ACQUISITION POLICY

PREPARED BY:
APPROVED BY:
REVISION DATE:
EFFECTIVE DATE:
The following sample outlines a set of policies and procedures for acquisitions/new business developments.

PURPOSE
The purpose of this standard is to detail the acquisitions/new business developments process for Company X,
including subsidiaries.

SCOPE
This standard applies to the initiation, due diligence, execution, and purchase accounting and integration of all
acquisitions for Company X, including subsidiaries.

POLICY
All acquisitions for Company X locations, regardless of size, will be executed through the Acquisition/Integration
Committee.

DEFINITIONS
Regulation S-X: The regulation that governs the requirements for financial statements under the Securities Act of
1933, and the Securities Exchange Act of 1934.

PROCEDURES
REVIEW OF THE ACQUISITION
For all acquisitions the Corporate Financial Reporting Department will determine whether or not the acquisition
meets the requirements of Rule 3.05 of Regulation S-X:
If the acquisition meets the rule, then the financial statements of the acquired company will be audited and filed
with the Securities and Exchange Commission (SEC).
If the acquisition is not large enough to meet the requirements of Rule 3.05 of Regulation S-X, then the financial
statements of the acquired company do not need to be audited or filed with the SEC.
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Approval from the Board of Directors is necessary for all acquisitions that meet any of the following conditions:
Investment in acquiree as a % of consolidated total assets is greater than 10%.
Proportionate share of the total assets of the acquiree as a % of consolidated total assets is greater than 10%.
Income before taxes, extraordinary items, and cumulative effect of change in accounting principle of acquiree as
% of consolidated income before taxes is greater than 10%.
The Acquisition/Integration Steering Committee must be involved in all potential acquisitions and business
integration issues to ensure the proper accounting, legal, information technology/systems and operational items
are addressed prior to execution. The Acquisition/Integration Steering Committee will be composed of members
from the Corporate Accounting, Corporate Legal, and IT Departments, as well as Operations and Executive
Management.
Due diligence will be performed for all acquisitions. A Due Diligence Checklist will be completed and signed by
appropriate personnel to ensure all items are addressed prior to execution and provide evidence that due
diligence was performed.
The CFO is responsible for reviewing all due diligence documentation and determining whether all items noted
during the due diligence process are adequately addressed prior to executing contracts.
An Acquisition Closing Checklist will be completed and signed by appropriate personnel to ensure all items are
addressed prior to execution and provide evidence that the acquisition process was followed.

ACQUISITION CONTRACT EXECUTION

The CEO, COO, CFO, and/or General Counsel must review and execute contracts for all acquisitions. Execution
of contracts will be done in accordance with approval requirements noted above.
Once a contract is executed, a copy will be given to the Corporate Accounting, Corporate Financial Reporting, and
Corporate Legal Departments.

VALUATION OF ACQUISITION
Valuation of all accounts will be performed for all acquisitions.
Beginning balances for the acquired company will be booked based on the results of the valuation.
A valuation will be performed by a third party at the discretion of the CFO.
The value assigned to goodwill must equal the residual value between the purchase price and the asset valuation.
All valuation documentation will be reviewed for reasonableness and approved by the CFO, and Corporate
Controller. This documentation will be provided to Corporate Financial Reporting Manager in a timely manner.

FINANCIAL REPORTING OF ACQUISITION

Purchase Accounting Entries:
The completed Acquisition Closing Checklist will be sent to the Corporate Accounting Department providing
notification of the acquisition to ensure timely preparation of the purchase accounting journal entries.

Financial Reporting:
For acquisitions that meet the requirements of Rule 3.05 of Regulation S-X, an 8-K will be filed disclosing the
closure of the acquisition.
Based on the valuation and due diligence, the Corporate Financial Reporting Department will file the pro forma
financial statements and the audited financial statements of the acquired company for the periods required
under the rule in a separate 8-K filing.
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