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HEWETT-KIER CONSTRUCTION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1998 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Cash Equivalents Cash equivalents consist of money market funds and overnight bank investment accounts, which are carried at cost. Marketable Securities The Company's marketable securities consist of debt and equity securities that have a readily determinable fair market value. Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determinations at each balance sheet date. Since the Company does not intend to sell these securities in the near term, they are ® classified as "available for sale' and, accordingly, are carded at fair value, with unrealized gains and losses reported as a separate component within the stockholder's equity section of the balance sheet Realized gains and losses on marketable securities are determined by specific identification or average cost methods and are charged or credited-to current earnings. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates -and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Long-Lived Assets Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed or was adopted by the Company. This statement requires that long-lived and certain intangible assets held and used by the Company be reviewed for impairment. The Company determined that no impairment loss need be recognized. 6