Form S-1 Table of Contrail In the normal course of business, we use trade promotions to support our business. Trade promotions. consisting primarily of temporary• price reductions. consumer coupons, product placement fees. advertising allowances and other rebates arc offered through various programs to customers and consumers. Sales arc recorded net of trade promotion :pending, which is recognized at the later of the date on which the Company recognizes the related revenue or the date on which the Company offers the incentive. Most of these arrangements have terms of approximately one year. Accruals for expected payouts under these programs are included in other current liabilities on the consolidated balance sheet. We also maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make payments and other actual and estimated deductions. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments. an additional allowance could be required. Past due balances are reviewed individually for collectability. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. Inventories We provide reserves for estimated obsolescence bawd on specific identification. If assumptions about future demand change or actual market conditions arc less favorable than those projected by management, we may require additional reserves. Loss Contingencies We record accruals for various contingencies including legal exposures as they arise in the normal course of business. We determine whether to disclose and accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible. or probable. Our assessment is developed in consultation with our internal and external counsel and other advisors and is based on an analysis of possible outcomes under various