to the recognition of revenue : · persuasive evidence of an arrangement for the sale of product or services must exist . · delivery has occurred or services rendered . · the sales price to the customer is fixed or determinable . · collection is reasonably assured . the company generally recognizes revenue upon shipment in accordance with the above principles . gross sales are reduced for all consideration paid to customers for which no identifiable benefit is received by the company . this includes promotional incentives , which includes various programs including year-end rebates and discounts . the amounts of certain incentives are known with reasonable certainty at the time of sale , while others are projected based upon the most reliable information available at the reporting date . commissions , for which the company receives an identifiable benefit , are accounted for as a selling expense . accounts receivable accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future . the estimated allowance for uncollectible amounts is based primarily on specific analysis of accounts in the receivable portfolio and historical write-off experience . while management believes the allowance to be adequate , if the financial condition of the company 's customers were to deteriorate , resulting in their inability to make payments , additional allowances may be required . inventory inventories are valued at the lower of cost or market . cost of inventories are determined by the first-in , first-out ( fifo ) method . the company generally considers inventory quantities beyond two-years usage , measured on a historical usage basis , to be excess inventory and reduces the gross carrying value of inventory accordingly . goodwill in accordance with financial accounting standards board ( fasb ) asc topic 350 , with respect to goodwill , the company performs annual impairment tests using the market capitalization on the last day of the year to determine the fair value of the reporting unit and then compares that value to the carrying value . as of december 31 , 2012 and december 31 , 2011 , the fair value of the reporting unit exceeded the carrying value , and therefore the company concluded that goodwill was not impaired . product liability reserves product liability reserves represent the unpaid amounts under the company 's insurance policies with respect to known claims . the company uses the most current available data to estimate claims . as explained more fully under contingencies , for various product liability claims covered under the company 's general liability insurance policies , the company must pay certain defense costs within its deductible or self-insured retention limits , ranging primarily from $ 25,000 to $ 250,000 per claim , depending on the terms of the policy in the applicable policy year , up to an aggregate amount . the company is vigorously defending against all known claims . phantom stock the company uses the black-scholes option pricing model as its method for determining fair value of the units . the company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the units . the compensation expense ( including adjustment of the liability to its fair value ) from the units is recognized over the requisite service -18- period of each grant or award . the fasb asc topic 718 stock compensation requires forfeitures to be estimated at the time of grant and revised , if necessary , in subsequent periods if actual forfeitures differ from those estimates in order to derive the company 's best estimate of awards ultimately to vest . forfeitures represent only the unvested portion of a surrendered unit and are typically estimated based on historical experience . based on an analysis of the company 's historical data , which has limited experience related to any stock-based plan forfeitures , the company applied a 0 % forfeiture rate to plan units outstanding in determining its plan unit compensation expense for december 31 , 2012. accounting for income taxes the company accounts for federal tax liabilities

liquidity and capital resources historically , the company 's primary cash needs have been related to working capital items ( including inventory purchases ) , which the company has largely funded through cash generated from operations . as of december 31 , 2012 , the company had a cash balance of $ 939,000. additionally , the company has a $ 10,000,000 line of credit available with sovereign bank , as discussed in detail in note 4 , which had borrowings of $ 324,000 outstanding upon it at the end of 2012. at december 31 , 2011 , the company had cash of $ 3,476,000 , and therefore had experienced a decrease in cash of $ 2,537,000 during 2012. operating activities cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities , such as those included in working capital . for the twelve months of 2012 , the company 's cash from operating activities increased $ 5,876,000 over the comparable period in the prior year , of which a portion was due to cash generated from 2012 standard operations over and above 2011. a significant factor contributing to the increase was however related to the insurance legal recovery received during the first quarter of 2012 , which enhanced cash from operations by approximately $ 2,500,000 after considering the deduction for auxiliary costs such as taxes . additionally , the company had experienced a $ 1,882,000 increase in its marketing related promotional incentive liabilities when comparing december 31 , 2012 to 2011. while the extra promotional incentives reduced income in 2012 , the associated cash will not be paid until the first quarter of 2013. further , in 2011 the company paid approximately $ 900,000 more for insurance costs than in 2012 , largely connected to long-term coverage . the overall increase discussed above was reflected even though the company paid incentive compensation during december 2012 which would normally have been paid during the first quarter of the new year . this was done preemptively in light of the looming governmental tax increases .


 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 historically , the company 's primary cash needs have been related to working capital items ( including inventory purchases ) , which the company has largely funded through cash generated from operations . as of december 31 , 2012 , the company had a cash balance of $ 939,000. additionally , the company has a $ 10,000,000 line of credit available with sovereign bank , as discussed in detail in note 4 , which had borrowings of $ 324,000 outstanding upon it at the end of 2012. at december 31 , 2011 , the company had cash of $ 3,476,000 , and therefore had experienced a decrease in cash of $ 2,537,000 during 2012. operating activities cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities , such as those included in working capital . for the twelve months of 2012 , the company 's cash from operating activities increased $ 5,876,000 over the comparable period in the prior year , of which a portion was due to cash generated from 2012 standard operations over and above 2011. a significant factor contributing to the increase was however related to the insurance legal recovery received during the first quarter of 2012 , which enhanced cash from operations by approximately $ 2,500,000 after considering the deduction for auxiliary costs such as taxes . additionally , the company had experienced a $ 1,882,000 increase in its marketing related promotional incentive liabilities when comparing december 31 , 2012 to 2011. while the extra promotional incentives reduced income in 2012 , the associated cash will not be paid until the first quarter of 2013. further , in 2011 the company paid approximately $ 900,000 more for insurance costs than in 2012 , largely connected to long-term coverage . the overall increase discussed above was reflected even though the company paid incentive compensation during december 2012 which would normally have been paid during the first quarter of the new year . this was done preemptively in light of the looming governmental tax increases .
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 Suspicious Activity Report : most of the company 's products are manufactured at the company 's exton , pennsylvania facility with a minor amount of manufacturing performed in the united kingdom . a majority of the company 's sales across all industries are generated through independent outside sales organizations such as sales representatives , wholesalers and distributors , or a combination of both . the company has a broad distribution network in north america and to a lesser extent in other global markets . changes in financial condition cash and cash equivalents were $ 939,000 at december 31 , 2012 , compared to $ 3,476,000 at december 31 , 2011. the change is essentially a function of solid earnings from operations , plus insurance legal recovery funds , less a dividend payment . as stated in the company 's statement of operations , the company had net income during 2012 of $ 6,876,000 , which resulted in higher cash . a good portion of the company 's income was generated from ongoing operations . as disclosed in march 2012 , the company also received a $ 4,700,000 insurance legal recovery , which after considering its auxiliary costs such as taxes , served to increase the year 's income and cash by approximately $ 2,530,000. as a result of the strong cash position of the company as of september 2012 , which had a balance of $ 9,206,000 , as well as other factors , the board elected to pay a cash dividend to shareholders during december 2012 , which amounted to $ 10,092,000. it should also be mentioned that the board elected to allow the company to pay the bulk of the year 's earned incentive compensation during december 2012. accounts receivable was $ 12,134,000 at december 31 , 2012 , compared to $ 9,052,000 at december 31 , 2011 , increasing $ 3,082,000 , or 34.0 % . the majority of this increase is the result of higher sales during fourth quarter of 2012 , particularly in december , compared to the fourth quarter and december of 2011. the aging of the company 's receivables appears stable and consistent , and the company is not aware of any deterioration in the viability of its customer base which is regularly monitored . inventory has increased $ 663,000 or 10.3 % from december 31 , 2011. this was largely due to a ramp up in emerging product inventory , such as doubletrac® , to meet the increasing market demand in a timely manner . -12- accounts payable has increased $ 1,718,000 ( 168.6 % ) , ending at $ 2,737,000 at december 31 , 2012 , from a balance of $ 1,019,000 at december 31 , 2011. the company acquired a sizable amount of raw materials during the latter part of december 2012 , and those obligations , as well as a few other large invoices were still unpaid as of the end of the period , but all were still within normal payments terms . the change was therefore largely timing related , as the company typically pays all vendors within discount terms to ensure priority relationships . the line of credit had a balance of $ 324,000 at the end of december 2012 , but had no borrowings against it at the same point in 2011. as noted above , the company paid a significant dividend payment and also incentive compensation at the end of 2012 , which reduced cash and required the company to draw against the line . accrued compensation was $ 349,000 at december 31 , 2012 , decreasing $ 1,121,000 or 76.3 % from its balance of $ 1,470,000 at december 31 , 2011. the majority of this change relates to the incentive compensation payment discussed above , which was made during december 2012 , and was higher than the prior year in general as it changes in correlation with profits . accrued commissions and sales incentives were $ 3,671,000 and $ 2,098,000 at december 31 , 2012 and 2011 , respectively , increasing $ 1,573,000 or 75.0 % . a larger portion of the customer base has achieved growth tiers , which increases the payments due to them related to accrued sales incentives . other accrued liabilities have increased $ 2,071,000 or 96.6 % from december 31 , 2011 , primarily due to an increase in the legal accrual in relation to the legal settlement discussed in note 13 , subsequent events , also due to an increase in legal and product liability accruals , which is described in detail in note 11 , commitments and contingencies . results of operations three-months ended december 31 , 2012 vs. december 31 , 2011 the company reported comparative results from continuing operations for the three-month period ended december 31 , 2012 and 2011 as follows : replace_table_token_1_th net sales . the company 's 2012 fourth quarter sales dollars increased $ 2,808,000 ( 18.0 % ) over the same period in 2011 , ending at $ 18,426,000 , compared to $ 15,618,000 for the same three months in 2011. volume , or units sold , increased approximately 24 % compared to the prior year quarter . pricing related decreases were however required due to the competitive nature of the market place , which lessened the impact of the surge in volume . during the fourth quarter of 2012 , the company had experienced sales growth simultaneously from various product lines . domestically , the company 's gas piping product , tracpipe® counterstrike® , had benefited from the improving construction environment , as everything from single homes to high-rises and hospitals look to install gas piping to keep energy costs down . additionally , the company 's emerging doubletrac® and def-trac® double-containment piping systems have thrived , as the world moves towards more environmentally friendly solutions . story_separator_special_tag from time to time , there may be a shortage of skilled labor , which may make it more difficult and expensive for the company to attract and retain qualified employees . the company is dependent upon the relatively unique talents and managerial skills of a small number of key executives . critical accounting policies and use of estimates financial reporting release no . 60 , released by the securities and exchange commission , requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements . note 2 in the notes to the consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements . the following is a brief discussion of the company 's more significant accounting policies . the preparation of financial statements in conformity with generally accepted accounting principles ( gaap ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods . the most significant estimates and assumptions relate to revenue recognition , inventory valuations , goodwill and intangible asset valuations , product liability costs , phantom stock and accounting for income taxes . actual amounts could differ significantly from these estimates . our critical accounting policies and significant estimates and assumptions are described in more detail as follows : -17- revenue recognition the company 's revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe . under gaap , revenues are considered to have been earned when the company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues . the following criteria represent preconditions to the recognition of revenue : · persuasive evidence of an arrangement for the sale of product or services must exist . · delivery has occurred or services rendered . · the sales price to the customer is fixed or determinable . · collection is reasonably assured . the company generally recognizes revenue upon shipment in accordance with the above principles . gross sales are reduced for all consideration paid to customers for which no identifiable benefit is received by the company . this includes promotional incentives , which includes various programs including year-end rebates and discounts . the amounts of certain incentives are known with reasonable certainty at the time of sale , while others are projected based upon the most reliable information available at the reporting date . commissions , for which the company receives an identifiable benefit , are accounted for as a selling expense . accounts receivable accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future . the estimated allowance for uncollectible amounts is based primarily on specific analysis of accounts in the receivable portfolio and historical write-off experience . while management believes the allowance to be adequate , if the financial condition of the company 's customers were to deteriorate , resulting in their inability to make payments , additional allowances may be required . inventory inventories are valued at the lower of cost or market . cost of inventories are determined by the first-in , first-out ( fifo ) method . the company generally considers inventory quantities beyond two-years usage , measured on a historical usage basis , to be excess inventory and reduces the gross carrying value of inventory accordingly . goodwill in accordance with financial accounting standards board ( fasb ) asc topic 350 , with respect to goodwill , the company performs annual impairment tests using the market capitalization on the last day of the year to determine the fair value of the reporting unit and then compares that value to the carrying value . as of december 31 , 2012 and december 31 , 2011 , the fair value of the reporting unit exceeded the carrying value , and therefore the company concluded that goodwill was not impaired . product liability reserves product liability reserves represent the unpaid amounts under the company 's insurance policies with respect to known claims . the company uses the most current available data to estimate claims . as explained more fully under contingencies , for various product liability claims covered under the company 's general liability insurance policies , the company must pay certain defense costs within its deductible or self-insured retention limits , ranging primarily from $ 25,000 to $ 250,000 per claim , depending on the terms of the policy in the applicable policy year , up to an aggregate amount . the company is vigorously defending against all known claims . phantom stock the company uses the black-scholes option pricing model as its method for determining fair value of the units . the company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the units . the compensation expense ( including adjustment of the liability to its fair value ) from the units is recognized over the requisite service -18- period of each grant or award . the fasb asc topic 718 stock compensation requires forfeitures to be estimated at the time of grant and revised , if necessary , in subsequent periods if actual forfeitures differ from those estimates in order to derive the company 's best estimate of awards ultimately to vest . forfeitures represent only the unvested portion of a surrendered unit and are typically estimated based on historical experience . based on an analysis of the company 's historical data , which has limited experience related to any stock-based plan forfeitures , the company applied a 0 % forfeiture rate to plan units outstanding in determining its plan unit compensation expense for december 31 , 2012. accounting for income taxes the company accounts for federal tax liabilities

