GLOBAL REACH. LEADlNG TECHNOLOGY. - Zonebourse.com

is adjusted appropriately for future estimated costs. If a loss is expected at any time, the full amount of the loss is
recognized immediately.
In limited circumstances, we have customer agreements that are multiple element arrangements as defined by
the Financial Accounting Standards Board Emerging Issues Task Force (“EITF”) No. 00-21, “Revenue
Arrangements with Multiple Deliverables.” The agreements are considered for multiple elements based on the
following criteria: the delivered item has value to the customer on a standalone basis, there is objective and reliable
evidence of the fair value of the undelivered item and the arrangement includes a general right of return relative to
the delivered item, and delivery or performance of the undelivered item is considered probable and substantially in
the control of the vendor. Revenue is then allocated to each identified unit of accounting based on our estimate of
their relative fair values.
Revenue recognition involves judgments, assessments of expected returns, the likelihood of nonpayment, and
estimates of expected costs and profits on long-term contracts. We analyze various factors, including a review of
specific transactions, historical experience, credit-worthiness of customers, and current market and economic
conditions, in determining when to recognize revenue. Changes in judgments on these factors could impact the
timing and amount of revenue recognized with a resulting impact on the timing and amount of associated income.
Inventories
Inventories are carried at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method
for all inventories. We evaluate the need to record valuation adjustments for inventory on a regular basis. Our
policy is to evaluate all inventories including raw material, work-in-process, finished goods, and spare parts.
Inventory in excess of our estimated usage requirements is written down to its estimated net realizable value.
Inherent in the estimates of net realizable value are estimates related to our future manufacturing schedules,
customer demand, possible alternative uses, and ultimate realization of potentially excess inventory.
Goodwill and Other Intangible Assets
Intangible assets include drawings, patents, trademarks, technology, customer relationships and other
specifically identifiable assets. Indefinite-lived intangible assets are not being amortized. These assets are evaluated
for impairment annually or more frequently if events or changes occur that suggest impairment in carrying value.
Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed, which is
principally the straight-line method. Intangible assets that are subject to amortization are evaluated for impairment
annually or more frequently if events or changes occur that suggest impairment in carrying value.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a
business combination. Goodwill is tested for impairment using the two-step approach, in accordance with Statement
on Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”).
Goodwill is assigned to specific reporting units and tested for impairment at least annually, during the fourth quarter
of our fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a
reporting unit’s carrying amount is greater than its fair value. Management judgment is used in the development of
assumptions in the impairment testing process, including growth and discount rate assumptions. We performed our
goodwill impairment testing in the fourth quarter of fiscal 2008 and no impairment was identified.
Accrued Warranties
We record accruals for potential warranty claims based on prior claim experience. Warranty costs are accrued
at the time revenue is recognized. These warranty costs are based upon management’s assessment of past claims
and current experience. However, actual claims could be higher or lower than amounts estimated, as the amount and
value of warranty claims are subject to variation as a result of many factors that cannot be predicted with certainty.
Pension and Postretirement Benefits and Costs
We have pension and postretirement benefits and expenses which are developed from actuarial valuations.
These valuations are based on assumptions including, among other things, discount rates, expected returns on plan
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