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Schmidt Construction <br />Notes to Divisional Balance Sheet <br />December 31, 2000 <br />Note I -Nature of Business and Significant Accounting Policies <br />The divisional balance sheet of Schmidt Construction (the "Division"), a division of <br />Edw. C. Levy Co. (the "Parent"), includes the accounts of the Division as of <br />December 31, 2000. The corporate staff of the Parent company provides the <br />Division with certain executive, administrative, financial, legal, and general 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 stated at the lower of cost or market. Cost is <br />determined using the firm-in, first-out (FIFO) method for substantially all inventory. <br />Property, Plant, and Equipment -Property, plant, and equipment are recorded <br />at cost. Depreciation is computed using the straight-line method for buildings and <br />the double-declining balance method for other assess over the estimated useful lives <br />of the assess. <br />Divisional Equity -Divisional equity is the accumulated earnings of the Division <br />since inception. <br />SeH-insurance -The Division and affiliates of the Parent are partially self-insured <br />for workers' compensazion. The Division and affiliates of the Parent have obtained <br />specific excess reinsurance coverage for claims in excess of 4300,000. The Division <br />a also self-insured for employee heakh care coverage. The Division has recorded an <br />accrual of approximazely 540,000 az December3l, 2000 for estimazed claims <br />incurred but not reported under bolt of these plans. <br />Use of Estimates -The preparation of a balance sheet in conformity with generally <br />accepted accounting principles requires managemerrt to make estimazes and <br />assumptions that affect the reported amourtts of assets and liabilities and disclosure <br />of contingent assets and liabilities az the date of the balance sheet. Actual resuhs <br />could differ from those estimates. <br />3 ~®p~ <br />1'u~rre & Mott~~. u.P <br />