SPIRE INC - FORM 8-K - EX-99.3 - EXHIBIT 99.3

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8-K - FORM 8-K - SPIRE INC	lg8k052013.htm
EX-99.2 - EXHIBIT 99.2 - SPIRE INC	lg8k052013exhibit992.htm
EX-99.1 - EXHIBIT 99.1 - SPIRE INC	lg8k052013exhibit991.htm
EX-23.1 - EXHIBIT 23.1 - SPIRE INC	lg8k052013exhibit231.htm

EXHIBIT 99.3

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 Missouri Gas Energy (“MGE”) and the corresponding equity offering reflected in the preliminary prospectus supplement filed by Laclede on May 20, 2013. 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 of Laclede and MGE have been derived from:


•	the audited consolidated financial statements of The Laclede Group, Inc. as of and for the year ended September 30, 2012 included in The Laclede Group, Inc.’s Form 10-K for the fiscal year then ended;


•	the consolidated financial statements of The Laclede Group, Inc. as of and for the six months ended March 31, 2013 (unaudited) included in The Laclede Group, Inc.’s Form 10-Q for the quarterly period ended March 31, 2013;


•	the audited financial statements of MGE as of and for the year ended December 31, 2012; and


•	the financial statements of MGE as of and for the six months ended March 31, 2013 (unaudited)

Laclede’s acquisition of MGE (“MGE 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, 2012 and six months ended March 31, 2013 give effect to the MGE acquisition as if it were completed on October 1, 2011. The Unaudited Pro Forma Combined Condensed Balance Sheets (“pro forma balance sheets”) as of September 30, 2012 and March 31, 2013 give effect to the MGE acquisition as if it were completed on those respective dates. Due to the seasonal nature of the natural gas utility businesses, earnings are typically concentrated in the November through April period, which generally corresponds with the heating season. As such, the September 30, 2012 pro forma balance sheet has been included with the most recently completed period ending March 31, 2013 to provide an appropriate view of the seasonal working capital changes. These unaudited pro forma financial statements should be read in conjunction with the accompanying notes.

Laclede’s fiscal year ends on September 30 whereas MGE’s fiscal year ends on December 31. Due to this difference in fiscal year end dates, the results of MGE for the three months ended December 31, 2012 are included in both the pro forma statements of income for the fiscal year ended September 30, 2012 and the six months ended March 31, 2013. As such, additional financial information about MGE’s results for the three months ended December 31, 2012 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;


•	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 MGE.

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 MGE acquisition. 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 MGE acquisition is completed. The pro forma statements of income reflect adjustments to remove the effect of transaction costs associated with the MGE 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 MGE 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 MGE 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 MGE’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 Missouri Gas Energy

Unaudited Pro Forma Combined Condensed Statement of Income

For the Six Months Ended March 31, 2013



		The Laclede Group, Inc.		Missouri Gas Energy			Pro Forma Adjustments Relating to the MGE Acquisition			Pro Forma Adjustments Relating to Bridge Financing and Equity Offering		Note 3		Pro Forma Combined
(Thousands, Except Per Share Amounts)

Operating Revenues:
Gas Utility	$	604,208	$	360,013		$	—		$	—			$	964,221
Gas Marketing and Other		100,408		—			—			—				100,408
Total Operating Revenues		704,616		360,013			—			—				1,064,629
Operating Expenses:
Gas Utility
Natural and propane gas		366,956		231,533			—			—				598,489
Other operation and maintenance		80,842		51,358			—			—				132,200
Depreciation and amortization		22,223		15,108			—			—				37,331
Taxes, other than income taxes		36,557		27,696			—			—				64,253
Total Gas Utility Operating Expenses		506,578		325,695			—			—				832,273
Gas Marketing and Other		104,103		—			(6,300	)		—		A		97,803
Total Operating Expenses		610,681		325,695			(6,300	)		—				930,076
Operating Income		93,935		34,318			6,300			—				134,553
Other Income and (Income Deductions) - Net		2,424		133			—			—				2,557
Interest Charges		12,731		(234	)		—			9,908		B		22,405
Income (Loss) Before Income Taxes		83,628		34,685			6,300			(9,908	)			114,705
Income Tax Expense (Benefit)		27,818		14,452			2,413			(3,795	)	C		40,888
Net Income	$	55,810	$	20,233		$	3,887		$	(6,113	)		$	73,817


Weighted Average Number of Common Shares Outstanding:
Basic		22,396								8,700				31,096
Diluted		22,466								8,700				31,166

Basic Earnings Per Share of Common Stock	$	2.48											$	2.36
Diluted Earnings Per Share of Common Stock	$	2.47											$	2.36

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

The Laclede Group, Inc. and Missouri Gas Energy

Unaudited Pro Forma Combined Condensed Balance Sheet

As of March 31, 2013



	The Laclede Group, Inc.				Missouri Gas Energy			Pro Forma Adjustments Relating to the MGE Acquisition		Pro Forma Adjustments Relating to the Bridge Financing and Equity Offering		Note 3	Pro Forma Combined
(Thousands)

ASSETS
Utility Plant	$	1,538,890		$	659,378		$	—		$	—		$	2,198,268
Less: Accumulated depreciation and amortization		478,971			21,601			—			—			500,572
Net Utility Plant		1,059,919			637,777			—			—			1,697,696
Goodwill		—			132,604			148,602			—	D		281,206
Other Property and Investments		58,366			3,334			—			—			61,700

Current Assets:
Cash and cash equivalents		146,880			89,302			(991,629	)		943,260	E, G		187,813
Accounts receivable		213,839			116,419			—			—			330,258
Allowance for doubtful accounts		(8,833	)		(1,300	)		—			—			(10,133	)
Delayed customer billings		19,663			—			—			—			19,663
Inventories		46,124			8,830			—			—			54,954
Natural gas receivable		13,470			—			—			—			13,470
Unamortized purchased gas adjustments		11,039			—			—			—			11,039
Prepayments and other		17,731			6,764			—			—			24,495
Total Current Assets		459,913			220,015			(991,629	)		943,260			631,559
Regulatory assets and other deferred charges		430,900			70,057			—			4,040	G		504,997
Total Assets	$	2,009,098		$	1,063,787		$	(843,027	)	$	947,300		$	3,177,158

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

The Laclede Group, Inc. and Missouri Gas Energy

Unaudited Pro Forma Combined Condensed Balance Sheet (Continued)

As of March 31, 2013



		The Laclede Group, Inc.		Missouri Gas Energy		Pro Forma Adjustments Relating to the MGE Acquisition		Pro Forma Adjustments Relating to the Bridge Financing and Equity Offering		Note 3	Pro Forma Combined
(Thousands)

CAPITALIZATION AND LIABILITIES
Capitalization:
Total common stock equity	$	640,003	$	724,674	$	(738,001	)	$	389,590	H, I, F	$	1,016,266
Long-term debt (less current portion)		464,434		—		—			—			464,434
Total Capitalization		1,104,437		724,674		(738,001	)		389,590			1,480,700

Current Liabilities:
Notes payable		—		—		75,000			557,710	E, J		632,710
Accounts payable		108,648		24,075		—			—			132,723
Advance customer billings		—		3,362		—			—			3,362
Current portion of long-term debt		—		—		—			—			—
Accrued liabilities and other		98,696		47,916		(9,139	)		—	K		137,473
Total Current Liabilities		207,344		75,353		65,861			557,710			906,268

Deferred Credits and Other Liabilities:
Deferred income taxes		343,016		170,887		(170,887	)		—	K		343,016
Pension and postretirement benefit costs		191,778		61,780		—			—			253,558
Regulatory liabilities		86,032		11,388		—			—			97,420
Asset retirement obligations and other		76,491		19,705		—			—			96,196
Total Deferred Credits and Other Liabilities		697,317		263,760		(170,887	)		—			790,190
Commitments and Contingencies
Total Capitalization and Liabilities	$	2,009,098	$	1,063,787	$	(843,027	)	$	947,300		$	3,177,158

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

The Laclede Group, Inc. and Missouri Gas Energy

Unaudited Pro Forma Combined Condensed Statement of Income

For The Year Ended September 30, 2012



		The Laclede Group, Inc.		Missouri Gas Energy (1)			Pro Forma Adjustments Relating to the MGE Acquisition			Pro Forma Adjustments Relating to the Bridge Financing and Equity Offering		Note 3		Pro Forma Combined
(Thousands, Except Per Share Amounts)

Operating Revenues:
Gas Utility	$	763,447	$	452,327		$	—		$	—			$	1,215,774
Gas Marketing and Other		362,028		—			—			—				362,028
Total Operating Revenues		1,125,475		452,327			—			—				1,577,802
Operating Expenses:
Gas Utility
Natural and propane gas		397,304		223,924			—			—				621,228
Other operation and maintenance		167,351		117,368			—			—				284,719
Depreciation and amortization		40,739		29,936			—			—				70,675
Taxes, other than income taxes		53,672		38,341			—			—				92,013
Total Gas Utility Operating Expenses		659,066		409,569			—			—				1,068,635
Gas Marketing and Other		355,807		—			(200	)		—		L		355,607
Total Operating Expenses		1,014,873		409,569			(200	)		—				1,424,242
Operating Income		110,602		42,758			200			—				153,560
Other Income and (Income Deductions) - Net		3,272		(131	)		—			—				3,141
Interest Charges		24,945		(243	)		—			25,393		M		50,095
Income (Loss) Before Income Taxes		88,929		42,870			200			(25,393	)			106,606
Income Tax Expense (Benefit)		26,289		19,532			77			(9,726	)	N		36,172
Net Income	$	62,640	$	23,338		$	123		$	(15,667	)		$	70,434


Weighted Average Number of Common Shares Outstanding:
Basic		22,262								8,700				30,962
Diluted		22,340								8,700				31,040

Basic Earnings Per Share of Common Stock	$	2.80											$	2.26
Diluted Earnings Per Share of Common Stock	$	2.79											$	2.26

(1) Missouri Gas Energy amounts are for the fiscal year ended December 31, 2012.

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

The Laclede Group, Inc. and Missouri Gas Energy

Unaudited Pro Forma Combined Condensed Balance Sheet

As Of September 30, 2012



	The Laclede Group, Inc.				Missouri Gas Energy (1)			Pro Forma Adjustments Relating to the MGE Acquisition		Pro Forma Adjustments Relating to the Bridge Financing and Equity Offering		Note 3	Pro Forma Combined
(Thousands)

ASSETS
Utility Plant	$	1,497,419		$	654,105		$	—		$	—		$	2,151,524
Less: Accumulated depreciation and amortization		478,120			15,793			—			—			493,913
Net Utility Plant		1,019,299			638,312			—			—			1,657,611
Goodwill		—			132,604			102,471			—	O		235,075
Other Property and Investments		56,814			3,334			—			—			60,148

Current Assets:
Cash and cash equivalents		27,457			16,641			(918,968	)		941,730	P, R		66,860
Accounts receivable		141,547			103,079			—			—			244,626
Allowance for doubtful accounts		(7,705	)		(500	)		—			—			(8,205	)
Inventories		106,472			52,863			—			—			159,335
Natural gas receivable		22,377			—			—			—			22,377
Unamortized purchased gas adjustments		40,674			—			—			—			40,674
Prepayments and other		12,194			1,437			—			—			13,631
Total Current Assets		343,016			173,520			(918,968	)		941,730			539,298
Regulatory assets and other deferred charges		461,133			109,122			—			5,570	R		575,825
Total Assets	$	1,880,262		$	1,056,892		$	(816,497	)	$	947,300		$	3,067,957

(1) Missouri Gas Energy amounts are as of December 31, 2012.

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

The Laclede Group, Inc. and Missouri Gas Energy

Unaudited Pro Forma Combined Condensed Balance Sheet (Continued)

As Of September 30, 2012



		The Laclede Group, Inc.		Missouri Gas Energy (1)		Pro Forma Adjustments Relating to the MGE Acquisition		Pro Forma Adjustments Relating to the Bridge Financing and Equity Offering		Note 3	Pro Forma Combined
(Thousands)

CAPITALIZATION AND LIABILITIES
Capitalization:
Total common stock equity	$	601,611	$	700,544	$	(713,871	)	$	389,590	Q, S, T	$	977,874
Long-term debt (less current portion)		339,416		—								339,416
Total Capitalization		941,027		700,544		(713,871	)		389,590			1,317,290

Current Liabilities:
Notes payable		40,100		—		75,000			557,710	P, U		672,810
Accounts payable		89,503		32,154								121,657
Advance customer billings		25,146		23,536								48,682
Current portion of long-term debt		25,000		—								25,000
Accrued liabilities and other		72,375		50,397		(10,626	)			V		112,146
Total Current Liabilities		252,124		106,087		64,374			557,710			980,295

Deferred Credits and Other Liabilities:
Deferred income taxes		355,509		167,000		(167,000	)			V		355,509
Pension and postretirement benefit costs		196,558		64,389								260,947
Regulatory liabilities		59,432		2,289								61,721
Asset retirement obligations and other		75,612		16,583								92,195
Total Deferred Credits and Other Liabilities		687,111		250,261		(167,000	)		—			770,372
Commitments and Contingencies
Total Capitalization and Liabilities	$	1,880,262	$	1,056,892	$	(816,497	)	$	947,300		$	3,067,957

(1) Missouri Gas Energy amounts are as of December 31, 2012.

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

NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

1. Description of the Transaction

On December 14, 2012, The Laclede Group, Inc. (“Laclede” or “the Company”) entered into purchase and sale agreements to acquire from Southern Union Company (“SUG”), an affiliate of Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P., substantially all of the assets (exclusive of cash and cash equivalents) and liabilities of SUG’s Missouri Gas Energy (“MGE”) and New England Gas Company (“NEG”). On February 11, 2013, Laclede entered into an agreement with Algonquin Power & Utilities Corp. (“APUC”) that will allow an APUC subsidiary to acquire the rights to purchase the assets of NEG, subject to certain approvals and conditions. Under the terms of this agreement, Laclede will receive $11 million from APUC at closing. Laclede’s agreement to acquire MGE for $975 million was assigned by Laclede to its wholly owned subsidiary, Laclede Gas Company, on January 11, 2013. With the effect of the NEG proceeds, the adjusted purchase price is $964 million. As it is not probable that Laclede will own the NEG assets, they have been excluded from these Unaudited Pro Forma Combined Condensed Financial Statements (“pro forma financial statements”), except for the receipt of the proceeds noted above. The agreements are subject to customary closing adjustments. As detailed in the MGE purchase and sale agreement, the MGE purchase price will be adjusted based upon MGE’s net assets on the date immediately prior to 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 Laclede’s acquisition of MGE through a combination of senior bridge financing (“bridge financing”), the use of proceeds from the proposed issuance of 8.7 million shares of Laclede’s common stock (“equity offering”), as reflected in the preliminary prospectus supplement filed by Laclede on May 20, 2013, available cash, and short-term borrowings under its existing revolving credit facility. Laclede intends to issue $454 million of long-term debt subsequent to the equity offering to be used to complete the acquisition of MGE in place of the bridge financing. However, as Laclede does not have a firmly committed agreement related to its long-term debt issuance, the pro forma financial statements reflect the issuance of bridge financing under its fully committed bridge facility rather than permanent long-term debt financing. All associated fees related to the bridge financing have been reflected on a pro rata basis for the periods presented.

3. Adjustments to Pro Forma Financial Statements

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;


•	factually supportable; and


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

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

Unaudited Pro Forma Combined Condensed Statement of Income for the Six Months Ended March 31, 2013

(A) Reflects adjustment to remove transaction costs incurred by Laclede through March 31, 2013 directly attributable to the MGE acquisition (see note (I)).

(B) Reflects an increase in interest expense related to the issuance of $557.7 million of bridge financing with an effective interest rate of 3.55%, inclusive of all fees based on the terms of the commitment letter and accompanying term sheet for the bridge financing, and 182 days outstanding. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.4 million for the six-month period.



(Dollar amounts in thousands)	6 Mos. Ended March 31, 2013
Issuance of senior bridge financing	$	557,710
Interest rate	3.55		%
Pro forma interest expense (182 / 364 days)	$	9,908

(C) Reflects the income tax effect of the pro forma adjustments based on an estimated statutory tax rate of 38.3% for the period ended March 31, 2013. This estimated tax rate is different from Laclede’s effective tax rate for the period ended March 31, 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.

Unaudited Pro Forma Combined Condensed Balance Sheet at March 31, 2013

(D) 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 Missouri. The following represents the excess of the purchase price over the fair value of the net assets acquired:



(Thousands)
Purchase price	$	975,000
NEG Proceeds		(11,000	)
Total purchase consideration		964,000
Less: book value of MGE net assets		(724,674	)
Excess consideration transferred over net book value of assets acquired		239,326
Adjustments related to:
Pro forma adjustment for cash retained by sellers (see note (E))		89,302
Pro forma adjustment to deferred income tax liabilities (see note (K))		(180,026	)
Pro forma adjustment to goodwill		148,602
MGE historical goodwill included in MGE net assets		132,604
Pro forma goodwill	$	281,206

(E) Reflects the net change to cash if the acquisition had occurred on March 31, 2013



(Thousands)
Purchase price	$	(975,000	)
NEG proceeds		11,000
Short-term borrowings under revolving credit facility		75,000
Transaction expenses, net of tax benefit received (see note (I))		(13,327	)
Net cash used		(902,327	)
Less cash retained by sellers		(89,302	)
Net change to cash	$	(991,629	)

The pro forma adjustment to cash and cash equivalents at March 31, 2013 assumes that the tax benefit associated with the transaction expenses has been received as of that date.

(F) Reflects the issuance of common stock of $406.3 million based on the May 17, 2013 closing price of $46.70 per share, less equity issuance costs of $16.7 million. A $1.00 per share increase (decrease) in the assumed offering price of $46.70 per share would increase (decrease) the net proceeds to the Company by $8.4 million. The proceeds will be utilized to pay for the MGE acquisition.



(Thousands)
Assumed equity proceeds	$	406,290
Equity issuance costs		(16,700	)
Net proceeds	$	389,590

(G) Reflects the use of proceeds from the bridge financing and equity. Total estimated bridge financing fees expected to be incurred are $5.6 million, of which $1.5 million had been paid during the six months ended March 31, 2013.



(Thousands)
Assumed equity proceeds (see note (F))	$	406,290
Equity issuance costs		(16,700	)
Assumed bridge financing		557,710
Bridge financing costs		(4,040	)
	$	943,260

(H) Reflects the elimination of MGE stockholders’ equity accounts of $724.7 million.

(I) Reflects a reduction in retained earnings, which is a component of total common stock equity, for total estimated acquisition-related expenses of $21.6 million, less the estimated tax benefit received of $8.3 million. During the six months ended March 31, 2013, pre-tax acquisition-related expenses incurred by the Company were $6.3 million (see note (A)).

(J) Reflects the assumed issuance of bridge financing of $557.7 million.

(K) Reflects a purchase accounting adjustment to reflect the elimination of MGE’s deferred tax liabilities.

Unaudited Pro Forma Combined Condensed Statement of Income for the Year Ended September 30, 2012

(L) Reflects an adjustment to remove transaction costs incurred by Laclede through September 30, 2012 directly attributable to the acquisition (see note (T)).

(M) Reflects an increase in interest expense related to the assumed issuance of $557.7 million of bridge financing with an effective interest rate of 4.55%, inclusive of all fees based on the terms of the commitment letter and accompanying term sheet for the bridge financing, and a 364 day maturity. A 1/8% change in the interest rate would result in an increase or decrease in interest expense of $0.7 million for the twelve-month period.



(Dollar amounts in thousands)		Year Ended September 30, 2012
Issuance of senior bridge financing	$	557,710
Interest rate		4.55	%
Pro forma interest expense (364 / 364 days)	$	25,393

(N) Reflects the income tax effect of the pro forma adjustments based on an estimated statutory tax rate of 38.3% for the period ended September 30, 2012. This estimated tax rate is different from Laclede’s effective tax rate for the period ended September 30, 2012, 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.

Unaudited Pro Forma Combined Condensed Balance Sheet at September 30, 2012

(O) 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 Missouri. The following represents the excess of the purchase price over the fair value of the net assets acquired:



(Thousands)
Purchase price	$	975,000
NEG Proceeds		(11,000	)
Total purchase consideration		964,000
Less: book value of MGE net assets		(700,544	)
Excess consideration transferred over net book value of assets acquired		263,456
Adjustments related to:
Pro forma adjustment for cash retained by sellers (See note (P))		16,641
Pro forma adjustment to deferred income tax liabilities (See note (V))		(177,626	)
Pro forma adjustment to goodwill		102,471
Historical MGE goodwill included in MGE net assets		132,604
Pro forma goodwill	$	235,075

(P) Reflects the net change to cash if the acquisition had occurred on September 30, 2012:



(Thousands)
Purchase price	$	(975,000	)
NEG proceeds		11,000
Short-term borrowings under revolving credit facility		75,000
Transaction expenses, net of tax benefit received (see note (T))		(13,327	)
Net cash used		(902,327	)
Less cash retained by sellers		(16,641	)
Net change to cash	$	(918,968	)

The pro forma adjustment to cash and cash equivalents at September 30, 2012 assumes that the tax benefit associated with the transaction expenses has been received as of that date.

(Q) Reflects the issuance of common stock of $406.3 million based on the May 17, 2013 closing price of $46.70 per share, less equity issuance costs of $16.7 million. A $1.00 per share increase (decrease) in the assumed offering price of $46.70 per share would increase (decrease) the net proceeds to the Company by $8.4 million. The proceeds will be utilized to pay for the MGE acquisition.



(Thousands)
Assumed equity proceeds	$	406,290
Equity issuance costs		(16,700	)
Net proceeds	$	389,590

(R) Reflects the use of proceeds for the bridge financing and equity offering. Total estimated bridge financing fees expected to be incurred are $5.6 million of which none had been paid during the year ended September 30, 2012.



(Thousands)
Assumed equity proceeds (see note (Q))	$	406,290
Equity issuance costs		(16,700	)
Assumed bridge financing		557,710
Bridge financing costs		(5,570	)
	$	941,730

(S) Reflects a purchase accounting adjustment to eliminate MGE stockholders’ equity accounts of $700.5 million.

(T) Reflects a reduction in retained earnings, which is a component of total common stock equity, for total estimated acquisition-related expenses of $21.6 million, less the estimated tax benefit received of $8.3 million. As of September 30, 2012, $0.2 million of pre-tax acquisition-related transaction expenses had been incurred (see note (L)).

(U) Reflects the assumed issuance of bridge financing of $557.7 million.

(V) Reflects a purchase accounting adjustment to reflect the elimination of MGE’s deferred tax liabilities.


4.	Missouri Gas Energy Financial Information for the Three Months Ended December 31, 2012 (Unaudited)

Laclede Group’s fiscal year ends on September 30 whereas MGE’s fiscal year ends on December 31. Due to this difference in fiscal year end dates, the results of MGE for the three months ended December 31, 2012 are included in both the Unaudited Pro Forma Combined Condensed Statements of Income for the fiscal year ended September 30, 2012 and the six months ended March 31, 2013. Additional financial information about MGE’s results for the three months ended December 31, 2012 is presented below. There were no unusual charges or adjustments recorded by MGE during this period.



(Thousands)
Operating Revenues	$	143,025
Operating Income		16,485
Net Income		9,122

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