Revenue Recognition Sales to our customers are recognized when proof of delivery is received from our carriers and are recorded net of estimated customer programs and returns. We recognize revenue when all of the following conditions have been met: (1) Persuasive evidence of an arrangement exists A revenue transaction is initiated and evidenced by receipt of a purchase order from our customer. (2) Delivery has occurred or services have been rendered An invoice is created from the bill of lading at our shipping plant and revenue is recognized when proof of delivery of the receipt of goods is received from our carriers. (3) The seller s price to the buyer is fixed or determinable Our sales invoice includes an agreed upon selling price. (4) Collectability is reasonably assured We have a documented credit and collection policy and procedure manual for determining collectability from our customers. Our shipping policy is FOB destination; therefore, title to goods remains with us until delivered by the carrier to our customer. Only a minor portion of our sales result in customer returns. An accrual is estimated based on historical trends and reviewed periodically for adequacy. Revenue is appropriately reduced to reflect estimated returns. We are able to make a reasonable estimate of customer returns based upon historical trends due to the fact that our sales are not susceptible to significant external factors, the return period is short, and our sales are high volume and homogeneous in nature. Customer incentive programs include customer rebates, volume discounts and allowance programs. We have contractual arrangements with our customers and utilize agreed-upon discounts to determine the accrued promotion costs related to these customers. In addition, we have contractual arrangements with end-user customers and utilize historical experience to estimate this accrual.