ACQUISITIONS

Spire’s recent acquisitions are described below. The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed at the acquisition dates. Measurement period adjustments were immaterial.



	Alagasco			EnergySouth
Recognized amounts of identifiable assets acquired and liabilities assumed:
Utility plant	$	892.7		$	199.5
Cash	12.1			2.0
Other current assets	99.4			17.5
Deferred tax assets	282.0			—
Other assets	143.4			79.8
Long-term debt	(249.8		)	(67.0		)
Current portion of long-term debt	(15.0		)	—
Other current liabilities	(173.4		)	(42.7		)
Deferred tax liabilities	—			(35.5		)
Other liabilities	(130.4		)	(52.8		)
Total identifiable net assets	861.0			100.8
Goodwill	735.8			218.9
Deferred tax elimination (Spire)	(271.3		)	—
Consideration (cash)	$	1,325.5		$	319.7

Acquisition of Alagasco

Spire completed the acquisition of 100% of the common stock of Alagasco from Energen effective on August 31, 2014. Total cash consideration paid at closing, net of cash acquired and debt assumed was $1,305.2. Subsequently, the Company and Energen agreed to a final reconciliation of net assets, and $8.2 was paid by the Company to Energen on January 6, 2015, effectively increasing the total net consideration to $1,313.4.

The goodwill of $735.8 arising from this acquisition, $717.6 of which is expected to be deductible for tax purposes, is attributable to Alagasco’s assembled workforce and the expected cost efficiencies and strategic benefits of the transaction. The acquisition was supportive of the strategic focus on growing the Company’s regulated footprint and created geographic and regulatory diversity. The Company determined that the Alagasco acquisition met the scope exceptions for pushdown accounting; therefore, the goodwill was recorded on the Spire parent company balance sheet rather than the Alagasco subsidiary balance sheet and included in disclosures of segment assets under Other rather than the Gas Utility segment.

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 acquisition as a deemed purchase and sale of assets for tax purposes. As a result of the election, goodwill was generated for tax purposes at Alagasco. For book purposes, as noted above, goodwill was recorded on the Spire parent entity and not pushed down to Alagasco. Consequently, a deferred tax asset (DTA) was recorded at Alagasco related to the excess of tax deductible goodwill over book goodwill for the stand-alone entity. That initial goodwill DTA is eliminated (along with the investment in subsidiary and Alagasco’s equity) in the Spire consolidated balance sheet because, at that consolidated level, there is no excess of tax deductible goodwill over book goodwill. As the tax goodwill is amortized and deducted for tax purposes, the DTA at Alagasco is reduced, and for Spire, a deferred tax liability (DTL) is created. For both Alagasco and consolidated Spire, the changes to the goodwill DTA/DTL are reported as a component of deferred tax expense in the income statement. Because the deferred tax expense impact will be offset by an opposite current tax expense impact, there will be no significant impact on the effective tax rate of the Company.

Acquisition of EnergySouth

Effective September 12, 2016, Spire completed the acquisition of 100% of the common stock of EnergySouth, the parent company of Mobile Gas and Willmut Gas, serving natural gas utility customers in Alabama and Mississippi. This acquisition is supportive of the strategic focus on growing Spire’s gas utility business and creating geographic and regulatory diversity. Total cash consideration paid at closing, net of cash acquired and debt assumed was $317.7. The goodwill of $218.9 arising from this acquisition, which is not deductible for tax purposes, is attributable to the assembled workforce and the expected cost efficiencies and strategic benefits of the transaction. The Company did not elect pushdown accounting, so the goodwill was recorded on the Spire parent company balance sheet rather than the EnergySouth subsidiary balance sheet and is included in disclosures of segment assets under Other. Because the acquisition occurred near the end of the fiscal year and certain assessments are still in progress, the assignment of goodwill to reporting units has not yet been completed. Similarly, the recorded values of some of the assets acquired and liabilities assumed, such as those related to income taxes and contingencies, are provisional pending completion of analyses of those items.

Actual and Pro Forma Results

The results of operations of each of the acquisitions are included in the Spire statements of income from the date of acquisition, as shown in the following table.



	Alagasco							EnergySouth
	2016		2015		2014			2016
Total Operating Revenues	$	368.5	$	479.2	$	19.7		$	3.3
Net Income (Loss)	53.2		48.0		(2.9		)	(0.2		)
Earnings (Loss) Per Share	$	1.20	$	1.11	$	(0.08	)	$	—

The following unaudited pro forma financial information presents Spire’s combined results of operations as though the EnergySouth acquisition had occurred as of the beginning of fiscal year 2015 and the Alagasco acquisition had occurred as of the beginning of fiscal year 2013. The unaudited pro forma financial information is not necessarily indicative of either future results of operations or results that would have been achieved if the acquisitions had occurred as of those earlier dates. It does not reflect the costs of any integration activities. It includes estimates and assumptions which management believes are reasonable.



	2016		2015		2014
Total Operating Revenues	$	1,632.4	$	2,081.6	$	2,187.1
Net Income	153.9		143.6		133.5
Basic Earnings Per Share	$	3.48	$	3.32	$	3.11
Diluted Earnings Per Share	3.46		3.31		3.10