2018 Kimley-Horn Report with Disclaimer

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KIMLEY‐HORN AND ASSOCIATES, INC. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2018 AND 2017 (SEE INDEPENDENT ACCOUNTANT’S REVIEW REPORT) 9 Note 1—Summary of significant accounting policies (continued) Goodwill - During 2017 and 2016, the Company was party to two different business combinations. In conjunction with these business combinations, the excess of the purchase price over the net assets acquired was allocated to goodwill. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-02, Accounting for Goodwill, a consensus of the Private Company Council, the Company amortizes goodwill on a straight-line basis over a 10-year useful life and only evaluates goodwill for impairment at the entity level when a triggering event occurs. During the years ended December 31, 2018 and 2017, no triggering events occurred requiring impairment testing; therefore, no impairment loss was recorded. Goodwill and related accumulated amortization, respectively, were $330,000 and $70,583 in 2018 and $330,000 and $37,583 in 2017. Income Taxes - The Company uses the cash method of accounting for income tax purposes. The income (loss) of the Company is included in the consolidated federal and state income tax returns of APHC, Inc. Where state income tax laws do not permit the filing of a consolidated income tax return, separate returns are filed. The Company provides for current income tax expense (benefit) on a separate company basis. The Company is only subject to U.S. federal, state, and local tax examinations by taxing authorities for three years from the date of filing. The Company uses the asset and liability approach to recognize the tax effects of temporary differences between financial reporting and tax purposes at enacted tax rates expected to be in effect when such amounts are recovered or settled. Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Other Comprehensive Income - Comprehensive income includes all nonshareholder changes in equity during a period and is divided into two broad classifications: net income and other comprehensive income (“OCI”). OCI includes revenues, expenses, gains, and losses that are excluded from earnings under U.S. generally accepted accounting principles. For the Company, OCI consists of amounts related to post-retirement health benefits.