ACQUISITIONS

The transactions are strategic, delivering on the Company's commitment to growth and long-term shareholder value. These utilities are ideal in terms of size and scope. By leveraging the Company's core gas utility expertise and further expanding its footprint, it will be able to support growth initiatives in new markets with new customers.

MGE

Effective September 1, 2013, Laclede Gas completed the purchase from SUG, an affiliate of ETE and Energy Transfer Partners, L.P., of substantially all of the assets and liabilities of MGE, a utility engaged in the distribution of natural gas on a regulated basis in western Missouri. The purchase was completed pursuant to the MGE PSA dated December 14, 2012. Under the terms of the MGE PSA, Laclede Gas acquired MGE for a purchase price of $975.0, subject to reconciliation of certain amounts as discussed below.

In accordance with Section 3.2 of the MGE PSA, Laclede Gas provided to SUG a reconciliation of certain balance sheet accounts from the amounts at September 30, 2012 to August 31, 2013, indicating the difference due to changes in the actual net assets transferred to the Company at closing from the level at September 30, 2012. Laclede Gas and SUG agreed to the final reconciliation amount of $23.9, which was paid by ETE to Laclede Gas on February 14, 2014.

Also, on December 12, 2012, Plaza Mass agreed to purchase NEG from SUG. Subsequently, on February 11, 2013, the Company agreed to sell Plaza Mass to APUC. On December 13, 2013, the MDPU approved the transfer of NEG to an APUC subsidiary. Consistent with the February 11, 2013 agreements, on December 20, 2013, the Company closed the sale of Plaza Mass to an APUC subsidiary and received $11.0 from APUC. On December 24, 2013, the Massachusetts Attorney General filed a Motion for Clarification/Reconsideration with the MDPU claiming, among other things, that legislative approval was required for a transfer of utility assets. On March 26, 2014, the MDPU issued an order denying the Attorney General's motion. The Attorney General did not appeal, thus the MDPU's order approving the sale of NEG is final.

These receipts of funds and other working capital adjustments during the year effectively reduced Laclede Gas' purchase price of MGE to $940.2 and reduced goodwill related to the transaction from $247.1 to $210.2. In accordance with ASC 805 (“Topic 805”), “Business Combinations,” goodwill is measured as the excess of the acquisition-date fair value of the consideration transferred over the amount of acquisition-date identifiable assets acquired net of assumed liabilities. As such, Laclede Gas has recorded adjustments during the measurement period to finalize the allocation of purchase price as of September 30, 2014.

The amount of revenue and earnings of MGE included in Laclede Gas' Statements of Income and the Company's Statements of Consolidated Income subsequent to the September 1, 2013 acquisition date are as follows:



($ Millions, except per share data)	Year ended September 30, 2014		September 1, 2013 - September 30, 2013
Total net revenues	$	554.2	$	22.0
Net Income	39.5		1.8
Earnings per share:
Basic	$	1.10	$	0.07
Diluted	$	1.10	$	0.07

The following table summarizes the fair value of the MGE assets acquired and liabilities assumed at the date of the acquisition:



($ Millions)	September 1, 2013
Assets:
Utility plant	$	671.1
Other property and investments	3.3
Goodwill	210.2
Other Property and Investments	884.6
Accounts receivable and other current assets	36.0
Inventories	62.7
Total Current Assets	983.3
Deferred Charges:
Regulatory assets	81.4
Other	14.3
Total Deferred Charges	95.7
Total Assets Acquired	$	1,079.0

Liabilities:
Accounts payable	$	19.8
Taxes accrued	17.2
Other	28.9
Total Current Liabilities	65.9
Pension and postretirement benefit costs	24.5
Asset retirement obligations	32.1
Other	16.3
Total Deferred Credits and Other Liabilities	72.9
Total Liabilities Assumed	138.8
Net Assets Acquired	$	940.2

Alagasco

The Company completed the acquisition of 100% of the common shares of Alagasco (Alagasco Transaction), a public utility engaged in the distribution of natural gas in central and northern Alabama, from Energen for $1,600.0, including assumed debt. The acquisition date (Closing Date) was September 2, 2014, with an effective time under the Stock Purchase Agreement (SPA) of 11:59 p.m. on August 31, 2014. The Alagasco Transaction is subject to certain post-closing adjustments for cash, indebtedness and working capital. Total consideration paid, net of cash acquired, at closing was $1,305.2.

The Alagasco Transaction was accounted for under the acquisition method of accounting in accordance with ASC 805 (Topic 805), “Business Combinations.” The Company determined that the Alagasco Transaction met the scope exceptions for pushdown accounting, and as such the excess consideration transferred over the fair value of assets acquired was recorded at Laclede Group. The Company and Energen made 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. As a result the existing deferred tax assets and liabilities were remeasured as of the Closing Date.

The purchase of Alagasco is supportive of the strategic focus on growing the Company's regulated footprint. Alagasco also creates geographic and regulatory diversity by expanding the Company's focus into Alabama.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the Alagasco acquisition:



($ Millions)	August 31, 2014
Assets:
Utility plant	$	892.7
Accounts receivable	37.3
Inventories	47.7
Prepayments and other	26.6
Total Current Assets	1,004.3
Deferred Charges:
Regulatory assets	99.5
Deferred tax asset	278.4
Pension and other postretirement	25.7
Other	18.2
Total Deferred Charges	421.8
Total Assets Acquired	$	1,426.1

Liabilities:
Accounts payable	$	32.9
Customer deposits	19.9
Taxes accrued	28.4
Regulatory liabilities
Current portion of long-term debt	15.0
Other	92.2
Total Current Liabilities	188.4
Pension and postretirement benefit costs	27.9
Asset retirement obligations	30.6
Regulatory liabilities	56.1
Long-term debt	249.8
Other	15.8
Total Deferred Credits and Other Liabilities	380.2
Total Liabilities Assumed	$	568.6

Laclede Group
Goodwill	$	727.6
Deferred Tax Elimination	(267.8		)

Net Assets Acquired	$	1,317.3

The amount of revenue and earnings of Alagasco included in our Statements of Consolidated Income subsequent to the Closing Date are as follows:



($ Millions, except per share data)	September 1, 2014 - September 30, 2014
Total net revenues	$	19.7
Net Loss	(2.9		)
Earnings/(loss) per share:
Basic	$	(0.08	)
Diluted	$	(0.08	)

Pro Forma

The following unaudited pro forma financial information presents the combined results of operations as if the MGE acquisition had occurred on October 1, 2012 and the Alagasco acquisition has occurred on October 1, 2013, respectively. The pro forma financial information does not reflect the costs of any integration activities. The pro forma results include estimates and assumptions, which management believes are reasonable. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had Alagasco or MGE been part of the Company as of the beginning of fiscal years 2013 and 2012, respectively.



	Twelve Months Ended September 30,
($ Millions, except per share data)	2014		2013		2012
Total net revenues	$	2,187.1	$	2,051.5	$	1,581.4
Net Income	133.5		102.0		81.7
Earnings per share:
Basic	$	3.11	$	2.50	$	2.52
Diluted	$	3.10	$	2.49	$	2.51

Goodwill

The following table presents the total goodwill activity for the twelve months ended September 30, 2014:



($ Millions)	Laclede Group			Laclede Gas
September 30, 2013	$	247.1		$	247.1
MGE:
Working capital and other adjustments to acquisition cost	(25.9		)	(25.9		)
Sale of NEG	(11.0		)	(11.0		)
Alagasco Acquisition	727.6			—
September 30, 2014	$	937.8		$	210.2