In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers: Topic 606.” This ASU replaces nearly all existing U.S. GAAP guidance on revenue recognition. The standard prescribes a five-step model for recognizing revenue, the application of which may require significant judgment. The new guidance requires PPG to evaluate the transfer of promised goods or services to customers and recognize revenue in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods and services.

The Company recognizes revenue when control of the promised goods or services is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales. For most transactions, control passes in accordance with agreed upon delivery terms. This approach is consistent with the Company’s historical revenue recognition methodology.

The Company delivers products to company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires and independent distributors, company-owned distribution networks, and directly to manufacturing companies and retail customers. Each product delivered to a third party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates.

The Company also provides services by applying coatings to customers' manufactured parts and assembled products and by providing technical support to certain customers. Performance obligations are satisfied over time as critical milestones are met and as services are provided. PPG is entitled to payment as the services are rendered. For the three and six months ended June 30, 2018 and 2017, service revenue constituted approximately 5% of total revenue, while the balance constituted standard ship and bill, retail or consignment arrangements. Accounts receivable are recognized when there is an unconditional right to consideration. Payment terms vary from customer to customer, depending on creditworthiness, prior payment history and other considerations.

Net sales by segment and region for the three and six months ended June 30, 2018 and 2017 were as follows:



($ in millions)	Performance Coatings				Industrial Coatings				Total Net Sales
	Three Months Ended June 30				Three Months Ended June 30				Three Months Ended June 30
	2018		2017		2018		2017		2018		2017
			As Restated								As Restated
United States and Canada		$1,173		$1,093		$619		$588		$1,792		$1,681
EMEA	811		740		468		412		1,279		1,152
Asia-Pacific	277		238		403		370		680		608
Latin America	237		228		143		135		380		363
Total		$2,498		$2,299		$1,633		$1,505		$4,131		$3,804



($ in millions)	Performance Coatings				Industrial Coatings				Total Net Sales
	Six Months Ended June 30				Six Months Ended June 30				Six Months Ended June 30
	2018		2017		2018		2017		2018		2017
			As Restated								As Restated
United States and Canada		$2,147		$2,055		$1,230		$1,169		$3,377		$3,224
EMEA	1,518		1,369		941		806		2,459		2,175
Asia-Pacific	519		458		791		733		1,310		1,191
Latin America	474		434		292		266		766		700
Total		$4,658		$4,316		$3,254		$2,974		$7,912		$7,290

The Company adopted the ASU using the modified retrospective approach which required the financial statements to reflect the new standard as of January 1, 2018, and as a result, contracts that ended prior to January 1, 2018 were not included within the Company’s assessment. Accordingly, the amounts in the comparative condensed consolidated statements of income and condensed consolidated balance sheet have not been recast. The ASU also provided additional clarity that resulted in reclassifications to or from Net sales, Cost of sales, exclusive of depreciation and amortization, Selling, general and administrative and Other income. Certain costs historically reported in Selling, general and administrative costs will now be recorded in Cost of sales, exclusive of depreciation and amortization in the condensed consolidated statement of income, as they represent costs incurred in satisfaction of performance obligations. In addition, the cost of certain customer incentives are now recorded as a reduction of Net sales rather than Cost of sales, exclusive of depreciation and amortization or Selling, general and administrative costs.

The following table summarizes the impact of the adoption of this ASU on the condensed consolidated statement of income for the three and six months ended June 30, 2018:



	Three Months Ended June 30, 2018
($ in millions)	Without adoption			Adjustments			As Reported
Net sales		$4,134			($3	)		$4,131
Cost of sales, exclusive of depreciation and amortization	2,360			19			2,379
Selling, general and administrative	963			(18		)	945
Other income	(26		)	2			(24		)
Income from continuing operations before income taxes	479			—			479



	Six Months Ended June 30, 2018
($ in millions)	Without adoption			Adjustments			As Reported
Net sales		$7,919			($7	)		$7,912
Cost of sales, exclusive of depreciation and amortization	4,517			43			4,560
Selling, general and administrative	1,892			(41		)	1,851
Other income	(53		)	5			(48		)
Income from continuing operations before income taxes	900			—			900