3. REVENUE

WESCO’s revenue arrangements generally consist of single performance obligations to transfer a promised good or service, or a combination of goods and services. Revenue is recognized when control has transferred to the customer, which is generally when the product has shipped from a WESCO facility or directly from a supplier. For products that ship directly from suppliers to customers, WESCO acts as the principal in the transaction and recognizes revenue on a gross basis. Revenue for integrated supply services is recognized over time based on hours incurred. This method reflects the transfer of control as the customer benefits from these services as they are being performed. WESCO generally satisfies its performance obligations within a year or less.

WESCO generally does not have significant financing terms associated with its contracts; payments are normally received within 60 days. There are no significant costs associated with obtaining customer contracts. WESCO generally passes through the warranties offered by the applicable manufacturer or supplier to its customers. Sales taxes (and value added taxes in foreign jurisdictions) collected from customers and remitted to governmental authorities are excluded from net sales.

The following tables disaggregate WESCO’s revenue by end market and geography:



	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2018		2017		2018		2017
Industrial	$	723,869	$	722,227	$	2,243,590	$	2,111,813
Construction	686,165		674,996		2,007,708		1,870,406
Utility	345,937		312,501		998,438		861,162
Commercial, Institutional and Government ("CIG")	311,274		290,435		915,418		838,994
Total by end market	$	2,067,245	$	2,000,159	$	6,165,154	$	5,682,375



	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2018		2017		2018		2017
United States	$	1,525,393	$	1,473,016	$	4,571,533	$	4,267,684
Other ⁽¹⁾	541,852		527,143		1,593,621		1,414,691
Total by geography	$	2,067,245	$	2,000,159	$	6,165,154	$	5,682,375


⁽¹⁾	Other primarily includes net sales originating in Canada.

WESCO distributes products and provides services to customers globally within the following end markets: (1) industrial, (2) construction, (3) utility, and (4) CIG. Revenue is measured as the amount of consideration WESCO expects to receive in exchange for transferring goods or providing services.

In accordance with certain contractual arrangements, WESCO receives payment from its customers in advance and recognizes such payment as deferred revenue. Revenue for advance payment is recognized when the performance obligation has been satisfied and control has transferred to the customer, which is generally upon shipment. Deferred revenue is usually recognized within a year or less from the date of the customer’s advance payment. At September 30, 2018 and December 31, 2017, $8.8 million and $15.5 million, respectively, of deferred revenue was recorded as a component of other current liabilities in the Condensed Consolidated Balance Sheets.

WESCO’s revenues are adjusted for variable consideration, which includes customer volume rebates, returns, and discounts. WESCO measures variable consideration by estimating expected outcomes using analysis and inputs based upon anticipated performance, historical data, as well as current and forecasted information. Measurement and recognition of variable consideration is reviewed by management on a monthly basis and revenue is adjusted accordingly. Variable consideration reduced revenue for the three months ended September 30, 2018 and 2017 by approximately $25.1 million and $24.2 million, respectively, and by approximately $74.5 million and $66.5 million for the nine months ended September 30, 2018 and 2017, respectively.

Shipping and handling costs are recognized in net sales when they are billed to the customer. These costs are recognized as a component of selling, general and administrative expenses when WESCO does not bill the customer. WESCO has elected to recognize shipping and handling costs as a fulfillment cost. Shipping and handling costs recorded as a component of selling, general and administrative expenses totaled $18.8 million and $15.5 million for the three months ended September 30, 2018 and 2017, respectively, and $55.6 million and $43.2 million for the nine months ended September 30, 2018 and 2017, respectively.