this represents the second consecutive year of gross margin expansion , after 2017 increased from 8.8 % of net sales in 2016. selling , general and administrative ( “ sg & a ” ) expenses increased by $ 2.9 million in 2018. the increase in sg & a was driven by higher employee related costs , including incentive compensation , associated with the increased business levels . overall , our operating income in 2018 was $ 16.1 million , compared to $ 4.2 million in 2017 , reflecting overall improved operational results . during 2018 , we generated $ 16.6 million of cash from operating activities , and used $ 15.4 million on capital expenditures , a significant portion of which was strategic capital spending related to finished bar production at our dunkirk facility . 15 our financing activities provide d net cash of $ 2.7 million . the company completed an equity offering in the second quarter of 2018 , which included the sale of 1 .4 million shares of common stock and raised $ 32.2 million of net proceeds . the proceeds were used to pay down our revolving cre dit facility . we entered into a new credit agreement that provide d a revolving credit facility of up to $ 110.0 million and a term loan facility of $ 10.0 million . we also entered into a new markets tax credit ( “ nmtc ” ) financing agreement , which provided low interest financing for our mid-size bar cell capital project at our dunkirk , ny facility . our operating facilities are integrated , and therefore our chief operating decision maker ( “ codm ” ) views the company as one business unit . our codm sets performance goals , assesses performance and makes decisions about resource allocations on a consolidated basis . as a result of these factors , as well as the nature of the financial information available which is reviewed by our codm , we maintain one reportable segment . results of operations 2018 results compared to 2017 replace_table_token_6_th 16 market segment information : replace_table_token_7_th melt type information : replace_table_token_8_th the majority of our products are sold to service centers rather than the ultimate end market customers . the end market information in this annual report is our estimate based upon our knowledge of our customers and the grade of material sold to them , which they will in-turn sell to the ultimate end market customer . end market information : replace_table_token_9_th net sales : net sales for the year ended december 31 , 2018 increased $ 53.3 million , or 26.3 % , compared to 2017. the increase in our sales reflects a 13.5 % increase in consolidated tons shipped , as demand for our products increased as a result of strengthening market conditions throughout 2018 , and a 11.3 % increase in sales dollars per shipped ton . the increase in sales dollars per shipped ton was driven by improved product mix , increased surcharges , and base price increases implemented during the year . 17 our product sales to all of our end markets except power generation increased as shown in the above table . our premium alloy sales reached a record level of $ 41.1 mill ion , or 16.1 % of total sales , for the year ended december 31 , 201 8 , compared to $ 27.3 million , or 13.5 % of total sales , for the year ended december 31 , 201 7 . our premium alloy sales are primarily for the a erospace end market . gross margin : our gross margin , as a percentage of net sales , increased to 14.8 % in 2018 from 11.4 % in 2017. the increase in gross margin is a result of better alignment of melt costs and surcharges for the majority of the current year , and the realization of manufacturing and productivity savings . gross margin in 2018 was adversely impacted toward the end of the year by the misalignment of customer surcharges and melt costs . selling , general and administrative expenses : our sg & a expenses consist primarily of employee costs including salaries , incentive compensation , payroll taxes and benefit related costs , legal and accounting services , share compensation and insurance costs . our sg & a expenses increased by $ 2.9 million for the year ended december 31 , 2018 compared to 2017. the increase is driven by higher employee related costs , including incentive compensation , consistent with increased business activity during the year . as a percentage of sales , our sg & a expenses were 8.5 % in 2018 compared to 9.3 % in 2017. interest expense and deferred financing amortization : our interest costs on our debt was $ 4.0 million for the years ended december 31 , 2018 and 2017. although our debt levels were substantially reduced for the second half of the 2018 , the variable interest rates charged on our credit agreement debt increased steadily throughout the year . the interest rate on our variable rate debt is determined by a libor-based rate plus an applicable margin based upon achieving certain ratios . other income : other income was $ 0.8 million in 2018 compared to less than $ 0.1 million in 2017. this increase is due to a favorable legal settlement of $ 0.7 million received in the second quarter of 2018. provision ( benefit ) from income taxes : the 2018 income tax provision is $ 1.9 million , compared to an income tax benefit of $ 7.6 million for 2017. the significant components of the current year tax provision include the federal statutory rate of 21 % , offset by the benefit of research and development tax credits . story_separator_special_tag million has been classified within current portion of long-term debt . additionally , the company has the option to further extend the maturity date of the notes to march 17 , 2021. extending the maturity date of the notes to march 17 , 2021 would require a principal payment in the aggregate amount of $ 2.0 million to be made in march 2020. the notes bore interest at a rate of 5.0 % per year through and including august 17 , 2017 and bear a rate of 6.0 % per year from and after august 18 , 2017. through and including june 18 , 2017 , all accrued and unpaid interest was payable semi-annually in arrears on each june 18 and december 18. after june 18 , 2017 , all accrued and unpaid interest is payable quarterly in arrears on each september 18 , december 18 , march 18 and june 18. the holder had the right to elect at any time on or prior to august 17 , 2017 to convert all or any portion of the outstanding principal amount of the notes . the holder 's conversion rights expired and are no longer subject to exercise . capital leases the company enters into capital lease arrangements from time to time , and the capital assets and obligations are recorded at the present value of minimum lease payments . the assets are included in property , plant and equipment , net on the consolidated balance sheets , and are depreciated over the respective lease terms which range from three to five years . the long-term component of the capital lease obligations is included in long-term debt and the current component is included in current portion of long-term debt . during 2017 , the company entered into capital lease agreements for which the net present value of the minimum lease payments , at inception , was $ 0.5 million . these amounts have been excluded from the consolidated statements of cash flows as they are non-cash . share-based activity we granted stock options and issued shares of our common stock to officers , employees , and non-employee directors during 2018 , 2017 and 2016 through our incentive compensation plans . refer to note 11 for further information . 24 contractual obligations at december 31 , 2018 , we had the following contractual principal , interest and purchase obligations : replace_table_token_14_th ( a ) amounts include interest expense , which was estimated based upon the december 31 , 2018 interest rate for our debt and assumes that debt will not be repaid until its maturity . the less than 1 year period includes a $ 2 million required principal payment on the notes in 2019. the 1-3 years period includes the maturity of the remaining $ 17 million of the notes . ( b ) purchase obligations include the value of all open purchase orders with established quantities and purchase prices as well as minimum purchase commitments and operating leases . contingent items product claims . we are subject to various claims and legal actions that arise in the normal course of conducting business . there were no material product claims outstanding at december 31 , 2018. environmental matters . we , as well as other steel companies , are subject to demanding environmental standards imposed by federal , state and local environmental laws and regulations . we are not aware of any environmental condition that currently exists at any of our facilities that are probable or reasonably possible of having a material impact on our results of operations or liquidity . we are aware of energy usage concerns relating to climate change ; however , we are not aware of any pending regulations that are expected to have a material impact on our results of operations or liquidity . legal matters . from time to time , various lawsuits and claims have been or may be asserted against us relating to the conduct of our business , including routine litigation relating to commercial and employment matters . the ultimate cost and outcome of any litigation or claim can not be predicted with certainty . management believes , based on information presently available , that the likelihood that the ultimate outcome of any such pending matter will have a material adverse effect on its financial condition , or liquidity or a material impact to its results of operations is remote , although the resolution of one or more of these matters may have a material adverse effect on its results of operations for the period in which the resolution occurs . critical accounting estimates the company 's revenues are primarily composed of sales of products . revenue from the sale of products is recognized when the company satisfies its performance obligation under a contract by transferring control of the promised product to its customer , which in most cases coincides with shipment of the related product . certain sales qualify for over-time revenue recognition . sales of certain specified product grades and shapes , and sales from conversion services , are recognized over-time . the company 's identification of and accounting for these sales is discussed further in note 2. management regularly monitors the ability to collect its unpaid sales invoices and the valuation of its receivables . the allowance for doubtful accounts includes specific reserves for the value of outstanding invoices issued to customers that are deemed potentially not collectible . inventories are stated at the lower of cost or net realizable value . the cost of inventory is principally determined by the weighted average cost method for material and operation costs . an inventory reserve is provided for material on hand for which management believes cost exceeds net realizable value . we reserve for slow-moving inventory and inventory that is being evaluated under our quality control process . the reserves are based upon management 's expected method of disposition . 25 property , plant and equipment ( “ pp

net cash provided by operating activities during 2018 , we generated net cash from operating activities of $ 16.6 million . our managed working capital , defined as net accounts receivable plus net inventory minus accounts payable , used $ 22.7 million of cash . inventories increased by $ 20.4 million to support increased demand and increased business activity . accounts receivable increased by $ 7.6 million due to increased sales in the fourth quarter of 2018 compared to the fourth quarter of the prior year . accounts payable increased by $ 5.3 million due to increased business activity levels and timing of payments . net income adjusted for non-cash expenses generated $ 32.8 million and all other operating activities generated $ 6.5 million of cash in 2018. during 2017 , we generated net cash from operating activities of $ 1.1 million . our managed working capital , defined as net accounts receivable plus net inventory minus accounts payable , used $ 18.8 million of cash from operations . inventories increased by $ 27.4 million primarily due to increased demand , accounts receivable increased by $ 5.6 million due to increased sales in the fourth quarter of 2017 , compared to the fourth quarter of 2016 , and accounts payable increased by $ 14.2 million due to increased activity levels in the fourth quarter of 2017 , compared to the fourth quarter of 2016. net income adjusted for non-cash expenses generated $ 20.3 million and all other operating activities used approximately $ 0.4 million of cash in 2017. net cash used in investing activities our capital spending was $ 15.4 million during 2018 and $ 8.0 million during 2017. the increase is due to strategic capital spending at our dunkirk , ny facility to install a new mid-size bar finishing operation . net cash used in financing activities during 2018 , financing activities provided $ 2.7 million in cash . we generated $ 32.2 million of cash through net proceeds from the equity offering , which we used to repay amounts outstanding under the company 's credit facility .


 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.
     ```net cash provided by operating activities during 2018 , we generated net cash from operating activities of $ 16.6 million . our managed working capital , defined as net accounts receivable plus net inventory minus accounts payable , used $ 22.7 million of cash . inventories increased by $ 20.4 million to support increased demand and increased business activity . accounts receivable increased by $ 7.6 million due to increased sales in the fourth quarter of 2018 compared to the fourth quarter of the prior year . accounts payable increased by $ 5.3 million due to increased business activity levels and timing of payments . net income adjusted for non-cash expenses generated $ 32.8 million and all other operating activities generated $ 6.5 million of cash in 2018. during 2017 , we generated net cash from operating activities of $ 1.1 million . our managed working capital , defined as net accounts receivable plus net inventory minus accounts payable , used $ 18.8 million of cash from operations . inventories increased by $ 27.4 million primarily due to increased demand , accounts receivable increased by $ 5.6 million due to increased sales in the fourth quarter of 2017 , compared to the fourth quarter of 2016 , and accounts payable increased by $ 14.2 million due to increased activity levels in the fourth quarter of 2017 , compared to the fourth quarter of 2016. net income adjusted for non-cash expenses generated $ 20.3 million and all other operating activities used approximately $ 0.4 million of cash in 2017. net cash used in investing activities our capital spending was $ 15.4 million during 2018 and $ 8.0 million during 2017. the increase is due to strategic capital spending at our dunkirk , ny facility to install a new mid-size bar finishing operation . net cash used in financing activities during 2018 , financing activities provided $ 2.7 million in cash . we generated $ 32.2 million of cash through net proceeds from the equity offering , which we used to repay amounts outstanding under the company 's credit facility .
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 Suspicious Activity Report : this represents the second consecutive year of gross margin expansion , after 2017 increased from 8.8 % of net sales in 2016. selling , general and administrative ( “ sg & a ” ) expenses increased by $ 2.9 million in 2018. the increase in sg & a was driven by higher employee related costs , including incentive compensation , associated with the increased business levels . overall , our operating income in 2018 was $ 16.1 million , compared to $ 4.2 million in 2017 , reflecting overall improved operational results . during 2018 , we generated $ 16.6 million of cash from operating activities , and used $ 15.4 million on capital expenditures , a significant portion of which was strategic capital spending related to finished bar production at our dunkirk facility . 15 our financing activities provide d net cash of $ 2.7 million . the company completed an equity offering in the second quarter of 2018 , which included the sale of 1 .4 million shares of common stock and raised $ 32.2 million of net proceeds . the proceeds were used to pay down our revolving cre dit facility . we entered into a new credit agreement that provide d a revolving credit facility of up to $ 110.0 million and a term loan facility of $ 10.0 million . we also entered into a new markets tax credit ( “ nmtc ” ) financing agreement , which provided low interest financing for our mid-size bar cell capital project at our dunkirk , ny facility . our operating facilities are integrated , and therefore our chief operating decision maker ( “ codm ” ) views the company as one business unit . our codm sets performance goals , assesses performance and makes decisions about resource allocations on a consolidated basis . as a result of these factors , as well as the nature of the financial information available which is reviewed by our codm , we maintain one reportable segment . results of operations 2018 results compared to 2017 replace_table_token_6_th 16 market segment information : replace_table_token_7_th melt type information : replace_table_token_8_th the majority of our products are sold to service centers rather than the ultimate end market customers . the end market information in this annual report is our estimate based upon our knowledge of our customers and the grade of material sold to them , which they will in-turn sell to the ultimate end market customer . end market information : replace_table_token_9_th net sales : net sales for the year ended december 31 , 2018 increased $ 53.3 million , or 26.3 % , compared to 2017. the increase in our sales reflects a 13.5 % increase in consolidated tons shipped , as demand for our products increased as a result of strengthening market conditions throughout 2018 , and a 11.3 % increase in sales dollars per shipped ton . the increase in sales dollars per shipped ton was driven by improved product mix , increased surcharges , and base price increases implemented during the year . 17 our product sales to all of our end markets except power generation increased as shown in the above table . our premium alloy sales reached a record level of $ 41.1 mill ion , or 16.1 % of total sales , for the year ended december 31 , 201 8 , compared to $ 27.3 million , or 13.5 % of total sales , for the year ended december 31 , 201 7 . our premium alloy sales are primarily for the a erospace end market . gross margin : our gross margin , as a percentage of net sales , increased to 14.8 % in 2018 from 11.4 % in 2017. the increase in gross margin is a result of better alignment of melt costs and surcharges for the majority of the current year , and the realization of manufacturing and productivity savings . gross margin in 2018 was adversely impacted toward the end of the year by the misalignment of customer surcharges and melt costs . selling , general and administrative expenses : our sg & a expenses consist primarily of employee costs including salaries , incentive compensation , payroll taxes and benefit related costs , legal and accounting services , share compensation and insurance costs . our sg & a expenses increased by $ 2.9 million for the year ended december 31 , 2018 compared to 2017. the increase is driven by higher employee related costs , including incentive compensation , consistent with increased business activity during the year . as a percentage of sales , our sg & a expenses were 8.5 % in 2018 compared to 9.3 % in 2017. interest expense and deferred financing amortization : our interest costs on our debt was $ 4.0 million for the years ended december 31 , 2018 and 2017. although our debt levels were substantially reduced for the second half of the 2018 , the variable interest rates charged on our credit agreement debt increased steadily throughout the year . the interest rate on our variable rate debt is determined by a libor-based rate plus an applicable margin based upon achieving certain ratios . other income : other income was $ 0.8 million in 2018 compared to less than $ 0.1 million in 2017. this increase is due to a favorable legal settlement of $ 0.7 million received in the second quarter of 2018. provision ( benefit ) from income taxes : the 2018 income tax provision is $ 1.9 million , compared to an income tax benefit of $ 7.6 million for 2017. the significant components of the current year tax provision include the federal statutory rate of 21 % , offset by the benefit of research and development tax credits . story_separator_special_tag million has been classified within current portion of long-term debt . additionally , the company has the option to further extend the maturity date of the notes to march 17 , 2021. extending the maturity date of the notes to march 17 , 2021 would require a principal payment in the aggregate amount of $ 2.0 million to be made in march 2020. the notes bore interest at a rate of 5.0 % per year through and including august 17 , 2017 and bear a rate of 6.0 % per year from and after august 18 , 2017. through and including june 18 , 2017 , all accrued and unpaid interest was payable semi-annually in arrears on each june 18 and december 18. after june 18 , 2017 , all accrued and unpaid interest is payable quarterly in arrears on each september 18 , december 18 , march 18 and june 18. the holder had the right to elect at any time on or prior to august 17 , 2017 to convert all or any portion of the outstanding principal amount of the notes . the holder 's conversion rights expired and are no longer subject to exercise . capital leases the company enters into capital lease arrangements from time to time , and the capital assets and obligations are recorded at the present value of minimum lease payments . the assets are included in property , plant and equipment , net on the consolidated balance sheets , and are depreciated over the respective lease terms which range from three to five years . the long-term component of the capital lease obligations is included in long-term debt and the current component is included in current portion of long-term debt . during 2017 , the company entered into capital lease agreements for which the net present value of the minimum lease payments , at inception , was $ 0.5 million . these amounts have been excluded from the consolidated statements of cash flows as they are non-cash . share-based activity we granted stock options and issued shares of our common stock to officers , employees , and non-employee directors during 2018 , 2017 and 2016 through our incentive compensation plans . refer to note 11 for further information . 24 contractual obligations at december 31 , 2018 , we had the following contractual principal , interest and purchase obligations : replace_table_token_14_th ( a ) amounts include interest expense , which was estimated based upon the december 31 , 2018 interest rate for our debt and assumes that debt will not be repaid until its maturity . the less than 1 year period includes a $ 2 million required principal payment on the notes in 2019. the 1-3 years period includes the maturity of the remaining $ 17 million of the notes . ( b ) purchase obligations include the value of all open purchase orders with established quantities and purchase prices as well as minimum purchase commitments and operating leases . contingent items product claims . we are subject to various claims and legal actions that arise in the normal course of conducting business . there were no material product claims outstanding at december 31 , 2018. environmental matters . we , as well as other steel companies , are subject to demanding environmental standards imposed by federal , state and local environmental laws and regulations . we are not aware of any environmental condition that currently exists at any of our facilities that are probable or reasonably possible of having a material impact on our results of operations or liquidity . we are aware of energy usage concerns relating to climate change ; however , we are not aware of any pending regulations that are expected to have a material impact on our results of operations or liquidity . legal matters . from time to time , various lawsuits and claims have been or may be asserted against us relating to the conduct of our business , including routine litigation relating to commercial and employment matters . the ultimate cost and outcome of any litigation or claim can not be predicted with certainty . management believes , based on information presently available , that the likelihood that the ultimate outcome of any such pending matter will have a material adverse effect on its financial condition , or liquidity or a material impact to its results of operations is remote , although the resolution of one or more of these matters may have a material adverse effect on its results of operations for the period in which the resolution occurs . critical accounting estimates the company 's revenues are primarily composed of sales of products . revenue from the sale of products is recognized when the company satisfies its performance obligation under a contract by transferring control of the promised product to its customer , which in most cases coincides with shipment of the related product . certain sales qualify for over-time revenue recognition . sales of certain specified product grades and shapes , and sales from conversion services , are recognized over-time . the company 's identification of and accounting for these sales is discussed further in note 2. management regularly monitors the ability to collect its unpaid sales invoices and the valuation of its receivables . the allowance for doubtful accounts includes specific reserves for the value of outstanding invoices issued to customers that are deemed potentially not collectible . inventories are stated at the lower of cost or net realizable value . the cost of inventory is principally determined by the weighted average cost method for material and operation costs . an inventory reserve is provided for material on hand for which management believes cost exceeds net realizable value . we reserve for slow-moving inventory and inventory that is being evaluated under our quality control process . the reserves are based upon management 's expected method of disposition . 25 property , plant and equipment ( “ pp

