Inventories Depreciable Assets Deferred Debt Issuance Costs  Goodwill Revenue Recognition Retirement Pension Plans  Costs for retirement pension plans include current service costs and amortization of prior service costs over periods of up to  thirty years. It is the Company's policy to fund current pension costs taking into consideration minimum funding requirements and  maximum tax deductible limitations. The expense of retiree medical benefit programs is recognized during the employees' service  with the Company as well as amortization of a transition obligation recognized on adoption of the accounting principle. The shipping costs for the majority of the Company’s sales are paid directly by the Company’s customers. In the  broadband communication market (approximately 12% of consolidated sales), the Company pays for shipping cost to the majority of  its customers. Amounts billed to customers related to shipping costs are immaterial and are included in net sales. All shipping costs  incurred to transport products to the customer, which are not reimbursed, are included in selling, general and administrative expense.  Revenue from sales of the Company’s products is recognized at the time the goods are delivered and title passes, provided  the earning process is complete and revenue is measurable. Delivery is determined by the Company’s shipping terms, which are  primarily FOB shipping point. Revenue is recorded at the net amount to be received after deductions for estimated discounts,  allowances and returns. These estimates and reserves are determined and adjusted as needed based upon historical experience,  contract terms and other related factors. The Company’s primary source of revenue is from product sales to its customers.  The Company performs its annual evaluation for the impairment of goodwill for the Company's reporting units, in  accordance with Financial Accounting Standards Board Statement No. 142 (“FAS 142”), as of each June 30. The Company has  defined its reporting units as the operating segments within its two reportable business segments "Interconnect Products and  Assemblies" and "Cable Products", as the components of these operating segments have similar economic characteristics. Goodwill  impairment for each reporting unit is evaluated using a two-step approach requiring the Company to determine the fair value of the  reporting unit and compare that to the carrying value including goodwill. If the carrying value exceeded the fair value, the goodwill  of the reporting unit would be potentially impaired and a second step of additional testing would be performed to measure the  impairment loss. As of June 30, 2004, and for each previous year in which the impairment test has been performed, the fair market  value of the Company's reporting units exceeded the carrying value and therefore no impairment was recognized. In 2004, goodwill  increased by $29,076 primarily as a result of one relatively minor acquisition with a total acquisition price of $33,586, less the fair  value of net assets acquired of $13,980, payment of contingent consideration relating to previously acquired subsidiaries of $10,490  less other purchase price adjustments occurring during the year of $1,020. The increase in goodwill was related to the interconnect  products and assemblies segment.  Deferred debt issuance costs are being amortized on the interest method over the term of the related debt and such  amortization is included in interest expense. Property, plant and equipment are carried at cost. Depreciation and amortization of property, plant and equipment are  provided on a straight-line basis over the respective asset lives determined on a composite basis by asset group or on a specific item  basis using the estimated useful lives of such assets which range from 3 to 12 years for machinery and equipment and 20 to 40 years  for buildings. It is the Company's policy to periodically review fixed asset lives. Inventories are stated at the lower of standard cost, which approximates average cost, or market. The principal components  of cost included in inventories are materials, direct labor and manufacturing overhead. 41 A M P H E N O L C O R P O R A T I O N 2 0 0 4 A N N U A L R E P O R T 