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Schmidt Construction <br />Notes to Divisional Balanaa S <br />December 3 I, 2000 <br />Note 1 -Nature of Business and Significant Accounting Policies <br />The divisional balance sheet of Schmidt Construttion (the "Division'), a division of <br />Edw. C. Levy Co. (the "Parent"), includes the accounts of the Division az of <br />December 3l, 2000. The corporate staff of the Parent company provides the <br />Division with certain executive. administrative, financial, legal, and generJ services <br />performed on a centralized basis. <br />The Division extracts and processes natural aggregates, provides trucking services, <br />manufactures asphalt products, and paves roads, parking lots, and other surfaces in <br />and around Colorado Springs, Colorado. <br />Inventories -Inventories are sated at the lower of cost or market. Cost is <br />determined using the first-in, first-out (FIFO) method for substantially all im~entory. <br />Property, Plant, and Equipment -Property, plant, and equipment are recorded <br />at cox. Depreciation is computed using the straight-line method for buildings and <br />the double-declining balance method for other azsets over the estimated useful lives <br />of the assets. <br />Divisional Equity -Divisional equity is the accumulated earnings of thE: Division <br />since inception. <br />SeH insurance -The Division and affiiliates of the Parent are partially self-insured <br />for workers compensation. The Division and affiliates of the Parent have obtained <br />specific excess reinsurance coverage for claims in excess of 4300,000. The Division <br />is also self-insured for employee health care coverage. The Division haz recorded an <br />accrual of approximately 840,000 at December 31, 2000 for estimated claims <br />incur-ed but not reported under both of these plans. <br />Use of Estimates -The preparation of a balance sheet in conformity with generally <br />accepted accounting principles requires management to make estimazes and <br />assumptions that affect the reported amounts of assets and liabilities and disclosure <br />of contingerrt assets and Liabilities at the date of the balance sheet. Actual resuks <br />could differ from those estimates. <br />C~> ~J p~ <br />3 <br />f'ur+re&Mow~~. u.v <br />