The new revenue standard introduces a five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue standard also requires disclosures sufficient to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract. For further information about the Company's revenues from contracts with customers, refer to Note 11 - Revenue.

On January 1, 2018, the Company adopted the new revenue standard and all of the related amendments using the modified retrospective method and applied those provisions to all open contracts. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The cumulative effect of changes made to the balance sheet as of January 1, 2018 for the adoption of the new revenue standard was as follows:



	Balance at December 31, 2017		Effect of Accounting Change			Balance at January 1, 2018
ASSETS
Accounts receivable, less allowances	$	524.9	$	(67.3	)	$	457.6
Unbilled receivables	—		100.5			100.5
Inventories, net	738.9		(22.9		)	716.0
Other current assets	81.2		3.0			84.2
Deferred income taxes	61.0		(2.6		)	58.4
LIABILITIES
Other current liabilities	160.7		3.0			163.7
EQUITY
Earnings invested in the business	1,408.4		7.7			1,416.1

The tables below reflect changes to financial statement line items as a result of adopting the new revenue standard. The adoption of the new revenue standard did not have an impact on "Net cash used in operating activities" on the Consolidated Statement of Cash Flows for the nine months ended September 30, 2018.

Consolidated Statement of Income for the three months ended September 30, 2018:



	Previous Accounting Method		Effect of Accounting Change		As Reported
Net sales	$	875.6	$	5.7	$	881.3
Cost of products sold	623.2		4.8		628.0
Selling, general, and administrative expenses	141.3		0.7		142.0
Income before income taxes	97.1		0.2		97.3
Provision for income taxes	25.0		—		25.0
Net income	72.1		0.2		72.3
Net income attributable to The Timken Company	$	71.4	$	0.2	$	71.6
Basic earnings per share	$	0.93	$	—	$	0.93
Diluted earnings per share	$	0.91	$	—	$	0.91

Consolidated Statement of Income for the nine months ended September 30, 2018:



	Previous Accounting Method		Effect of Accounting Change		As Reported
Net sales	$	2,653.7	$	17.0	$	2,670.7
Cost of products sold	1,874.2		10.9		1,885.1
Selling, general, and administrative expenses	430.6		1.8		432.4
Income before income taxes	323.9		4.3		328.2
Provision for income taxes	82.5		1.0		83.5
Net income	241.4		3.3		244.7
Net income attributable to The Timken Company	$	239.5	$	3.3	$	242.8
Basic earnings per share	$	3.10	$	0.04	$	3.14
Diluted earnings per share	$	3.05	$	0.04	$	3.09

Consolidated Balance Sheet as of September 30, 2018:



	Previous Accounting Method		Effect of Accounting Change			As Reported
ASSETS
Accounts receivable, less allowances	$	637.5	$	(88.9	)	$	548.6
Unbilled receivables	—		137.3			137.3
Inventories, net	874.8		(33.8		)	841.0
Other current assets	72.5		3.5			76.0
Deferred income taxes	55.9		(3.6		)	52.3
LIABILITIES
Other current liabilities	169.2		3.5			172.7
EQUITY
Earnings invested in the business	1,584.4		11.0			1,595.4