diff --git a/salt/state.py b/salt/state.py
index 625df33381..5f82b59703 100644
--- a/salt/state.py
+++ b/salt/state.py
@@ -1324,6 +1324,15 @@ class BaseHighState(object):
                             ext[name]['__sls__'] = sls
                         if '__env__' not in ext[name]:
                             ext[name]['__env__'] = env
+                        for key in ext[name]:
+                            if key.startswith('_'):
+                                continue
+                            if not isinstance(ext[name][key], list):
+                                continue
+                            if '.' in key:
+                                comps = key.split('.')
+                                ext[name][comps[0]] = ext[name].pop(key)
+                                ext[name][comps[0]].append(comps[1])
                         if '__extend__' not in state:
                             state['__extend__'] = [ext]
                         else:
@@ -1331,27 +1340,7 @@ class BaseHighState(object):
                 for name in state:
                     if not isinstance(state[name], dict):
                         if name == '__extend__':
-                            for name_ in state[name]:
-                                if isinstance(state[name][name_], basestring):
-                                    # Is this is a short state, it needs to be
-                                    # padded
-                                    if '.' in state[name][name_]:
-                                        comps = state[name][name_].split('.')
-                                        state[name][name_] = {comps[0]: [comps[1]]}
-                                        continue
-                                errors.append(('Name {0} in sls {1} is not a dictionary'
-                                               .format(name_, sls)))
-
-                                # TODO add extend support for new dotted standrd decs
-                                for key in state[name][name_]:
-                                    if key.startswith('_'):
-                                        continue
-                                    if not isinstance(state[name][name_][key], list):
-                                        continue
-                                    if '.' in key:
-                                        comps = key.split('.')
-                                        state[name][name_][comps[0]] = state[name].pop(key)
-                                        state[name][name_][comps[0]].append(comps[1])
+                            continue
                         
                         if isinstance(state[name], basestring):
                             # Is this is a short state, it needs to be padded