Document nkYnZE8z6Rm4JB8yxd3ro0gb1

MAFCO CONSOLIDATED GROUP INC (Form- 10-K, Received: 03/28/1997 00 00:0.. Page 65 of 116 The Company recognizes gams and losses on issuances of subsidiary stock in its Consolidated Statements of Earnings. Stock-Based Compensation: In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") SFAS 123, encourages, but does not require companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation plans using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related Interpretations Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market pnce of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock (See Note 12 ) Income Taxes: The Company computes income taxes under the liability method Under the liability method, deferred income taxes are generally determined based on the difference between the financial statement and tax bases of assets and effect in the years in which the differences are expected to reverse Net deferred tax assets are recorded when it is more likely than not that such tax benefits will be reahzed. Concentration of Credit Risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables The Company's customers are geographically dispersed but are concentrated m the tobacco industry The Company historically has had no matenal losses on its trade receivables from customers in the tobacco industry in excess of allowances provided Cash Flow Information: Cash equivalents are considered to be all highly liquid investments with maturities of three months or less when acquired and exclude restricted cash Use of Estimates: The preparation of financial statements m conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes Actual results could differ from these estimates. The most significant estimates included in the preparation of the financial statements are related to actuarial assumptions used m the determination of the pension asset and liability, postretirement benefit liability and the valuation of deferred tax assets F-ll MAFCO CONSOLIDATED GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. ACQUISITIONS AND DISPOSITIONS http //www edgarpro.com/EFX dll/EDGARpro dll?FetchFilingHTMLl?ID=969943&Ses.. 10/19/2003