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INVENTORIES

Inventories are stated at the lower of cost or market.  The cost of most inventories in the U.S. is determined by the “last-in, first-out” (LIFO) method.  The cost of all of the Company’s remaining inventories in and outside the U.S. is determined by the “first-in, first-out” (FIFO) or average cost method, which approximates current cost.  The Company provides inventory reserves for excess, obsolete or slow-moving inventory based on changes in customer demand, technology developments or other economic factors.

PROPERTIES

Properties are recorded at cost, net of accumulated depreciation.  The Company principally calculates depreciation expense using the straight-line method over the assets’ estimated useful lives, which are as follows:

Maintenance and repairs are charged to expense as incurred.  Upon sale or other disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to income.

GOODWILL

Goodwill represents the excess of purchase price over the fair value of net assets acquired.  The Company applies the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets.”  In accordance with SFAS No. 142, goodwill is not amortized, but is required to be assessed for impairment at least annually.  The Company has elected to make September 30 the annual impairment assessment date for all of its reporting units, and will perform additional impairment tests when events or changes in circumstances occur that would more likely than not reduce the fair value of the reporting unit below its carrying amount.  SFAS No. 142 defines a reporting unit as an operating segment or one level below an operating segment.  The Company estimates the fair value of its reporting units through internal analyses and external valuations, which utilize income and market approaches through the application of capitalized earnings, discounted cash flow and market comparable methods.  The assessment is required to be performed in two steps, step one to test for a potential impairment of goodwill and, if potential losses are identified, step two to measure the impairment loss.  The Company completed step one in its fourth quarter and determined that there were no such impairments.  Accordingly, the performance of step two was not required. 

REVENUE

The Company’s revenue transactions include sales of the following:  products; equipment; software; services; equipment bundled with products and/or services; and integrated solutions.  The Company recognizes revenue when realized or realizable and earned, which is when the following criteria are met:  persuasive evidence of an arrangement exists; delivery has occurred; the sales price is fixed or determinable; and collectibility is reasonably assured.  At the time revenue is recognized, the Company provides for the estimated costs of customer incentive programs, warranties and estimated returns and reduces revenue accordingly.