Goodwill and Intangible Assets  Self-Insurance Liabilities  Revenue Recognition  Shipping and Handling Costs  Income Taxes  Share-Based Compensation  Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized. Goodwill is reviewed for impairment annually as of January 1 or whenever changes in conditions indicate an  evaluation should be completed. These conditions could include a significant change in the business climate, legal factors, operating  performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The Company utilizes discounted  cash flow models and market multiples for comparable businesses to determine the fair value of reporting units. Evaluating impairment  requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term  rate of growth of the business, and determination of an appropriate discount rate. While the Company uses available information to  prepare the estimates and evaluations, actual results could differ significantly.  The Company recognizes acquired intangible assets such as customer relationships, trade names, vendor relationships, and non- competition agreements apart from goodwill. Customer relationship intangibles are amortized using the sum-of-the-years-digits  method over estimated useful lives consistent with assumptions used in the determination of their value. Amortization of all other  finite-lived intangible assets is computed using the straight-line method over the estimated period of benefit. The Company also  maintains intangible assets with indefinite lives which are not amortized. Amortization of intangible assets is included in selling,  distribution and administrative expenses in the accompanying statements of consolidated income. Intangible assets with finite lives are  reviewed for impairment when changes in conditions indicate carrying value may not be recoverable. Intangible assets with indefinite  lives are reviewed for impairment on an annual basis or whenever changes in conditions indicate an evaluation should be completed.  The Company maintains business insurance programs with significant self-insured retention covering workers’ compensation,  business, automobile, general product liability and other claims. The Company accrues estimated losses including those incurred but  not reported using actuarial calculations, models and assumptions based on historical loss experience. The Company maintains a  self-insured health benefits plan, which provides medical benefits to U.S. based employees electing coverage under the plan. The  Company estimates its reserve for all unpaid medical claims including those incurred but not reported based on historical experience,  adjusted as necessary based upon management’s reasoned judgment.  Sales are recognized when the sales price is fixed, collectability is reasonably assured and the product’s title and risk of loss is  transferred to the customer. Typically, these conditions are met when the product is shipped to the customer. The Company charges  shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in net sales. The  Company reports its sales net of actual sales returns and the amount of reserves established for anticipated sales returns based on  historical rates. Sales tax collected from customers is excluded from net sales in the accompanying statements of consolidated income.  The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution and  administrative expenses in the accompanying statements of consolidated income. Internal delivery costs in selling, distribution and  administrative expenses were approximately $15,500, $15,400 and $14,400 for the fiscal years ended June 30, 2012, 2011 and  2010, respectively.  Income taxes are determined based upon income and expenses recorded for financial reporting purposes. Deferred income taxes  are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and  income tax purposes, giving consideration to enacted tax laws. Uncertain tax positions meeting a more-likely-than-not recognition  threshold are recognized in accordance with the Income Taxes topic of the ASC. The Company recognizes accrued interest and  penalties related to unrecognized income tax benefits in the provision for income taxes.  Following approval by the Company's shareholders in October 2011, the 2011 Long-Term Performance Plan (the "2011 Plan")  replaced the 2007 Long-Term Performance Plan (the "2007 Plan"). Share-based compensation represents the cost related to share-based awards granted to associates under either the 2011 Plan or the 2007 Plan. The Company measures share-based  compensation cost at grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service 21 Applied Industrial Technologies, Inc. and Subsidiaries