QIAGEN N.V. Annual Report 2001

h. Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or a group of assets may not be recoverable. The Company considers a history
of operating losses or a change in expected sales levels to be indicators of potential impairment. Assets are
grouped and evaluated for impairment at the lowest level for which there are identified cash flows that are largely
independent of the cash flows of other groups of assets. The Company deems an asset to be impaired if a forecast
of undiscounted projected future operating cash flows directly related to the asset, including disposal value, if any, is
less than its carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which
the carrying amount of the asset exceeds fair value. The Company generally measures fair value by discounting
projected future cash flows. Considerable management judgment is necessary to estimate discounted future cash
flows. Accordingly, actual results could differ from such estimates.
i. Revenue Recognition
38
Revenue from consumable product sales is recognized when title passes, generally upon shipment (FOB shipping
point). Revenue from instrumentation equipment is not recognized until title passes to the customer, either upon
shipment in the case of sales to distributors (FOB shipping point), or written customer acceptance in the case of sales
to end users after satisfying any installation and training requirements. For instrumentation equipment sales that
contain other obligations, such as providing service or supplies, revenue is allocated based on the relative fair values
of the individual components as determined by list prices. If cash sales prices are not available for individual
components, then the sales value is deferred until all individual components are delivered or performed. Revenue from
instrumentation service contracts, which account for less than 10 percent of total consolidated net sales, is deferred
and recognized over the term of the contract.
j. Shipping and Handling Income and Costs
The Company accounts for income and costs related to shipping and handling activities in accordance with the
Emerging Issues Task Force Issue No. 00-10 ”Accounting for Shipping and Handling Revenues and Costs.” Income
from shipping and handling is included with revenue from product sales. Associated costs of shipping and handling
are included in sales and marketing expenses. For the years ended December 31, 2001, 2000 and 1999, shipping
and handling costs totaled $9.3 million, $7.1 million and $5.2 million, respectively.
k. Warranty
The Company warrants its products against defects in materials and workmanship for a period of one year. A
provision for estimated future warranty is recorded when consumables are shipped and when title on instrumentation
equipment passes to the customer.
l. Foreign Currency Translation
The Company’s reporting currency is the United States dollar. The subsidiaries’ functional currencies are primarily the
local currency of the respective country. Balance sheets prepared in their functional currencies are translated to the
reporting currency at exchange rates in effect at the end of the accounting period except for shareholders’ equity
accounts, which are translated at rates in effect when these balances were originally recorded. Revenue and expense
accounts are translated at a weighted average of exchange rates during the period. The cumulative effect of
translation is included in accumulated other comprehensive loss in the accompanying consolidated balance sheets.
m. Fair Value of Financial Instruments
The carrying value of the Company’s cash and cash equivalents, notes receivable, accounts receivable, accounts
payable and accrued liabilities approximate their fair values because of the short maturities of those instruments. The
carrying value of the Company’s debt and capital leases approximate their fair values because of the short
maturities and/or interest rates which are comparable to those available to the Company on similar terms.