CPTS » Topics » Revenue Recognition

These excerpts taken from the CPTS 10-K filed Mar 13, 2009.

Revenue Recognition

        Our revenue is primarily comprised of the sale of our Essure system. We recognize revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:

    1.
    Persuasive evidence of an arrangement exists;

    2.
    Delivery has occurred;

    3.
    Our selling price is fixed or determinable; and

    4.
    Collectibility is reasonably assured.

        The four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.

        We recognize revenues from our Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no continuing obligations subsequent to shipment. We do not accept returns of the Essure system. We obtain written authorizations from our customers for a specified amount of product at a specified price and the price is not dependent on actual Essure procedures performed.

36


Table of Contents

        For sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales, training and warranty of the Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the Essure system and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.

        Additionally, we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.

        We assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.

        Certain sales of our Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases, we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task Force No. 00-21, Revenue Arrangements with Multiple Deliverables or EITF 00-21. When we have objective and reliable evidence of fair value of the undelivered elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled. Otherwise we defer all revenue until all elements are delivered.

Revenue Recognition

        Our revenue is primarily comprised of the sale of our Essure system. We recognize revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:

    1.
    Persuasive evidence of an arrangement exists;

    2.
    Delivery has occurred;

    3.
    Our selling price is fixed or determinable; and

    4.
    Collectibility is reasonably assured.

        The four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.

        We recognize revenues from our Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no continuing obligations subsequent to shipment. We do not accept returns of the Essure system. We obtain written authorizations from our customers for a specified amount of product at a specified price and the price is not dependent on actual Essure procedures performed.

36


Table of Contents

        For sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales, training and warranty of the Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the Essure system and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.

        Additionally, we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.

        We assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.

        Certain sales of our Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases, we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task Force No. 00-21, Revenue Arrangements with Multiple Deliverables or EITF 00-21. When we have objective and reliable evidence of fair value of the undelivered elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled. Otherwise we defer all revenue until all elements are delivered.

Revenue Recognition



        Our revenue is primarily comprised of the sale of our Essure system. We recognize
revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104,
Revenue Recognition in Financial
Statements
or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:





    1.
    Persuasive
    evidence of an arrangement exists;


    2.
    Delivery
    has occurred;


    3.
    Our
    selling price is fixed or determinable; and


    4.
    Collectibility
    is reasonably assured.



        The
four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.



        We
recognize revenues from our
Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no
continuing obligations subsequent to shipment. We do not accept returns of the
Essure system. We obtain written authorizations from our customers for a
specified amount of product at a specified price and the price is not dependent on actual
Essure procedures performed.



36









HREF="#bg10801a_main_toc">Table of Contents



        For
sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales,
training and warranty of the
Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock
rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the
Essure system
and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.



        Additionally,
we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues
associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have
no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.




        We
assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.



        Certain
sales of our
Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases,
we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task
Force No. 00-21,
Revenue Arrangements with Multiple Deliverables or EITF 00-21. When we have objective and
reliable evidence of fair value of the undelivered elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled.
Otherwise we defer all revenue until all elements are delivered.



Revenue Recognition



        Our revenue is primarily comprised of the sale of our Essure system. We recognize
revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104,
Revenue Recognition in Financial
Statements
or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:





    1.
    Persuasive
    evidence of an arrangement exists;


    2.
    Delivery
    has occurred;


    3.
    Our
    selling price is fixed or determinable; and


    4.
    Collectibility
    is reasonably assured.



        The
four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.



        We
recognize revenues from our
Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no
continuing obligations subsequent to shipment. We do not accept returns of the
Essure system. We obtain written authorizations from our customers for a
specified amount of product at a specified price and the price is not dependent on actual
Essure procedures performed.



36









HREF="#bg10801a_main_toc">Table of Contents



        For
sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales,
training and warranty of the
Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock
rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the
Essure system
and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.



        Additionally,
we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues
associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have
no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.




        We
assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.



        Certain
sales of our
Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases,
we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task
Force No. 00-21,
Revenue Arrangements with Multiple Deliverables or EITF 00-21. When we have objective and
reliable evidence of fair value of the undelivered elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled.
Otherwise we defer all revenue until all elements are delivered.



Revenue Recognition

        Our revenue is primarily comprised of the sale of our Essure system. We recognize revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements", or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:

    1.
    Persuasive evidence of an arrangement exists;

    2.
    Delivery has occurred;

    3.
    Our selling price is fixed or determinable; and

    4.
    Collectability is reasonably assured.

        The four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.

        We recognize revenues from our Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no continuing obligations subsequent to shipment. We do not accept returns of the Essure system. We obtain written authorizations from our customers for a specified amount of product at a specified price and the price is not dependent on actual Essure procedures performed.

        For sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales, training and warranty for the Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the Essure system and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.

        Additionally, we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.

71


Table of Contents


CONCEPTUS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

        We assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.

        Certain sales of our Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases, we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task Force No. 00-21, "Revenue Arrangements with Multiple Deliverables" or EITF 00-21. When we have objective and reliable evidence of fair value of the undelivered elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled. Otherwise we defer all revenue until all elements are delivered.

Revenue Recognition

        Our revenue is primarily comprised of the sale of our Essure system. We recognize revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements", or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:

    1.
    Persuasive evidence of an arrangement exists;

    2.
    Delivery has occurred;

    3.
    Our selling price is fixed or determinable; and

    4.
    Collectability is reasonably assured.

        The four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.

        We recognize revenues from our Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no continuing obligations subsequent to shipment. We do not accept returns of the Essure system. We obtain written authorizations from our customers for a specified amount of product at a specified price and the price is not dependent on actual Essure procedures performed.

        For sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales, training and warranty for the Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the Essure system and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.

        Additionally, we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.

71


Table of Contents


CONCEPTUS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

        We assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.

        Certain sales of our Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases, we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task Force No. 00-21, "Revenue Arrangements with Multiple Deliverables" or EITF 00-21. When we have objective and reliable evidence of fair value of the undelivered elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled. Otherwise we defer all revenue until all elements are delivered.

Revenue Recognition





        Our revenue is primarily comprised of the sale of our Essure system. We recognize
revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements", or SAB 104. Under this
standard, the following four criteria must be met in order to recognize revenue:





    1.
    Persuasive
    evidence of an arrangement exists;


    2.
    Delivery
    has occurred;


    3.
    Our
    selling price is fixed or determinable; and


    4.
    Collectability
    is reasonably assured.



        The
four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.




        We
recognize revenues from our
Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no
continuing obligations subsequent to shipment. We do not accept returns of the
Essure system. We obtain written authorizations from our customers for a
specified
amount of product at a specified price and the price is not dependent on actual
Essure procedures performed.



        For
sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales,
training and warranty for the
Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock
rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the
Essure system
and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.



        Additionally,
we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues
associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have
no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.



71









HREF="#bg10801a_main_toc">Table of Contents





CONCEPTUS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



2. Summary of Significant Accounting Policies (Continued)



        We
assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.



        Certain
sales of our
Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases,
we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task
Force No. 00-21, "Revenue Arrangements with Multiple Deliverables" or EITF 00-21. When we have objective and reliable evidence of fair value of the undelivered
elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled. Otherwise we defer all revenue until all elements are
delivered.





Revenue Recognition





        Our revenue is primarily comprised of the sale of our Essure system. We recognize
revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements", or SAB 104. Under this
standard, the following four criteria must be met in order to recognize revenue:





    1.
    Persuasive
    evidence of an arrangement exists;


    2.
    Delivery
    has occurred;


    3.
    Our
    selling price is fixed or determinable; and


    4.
    Collectability
    is reasonably assured.



        The
four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.




        We
recognize revenues from our
Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no
continuing obligations subsequent to shipment. We do not accept returns of the
Essure system. We obtain written authorizations from our customers for a
specified
amount of product at a specified price and the price is not dependent on actual
Essure procedures performed.



        For
sales through distributors we recognize revenues upon shipment as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales,
training and warranty for the
Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock
rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the
Essure system
and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.



        Additionally,
we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues
associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have
no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.



71









HREF="#bg10801a_main_toc">Table of Contents





CONCEPTUS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



2. Summary of Significant Accounting Policies (Continued)



        We
assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectability is reasonably assured.



        Certain
sales of our
Essure system require delivery of additional items. These obligations are fulfilled after shipment of the Essure system, and in these cases,
we recognize revenue in accordance with the multiple element accounting guidance set forth in Emerging Issues Task
Force No. 00-21, "Revenue Arrangements with Multiple Deliverables" or EITF 00-21. When we have objective and reliable evidence of fair value of the undelivered
elements we defer revenue attributable to the post-shipment obligations and recognize such revenue when the obligation is fulfilled. Otherwise we defer all revenue until all elements are
delivered.





These excerpts taken from the CPTS 10-K filed Mar 14, 2008.

Revenue Recognition

        Our revenue is primarily comprised of the sale of our Essure system. We recognize revenue in accordance with the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements", or SAB 104. Under this standard, the following four criteria must be met in order to recognize revenue:

    1.
    Persuasive evidence of an arrangement exists;

    2.
    Delivery has occurred;

    3.
    Our selling price is fixed or determinable; and

    4.
    Collectibility is reasonably assured.

        The four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.

        We recognize revenues from our Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no continuing obligations subsequent to shipment. We do not accept returns of the Essure system. We obtain written authorizations from our customers for a specified amount of product at a specified price and the price is not dependent on actual Essure procedures performed.

        In 2007, we had international distributors in France, Spain, Australia and Canada. We recognize revenues upon shipment for sales through distributors as we have no continuing obligations subsequent to shipment. Our distributors are responsible for all marketing, sales, training and warranty for the sale of the Essure device in their respective territories. Our standard terms and conditions do not provide price protection or stock rotation rights to any of our distributors. In addition, our distributor agreements do not allow the distributor to return or exchange the Essure system and the distributor is obligated to pay us for the sale regardless of their ability to resell the product.

        Additionally, we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.

69


CONCEPTUS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

        We assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectibility is reasonably assured.

Revenue Recognition





        Our revenue is primarily comprised of the sale of our Essure system. We recognize revenue in accordance with the
Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements", or SAB 104. Under this standard, the following four criteria
must be met in order to recognize revenue:





    1.
    Persuasive
    evidence of an arrangement exists;


    2.
    Delivery
    has occurred;


    3.
    Our
    selling price is fixed or determinable; and


    4.
    Collectibility
    is reasonably assured.



        The
four revenue recognition criteria and other revenue related pronouncements are applied to our sales as described in the following paragraphs.




        We
recognize revenues from our
Essure system when we ship the device. We recognize revenue upon shipment of the system as we have no
continuing obligations subsequent to shipment. We do not accept returns of the
Essure system. We obtain written authorizations from our customers for a
specified amount of product at a specified price and the price is not dependent on actual
Essure procedures performed.



        In
2007, we had international distributors in France, Spain, Australia and Canada. We recognize revenues upon shipment for sales through distributors as we have no continuing obligations
subsequent to shipment. Our distributors are responsible for all marketing, sales, training and warranty for the sale of the
Essure device in their
respective territories. Our standard terms and conditions do not provide price protection or stock rotation rights to any of our distributors. In addition, our distributor agreements do not allow the
distributor to return or exchange the
Essure system and the distributor is obligated to pay us for the sale regardless of their ability to resell the
product.



        Additionally,
we require physicians to be preceptored between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues
associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have
no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.



69








CONCEPTUS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



2.    Summary of Significant Accounting Policies (Continued)



        We
assess the credit worthiness of all customers in connection with their purchases. We only recognize revenue when collectibility is reasonably assured.





This excerpt taken from the CPTS 10-K filed Mar 15, 2007.

Revenue Recognition

Product revenue is recognized when title and risk of ownership has been transferred, provided that persuasive evidence of an arrangement exists, the price is fixed and determinable, remaining obligations are insignificant and collectibility is reasonably assured. Revenue from product sales to distributors is recognized in the same manner as product sales to customers. We do not currently accept product returns from customers or distributors. Where appropriate, provision is made for estimated warranty costs relating to product sales at the time revenue is recognized. Non-recurring payments from contractual arrangements are deferred and recognized as revenue is earned based on an appropriate basis and time frame such as when services are performed or the term of the contract.

69




We require that a hospital have at least one physician preceptored for generally between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician or from us from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant from inception to-date.

This excerpt taken from the CPTS 10-K filed Mar 16, 2006.

Revenue Recognition

        Product revenue is recognized when title and risk of ownership has been transferred, provided that persuasive evidence of an arrangement exists, the price is fixed and determinable, remaining obligations are insignificant and collectibility is reasonably assured. Revenue from product sales to distributors is recognized in the same manner as product sales to customers. Net sales generated by distributors were 12%, 15% and 12% for the years ended December 31, 2005, 2004 and 2003, respectively. The Company does not currently accept product returns from customers or distributors. Where appropriate, provision is made for estimated warranty costs relating to product sales at the time revenue is recognized. Non-recurring payments from contractual arrangements are deferred and recognized as revenue is earned based on an appropriate basis and time frame such as when services are performed or the term of the contract.

        In addition, we require that a hospital have at least one physician preceptored for generally between 3 and 5 cases by a certified trainer before being able to perform the procedure independently. There are no revenues associated with the training activities. We do not charge a fee for the activity and no commitment arises for the physician from the preceptorship. Physician training is provided upfront and we have no obligation subsequent to the initial training. Training costs have not been significant to-date.

63



This excerpt taken from the CPTS 10-K filed Mar 31, 2005.

Revenue Recognition

        Product revenue is recognized when title and risk of ownership has been transferred, provided that persuasive evidence of an arrangement exists, the price is fixed and determinable, remaining obligations are insignificant and collectibility is reasonably assured. Revenue from product sales to distributors is recognized in the same manner as product sales to customers. Net sales generated by distributors were 15%, 12% and 53% for the years ended December 31, 2004, 2003 and 2002, respectively. The Company does not currently accept product returns from customers or distributors. Where appropriate, provision is made for estimated warranty costs relating to product sales at the time revenue is recognized. Non-recurring payments from contractual arrangements are deferred and recognized as revenue is earned based on an appropriate basis and time frame such as when services are performed or the term of the contract.

65


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