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ACQUISITION OF MGE
 12 Months Ended
Sep. 30, 2013
Business Combinations [Abstract]  
ACQUISITION OF MGE
ACQUISITION OF MGE
Effective September 1, 2013, Laclede Group completed the purchase of substantially all of the assets and liabilities of Missouri Gas Energy (MGE), a utility engaged in the distribution of natural gas on a regulated basis in western Missouri, from Southern Union Company (SUG), an affiliate of Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P. The purchase was completed pursuant to the purchase agreement dated December 14, 2012. Under the terms of the purchase agreement, Laclede Group acquired MGE for a purchase price of $975 million. The acquisition was supported through a combination of the issuance of 10.0 million shares of Laclede Group common stock, completed on May 29, 2013, the issuance by Laclede Gas of $450.0 million of first mortgage bonds, completed on August 13, 2013, short-term borrowings, and available cash.
The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805 (“Topic 805”), “Business Combinations.” Accordingly, goodwill was 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. Laclede Group recorded $247.1 million of goodwill as an asset in the consolidated balance sheet, which has been assigned to the Company’s Gas Utility segment.
As part of the MGE acquisition, Laclede Gas has estimated the asset retirement obligation of MGE’s long-lived assets as of the acquisition date. This allocation of asset retirement obligations is preliminary and will be finalized upon completion of a detailed fair value analysis that is being performed by the Company in the first quarter of fiscal 2014.
Under Topic 805, merger-related transaction costs (such as advisory, legal, valuation and other professional fees) are not included as components of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. During the years ended September 30, 2013 and 2012, Laclede Group incurred $17.0 million and $0.2 million, respectively, of third party pre-tax expenses associated with the transaction. These expenses are included in the Statement of Consolidated Income, with $15.1 million included in Other Operating Expenses and $1.9 million included in Interest on Long-term Debt.
On November 13, 2013, in accordance with Section 3.2 of the purchase agreement for MGE, the Utility provided to SUG a reconciliation of certain balance sheet accounts as of August 31, 2013, the date immediately prior to the closing of the acquisition to the initial valuation date of September 30, 2012. The resulting difference adjusts for changes in the actual net assets transferred to the Utility at closing from the level at September 30, 2012. Section 3.2 also contains a process to resolve any disagreements among the parties, and the Utility plans to adjust cash and goodwill for any change as a result of this process upon final settlement, which is anticipated to be in the first quarter of fiscal 2014.
The amount of revenue and earnings of MGE included in our Statements of Consolidated Income subsequent to the September 1, 2013 acquisition date are as follows:
(Thousands, Except Per Share Amounts)
September 1, 2013 - September 30, 2013
Total net revenues
$
21,985

Net Income
1,795

Earnings/(loss) per share:
 
Basic
$
0.07

Diluted
$
0.07



The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the acquisition:
(Thousands)
 
Assets:
 
Utility plant
$
671,793

Non-utility property
238

Other investments
3,096

Goodwill
247,078

Other Property and Investments
922,205

Accounts receivable:
 
Utility
19,963

Other
6,119

Delayed customer billings
10,701

Inventories:
 
Natural gas stored underground
58,679

Materials and supplies at average cost
3,988

Prepayments and other
487

Total Current Assets
99,937

Deferred Charges:
 
Regulatory assets
84,014

Other
4,928

Total Deferred Charges
88,942

Total Assets Acquired
$
1,111,084

 
 
Liabilities:
 
Accounts payable
$
20,154

Wages and compensation accrued
5,088

Customer deposits
8,362

Interest accrued
183

Taxes accrued
17,197

Other
12,620

Total Current Liabilities
63,604

Pension and postretirement benefit costs
24,466

Asset retirement obligations
32,056

Regulatory liabilities
2,249

Other
13,709

Total Deferred Credits and Other Liabilities
72,480

Total Liabilities Assumed
$
136,084

Net Assets Acquired
$
975,000


The following unaudited pro forma financial information presents the combined results of operations as if the acquisition had occurred on October 1, 2011. 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 MGE been part of the Utility as of the beginning of fiscal year 2012.
 
Twelve Months Ended September 30,
(Thousands, Except Per Share Amounts)
2013
 
2012
Total net revenues
$
1,518,201

 
$
1,581,425

Net Income
83,642

 
81,722

Earnings per share:
 
 
 
Basic
$
2.57

 
$
2.52

Diluted
$
2.56

 
$
2.51