8-K

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 12, 2014

The Laclede Group, Inc.

(Exact name of registrant as specified in its charter)

Missouri	1-16681	74-2976504
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

720 Olive Street

St. Louis, Missouri 63101

(Address of principal executive offices, including ZIP code)

(314) 342-0500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 13e-4(c))

Item 8.01 Other Events.

On April 5, 2014, The Laclede Group, Inc. (“Laclede”) entered into a definitive agreement to acquire from Energen Corporation (“Energen”) all of the outstanding shares of stock (the “Alagasco Transaction”) of Alabama Gas Corporation (“Alagasco”). The Alagasco Transaction will be effected pursuant to a stock purchase agreement among Laclede, Energen and Alagasco (the “Acquisition Agreement”). The consideration for the Alagasco Transaction is $1.6 billion, including the assumption of approximately $250 million of long-term debt, including the current portion. Laclede has agreed to make an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, to treat the Alagasco Transaction as a deemed purchase and sale of assets for tax purposes. The consideration will be subject to customary post-closing adjustments for cash, indebtedness and working capital. Following completion of the Alagasco Transaction, Alagasco will be a wholly-owned subsidiary of Laclede.

Laclede has received the final approval by the Alabama public utility regulators and anticipates completing the acquisition of Alagasco before the end of the fourth quarter of fiscal year 2014.

Laclede is filing the information under this Item 8.01 solely to file the required historical unaudited condensed financial statements of Alagasco and the unaudited pro forma combined condensed financial statements, which give pro forma effect to the Alagasco Transaction described above, and the acquisition of the assets and liabilities of Missouri Gas Energy (“MGE”) on September 1, 2013 (the “MGE Transaction”).

This Item 8.01 contains:

• Historical unaudited condensed financial statements of Alagasco, in accordance with Rule 3-05 of Regulation S-X, included as Exhibit 99.1, which is incorporated by reference; and

• Pro forma financial information of Laclede, MGE and Alagasco on a combined basis in accordance with Article 11 of Regulation S-X giving effect to certain pro forma events relating to Laclede’s pending acquisition of Alagasco, included as Exhibit 99.2 hereto, which is incorporated herein by reference.

This information under this Item 8.01 and Exhibits 99.1 and 99.2 attached hereto are hereby incorporated by reference into Laclede’s Registration Statement on Form S-3 (Registration No. 333-190388) filed with the Securities and Exchange Commission on August 6, 2013, as amended.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Filed herewith are the following financial statements of Alagasco:

• Unaudited Condensed Financial Statements of Alagasco as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013 attached hereto.

(b) Pro Forma Financial Information.

Filed herewith is the following pro forma financial information:

• Unaudited Pro Forma Combined Condensed Balance Sheet as of June 30, 2014, Unaudited Pro Forma Combined Condensed Statement of Income for the nine months ended June 30, 2014, and Unaudited Pro Forma Combined Condensed Statement of Income for the year ended September 30, 2013 of Laclede.

(d) Exhibits.

The following exhibits are filed as part of this report:

99.1 Unaudited Condensed Financial Statements of Alabama Gas Corporation as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013

99.2 Unaudited Pro Forma Combined Condensed Balance Sheet as of June 30, 2014, Unaudited Pro Forma Combined Condensed Statement of Income for the nine months ended June 30, 2014, and Unaudited Pro Forma Combined Condensed Statement of Income for the year ended September 30, 2013 of The Laclede Group, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE LACLEDE GROUP, INC.
Date: August 12, 2014	By:	/s/ S.P. Rasche
		S.P. Rasche Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit Number	Description
99.1	Unaudited Condensed Financial Statements of Alabama Gas Corporation as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013
99.2	Unaudited Pro Forma Combined Condensed Balance Sheet as of June 30, 2014, Unaudited Pro Forma Combined Condensed Statement of Income for the nine months ended June 30, 2014, and Unaudited Pro Forma Combined Condensed Statement of Income for the for the year ended September 30, 2013 of The Laclede Group, Inc.

EX-99.1

Exhibit 99.1

ALABAMA GAS CORPORATION

INDEX TO FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULES

	Page
Financial Statements
Statements of Income for the three months ended June 30, 2014 and 2013		2
Balance Sheets as of June 30, 2014 and December 31, 2013		3
Statements of Cash Flows for the six months ended June 30, 2014 and 2013		5
Notes to Financial Statements		6
Controls and Procedures		12

Schedules other than those listed above are omitted because they are not required, not applicable, or the required information is shown in the financial statements or notes thereto.

1

ALABAMA GAS CORPORATION

STATEMENTS OF INCOME

(Unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
(in thousands)	2014			2013			2014			2013
Operating Revenues	$	93,873		$	104,514		$	357,774		$	342,199
Operating Expenses
Cost of gas		38,468			47,571			166,582			143,013
Operations and maintenance		34,771			36,005			70,995			74,022
Depreciation and amortization		11,445			10,873			22,770			21,602
Income taxes
Current		(687	)		(1,778	)		24,530			24,143
Deferred		227			1,335			1,494			4,355
Taxes, other than income taxes		7,243			7,846			23,130			22,050
Total operating expenses		91,467			101,852			309,501			289,185
Operating Income		2,406			2,662			48,273			53,014
Other Income (Expense)
Allowance for funds used during construction		62			227			135			446
Other income		1,090			361			2,598			1,111
Other expense		(428	)		(121	)		(883	)		(190	)
Total other income		724			467			1,850			1,367
Interest Expense
Interest on long-term debt		3,375			3,377			6,752			6,755
Other interest expense		370			456			958			1,108
Total interest expense		3,745			3,833			7,710			7,863
Net Income (Loss)	$	(615	)	$	(704	)	$	42,413		$	46,518

The accompanying notes are an integral part of these unaudited financial statements.

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ALABAMA GAS CORPORATION

BALANCE SHEETS

(Unaudited)

(in thousands)	June 30, 2014			December 31, 2013
ASSETS
Property, Plant and Equipment
Utility plant	$	1,517,534		$	1,491,433
Less accumulated depreciation		624,704			605,924
Utility plant, net		892,830			885,509
Other property, net		40			41
Current Assets
Cash		11,807			3,032
Accounts receivable
Gas		49,938			103,301
Other		5,347			5,447
Affiliated companies		13,172			4,662
Allowance for doubtful accounts		(5,000	)		(5,000	)
Inventories
Storage gas inventory		31,975			32,095
Materials and supplies		5,098			5,471
Liquified natural gas in storage		2,877			3,634
Regulatory assets		2,316			2,756
Income tax receivable		—			3,644
Deferred income taxes		21,095			20,049
Prepayments and other		987			4,654
Total current assets		139,612			183,745
Other Assets
Regulatory assets		91,857			84,890
Other postretirement assets		28,985			26,457
Deferred charges and other		21,830			17,433
Total other assets		142,672			128,780
TOTAL ASSETS	$	1,175,154		$	1,198,075

The accompanying notes are an integral part of these unaudited financial statements.

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ALABAMA GAS CORPORATION

BALANCE SHEETS

(Unaudited)

(in thousands, except share data)	June 30, 2014		December 31, 2013
LIABILITIES AND CAPITALIZATION
Capitalization
Preferred stock, cumulative, $0.01 par value, 120,000 shares authorized	$	—	$	—
Common shareholder’s equity
Common stock, $0.01 par value; 3,000,000 shares authorized, 1,972,052 shares issued at June 30, 2014 and December 31, 2013		20		20
Premium on capital stock		31,682		31,682
Capital surplus		2,802		2,802
Retained earnings		370,899		350,076
Total common shareholder’s equity		405,403		384,580
Long-term debt		199,830		249,923
Total capitalization		605,233		634,503
Current Liabilities
Long-term debt due within one year		50,000		—
Notes payable to banks		—		50,000
Accounts payable		38,646		48,653
Accrued taxes		37,273		28,027
Customer deposits		20,102		21,692
Amounts due customers		9,556		16,990
Accrued wages and benefits		4,519		7,682
Regulatory liabilities		64,401		49,006
Other		10,055		10,113
Total current liabilities		234,552		232,163
Deferred Credits and Other Liabilities
Deferred income taxes		208,171		205,631
Pension liabilities		28,479		20,191
Regulatory liabilities		82,580		94,125
Other		16,139		11,462
Total deferred credits and other liabilities		335,369		331,409
Commitments and Contingencies
TOTAL LIABILITIES AND CAPITALIZATION	$	1,175,154	$	1,198,075

The accompanying notes are an integral part of these unaudited financial statements.

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ALABAMA GAS CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended June 30, (in thousands)	2014			2013
Operating Activities
Net income	$	42,413		$	46,518
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,770			21,602
Deferred income taxes		1,494			4,355
Bad debt expense		910			450
Gain on sale of assets		(703	)		—
Other, net		(141	)		7,083
Net change in:
Accounts receivable		15,172			8,179
Inventories		1,250			11,512
Accounts payable		(7,185	)		(6,828	)
Amounts due customers, including gas supply pass-through		33,839			26,797
Income tax receivable		3,644			2,762
Pension and other postretirement benefit contributions		(1,590	)		(5,600	)
Other current assets and liabilities		8,101			16,863
Net cash provided by operating activities		119,974			133,693
Investing Activities
Additions to property, plant and equipment		(31,703	)		(44,679	)
Net increases (decreases) in advances from affiliates		(8,510	)		2,378
Proceeds from sale of assets		797			—
Other, net		(100	)		(500	)
Net cash used in investing activities		(39,516	)		(42,801	)
Financing Activities
Payment of dividends on common stock		(21,590	)		(18,876	)
Reduction of long-term debt		(93	)		(10	)
Net change in short-term debt		(50,000	)		(77,000	)
Net cash used in financing activities		(71,683	)		(95,886	)
Net change in cash and cash equivalents		8,775			(4,994	)
Cash and cash equivalents at beginning of period		3,032			5,559
Cash and cash equivalents at end of period	$	11,807		$	565

The accompanying notes are an integral part of these unaudited financial statements.

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CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

ALABAMA GAS CORPORATION

1. BASIS OF PRESENTATION

The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes thereto for the years ended December 31, 2013, 2012 and 2011, included in the 2013 Annual Report of Energen Corporation (Energen) and Alabama Gas Corporation (Alagasco or the Company) on Form 10-K. Alagasco, a wholly owned subsidiary of Energen, is the largest natural gas distribution utility in the State of Alabama, serving customers primarily in central and north Alabama. Alagasco has a September 30 fiscal year for rate-setting purposes (rate year) and reports on a calendar year for the Securities and Exchange Commission and all other financial accounting reporting purposes. The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the disclosures required for complete financial statements. Alagasco’s business is seasonal in character and influenced by weather conditions. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the year. All adjustments to the unaudited condensed financial statements that are in the opinion of management, necessary for a fair statement of the results for the interim periods have been recorded. Such adjustments consist of normal recurring items. Certain reclassifications were made to conform prior years’ financial statements to the current-quarter presentation.

In April 2014, Energen signed a stock purchase agreement to sell Alagasco to The Laclede Group, Inc. (Laclede) for $1.6 billion, subject to closing adjustments, which includes an estimated $1.28 billion in cash and the assumption of $320 million in debt. This sale is expected to close during 2014.

2. REGULATORY MATTERS

Alagasco is subject to regulation by the Alabama Public Service Commission (APSC) which established the Rate Stabilization and Equalization (RSE) rate-setting process in 1983. Alagasco’s current RSE order has a term extending through September 30, 2018 and will continue beyond September 30, 2018, unless the APSC enters an order to the contrary in a manner consistent with law. In the event of unforeseen circumstances, whether physical or economic, of the nature of force majeure and including a change in control, the APSC and Alagasco will consult in good faith with respect to modifications, if any. Effective January 1, 2014, Alagasco’s allowed range of return on average common equity is 10.5 percent to 10.95 percent with an adjusting point of 10.8 percent. The previous allowed range of return on average common equity was 13.15 percent to 13.65 percent through December 31, 2013. Alagasco is eligible to receive a performance-based adjustment of 5 basis points to the return on equity adjusting point, based on meeting certain customer satisfaction criteria. Under RSE, the APSC conducts quarterly reviews to determine whether Alagasco’s return on average common equity at the end of the rate year will be within the allowed range of return. Reductions in rates can be made quarterly to bring the projected return within the allowed range; increases, however, are allowed only once each rate year, effective December 1, and cannot exceed 4 percent of prior-year revenues. During the three months and six months ended June 30, 2014, Alagasco had net pre-tax reductions in revenues of $4.0 million and $20.3 million, respectively, to bring the return on average common equity to midpoint within the allowed range of return. During the three months and six months ended June 30, 2013, Alagasco had pre-tax reductions in revenues of $3.8 million and $6.3 million, respectively, to bring the return on average common equity to midpoint within the allowed range of return. Under the provisions of RSE, an $8.5 million decrease, $10.3 million increase and $7.8 million increase in revenues became effective January 1, 2014, December 1, 2013 and 2012, respectively. The equity upon which a return will be permitted cannot exceed 56.5 percent of total capitalization, subject to certain adjustments. The APSC approved the sale of Alagasco to Laclede, and the order for approval to transfer one hundred percent ownership of common stock of Alagasco from Energen to Laclede was signed on July 24, 2014. This sale is expected to close during 2014.

The inflation-based Cost Control Mechanism (CCM), established by the APSC, allows for annual increases to operations and maintenance (O&M) expense. The CCM range is Alagasco’s 2007 actual rate year O&M expense (Base Year) inflation-adjusted using the June Consumer Price Index For All Urban Consumers each rate year plus or minus 1.75 percent (Index Range). If rate year O&M expense falls within the Index Range, no adjustment is required. If rate year O&M expense exceeds the Index Range, three-quarters of the difference is returned to customers through future rate adjustments. To the extent that rate year O&M is less than the Index Range, the utility benefits by one-half of the difference through future rate adjustments. Certain items that fluctuate based on situations demonstrated to be beyond Alagasco’s control may be excluded from the CCM calculation. During the second quarter of 2014, Alagasco recorded an increase to revenue of approximately $1.0 million pre-tax to reflect an estimated O&M expense benefit resulting from being below the Index Range. This estimate was based on actual O&M expense through June, 2014, and budgeted O&M expense through September, 2014.

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Alagasco’s rate schedules for natural gas distribution charges contain a Gas Supply Adjustment (GSA) rider, established in 1993, which permits the pass-through to customers of changes in the cost of gas supply. Alagasco’s tariff provides a temperature adjustment mechanism, also included in the GSA, which is designed to moderate the impact of departures from normal temperatures on Alagasco’s earnings. The temperature adjustment applies primarily to residential, small commercial and small industrial customers. Other non-temperature weather related conditions that may affect customer usage are not included in the temperature adjustment.

The APSC approved an Enhanced Stability Reserve (ESR) in 1998, which was subsequently modified and expanded in 2010. As currently approved, the ESR provides deferred treatment and recovery for the following: (1) extraordinary O&M expenses related to environmental response costs; (2) extraordinary O&M expenses related to self-insurance costs that exceed $1 million per occurrence; (3) extraordinary O&M expenses, other than environmental response costs and self-insurance costs, resulting from a single force majeure event or multiple force majeure events greater than $275,000 and $412,500, respectively, during a rate year; and (4) negative individual large commercial and industrial customer budget revenue variances that exceed $350,000 during a rate year. Charges to the ESR are subject to certain limitations which may disallow deferred treatment and which prescribe the timing of recovery. Funding to the ESR is provided as a reduction to the refundable negative salvage balance over its nine year term beginning December 1, 2010. Subsequent to the nine year period and subject to APSC authorization, Alagasco expects to be able to recover underfunded ESR balances over a five year amortization period with an annual limitation of $660,000. Amounts in excess of this limitation are deferred for recovery in future years.

3. EMPLOYEE BENEFIT PLANS

Effective April 30, 2014, Energen Corporation separated one of its defined benefit non-contributory pension plans into an Energen and an Alagasco plan reflecting the separation of assets and obligations in accordance with ERISA provisions. Energen and Alagasco remeasured these plans using current assumptions.

The components of net periodic benefit cost for Alagasco’s two defined benefit non-contributory pension plans and allocated costs from the Energen nonqualified supplemental pension plans were as follows:

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2014			2013			2014			2013
Components of net periodic benefit cost:
Service cost	$	1,696		$	2,176		$	3,393		$	4,352
Interest cost		1,439			1,612			2,878			3,225
Expected long-term return on assets		(1,679	)		(2,315	)		(3,359	)		(4,632	)
Actuarial loss		1,110			1,937			2,220			3,878
Prior service cost amortization		71			72			143			144
Net periodic expense	$	2,637		$	3,482		$	5,275		$	6,967

Alagasco anticipates required contributions of approximately $2.9 million during 2014 to the qualified pension plans. Alagasco expects sufficient funding credits, as established under Internal Revenue Code Section 430(f), exist to meet the required funding. Additionally, it is not anticipated that the funded status of the qualified pension plans will fall below statutory thresholds requiring accelerated funding or constraints on benefit levels or plan administration. Alagasco made a discretionary contribution of $1.4 million to the qualified pension plans in January 2014. During 2014, Alagasco may make discretionary contributions to the qualified pension plans depending on the amount and timing of employee retirements and market conditions. In the first quarter of 2014, Alagasco incurred a settlement charge of $10.2 million for the payment of lump sums from the qualified defined benefit pension plans, which was recognized as a pension asset in regulatory assets at Alagasco.

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Also effective April 30, 2014, Energen Corporation separated its postretirement health care and life insurance benefit plans into separate plans established for Energen and Alagasco employees in accordance with ERISA provisions. Energen and Alagasco remeasured these plans using current assumptions.

The components of net periodic postretirement benefit expense for Alagasco’s postretirement benefit plans were as follows:

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2014			2013			2014			2013
Components of net periodic benefit cost:
Service cost	$	132		$	314		$	265		$	629
Interest cost		614			664			1,227			1,328
Expected long-term return on assets		(1,172	)		(994	)		(2,343	)		(1,989	)
Actuarial loss		(388	)		—			(777	)		—
Transition amortization		17			251			34			502
Net periodic expense	$	(797	)	$	235		$	(1,594	)	$	470

There are no required contributions to the postretirement benefit plans during 2014.

4. COMMITMENTS AND CONTINGENCIES

Commitments and Agreements: Certain of Alagasco’s long-term contracts associated with the delivery and storage of natural gas include fixed charges of approximately $140 million through September 2024. During both the six months ending June 30, 2014 and 2013, Alagasco recognized approximately $23.5 million and $26.0 million, respectively, of long-term commitments through expense and its regulatory accounts in the accompanying financial statements. Alagasco also is committed to purchase minimum quantities of gas at market-related prices or to pay certain costs in the event the minimum quantities are not taken. These purchase commitments are approximately 115 Bcf through August 2020.

Alagasco purchases gas as an agent for certain of its large commercial and industrial customers. Alagasco has, in certain instances, provided commodity-related guarantees to the counterparties in order to facilitate these agency purchases. Liabilities existing for gas delivered to customers subject to these guarantees are included in the balance sheets. In the event the customer for whom the guarantee was entered fails to take delivery of the gas, Alagasco can sell such gas for the customer, with the customer liable for any resulting loss. Although the substantial majority of purchases under these guarantees are for the customers’ current monthly consumption and are at current market prices, in some instances, the purchases are for an extended term at a fixed price. At June 30, 2014, the fixed price purchases under these guarantees had a maximum term outstanding through December 2014 with an aggregate purchase price of $0.3 million with a market value of $0.3 million.

Legal Matters: Alagasco is, from time to time, a party to various pending or threatened legal proceedings and has accrued a provision for its estimated liability. Certain of these lawsuits include claims for punitive damages in addition to other specified relief. Alagasco recognizes its liability for contingencies when information available indicates both a loss is probable and the amount of the loss can be reasonably estimated. Based upon information presently available, and in light of available legal and other defenses, contingent liabilities arising from threatened and pending litigation are not considered material in relation to the financial position of Alagasco. It should be noted, however, that there is uncertainty in the valuation of pending claims and prediction of litigation results.

On December 17, 2013, an incident occurred at a Housing Authority apartment complex in Birmingham, Alabama which resulted in one fatality, personal injuries and property damage. Alagasco is cooperating with the National Transportation Safety Board which is investigating the incident. Alagasco has been named as a defendant in several lawsuits arising from the incident and additional lawsuits and claims may be filed against Alagasco.

Environmental Matters: Various environmental laws and regulations apply to the operations of Alagasco. Historically, the cost of environmental compliance has not materially affected Alagasco’s financial position, results of operations or cash flows. New regulations, enforcement policies, claims for damages or other events could result in significant unanticipated costs.

Alagasco is in the chain of title of nine former manufactured gas plant sites, four of which it still owns, and five former manufactured gas distribution sites, one of which it still owns. Management expects that, should future remediation of the sites be required,

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Alagasco’s share of the remediation costs will not materially affect the financial position of Alagasco. During 2011, a removal action was completed at the Huntsville, Alabama manufactured gas plant site pursuant to an Administrative Settlement Agreement and Order on Consent among the EPA, Alagasco and the current site owner.

In 2012, Alagasco responded to an EPA Request for Information Pursuant to Section 104 of CERCLA relating to the 35th Avenue Superfund Site located in North Birmingham, Jefferson County, Alabama. The Request related to a former site of a manufactured gas distribution facility owned by Alagasco and located in the vicinity of the 35th Avenue Superfund Site. In September 2013, Alagasco received from the EPA a General Notice Letter and Invitation to Conduct a Removal Action at the 35th Avenue Superfund Site. The letter identifies Alagasco as a PRP under CERCLA for the cleanup of the Site or costs the EPA incurs in cleaning up the Site. The EPA also offered the PRP group the opportunity to conduct Phase I of the proposed removal action which involved removal activities at approximately 50 residences that purportedly exceed certain risk levels for contamination. Alagasco has discussed its designation as a PRP further with the EPA, and Alagasco has requested additional information from the EPA regarding its designation as a PRP. Alagasco has also been approached by a law firm regarding entry into an agreement to toll the statute of limitations with potential plaintiffs related to purported damages allegedly incurred by such potential plaintiffs in connection with the 35th Avenue Superfund Site, and is considering whether to enter into such a tolling arrangement. Alagasco has not been provided information at this time that would allow it to determine the extent, if any, of its potential liability with respect to the 35th Avenue Superfund Site and the proposed removal action, and therefore Alagasco has not agreed to undertake the proposed removal activities and no amount has been accrued as of June 30, 2014.

5. LONG-TERM DEBT AND NOTES PAYABLE

Long-term debt consisted of the following:

(in thousands)	June 30, 2014		December 31, 2013
5.368% Notes, due December 1, 2015	$	80,000	$	80,000
5.20% Notes, due January 15, 2020		40,000		40,000
3.86% Notes, due December 21, 2021		50,000		50,000
5.70% Notes, due January 15, 2035		34,830		34,923
5.90% Notes, due January 15, 2037		45,000		45,000
		249,830		249,923
Less amounts due within one year		50,000		—
Total	$	199,830	$	249,923

The aggregate maturities of Alagasco’s long-term debt outstanding at June 30, 2014 are as follows:

(in thousands)
Remaining 2014	2015		2016		2017		2018		2019 and thereafter
$50,000	$	80,000		—		—		—	$	119,830

Alagasco’s 3.86 percent Notes due December 21, 2021 may be required to be repaid upon the sale of Alagasco as specified under certain covenants.

The long-term debt and short-term debt agreements of Alagasco contain financial and nonfinancial covenants including routine matters such as timely payment of principal and interest, maintenance of corporate existence and restrictions on liens. Although none of the agreements have covenants or events of default based on credit ratings, the interest rates applicable to the Alagasco syndicated credit facility discussed below may adjust based on credit rating changes. All of Alagasco’s debt is unsecured.

Under Alagasco’s Indenture dated November 1, 1993 with The Bank of New York as Trustee, a cross default provision provides that any debt default by Alagasco of more than $10 million will constitute an event of default by Alagasco. The Indenture does not include a restriction on the payment of dividends.

Alagasco Credit Facility: On October 30, 2012, Alagasco entered into a $100 million five-year syndicated unsecured credit facility (syndicated credit facility) with domestic and foreign lenders. Borrowings under the credit facility are subject to the execution of

9

individual note agreements each with maturity dates of less than one year. Accordingly, outstanding amounts due under the credit facility are classified as short term obligations in the accompanying financial statements. Alagasco has been authorized by the APSC to borrow up to $200 million at any one time under the short-term credit facility.

The financial covenants of the Alagasco credit facility limit Alagasco to a maximum consolidated debt to capitalization ratio of no more than 65 percent as of the end of any fiscal quarter. Alagasco may not pay dividends during an event of default or if the payment would result in an event of default. Also under the credit facility, a cross default provision provides that any debt default by Alagasco of more than $50 million will constitute an event of default by Alagasco.

Upon an uncured event of default under the credit facility, all amounts owing under the defaulted credit facility, if any, depending on the nature of the event of default will automatically, or may upon notice by the administrative agent or the requisite lenders thereunder, become immediately due and payable and the lenders may terminate their commitments under the defaulted facility. Alagasco was in compliance with the terms of its credit facility as of June 30, 2014.

The following is a summary of information relating to the credit facility:

(in thousands)	June 30, 2014			December 31, 2013
Notes payable to banks	$	—		$	50,000
Available for borrowings		100,000			50,000
Total	$	100,000		$	100,000
Alagasco maximum amount outstanding at any month-end	$	55,000		$	75,000
Alagasco average daily amount outstanding	$	17,956		$	35,027
Alagasco weighted average interest rates based on:
Average daily amount outstanding		1.28	%		1.12	%
Amount outstanding at period-end		—	%		1.26	%

Total interest expense for Alagasco was $3.7 million and $7.7 million for the three months and six months ended June 30, 2014, respectively. Alagasco’s total interest expense was $3.8 million and $7.9 million for the three months and six months ended June 30, 2013, respectively. At June 30, 2014, Alagasco paid commitment fees on the unused portion of available credit facilities of 15 basis points per annum.

6. FINANCIAL INSTRUMENTS

The stated value of cash, accounts receivable (net of allowance), and short-term debt approximates fair value due to the short maturity of the instruments. The fair value of Alagasco’s fixed-rate long-term debt, including the current portion, was approximately $266.6 million and $258.8 million and had a carrying value of $249.8 million and $249.9 million at June 30, 2014 and December 31, 2013, respectively. The fair values are based on market prices of similar debt issues having the same remaining maturities, redemption terms and credit rating. Short-term debt is classified as Level 1 fair value and long-term debt is classified as Level 2 fair value.

Finance Receivables: Alagasco finances third-party contractor sales of merchandise including gas furnaces and appliances. At June 30, 2014 and December 31, 2013, Alagasco’s finance receivable totaled $10.6 million and $10.8 million, respectively. These finance receivables currently have an average balance of approximately $3,000 with terms of up to 84 months. Financing is available only to qualified customers who meet creditworthiness thresholds for customer payment history and external agency credit reports. Alagasco relies upon ongoing payments as the primary indicator of credit quality during the term of each contract. The allowance for credit losses is recognized using an estimate of write-off percentages based on historical experience applied to an aging of the finance receivable balance. Delinquent accounts are evaluated on a case-by-case basis and, absent evidence of debt repayment after 90 days, are due in full and assigned to a third-party collection agency. The remaining finance receivable is written off approximately 12 months after being assigned to a third-party collection agency. Alagasco had finance receivables past due 90 days or more of $0.3 million and $0.4 million as of June 30, 2014 and December 31, 2013, respectively.

10

The following table sets forth a summary of changes in the allowance for credit losses as follows:

(in thousands)
Allowance for credit losses as of December 31, 2013	$	423
Provision		(118	)
Allowance for credit losses as of June 30, 2014	$	305

7. REGULATORY ASSETS AND LIABILITIES

The following table details regulatory assets and liabilities on the balance sheets:

(in thousands)	June 30, 2014				December 31, 2013
	Current		Noncurrent		Current		Noncurrent
Regulatory assets:
Pension assets	$	1,284	$	65,627	$	325	$	58,243
Accretion and depreciation of asset retirement obligations		—		18,825		—		18,046
Rate recovery of asset removal costs, net		—		3,405		—		4,601
Enhanced stability reserve		—		4,000		—		4,000
Gas supply adjustment		—		—		2,406		—
RSE adjustment		1,032		—		25		—
Total regulatory assets	$	2,316	$	91,857	$	2,756	$	84,890
Regulatory liabilities:
RSE adjustment	$	18,578	$	—	$	4,690	$	—
Unbilled service margin		6,445		—		28,504		—
Postretirement liabilities		—		26,948		—		26,197
Gas supply adjustment		25,985		—		—		—
Refundable negative salvage		13,360		26,760		15,779		39,663
Asset retirement obligation		—		28,152		—		27,528
Other		33		720		33		737
Total regulatory liabilities	$	64,401	$	82,580	$	49,006	$	94,125

8. ASSET RETIREMENT OBLIGATIONS

Alagasco recognizes a liability for the fair value of asset retirement obligations (ARO) in the periods incurred. Subsequent to initial measurement, liabilities are accreted to their present value and capitalized costs are depreciated over the estimated useful lives of the related assets. The ARO fair value liability is recognized on a discounted basis incorporating an estimate of performance risk specific to Alagasco.

Alagasco recognizes conditional obligations if such obligations can be reasonably estimated and a legal requirement to perform an asset retirement activity exists. Alagasco accrues removal costs on certain gas distribution assets over the useful lives of its property, plant and equipment through depreciation expense in accordance with rates approved by the APSC. Alagasco recorded a conditional asset retirement obligation, on a discounted basis, of $28.2 million and $27.5 million to purge and cap its gas pipelines upon abandonment and to remediate other related obligations, as a regulatory liability as of June 30, 2014 and December 31, 2013, respectively. Regulatory assets for rate recovery of accumulated asset removal costs of $3.4 million and $4.6 million as of June 30, 2014 and December 31, 2013, are included as regulatory assets in noncurrent assets on the balance sheets. The costs associated with asset retirement obligations are either currently being recovered in rates or are probable of recovery in future rates.

11

9. DISPOSITION OF PROPERTIES

In August 2013, Alagasco recorded a pre-tax gain of $10.9 million related to the sale of its Metro Operations Center which is located in Birmingham, Alabama, and has been in service since the 1940’s. Alagasco received approximately $13.8 million pre-tax in cash from the sale of this property. During the third quarter of 2013, the gain on the sale was recognized in other income and a related reduction in revenues was recognized to defer the gain as a regulatory liability pending review by the APSC. In conjunction with the receipt of the rate order from the APSC on December 20, 2013, Alagasco recognized the deferred revenues from this sale in the fourth quarter of 2013. Effective upon the sale of the Metro Operations Center, Alagasco leased the facility from the purchaser for a period of approximately 20 months.

In the second quarter of 2014, Alagasco sold property in Tuscaloosa resulting in a gain of approximately $0.7 million pre-tax, which was recorded in other income.

10. RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This update defines a discontinued operation as a disposal of a component or a group of components that is disposed of or is classified as held-for-sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. The amendment is effective for all annual periods beginning on or after December 15, 2014, and interim periods within those annual periods. The Company has adopted and is prospectively evaluating the impact of this ASU.

ITEM 4. CONTROLS AND PROCEDURES

Alabama Gas Corporation

(a) Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are designed to provide reasonable assurance of achieving their objectives and, as of the end of the period covered by this report, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level.

(b) During the most recent fiscal quarter covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

12

EX-99.2

EXHIBIT 99.2

THE LACLEDE GROUP, INC.

PRO FORMA FINANCIAL INFORMATION

(UNAUDITED)

The following Unaudited Pro Forma Combined Condensed Financial Statements (“pro forma financial statements”) give effect to the proposed acquisition by The Laclede Group, Inc. (“Laclede” or “the Company”) of Alabama Gas Corporation (“Alagasco”), the common stock and equity unit offerings completed on June 11, 2014, and the senior notes offering reflected in the preliminary prospectus supplement filed by Laclede on August 12, 2014. Effective September 1, 2013, Laclede purchased the assets and liabilities of Missouri Gas Energy (“MGE”). The pro forma financial statements for the year ended September 30, 2013 give effect to the MGE acquisition as though it occurred on October 1, 2012 in addition to the acquisition of Alagasco and related issuances of common stock, equity units and senior notes. The pro forma financial statements have been prepared for illustrative purposes only. The pro forma information is not necessarily indicative of what the combined company’s consolidated financial position or results of operations actually would have been had the transactions been completed as of the dates indicated. In addition, the unaudited pro forma combined condensed financial information does not purport to project the future financial position or operating results of the combined company. The pro forma adjustments are based on the information available at the time of the preparation of these pro forma financial statements.

The pro forma financial statements have been derived from:

• the audited consolidated financial statements of The Laclede Group, Inc. as of and for the year ended September 30, 2013 included in The Laclede Group, Inc.’s Form 10-K, as amended, for the fiscal year then ended;

• the audited financial statements of Alagasco as of and for the year ended December 31, 2013;

• the financial statements of MGE for the nine months ended June 30, 2013 (unaudited);

• the financial statements of MGE for the two months ended August 31, 2013 (unaudited);

• the consolidated financial statements of The Laclede Group, Inc. as of and for the nine months ended June 30, 2014 (unaudited) included in The Laclede Group, Inc.’s Form 10-Q for the quarterly period ended June 30, 2014; and

• the financial statements of Alagasco as of and for the nine months ended June 30, 2014 (unaudited).

Laclede’s acquisition of Alagasco (the “Alagasco acquisition”) will be accounted for in accordance with the acquisition method of accounting and the regulations of the Securities and Exchange Commission. The Unaudited Pro Forma Combined Condensed Statements of Income (“pro forma statements of income”) for the year ended September 30, 2013 and nine months ended June 30, 2014 give effect to the Alagasco acquisition as if it were completed on October 1, 2012.

Laclede completed the MGE acquisition on September 1, 2013. The results of Laclede for the year ended September 30, 2013 include the results of MGE for the one month period then ended. The pro forma statement of income for the year ending September 30, 2013 gives effect to the MGE acquisition as if it were completed on October 1, 2012 and is derived from the financial information denoted above. The pro forma adjustments relating to MGE are derived from the unaudited financial statements of MGE for the two months ended August 31, 2013. Additionally, the pro forma adjustments reflect the additional incremental

shares and additional incremental interest expense for the equity and debt offerings completed during 2013 to be reflected as if the offerings were both completed on October 1, 2012. These unaudited pro forma financial statements should be read in conjunction with the accompanying notes.

Laclede’s fiscal year ends on September 30 whereas Alagasco’s fiscal year ends on December 31. Due to this difference the unaudited pro forma combined condensed statement of income for the nine months ended June 30, 2014 are based on the historical financial information of Alagasco recast to match the accounting periods to those of Laclede.

The Alagasco historical information included in the unaudited pro forma combined condensed statement of income for the nine months ended June 30, 2014 was derived by adding Alagasco’s unaudited condensed statement of income for the six months ended June 30, 2014 and audited statement of income for the twelve months ended December 31, 2013 and then subtracting its unaudited condensed statement of income for the nine months ended September 30, 2013.

Additional financial information about Alagasco’s results for the three months ended December 31, 2013 is included in the accompanying Notes.

The historical consolidated financial information has been adjusted in the pro forma financial statements to give effect to pro forma events that are:

• directly attributable to the MGE acquisition;

• directly attributable to the Alagasco acquisition;

• factually supportable; and

• with respect to the pro forma statements of income, expected to have a continuing impact on the combined results of Laclede and Alagasco.

The pro forma financial statements do not reflect any cost savings (or associated costs to achieve such savings) from operating efficiencies or restructuring that could result from the Alagasco acquisition. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact Laclede’s financial results. The pro forma statements of income reflect adjustments to remove the effect of transaction costs associated with the Alagasco acquisition that have been incurred by Laclede and are included in its historical financial statements.

The pro forma financial statements have been presented for illustrative purposes only and are not necessarily indicative of results of operations and financial position that would have been achieved had the pro forma events taken place on the dates indicated, or the future consolidated results of operations or financial position of the combined company. Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in connection with the pro forma financial statements. Since the pro forma financial statements have been prepared in advance of the close of the Alagasco acquisition, the final amounts recorded upon closing may differ materially from the information presented. These estimates are subject to change pending further review of the assets acquired and liabilities assumed and additional information available at the time of closing.

The Company’s management believes that its assumptions provide a reasonable basis for presenting all of the significant effects of the Alagasco acquisition and that the pro forma adjustments give appropriate effect to those assumptions that are applied in the pro forma financial statements. Certain amounts in Alagasco’s historical balance sheets and statements of income have been reclassified to conform to Laclede’s presentation in these pro forma financial statements.

The Laclede Group, Inc. and Alabama Gas Corporation

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME

For the Nine Months Ended June 30, 2014

(Millions)

	The Laclede Group, Inc.			Alabama Gas Corporation		Reclassifications			Pro Forma Adjustments Relating to the Alagasco Acquisition			Pro Forma Adjustments Relating to the Financings			Notes	Pro Forma Combined
Operating Revenues:
Gas Utility	$	1,283.6		$	500.5	$										$	1,784.1
Gas Marketing and Other		121.3			—												121.3
Total Operating Revenues		1,404.9			500.5		—			—			—				1,905.4
Operating Expenses:
Gas Utility
Natural and propane gas		696.4			218.7												915.1
Other operation and maintenance		207.3			106.4												313.7
Depreciation and amortization		58.5			34.0												92.5
Taxes, other than income taxes		92.6			70.2		(37.8	)							F		125.0
Total Gas Utility Operating Expenses		1,054.8			429.3		(37.8	)									1,446.3
Gas Marketing and Other		175.3			—					(5.9	)				A		169.4
Total Operating Expenses		1,230.1			429.3		(37.8	)		(5.9	)		—				1,615.7
Operating Income		174.8			71.2		37.8			5.9			—				289.7
Other Income and (Income Deductions) - Net		(1.0	)		2.7												1.7
Interest Charges		31.2			11.6					1.2			16.4		B,C,D,E		60.4
Income (Loss) Before Income Taxes		142.6			62.3		37.8			4.7			(16.4	)			231.0
Income Tax Expense (Benefit)		43.1			—		37.8			1.8			(6.2	)	F		76.5
Net Income	$	99.5		$	62.3	$	—		$	2.9		$	(10.2	)		$	154.5
Weighted Average Number of Common Shares Outstanding:
Basic		33.3											9.7				43.0
Diluted		33.4											9.7				43.1
Basic Earnings per Share of Common Stock	$	2.97														$	3.59
Diluted Earnings per Share of Common Stock	$	2.97														$	3.58

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

The Laclede Group, Inc. and Alabama Gas Corporation

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET

As of June 30, 2014

(Millions)

	The Laclede Group, Inc.			Alabama Gas Corporation			Pro Forma Adjustments Relating to the Alagasco Acquisition			Pro Forma Adjustments Relating to the Financings		Notes	Pro Forma Combined
ASSETS
Utility Plant	$	2,360.3		$	1,517.5								$	3,877.8
Less: Accumulated depreciation and amortization		532.4			624.7									1,157.1
Net Utility Plant		1,827.9			892.8			—			—			2,720.7
Goodwill		210.0			—			757.5				G		967.5
Other Property and Investments		68.6			—			—			—			68.6
Current Assets:
Cash and cash equivalents		571.8			11.8			(1,182.8	)		619.7	H,I		20.5
Accounts receivable
Utility		127.8			49.9									177.7
Other		91.7			5.3									97.0
Affiliated companies		—			13.2									13.2
Allowance for doubtful accounts		(11.5	)		(5.0	)								(16.5	)
Delayed customer billings		28.7												28.7
Inventories
Natural gas stored underground		118.2			32.0									150.2
Liquified natural gas in storage		—			2.9									2.9
Propane gas		9.4			—									9.4
Materials and supplies at average cost		8.0			5.1									13.1
Deferred income taxes		—			21.1			(21.1	)			L		—
Regulatory Assets		—			2.3									2.3
Prepayments and other		51.1			1.0									52.1
Total Current Assets		995.2			139.6			(1,203.9	)		619.7			550.6
Deferred Charges:								—
Regulatory Assets		540.0			91.9									631.9
Other		15.0			50.8						5.3	I		71.1
Total Deferred Charges		555.0			142.7			—			5.3			703.0
Total Assets	$	3,656.7		$	1,175.1		$	(446.4	)	$	625.0		$	5,010.4
CAPITALIZATION AND LIABILITIES
Capitalization:
Total common stock equity	$	1,533.8		$	405.4		$	(408.2	)			J,K	$	1,531.0
Long-term debt (less current portion)		976.6			199.8						625.0	I		1,801.4
Total Capitalization		2,510.4			605.2			(408.2	)		625.0			3,332.4
Current Liabilities:
Notes payable		—			50.0			170.0				H		220.0
Accounts payable		152.0			38.6									190.6
Wages and compensation accrued		25.3			4.5									29.8
Customer deposits		—			20.1									20.1
Amounts due customers		—			9.6									9.6
Taxes accrued		56.1			37.3									93.4
Regulatory liabilities		—			64.4									64.4
Accrued liabilities and other		86.7			10.0									96.7
Total Current Liabilities		320.1			234.5			170.0			—			724.6
Deferred Credits and Other Liabilities:
Deferred Income Taxes		398.9			208.2			(208.2	)			L		398.9
Pension and postretirement benefit costs		209.7			28.5									238.2
Regulatory liabilities		90.1			82.6									172.7
Asset retirement obligations and other		74.3			—									74.3
Other		53.2			16.1									69.3
Total Deferred Credits and Other Liabilities		826.2			335.4			(208.2	)		—			953.4
Total Capitalization and Liabilities	$	3,656.7		$	1,175.1		$	(446.4	)	$	625.0		$	5,010.4

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

The Laclede Group, Inc. and Alabama Gas Corporation

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME

For the Year Ended September 30, 2013

(Millions)

	The Laclede Group, Inc. 9/30/2013		Missouri Gas Energy 9 Months Ended 6/30/2013			Pro Forma Adjustments Relating to Missouri Gas Energy			The Laclede Group, Inc. As Adjusted 9/30/2013		Alabama Gas Corporation 12/31/2013		Reclassifications			Pro Forma Adjustments Relating to the Alagasco Acquisition			Pro Forma Adjustments Relating to the Financings			Notes	Pro Forma Combined
Operating Revenues:
Gas Utility	$	847.2	$	446.0		$	45.1		$	1,338.3	$	533.3	$										$	1,871.6
Gas Marketing and Other		169.8		10.1			—			179.9		—												179.9
Total Operating Revenues		1,017.0		456.1			45.1			1,518.2		533.3		—			—			—				2,051.5
Operating Expenses:
Gas Utility
Natural and propane gas		433.4		272.2			10.7			716.3		215.5												931.8
Other operation and maintenance		180.3		82.5			19.9			282.7		143.1												425.8
Depreciation and amortization		48.3		22.7			5.0			76.0		43.9												119.9
Taxes, other than income taxes		60.1		36.2			4.5			100.8		71.8		(34.7	)							R		137.9
Total Gas Utility Operating Expenses		722.1		413.6			40.1			1,175.8		474.3		(34.7	)									1,615.4
Gas Marketing and Other		198.4		—			—			198.4		—												198.4
Total Operating Expenses		920.5		413.6			40.1			1,374.2		474.3		(34.7	)		—			—				1,813.8
Operating Income		96.5		42.5			5.0			144.0		59.0		34.7			—			—				237.7
Other Income and (Income Deductions) -Net		2.4		0.1			—			2.5		14.0												16.5
Interest Charges		28.6		(0.2	)		13.4			41.8		15.6					1.5			22.1		M,N,O,P,Q		81.0
Income (Loss) Before Income Taxes		70.3		42.8			(8.4	)		104.7		57.4		34.7			(1.5	)		(22.1	)			173.2
Income Tax Expense (Benefit)		17.6		17.6			(3.2	)		32.0		—		34.7			(1.0	)		(8.4	)	R		57.3
Net Income (Loss)	$	52.7	$	25.2		$	(5.2	)	$	72.7	$	57.4	$	—		$	(0.5	)	$	(13.7	)		$	115.9
Weighted Average Number of Common Shares Outstanding:
Basic		25.9					6.6			32.5										10.4				42.9
Diluted		26.0					6.6			32.6										10.4				43.0
Basic Earnings per Share of Common Stock	$	2.03							$	2.24													$	2.70
Diluted Earnings per Share of Common Stock	$	2.02							$	2.23													$	2.69

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

1. Description of the Transaction

On April 5, 2014, The Laclede Group, Inc. (“Laclede”), entered into a definitive agreement to acquire from Energen Corporation (“Energen”) all of the outstanding shares of stock (the “Alagasco Transaction”) of Alabama Gas Corporation (“Alagasco”). The Alagasco Transaction will be effected pursuant to a stock purchase agreement among Laclede, Energen and Alagasco (the “Acquisition Agreement”). The consideration for the Alagasco Transaction is $1.6 billion, including the assumption of approximately $250 million of long-term debt, including the current portion. Laclede has agreed to make an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, to treat the Alagasco Transaction as a deemed purchase and sale of assets for tax purposes. The consideration will be subject to customary post-closing adjustments for cash, indebtedness and working capital. Following completion of the Alagasco Transaction, Alagasco will be a wholly-owned subsidiary of Laclede.

Laclede has received the final approval of Alabama public utility regulators and anticipates completing the Alagasco Transaction before the end of the fourth quarter of fiscal year 2014.

The Alagasco Transaction is subject to customary closing adjustments. As detailed in the Acquisition Agreement, the Alagasco purchase price will be adjusted based upon Alagasco’s working capital on the closing date. This purchase price adjustment is to be determined and agreed to after closing, subject to a review period. Accordingly, no purchase price adjustment has been reflected in these pro forma financial statements.

2. Financing of the Transaction

These pro forma financial statements reflect the impact of the execution of the planned Alagasco Transaction through a combination of the issuance of 10.4 million shares of common stock, the issuance of $143.8 million of Corporate Units both of which Laclede completed on June 11, 2014, the proposed issuance of $625.0 million of senior notes, and short-term borrowings. Accordingly, pro forma weighted average shares outstanding were increased by 9.7 million shares and 10.4 million shares for each of the nine months ended June 30, 2014 and the year ended September 30, 2013, respectively, in the unaudited pro forma combined condensed statements of income.

3. Adjustments to Pro Forma Financial Statements

The historical financial information has been adjusted in the pro forma financial statements to give effect to pro forma events that are:

• directly attributable to the Alagasco Transaction;

• factually supportable; and

• with respect to the pro forma statements of income, expected to have a continuing impact on the combined results of Laclede and Alagasco.

The pro forma financial statements do not reflect any cost savings (or associated costs to achieve such savings) from operating efficiencies or restructuring that could result from the Alagasco Transaction. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact the pro forma financial statements when the Alagasco Transaction is completed. The pro forma statements of income reflect adjustments to remove the effect of transaction costs associated with the Alagasco Transaction that have been incurred by Laclede and are included in its historical financial statements.

The historical financial information has also been adjusted in the pro forma financial statements to give effect to Laclede’s previously consummated acquisition of Missouri Gas Energy (“MGE”) which was completed on September 1, 2013 to reflect a full year of operations and give effect to the related debt and equity transactions completed during fiscal year 2013 related to the financing of the acquisition of MGE as if they were completed on October 1, 2012. The Laclede historical financial information for the fiscal year ending September 30, 2013 reflects the one-month period from September 1, 2013 through September 30, 2013.

The pro forma adjustments included in the pro forma financial statements are as follows:

Unaudited Pro Forma Combined Condensed Statement of Income for the Nine Months Ended June 30, 2014

(A) Reflects adjustment to remove transaction costs incurred by Laclede through June 30, 2014 directly attributable to the Alagasco Transaction (see note (K)).

(B) Reflects an increase in interest expense related to the expected issuance of $625.0 million of senior notes with an effective interest rate of 2.73%. Interest is based on nine 30 day monthly periods and 270 days outstanding. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.6 million for the nine-month period. The increase in interest expense excludes the impact of interest rate hedge agreements.

	9 Mos. Ended 6/30/14
Issuance of senior notes	$	625.0
Interest rate		2.73	%
Pro forma interest expense (270 / 360 days)		12.8
Amortization of deferred financing costs		0.3
Total pro forma interest expense	$	13.1

(C) Reflects an increase in interest expense related to the June 11, 2014 issuance of $143.8 million of Corporate Units with an effective interest rate of 2.29% as if the Corporate Units had been outstanding since October 1, 2013.

	9 Mos. Ended 6/30/14
Issuance of Corporate Units	$	143.8
Interest rate		2.29	%
Pro forma interest expense (270 / 360 days)		2.5
Amortization of debt issuance costs		1.0
Interest expense and amortization included in Laclede operations for the period ending June 30, 2014		(0.2	)
Total pro forma interest expense	$	3.3

(D) Reflects an increase in interest expense related to the issuance of $80.0 million of short-term borrowings in the commercial paper market with an effective interest rate of 0.30%, inclusive of all fees. Interest is based on a 273 day period. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.1 million for the nine-month period.

	9 Mos. Ended 3/31/14
Issuance of short term borrowings	$	80.0
Interest rate		0.30	%
Pro forma interest expense (273 / 360 days)	$	0.2

(E) Reflects an increase in interest expense related to $90.0 million of short-term borrowings under Laclede Group’s existing revolver facility with an effective interest rate of 1.45%, inclusive of all fees. Interest is based on a 273 day period. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.1 million for the nine-month period.

	9 Mos. Ended 3/31/14
Issuance of short term borrowings	$	90.0
Interest rate		1.45	%
Pro forma interest expense (273 / 360 days)	$	1.0

(F) Reflects the income tax effect of the pro forma adjustments based on an estimated statutory tax rate of 37.8% for the period ended June 30, 2014. This estimated tax rate is different from Laclede’s effective tax rate for the period ended June 30, 2014, which includes other tax charges or benefits, and does not take into account any historical or possible future tax events that may impact the combined company. Alagasco historically recorded income taxes as a component of operating expenses. Income tax expense of $37.8 million was reclassified to conform to Laclede’s presentation.

Unaudited Pro Forma Combined Condensed Balance Sheet at June 30, 2014

(G) Reflects the estimated purchase price (see note 1) in excess of the fair value of the assets acquired and liabilities assumed. The estimated purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on the estimated fair values with the excess of the purchase price over the fair value recorded to goodwill. The historical book value of the assets and liabilities approximates the fair value given the regulatory environment the Company operates under in Alabama. The following represents the excess of the purchase price over the fair value of the net assets acquired:

Cash purchase price	$	1,350.0
Less: book value of Alagasco net assets		(405.4	)
Less: Pro forma adjustment to deferred income tax liabilities, net (see Note L)		(187.1	)
Pro Forma Adjustment to goodwill	$	757.5

(H) Reflects the net change to cash if the acquisition had occurred on June 30, 2014

Purchase price	$	(1,350.0	)
Notes payable - short-term borrowings (see notes D and E)		170.0
Transaction expenses, net of tax benefit received (see Note K)		(2.8	)
Net cash used	$	(1,182.8	)

The pro forma adjustment to cash and cash equivalents at June 30, 2014 assumes that the tax benefit associated with the transaction expenses has been received as of that date.

(I) Reflects total proceeds from the debt offering. Total debt issuance costs are expected to be $5.3 million of which none had been paid during the nine months ended June 30, 2014.

Assumed debt proceeds	$	625.0
Deferred financing costs		(5.3	)
Net debt proceeds	$	619.7

(J) Reflects the elimination of Alagasco stockholders’ equity accounts of $405.4 million.

(K) Reflects a reduction in retained earnings, which is a component of total common stock equity, for total estimated remaining acquisition-related expenses of $4.5 million, less the estimated tax benefit received of $1.7 million. During the nine months ended June 30, 2014, pre-tax acquisition-related expenses incurred by the Company were $5.9 million (see note (A)).

(L) Reflects a purchase accounting adjustment to reflect the elimination of Alagasco’s deferred tax assets and liabilities as the acquisition is being treated as an asset purchase under Section 338(h)(10) of the Internal Revenue Code.

Unaudited Pro Forma Combined Condensed Statement of Income for the Year Ended September 30, 2013

(M) On August 13, 2013 Laclede issued $450.0 million of first mortgage bonds with an effective interest rate of 3.36%. Proceeds from the issuance of the first mortgage bonds were used to fund the acquisition of Missouri Gas Energy. Interest expense of $1.7 million was recognized in the actual results of operations of Laclede for the year ending September 30, 2013. The adjustment reflects an increase to interest expense as if the first mortgage bonds had been outstanding on October 1, 2012.

	Year ended 9/30/13
Issuance of Series First Mortgage Bonds	$	450.0
Interest rate		3.36	%
Pro forma interest expense (360 / 360 days)		15.1
Interest expense included in Laclede operations for the period ending September 30, 2013		1.7
Pro forma adjustment to interest expense	$	13.4

(N) On June 11, 2014 Laclede issued $143.8 million of Corporate Units with an effective interest rate of 2.29%. Proceeds from the issuance of the Corporate Units will be used to fund the pending acquisition of Alagasco. The adjustment reflects an increase to interest expense as if the Corporate Units had been outstanding on October 1, 2012.

	Year ended 9/30/13
Issuance of Corporate Units	$	143.8
Interest rate		2.29	%
Pro forma interest expense (360 / 360 days)		3.3
Amortization of deferred financing costs		1.3
Total pro forma interest expense	$	4.6

(O) Reflects an increase in interest expense related to the issuance of $625.0 million of senior notes with an effective interest rate of 2.73%. Interest is based on a 360 days annual period. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.8 million for the twelve-month period. The increase in interest expense excludes the impact of interest rate hedge agreements.

	Year ended 9/30/13
Issuance of senior notes	$	625.0
Interest rate		2.73	%
Pro forma interest expense (360 / 360 days)		17.1
Amortization of deferred financing costs		0.4
Total pro forma interest expense	$	17.5

(P) Reflects an increase in interest expense related to the issuance of $80.0 million of short-term borrowings in the commercial paper market with an effective interest rate of 0.30%, inclusive of all fees. Interest is based on a 365 day period. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.1 million for the twelve-month period.

	Year ended 9/30/13
Issuance of short term borrowings	$	80.0
Interest rate		0.30	%
Pro forma interest expense (365 / 360 days)	$	0.2

(Q) Reflects an increase in interest expense related to $90.0 million of short-term borrowings under Laclede Group’s existing revolver facility with an effective interest rate of 1.45%, inclusive of all fees. Interest is based on a 365 day period. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.1 million for the twelve-month period.

	Year ended 9/30/13
Issuance of short term borrowings	$	90.0
Interest rate		1.45	%
Pro forma interest expense (365 / 360 days)	$	1.3

(R) Reflects the income tax effect of the pro forma adjustments based on an estimated statutory tax rate of 37.8% for the period ended September 30, 2013. This estimated tax rate is different from Laclede’s effective tax rate for the period ended September 30, 2013, which includes other tax charges or benefits, and does not take into account any historical or possible future tax events that may impact the combined company. Alagasco historically recorded income taxes as a component of operating expenses. Income tax expense of $34.7 million was reclassified to conform to Laclede’s presentation.

4. Earnings per Share

The pro forma earnings per share calculation for Laclede (as adjusted) for the year ended September 30, 2013 includes the full impact of the 10.005 million shares issued in Laclede’s May 2013 common stock offering to complete the acquisition of MGE by assuming these shares were outstanding for the entire twelve-month period ended September 30, 2013, resulting in an increase of 6.6 million shares to the weighted average number of shares outstanding on an as adjusted basis.

The pro forma combined earnings per share calculation for the nine months ended June 30, 2014 and the twelve months ended September 30, 2013 includes the full impact of the 10.4 million shares issued on June 11, 2014 to complete the pending Alagasco Transaction by assuming these shares were outstanding for the entire six-month and twelve-month periods, respectively.

5. Alabama Gas Corporation Financial Information for the Three Months Ended December 31, 2013 (Unaudited)

Laclede’s fiscal year ends on September 30 whereas Alagasco’s fiscal year ends on December 31. Due to this difference in fiscal year end dates, the results of Alagasco for the three months ended December 31, 2013 are included in both the Unaudited Pro Forma Combined Condensed Statements of Income for the fiscal year ended September 30, 2013 and the nine months ended June 30, 2014. Additional financial information about Alagasco’s results for the three months ended December 31, 2013 is presented below. There were no unusual charges or adjustments recorded by Alagasco during this period.

(Millions)
Operating revenues	$	142.8
Operating income		34.8
Net income		19.8