domestic sales increased 12.4 % or $ 30.0 million and international sales increased 3.5 % or $ 4.9 million compared to 2017. gross profit was $ 109.9 million for 2018 , resulting in gross margin of 26.5 % , compared to gross profit of $ 101.2 million and gross margin of 26.7 % for 2017. gross margin decreased 20 basis points largely driven by an unfavorable lifo impact of 70 basis points , partially offset by lower healthcare expense . selling , general and administrative ( sg & a ) expenses were $ 59.3 million and 14.3 % of net sales for 2018 compared to $ 55.5 million and 14.6 % of net sales for 2017. in 2018 , a special cash bonus paid to all employees impacted sg & a expenses by $ 1.3 million or 30 basis points . excluding this special cash bonus , sg & a expenses as a percentage of sales improved 60 basis points as a result of leverage from increased sales volume . operating income was $ 50.6 million , resulting in operating margin of 12.2 % for 2018 , compared to operating income of $ 41.6 million and operating margin of 11.0 % for 2017. in 2018 , a special cash bonus paid to all employees impacted operating income by $ 1.3 million or 30 basis points . included in 2017 operating income were non-cash impairment charges of $ 4.1 million or 100 basis points . excluding these items , operating margin improved 50 basis points due principally to leverage from increased sales volume and lower healthcare expense , partially offset by an unfavorable lifo impact . the company 's effective tax rate decreased to 20.5 % for 2018 from 32.6 % for 2017 , due primarily to the impact of the u.s. tax cuts and jobs act ( tax act ) enacted in december 2017. the effective tax rate for 2018 also benefited by 120 basis points from pension plan contributions eligible for tax deduction at the 35.0 % federal corporate tax rate for 2017 rather than the 21.0 % rate for 2018. the company 's current estimate of its full year 2019 effective income tax rate is between 22 % and 24 % . net income was a record $ 40.0 million for 2018 compared to $ 26.6 million in 2017 , and earnings per share were a record $ 1.53 for 2018 compared to $ 1.02 in 2017. in 2018 earnings were reduced by an unfavorable lifo impact of $ 0.12 per share , non-cash pension settlement charges of $ 0.08 per share and a special cash bonus paid to all employees of $ 0.04 per share . in 2017 earnings were reduced by an unfavorable lifo impact of $ 0.03 per share , non-cash pension settlement charges of $ 0.10 per share and non-cash impairment charges of $ 0.10 per share . 13 the company 's backlog of orders was $ 113.7 million at december 31 , 2018 and essentially unchanged compared to $ 114.0 million at december 31 , 2017. incoming orders increased 5.7 % in 2018 compared to 2017 and included increases in almost all the markets the company serves , most notably in the municipal , construction , petroleum and industrial markets . on january 24 , 2019 , the board of directors authorized the payment of a quarterly dividend of $ 0.135 per share , representing the 276th consecutive quarterly dividend to be paid by the company . during 2018 , the company again paid increased dividends and thereby attained its 46th consecutive year of increased dividends . these consecutive years of increases continue to position gorman-rupp in the top 50 of all u.s. public companies with respect to number of years of increased dividend payments . the regular dividend yield at december 31 , 2018 was 1.7 % . the company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends . however , any future dividends will be reviewed individually and declared by our board of directors at its discretion , dependent on our assessment of the company 's financial condition and business outlook at the applicable time . outlook we are pleased with the company 's 2018 financial results . overall demand remains solid , as incoming orders increased 5.7 % in 2018 as compared to 2017 across the majority of our markets . we ended 2018 with a backlog of orders of $ 113.7 million which is consistent with the backlog at the end of 2017. as material costs have risen primarily as a result of inflation and tariffs , we have implemented pricing actions that we expect to offset these inflationary pressures and will continue to closely monitor material costs and pricing going forward . our underlying fundamentals remain strong and we believe that we remain well positioned to drive long-term growth . our strong balance sheet provides us with the flexibility to continue to evaluate acquisition opportunities and new product development that we expect will help add value to our operations over the longer term . in addition , increased emphasis on infrastructure improvements at both the federal and state levels , coupled with the impact of lower taxes , could be other positive factors over the next several years . results of operations  2018 compared to 2017 : in 2017 , due primarily to the continued decreased demand for barge pumps for the marine transportation market driven by low oil prices and overcapacity of inland barges , the bayou city pump company ( bayou ) reporting unit recorded pre-tax non-cash goodwill and intangible asset impairment charges of $ 4.1 million . see note 9 to the consolidated financial statements , goodwill and other intangible assets . story_separator_special_tag the company has elected to account for the gilti tax in the period in which it is incurred . the basic principles related to accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity 's financial statements or tax returns . realization of the company 's deferred tax assets is principally dependent upon the company 's achievement of projected future taxable income , which management believes will be sufficient to fully utilize the deferred tax assets recorded , with the exception of deferred tax associated with certain state tax credits for which a valuation allowance has been recognized . the company is subject to income taxes in the u.s. federal and various state , local and foreign jurisdictions . income tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply . with few exceptions , the company is no longer subject to u.s. federal , state and local , or non-u.s. income tax examinations by tax authorities for the years before 2014. the company has $ 55,000 of unrecognized tax benefits recorded for periods for which the relevant statutes of limitations expire in the next 12 months . the company recognizes interest and penalties related to unrecognized tax benefits in income tax expense for all periods presented . the company accrued approximately $ 224,000 , $ 168,000 and $ 98,000 for the payment of interest and penalties at december 31 , 2018 , 2017 and 2016 , respectively . 22 goodwill and other intangibles the company accounts for goodwill in a purchase business combination as the excess of the cost over the fair value of net assets acquired . business combinations can also result in other intangible assets being recognized . amortization of intangible assets , if applicable , occurs over their estimated useful lives . goodwill is tested annually for impairment as of october 1 , or whenever events or changes in circumstances indicate there may be a possible permanent loss of value in accordance with asc 350 , intangibles - goodwill and other. goodwill is tested for impairment at the reporting unit level and is based on the net assets for each reporting unit , including goodwill and intangible assets . the company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount . if , after assessing the totality of events or circumstances , an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount , then performing a quantitative impairment assessment is unnecessary . in assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount , we identify and assess relevant drivers of fair value and events and circumstances that may impact the fair value and the carrying amount of the reporting unit . the identification of relevant events and circumstances and how these may impact a reporting unit 's fair value or carrying amount involve significant judgments and assumptions . the judgments and assumptions include the identification of macroeconomic conditions , industry and market considerations , cost factors , overall financial performance , company-specific events and share price trends and making the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact . when performing a quantitative assessment of goodwill impairment if necessary , or in years where we elect to do so , a discounted cash flow model is used to estimate the fair value of each reporting unit , which considers forecasted cash flows discounted at an estimated weighted-average cost of capital . the forecasted cash flows are based on the company 's long-term operating plan and the weighted-average cost of capital is an estimate of the overall after-tax rate of return . other valuation techniques including comparative market multiples are used when appropriate . discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units . based upon our fiscal 2018 and 2017 quantitative and qualitative impairment analyses , except for the bayou reporting unit , the company concluded that it is more likely than not that the fair value of our reporting units continues to exceed the respective carrying amounts . in 2017 , due primarily to the decreased demand for barge pumps for the marine transportation market driven by low oil prices and overcapacity of inland barges , the bayou reporting unit recorded pre-tax non-cash goodwill impairment charges of $ 0.9 million . the company 's annual impairment analysis performed as of october 1 , 2018 concluded that national pump company 's ( national ) fair value exceeded its carrying value by approximately 9 % . a sensitivity analysis was performed for the national reporting unit , assuming a hypothetical 50 basis point decrease in the expected long-term growth rate or a hypothetical 50 basis point increase in the weighted average cost of capital , and both scenarios independently yielded an estimated fair value for the national reporting unit slightly above carrying value . if national fails to experience growth or revises its long-term projections downward , it could be subject to impairment charges in the future . goodwill relating to the national reporting unit represents 4 % of the company 's december 31 , 2018 total assets . see note 9 to the consolidated financial statements , goodwill and other intangible assets . other indefinite-lived intangible assets primarily consist of trademarks and trade names

liquidity and sources of capital cash and cash equivalents totaled $ 46.5 million and there was no outstanding bank debt at december 31 , 2018. in addition , the company had $ 23.1 million available in bank lines of credit after deducting $ 7.9 million in outstanding letters of credit primarily related to customer orders . the company was in compliance with its debt covenants , including limits on additional borrowings and maintenance of certain operating and financial ratios , at all times in 2018 and 2017. capital expenditures for 2019 , which are expected to consist principally of building expansion and machinery and equipment purchases , are estimated to be in the range of $ 15- $ 20 million and are expected to be financed through internally generated funds . during 2018 , 2017 and 2016 , the company financed its capital improvements and working capital requirements principally through internally generated funds . free cash flow , a non-gaap measure for reporting cash flow , is defined by the company as adjusted earnings before interest , income taxes and depreciation and amortization , less capital expenditures and dividends . 18 the company believes free cash flow provides investors with an important perspective on cash available for investments , acquisitions and working capital requirements . the following table reconciles adjusted earnings before interest , income taxes and depreciation and amortization as reconciled above to free cash flow : replace_table_token_15_th financial cash flow replace_table_token_16_th the change in cash provided by operating activities in 2018 compared to 2017 was primarily due to an increase in inventories and accounts receivable driven by increased sales volume , and increased income tax payments . the change in cash provided by operating activities in 2017 compared to 2016 was primarily due to a decrease in accounts receivable , more than offset by increased inventories and decreased commissions payable and benefit obligations .


 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 sources of capital cash and cash equivalents totaled $ 46.5 million and there was no outstanding bank debt at december 31 , 2018. in addition , the company had $ 23.1 million available in bank lines of credit after deducting $ 7.9 million in outstanding letters of credit primarily related to customer orders . the company was in compliance with its debt covenants , including limits on additional borrowings and maintenance of certain operating and financial ratios , at all times in 2018 and 2017. capital expenditures for 2019 , which are expected to consist principally of building expansion and machinery and equipment purchases , are estimated to be in the range of $ 15- $ 20 million and are expected to be financed through internally generated funds . during 2018 , 2017 and 2016 , the company financed its capital improvements and working capital requirements principally through internally generated funds . free cash flow , a non-gaap measure for reporting cash flow , is defined by the company as adjusted earnings before interest , income taxes and depreciation and amortization , less capital expenditures and dividends . 18 the company believes free cash flow provides investors with an important perspective on cash available for investments , acquisitions and working capital requirements . the following table reconciles adjusted earnings before interest , income taxes and depreciation and amortization as reconciled above to free cash flow : replace_table_token_15_th financial cash flow replace_table_token_16_th the change in cash provided by operating activities in 2018 compared to 2017 was primarily due to an increase in inventories and accounts receivable driven by increased sales volume , and increased income tax payments . the change in cash provided by operating activities in 2017 compared to 2016 was primarily due to a decrease in accounts receivable , more than offset by increased inventories and decreased commissions payable and benefit obligations .
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 Suspicious Activity Report : domestic sales increased 12.4 % or $ 30.0 million and international sales increased 3.5 % or $ 4.9 million compared to 2017. gross profit was $ 109.9 million for 2018 , resulting in gross margin of 26.5 % , compared to gross profit of $ 101.2 million and gross margin of 26.7 % for 2017. gross margin decreased 20 basis points largely driven by an unfavorable lifo impact of 70 basis points , partially offset by lower healthcare expense . selling , general and administrative ( sg & a ) expenses were $ 59.3 million and 14.3 % of net sales for 2018 compared to $ 55.5 million and 14.6 % of net sales for 2017. in 2018 , a special cash bonus paid to all employees impacted sg & a expenses by $ 1.3 million or 30 basis points . excluding this special cash bonus , sg & a expenses as a percentage of sales improved 60 basis points as a result of leverage from increased sales volume . operating income was $ 50.6 million , resulting in operating margin of 12.2 % for 2018 , compared to operating income of $ 41.6 million and operating margin of 11.0 % for 2017. in 2018 , a special cash bonus paid to all employees impacted operating income by $ 1.3 million or 30 basis points . included in 2017 operating income were non-cash impairment charges of $ 4.1 million or 100 basis points . excluding these items , operating margin improved 50 basis points due principally to leverage from increased sales volume and lower healthcare expense , partially offset by an unfavorable lifo impact . the company 's effective tax rate decreased to 20.5 % for 2018 from 32.6 % for 2017 , due primarily to the impact of the u.s. tax cuts and jobs act ( tax act ) enacted in december 2017. the effective tax rate for 2018 also benefited by 120 basis points from pension plan contributions eligible for tax deduction at the 35.0 % federal corporate tax rate for 2017 rather than the 21.0 % rate for 2018. the company 's current estimate of its full year 2019 effective income tax rate is between 22 % and 24 % . net income was a record $ 40.0 million for 2018 compared to $ 26.6 million in 2017 , and earnings per share were a record $ 1.53 for 2018 compared to $ 1.02 in 2017. in 2018 earnings were reduced by an unfavorable lifo impact of $ 0.12 per share , non-cash pension settlement charges of $ 0.08 per share and a special cash bonus paid to all employees of $ 0.04 per share . in 2017 earnings were reduced by an unfavorable lifo impact of $ 0.03 per share , non-cash pension settlement charges of $ 0.10 per share and non-cash impairment charges of $ 0.10 per share . 13 the company 's backlog of orders was $ 113.7 million at december 31 , 2018 and essentially unchanged compared to $ 114.0 million at december 31 , 2017. incoming orders increased 5.7 % in 2018 compared to 2017 and included increases in almost all the markets the company serves , most notably in the municipal , construction , petroleum and industrial markets . on january 24 , 2019 , the board of directors authorized the payment of a quarterly dividend of $ 0.135 per share , representing the 276th consecutive quarterly dividend to be paid by the company . during 2018 , the company again paid increased dividends and thereby attained its 46th consecutive year of increased dividends . these consecutive years of increases continue to position gorman-rupp in the top 50 of all u.s. public companies with respect to number of years of increased dividend payments . the regular dividend yield at december 31 , 2018 was 1.7 % . the company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends . however , any future dividends will be reviewed individually and declared by our board of directors at its discretion , dependent on our assessment of the company 's financial condition and business outlook at the applicable time . outlook we are pleased with the company 's 2018 financial results . overall demand remains solid , as incoming orders increased 5.7 % in 2018 as compared to 2017 across the majority of our markets . we ended 2018 with a backlog of orders of $ 113.7 million which is consistent with the backlog at the end of 2017. as material costs have risen primarily as a result of inflation and tariffs , we have implemented pricing actions that we expect to offset these inflationary pressures and will continue to closely monitor material costs and pricing going forward . our underlying fundamentals remain strong and we believe that we remain well positioned to drive long-term growth . our strong balance sheet provides us with the flexibility to continue to evaluate acquisition opportunities and new product development that we expect will help add value to our operations over the longer term . in addition , increased emphasis on infrastructure improvements at both the federal and state levels , coupled with the impact of lower taxes , could be other positive factors over the next several years . results of operations  2018 compared to 2017 : in 2017 , due primarily to the continued decreased demand for barge pumps for the marine transportation market driven by low oil prices and overcapacity of inland barges , the bayou city pump company ( bayou ) reporting unit recorded pre-tax non-cash goodwill and intangible asset impairment charges of $ 4.1 million . see note 9 to the consolidated financial statements , goodwill and other intangible assets . story_separator_special_tag the company has elected to account for the gilti tax in the period in which it is incurred . the basic principles related to accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity 's financial statements or tax returns . realization of the company 's deferred tax assets is principally dependent upon the company 's achievement of projected future taxable income , which management believes will be sufficient to fully utilize the deferred tax assets recorded , with the exception of deferred tax associated with certain state tax credits for which a valuation allowance has been recognized . the company is subject to income taxes in the u.s. federal and various state , local and foreign jurisdictions . income tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply . with few exceptions , the company is no longer subject to u.s. federal , state and local , or non-u.s. income tax examinations by tax authorities for the years before 2014. the company has $ 55,000 of unrecognized tax benefits recorded for periods for which the relevant statutes of limitations expire in the next 12 months . the company recognizes interest and penalties related to unrecognized tax benefits in income tax expense for all periods presented . the company accrued approximately $ 224,000 , $ 168,000 and $ 98,000 for the payment of interest and penalties at december 31 , 2018 , 2017 and 2016 , respectively . 22 goodwill and other intangibles the company accounts for goodwill in a purchase business combination as the excess of the cost over the fair value of net assets acquired . business combinations can also result in other intangible assets being recognized . amortization of intangible assets , if applicable , occurs over their estimated useful lives . goodwill is tested annually for impairment as of october 1 , or whenever events or changes in circumstances indicate there may be a possible permanent loss of value in accordance with asc 350 , intangibles - goodwill and other. goodwill is tested for impairment at the reporting unit level and is based on the net assets for each reporting unit , including goodwill and intangible assets . the company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount . if , after assessing the totality of events or circumstances , an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount , then performing a quantitative impairment assessment is unnecessary . in assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount , we identify and assess relevant drivers of fair value and events and circumstances that may impact the fair value and the carrying amount of the reporting unit . the identification of relevant events and circumstances and how these may impact a reporting unit 's fair value or carrying amount involve significant judgments and assumptions . the judgments and assumptions include the identification of macroeconomic conditions , industry and market considerations , cost factors , overall financial performance , company-specific events and share price trends and making the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact . when performing a quantitative assessment of goodwill impairment if necessary , or in years where we elect to do so , a discounted cash flow model is used to estimate the fair value of each reporting unit , which considers forecasted cash flows discounted at an estimated weighted-average cost of capital . the forecasted cash flows are based on the company 's long-term operating plan and the weighted-average cost of capital is an estimate of the overall after-tax rate of return . other valuation techniques including comparative market multiples are used when appropriate . discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units . based upon our fiscal 2018 and 2017 quantitative and qualitative impairment analyses , except for the bayou reporting unit , the company concluded that it is more likely than not that the fair value of our reporting units continues to exceed the respective carrying amounts . in 2017 , due primarily to the decreased demand for barge pumps for the marine transportation market driven by low oil prices and overcapacity of inland barges , the bayou reporting unit recorded pre-tax non-cash goodwill impairment charges of $ 0.9 million . the company 's annual impairment analysis performed as of october 1 , 2018 concluded that national pump company 's ( national ) fair value exceeded its carrying value by approximately 9 % . a sensitivity analysis was performed for the national reporting unit , assuming a hypothetical 50 basis point decrease in the expected long-term growth rate or a hypothetical 50 basis point increase in the weighted average cost of capital , and both scenarios independently yielded an estimated fair value for the national reporting unit slightly above carrying value . if national fails to experience growth or revises its long-term projections downward , it could be subject to impairment charges in the future . goodwill relating to the national reporting unit represents 4 % of the company 's december 31 , 2018 total assets . see note 9 to the consolidated financial statements , goodwill and other intangible assets . other indefinite-lived intangible assets primarily consist of trademarks and trade names

