As of October 26, 2017,25, 2018, there were 40,166,80040,263,296 shares of common stock outstanding.

ThroughAll of our subsidiaries are wholly owned. From July 31, 2014 to June 29, 2017, we owned a 60% interest in Pool Systems Pty. Ltd. (PSL), an Australian company. Our ownership percentage constituted a controlling interest in the acquired company, which required us to consolidate PSL’s financial position and results of operations from the date of acquisition. On June 29, 2017, we purchased the remaining 40% interest in PSL. Thus, we will continuehave continued to consolidate PSL, but there willis no longer be a separate noncontrolling interest reported on our Consolidated Statements of Income, nor Redeemable noncontrolling interest reported on our Consolidated Balance Sheets. Please see Note 6 - Redeemable Noncontrolling Interest for additional information regarding this transaction.

The Consolidated Financial Statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. All significant intercompany accounts and intercompany transactions have been eliminated.

A description of our significant accounting policies is included in our 20162017 Annual Report on Form 10-K. You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2017 Annual Report.Report on Form 10-K.  The results for our three and nine month periods ended September 30, 20172018 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2017.2018.

Under the new standard, we recognize a sale when a customer obtains control of the product, and we record the amount that reflects the consideration we expect to receive in exchange for such product. As under the previous accounting guidance, we continue to recognize a sale when a customer picks up product at any sales center, when we deliver product to their premises or job sites via our trucks or when we present the product to a third-party carrier. For bill and hold sales, we determine when the customer obtains control of the product on a case-by-case basis to determine the amount of revenue to defer each period.

We measure revenue as the amount of consideration we expect to receive in exchange for transferring our products. Consideration may vary due to volume incentives and expected customer returns. We offer volume incentives to some of our customers and account for these incentives as a reduction of sales. We estimate the amount of volume incentives earned based on our estimate of cumulative sales for the fiscal year relative to our customers’ progress toward achieving minimum purchase requirements. We record customer returns, including those associated with customer early buy programs, as a reduction of sales. Based on available information related to our customers’ returns, we record an allowance for estimated returns, which historically has not been material. We regularly review our marketing programs, coupons and customary business practices to determine if any variable consideration exists under ASC 606. Other items that we record as reductions to sales include cash discounts, pricing adjustments and credit agreement is $8.5 million,card fees related to customer payments.

The majority of our sales transactions do not contain additional performance obligations after delivery; therefore, we do not have multiple performance obligations for which is fully funded. to allocate the transaction price. We elected to continue to recognize shipping and handling costs associated with outbound freight in selling and administrative expenses.

As of September 30, 2017, the estimated realizable amount under the credit agreement is recorded within Other assets on2018, we have not completed our Consolidated Balance Sheets and is collateralized by essentiallyaccounting for all of the assetstax effects of the business.Act. We filed our federal income tax return in the third quarter of 2018, and our return to provision adjustment, which addresses the provisional tax benefit we recorded under Staff Accounting Bulletin (SAB) 118 at December 31, 2017, was not material. We have a variable interest in this entity; however, we have no decision-making authority over its activities through voting or other rights. Additionally, we have no obligation to absorb any of its losses, nor do we have the right to receive any residual returns, should either occur. We are not considered the primary beneficiaryimpact of this variable interest entity,the statutory changes from the Act on our estimated effective tax rate for 2018, including reasonable estimates of those provisions effective for the 2018 tax year. The Act also created a new requirement that certain income earned by foreign subsidiaries, global intangible low-taxed income (GILTI), be included in the gross income of their U.S. shareholder. Entities may make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or recognize such taxes as a current-period expense when incurred. We elected to treat the tax effect of GILTI as a current-period expense when incurred.

We reduce federal and thereforestate income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit. We record all excess tax benefits as a component of income tax benefit or expense in the income statement in the period in which stock options are not requiredexercised or restrictions on awards lapse. We recorded excess tax benefits of $13.9 million in the first nine months of 2018 compared to consolidate this entity’s financial statements.$7.7 million in the same period of 2017.

We account for the retirement of treasury shares as a reduction of retained earnings (deficit). As of September 30, 2017,2018, the Retained deficit on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $1,234.9$1,278.2 million and cumulative dividends of $410.9$477.1 million.

We calculate basic earnings per share (EPS) by dividing Net income attributable to Pool Corporation by the weighted average number of common shares outstanding.  We include outstanding unvested restricted stock awards of our common stock in the basic weighted average share calculation.  Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options and shares to be purchased under our employee stock purchase plan. Using the treasury stock method, the effect of dilutive securities includes these additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued. As discussed in Note 1, as a result of the adoption of ASU 2016-09, the calculation of the effect of dilutive securities now excludes any derived excess tax benefits or deficiencies from assumed future proceeds, resulting in an increase in diluted weighted average shares outstanding for the three and nine months ended September 30, 2017.

Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):

On July 4, 2017,In January 2018, we acquired New Star HoldingsTore Pty. Ltd. (doing business as Newline Pool Products)Power), a wholesale distributor of pool and spa equipment in South Australia, with one distribution center in Adelaide, Australia.

In December 2017, we acquired Kripsol Intermark Malaga S.L. (Intermark), a swimming pool equipment and supplies distributor, with one distribution centerlocation in Brisbane, Australia.southern Spain.

On April 28,In October 2017, we acquired the distribution assets of Lincoln Equipment, Inc. (Lincoln Aquatics),E-Grupa, a national distributor ofswimming pool equipment and supplies to commercial and institutional swimming pool customers,distributor, with two locationsone location in California.Croatia.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material. These acquisitions did not have a material impact on our financial position or results of operations.operations, either individually or in the aggregate.

In April 1, 2016,2017, we acquired the distribution assets of Metro Irrigation Supply Company Ltd.Lincoln Equipment, Inc. (doing business as Lincoln Aquatics), an irrigationa national distributor of equipment and landscape supply companysupplies to commercial and institutional swimming pool customers, with eight locationsone location in Texas.California.

We have completed our acquisition accounting for this acquisition. This acquisitionthese acquisitions. These acquisitions did not have a material impact on our financial position or results of operations.operations, either individually or in the aggregate.

Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts and contingent consideration related to recent acquisitions. The three levels of the fair value hierarchy under the accounting guidance are described below:

The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contractscontract and our contingent consideration liabilities (in thousands):

For determining the fair value of our interest rate swap contracts, we use significant other observable market data or assumptions (Level 2 inputs) that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.  Our fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves. We include unrealized gains in Prepaid expenses and other current assets and unrealized losses in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from our swap counterparties as an adjustment to interest expense over the life of the swaps.  We designated these swaps as cash flow hedges, and to the extent effective we record the changes in the estimated fair value of the swaps to Accumulated other comprehensive loss on our Consolidated Balance Sheets.  To the extent our interest rate swaps are determined to be ineffective, we recognize the changes in the estimated fair value of our swaps in earnings.

We currently have three interest rate swap contracts in place, which became effective on October 19, 2016. These swaps were previously forward-starting contracts that were amended in October 2015 to bring the fixed rates per our forward-starting contracts in line with current market rates and extend the hedged period for future interest payments on our Credit Facility. As amended, these swap contracts terminate on November 20, 2019. In the first nine months of 2017,2018, we recognized a benefit of $1.3$1.5 million as a result of our determination of ineffectiveness for the period. These amounts were recorded in Interest and other non-operating expenses, net on our Consolidated Statements of Income.

The following table provides additional details related to each of these amended swap contracts:

Upon amendment of the original hedge agreements, we were required to freeze the amounts related to the changes in the fair values of these swaps, which are recordedswap contracts in Accumulated other comprehensive loss. AtOn September 30, 2017, the remaining balance of the unrealized losses was $1.9 million and is being amortized over the effective period of the original forward-starting interest rate swap contracts from October 2016 to September 2018.2018, these balances became fully amortized. In the first nine months of 2017,2018, we recorded expense of $1.4 million as amortization of the unrealized loss in Interest and other non-operating expenses, net.

For the three interest rate swap contracts in effect at September 30, 2017,2018, a portion of the change in the estimated fair value between periods relates to future interest expense. Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive loss on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income. These amounts were not material in the three and nine month periods ended September 30, 20172018 and September 30, 2016.2017.

In July 2016, we entered into an additional forward-starting interest rate swap contract to extend the hedged period for future interest payments on our Credit Facility to its maturity date at that time. This swap contract will convert the variable interest rate to a fixed interest rate on borrowings under the Credit Facility. This contract becomes effective on November 20, 2019 and terminates on November 20, 2020. The following table provides additional details related to this swap contract:

Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements.  Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we continue to be in a net pay position.

Our interest rate swap and forward-starting interest rate swap contracts are subject to master netting arrangements. According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these contracts.

As of September 30, 2017,2018, our Consolidated Balance Sheets reflected $0.7$0.6 million in Accrued expenses and other current liabilities and $1.2$0.8 million in Other long-term liabilities for contingent consideration related to future payouts for our acquisitions of The Melton Corporation (Melton), which we acquired in November 2015, Metro Irrigation Supply Company Ltd. and Newline Pool Products. In determining our original estimates for contingent consideration,(Metro), which are based on a percentage of gross profit for certain products for The Melton Corporation and a multiple of gross profit for Metro Irrigation Supply Company Ltd., we applied a linear model using our best estimate of gross profit projections for fiscal yearsacquired in April 2016, to 2020. The payout for Newline Pool Products is based on a multiple of earnings for the first fiscal year of the acquisition. We based our estimate for the Newline payout on projected operating results for that year. All of our estimates of contingent consideration use Level 3 inputs as defined in the accounting guidance. The maximum total payouts for Metro Irrigation Supply Company Ltd. and Newline Pool Products over the related time periods are $1.0 million and AU$0.5 million, respectively.(Newline), which we acquired in July 2017.

In the first nine months of 2017,2018, we paid approximately $0.2 million in contingent consideration to The Melton Corporation based on 20162017 results. Since the acquisition dates, we have recorded minimalimmaterial adjustments to our original estimates based on the calculated 2017 and 2018 payouts related to the respective fiscal year ended December 31, 2016.years and estimated future payouts considering results through September 2018. Adjustments to the fair value of contingent consideration are recognized in earnings in the period in which we determine that the fair value changed. As of September 30, 2017,2018, we have determined that the contingent consideration liability was in a range of acceptable estimates for all applicable fiscal periods.

Our obligations under the Credit Facility are guaranteed by certain of our subsidiaries. The Credit Facility also contains affirmative and negative covenants and events of default customary for transactions of this type. If we default under the Credit Facility, the lenders may terminate their commitments and may require us to repay all amounts.

We account for the sale of the receivable interests as a secured borrowing on our Consolidated Balance Sheets. The receivables subject to the agreement collateralize the cash proceeds received from the third partythird-party financial institutions. We classify the entire outstanding balance as Long-term debt net on our Consolidated Balance Sheets as we intend and have the ability to refinance the obligations on a long-termlong‑term basis. We present the receivables that collateralize the cash proceeds separately as Receivables pledged under receivables facility on our Consolidated Balance Sheets.

You should read the following discussion in conjunction with Management’s Discussion and Analysis included in our 20162017 Annual Report on Form 10-K.  

For a discussion of our base business calculations, see the RESULTS OF OPERATIONS section below.

Our disclosure and analysis in this report contains forward-looking information that involves risks and uncertainties.  Our forward‑looking statements express our current expectations or forecasts of possible future results or events, including projections of earnings and other financial performance measures, statements of management’s expectations regarding our plans and objectives and industry, general economic and other forecasts of trends, future dividend payments and other matters. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.  You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “will likely result,” “outlook,” “plan,” “project,” “should” and other words and expressions of similar meaning. In addition, forward-looking statements and estimates regarding the effects of the Tax Cuts and Jobs Act, which are based on our current interpretation of this legislation and on reasonable estimates, may change as a result of new guidance issued by regulators or changes in our estimates.

No assurance can be given that the results in any forward-looking statements will be achieved and actual results may differ materially due to one or more factors, including the sensitivity of our business to weather conditions, changes in the economy and the housing market, our ability to maintain favorable relationships with suppliers and manufacturers, competition from other leisure product alternatives and mass merchants, excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in our 20162017 Annual Report on Form 10-K.  For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.

TotalAs of September 30, 2018, total net receivables, including pledged receivables, increased 13% from10% compared to September 30, 2016, including a 2% increase from acquisitions.2017, primarily reflecting sales growth. Our days sales outstanding (DSO), as calculated on a trailing four quarters basis, was 30.2 days at September 30, 2018 and 29.8 days at September 30, 2017, an improvement from 30.3 days at September 30, 2016, reflecting the effectiveness of our collection efforts.2017. Our allowance for doubtful accounts balance was $5.4 million at September 30, 2018 and $4.1 million at September 30, 2017 and $3.7 million at September 30, 2016.2017.

Net inventory levels grew 6%26% compared to levels at September 30, 2016.2017. The increase of $125.7 million between periods reflects significant inventory purchases we made in the third quarter of 2018 in advance of greater-than-normal vendor price increases, as well as purchases needed to support normal business growth, and the addition of inventories from acquisitions. The inventory reserve was $8.8 million at September 30, 2018 and $7.8 million at September 30, 2017 and $8.1 million at September 30, 2016.2017. Our inventory turns, as calculated on a trailing four quarters basis, werewas 3.4 times at September 30, 2018 and 3.5 times at both September 30, 2017 and September 30, 2016.2017.

Total debt outstanding at September 30, 20172018 was $564.6$580.7 million, an increase of $174.4 million, or 45%,up 3% compared to total debt at September 30, 2016, primarily because of share repurchases of $199.0 million over the last 12 months, as well as debt incurred to fund business driven working capital growth.2017.

For a detailed discussion of trends through 2016,2017, see the Current Trends and Outlook section of Management’s Discussion and Analysis included in Item 7 of our 20162017 Annual Report on Form 10-K.  

We project base business sales growth of 6% toapproximately 7% for 2018. After a slower than normal start in March and April, activity returned to expected levels through the full yearend of the third quarter with the main limitation being customer capacity. We believe that customer labor constraints and reduced work days due to higher rainfall in selected markets created a build up of demand in the second and third quarters, which will lead to ongoing sales growth in the fourth quarter of 2018 as demand remains strong. Due to product cost increases imposed by our vendors, which we have passed on to our customers, we also expect gross margininflation to be similarcloser to 2016, including an expected decline2% in the fourth quarter of 2018 versus the historical average of 1% to 2%. We believe this factor will benefit our gross margin in the fourth quarter of 2017 due2018 and expect our full year 2018 gross margin to anticipated product mix changes following major third quarter weather events as well as an unfavorable comparisonbe similar to fourth quarter 2016 results, which benefited by 20 basis points from an increase in the vendor incentive accrual at year-end. For the year, we have incurred growth-driven expense increases related2017.

We continue to labor, facilities expansion and delivery costs, although the growth in these types of operating expenses has moderated as we have moved throughout the year. We expect base business operating expenses aswill grow at a percentagerate that will enable us to achieve operating margin improvement of net sales for 2017 to decline between 20 and 40 basis points as compared to 2016, resulting in aapproximately 20 to 40 basis points increasefor the full year 2018 compared to 2017. Through September, our operating margin has improved 20 basis points year to date and should improve to the upper end of our 20 to 40 basis points range by the end of the fourth quarter. Changes in base businessnon-executive performance-based compensation programs that impact the timing of our expense recognition resulted in higher compensation expense in the first half of 2018, primarily in the second quarter. We believe our fourth quarter results should particularly benefit from this timing change, as we observed some benefit in the third quarter. Inflationary pressure related to labor, fuel and freight continues to rise, but we expect our productivity plans will allow these cost increases to better correlate with sales volume growth and improve our operating income as a percentage of net sales.leverage.

GivenAs discussed further in Results of Operations, our $174.4 million increase inaverage outstanding debt as offor the nine months ended September 30, 20172018 increased 14% over the priorsame period last year, and given the increase in the 30-Day LIBOR, ofour effective interest rate increased approximately 7060 basis points over last year,between periods. Based on these trends, we expect our Interest and other non-operating expenses, net for the full year 2017 towill increase by approximately $1.5 million toroughly $2.0 million over 2016, depending onin the fourth quarter borrowingsof 2018 compared to fund future share repurchases.the same period in 2017.

Our effective tax rate is dependent uponon our results of operations and may change if actual results are differentdiffer materially from our current expectations, particularly any significant changes in our geographic mix. Due to the adoption of the new accounting standard,ASU 2016-09 requirements, we expect our effective tax rate will fluctuate from quarter to quarter, particularly in periods when employees elect to exercise their vested stock options or when restrictions on share-based awards lapse. Based on our comparison of our deferred tax assetsWe recorded a $13.9 million benefit from ASU 2016-09 for share-based compensation to the current intrinsic value of the underlying awards, we expect to recognize material incomenine months ended September 30, 2018. Additional tax benefits could be recognized related to stock option exercises in periods when these transactions occur.2018 from grants that expire in years after 2018, for which we have not included any expected benefits in our guidance. The estimated impact related to ASU 2016-09 is subject to several variables,assumptions which can vary significantly, including our estimated share price and the periodperiods in which our employees will exercise shares of outstanding vested stock options.

We have updated our 2018 earnings guidance range to $5.58 to $5.78 per diluted share from $5.50 to $5.70 per diluted share, which includes the tax benefits realized from ASU 2016-09 in the first nine months of 2018.

Given the timing changes in our inventory purchasing activity in 2018, we expect that cash provided by operations will exceedbe less than net income for the 20172018 fiscal year. We expect an offsetting benefit in 2019 as our purchasing activity normalizes. We anticipate that we may use approximately $140.0$100.0 million to $160.0$150.0 million in cash to fundfor share repurchases in 2017.2018.

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales:

Note: Due to rounding, percentages may not add to Operating income or Income before income taxes and equity earnings.

We have included the results of operations from the acquisitions in 20172018 and 20162017 in our consolidated results since the acquisition dates.

When calculating our base business results, we exclude sales centers that are acquired, closed, or opened in new markets for a period of 15 months. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers.

We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales.  After 15 months of operations, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.

Net sales increased 8%9% in the third quarter of 20172018 compared to the third quarter of 2016,2017, with base business sales up 6%8% for the period. SevereDespite severe weather events, duringwith Hurricane Florence impacting the third quarter of this year, particularly Hurricanes Irma and Harvey, were the most disruptive impact to our sales growth. SalesCarolinas, elevated rainfall in Texas largely recovered by the end of the quarter, but salesand wildfires in Florida remain behind the growth levels experienced prior to Hurricane Irma. We estimate these recent weather events negatively impacted net sales by approximately $4.0 million. Our seasonal markets generated sales growth of 6% during the quarter.California, we achieved favorable results.

The following factors positively impactedbenefited our sales growth (listed in order of estimated magnitude):

GrossThe slight decline in gross margin for the third quarter of 2017 increased approximately 20 basis points compared to the third quarter of 2016. This increasebetween periods primarily reflects minor product mix and benefits from sourcing initiatives.

Operating expenses increased 7%6% in the third quarter of 20172018 compared to the third quarter of 2016,2017, with base business operating expenses up approximately 5% compared to the same period last year. Increased growth-drivenThis increase reflects variable labor and freight expenses, as well ascosts together with higher performance-based and equity-based compensation costs comprised the majority of our operating expense growth. As a percentage of net sales, base business operating expenses declined to 17.9% for the third quarter versus 18.1% last year.facility costs.

Interest and other non-operating expenses, net for the third quarter of 2018 increased $1.0$0.9 million compared to the third quarter of 2016, primarily due to2017. The increase mostly reflects higher interest ratesexpense on our debt and an increase in borrowings.debt. Our weighted average effective interest rate increased to 3.3% for the third quarter of 2018 from 2.7% for the third quarter of 2017 from 2.0% for the third quarter of 2016 on higher average outstanding debt of $535.5$566.2 million versus $426.7$535.5 million for the respective periods.

Our effective income tax rate was 20.8% for the three months ended September 30, 2018 and 37.4% for the three months ended September 30, 20172017. Both ASU 2016-09 and 37.7%U.S. tax reform impacted our income tax provision for the three monthsthird quarter of 2018. We recorded a $3.3 million benefit from ASU 2016-09 in the quarter ended September 30, 2016. Our2018 compared to a benefit of $0.3 million realized in the same period last year. Excluding the benefits from ASU 2016-09, our effective tax rate was 24.6% and 37.9% for the third quarter effectivequarters of 2018 and 2017, respectively, mostly reflecting the lower corporate income tax rate is typically lower compared to other quarters, primarily due to the timingenacted as part of our accounting for uncertainU.S. tax positions, including the expiration of statutes of limitations. The decline also reflects a $0.3 million tax benefit recorded in our provision for income taxes from the adoption of ASU 2016-09.reform.

Net income attributable to Pool Corporation increased 10%42% to $48.8$69.3 million in the third quarter of 20172018 compared to the third quarter of 2016.2017. Earnings per diluted share increased to $1.16$1.66 for the third quarter of 20172018 versus $1.03$1.16 per diluted share for the comparable period2017 period. The reduction in 2016. The adoption of ASU 2016-09 did not have an impact our earningseffective tax rate from 37.4% to 20.8% as discussed above reduced our income tax expense by approximately $14.5 million, or $0.35 per diluted share, in the third quarter of 2017.

Net sales for the first nine months of 20172018 increased 7%8% compared to the same period last year, with muchmost of this growth resulting from the 6%7% improvement in base business sales. We started the year off strong, but multiple storms in March hindered our customers’ ability to complete projects, and cold temperatures and snow in our seasonal markets delayed pool openings through April. Our seasonal markets finally warmed up in May 2018, allowing us to serve the pent-up demand and generate solid sales growth through the remainder of the second and third quarters, despite several occurrences of severe weather in the third quarter of 2018.

The following factors contributed tobenefited our sales growth (listed in order of estimated magnitude):

Gross margin for the nine months ended September 30, 2017 wasThe slight decline in line with gross margin for the nine months ended September 30, 2016.