UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 2013

OR

[     ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ­__________ to __________

Commission File Number 1-16681

THE LACLEDE GROUP, INC.

(Exact name of registrant as specified in its charter)

Missouri (State of Incorporation)	74-2976504 (I.R.S. Employer Identification number)
720 Olive Street St. Louis, MO  63101 (Address and zip code of principal executive offices) 314-342-0500 (Registrant’s telephone number, including area code)

Indicate by check mark if the registrant:

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report) and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [     ]

has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [     ]

is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ X ]	Accelerated filer	[     ]
Non-accelerated filer	[     ]	Smaller reporting company	[     ]

is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [     ] No [ X ]

As of April 26, 2013, there were 22,671,392 shares of the registrant’s Common Stock, par value $1.00 per share, outstanding.

TABLE OF CONTENTS			Page No.
PART I.  FINANCIAL INFORMATION
Item 1	Financial Statements:
		Statements of Consolidated Income	4
		Statements of Consolidated Comprehensive Income	5
		Consolidated Balance Sheets	6
		Statements of Consolidated Cash Flows	8
		Notes to Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and
		Results of Operations	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk		44
Item 4	Controls and Procedures		44
PART II.  OTHER INFORMATION
Item 1	Legal Proceedings		45
Item 1A	Risk Factors		45
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 6	Exhibits		47
SIGNATURE			48
INDEX TO EXHIBITS			49

2

PART I. FINANCIAL INFORMATION

The interim financial statements included herein have been prepared by The Laclede Group, Inc. (Laclede Group or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Form 10-K for the fiscal year ended September 30, 2012.

3

Item 1. Financial Statements

THE LACLEDE GROUP, INC.

STATEMENTS OF CONSOLIDATED INCOME

(UNAUDITED)

	Three Months Ended				Six Months Ended
	March 31,				March 31,
(Thousands, Except Per Share Amounts)	2013		2012		2013		2012
Operating Revenues:
Gas Utility	$	354,097	$	298,620	$	604,208	$	549,522
Gas Marketing	41,255		59,434		96,504		218,022
Other	2,261		121		3,904		1,544
Total Operating Revenues	397,613		358,175		704,616		769,088
Operating Expenses:
Gas Utility
Natural and propane gas	230,440		171,164		366,956		317,915
Other operation expenses	35,267		38,043		69,187		75,608
Maintenance	5,924		5,761		11,655		11,069
Depreciation and amortization	11,258		10,175		22,223		20,264
Taxes, other than income taxes	21,751		20,093		36,557		34,760
Total Gas Utility Operating Expenses	304,640		245,236		506,578		459,616
Gas Marketing	35,995		61,805		93,376		214,364
Other	5,129		551		10,727		1,420
Total Operating Expenses	345,764		307,592		610,681		675,400
Operating Income	51,849		50,583		93,935		93,688
Other Income and (Income Deductions) – Net	1,340		1,381		2,424		3,320
Interest Charges:
Interest on long-term debt	5,689		5,740		11,127		11,479
Other interest charges	1,016		539		1,604		1,114
Total Interest Charges	6,705		6,279		12,731		12,593
Income Before Income Taxes	46,484		45,685		83,628		84,415
Income Tax Expense	16,242		16,001		27,818		29,557
Net Income	$	30,242	$	29,684	$	55,810	$	54,858
Weighted Average Number of Common Shares Outstanding:
Basic	22,421		22,254		22,396		22,223
Diluted	22,498		22,336		22,466		22,299
Basic Earnings Per Share of Common Stock	$	1.34	$	1.33	$	2.48	$	2.45
Diluted Earnings Per Share of Common Stock	$	1.34	$	1.32	$	2.47	$	2.45
Dividends Declared Per Share of Common Stock	$	0.425	$	0.415	$	0.850	$	0.830
See Notes to Consolidated Financial Statements.

4

THE LACLEDE GROUP, INC.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
(Thousands)	2013			2012			2013			2012
Net Income	$	30,242		$	29,684		$	55,810		$	54,858
Other Comprehensive Income (Loss), Before Tax:
Net gains (losses) on cash flow hedging derivative instruments:
Net hedging (loss) gain arising during the period	(7,590		)	5,106			(6,201		)	8,153
Reclassification adjustment for (gains) losses included in
net income	(22		)	408			2,228			(2,422		)
Net unrealized gains (losses) on cash flow hedging
derivative instruments	(7,612		)	5,514			(3,973		)	5,731
Defined benefit pension and other postretirement plans:
Net actuarial loss arising during the period	—			(2,366		)	—			(2,366		)
Amortization of actuarial loss included in net periodic
pension and postretirement benefit cost	90			3,482			181			3,573
Net defined benefit pension and other postretirement plans	90			1,116			181			1,207
Other Comprehensive Income (Loss), Before Tax	(7,522		)	6,630			(3,792		)	6,938
Income Tax (Benefit) Expense Related to Items of Other
Comprehensive Income	(2,868		)	2,561			(1,417		)	2,680
Other Comprehensive (Loss) Income, Net of Tax	(4,654		)	4,069			(2,375		)	4,258
Comprehensive Income	$	25,588		$	33,753		$	53,435		$	59,116
See Notes to Consolidated Financial Statements.

5

THE LACLEDE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	Mar. 31,			Sept. 30,			Mar. 31,
(Thousands)	2013			2012			2012
ASSETS
Utility Plant	$	1,538,890		$	1,497,419		$	1,425,922
Less:  Accumulated depreciation and amortization	478,971			478,120			468,209
Net Utility Plant	1,059,919			1,019,299			957,713
Non-utility property	5,456			6,039			4,448
Other investments	52,910			50,775			54,688
Other Property and Investments	58,366			56,814			59,136
Current Assets:
Cash and cash equivalents	146,880			27,457			9,302
Accounts receivable:
Utility	148,624			64,027			100,015
Non-utility	55,925			51,042			34,915
Other	9,290			26,478			18,666
Allowance for doubtful accounts	(8,833		)	(7,705		)	(8,758		)
Delayed customer billings	19,663			—			13,464
Inventories:
Natural gas stored underground	32,776			92,729			57,456
Propane gas	8,963			10,200			8,964
Materials and supplies at average cost	4,385			3,543			4,102
Natural gas receivable	13,470			22,377			16,351
Derivative instrument assets	6,021			2,855			5,297
Unamortized purchased gas adjustments	11,039			40,674			11,241
Deferred income taxes	2,527			—			—
Prepayments and other	9,183			9,339			6,795
Total Current Assets	459,913			343,016			277,810
Deferred Charges:
Regulatory assets	424,743			456,047			457,749
Other	6,157			5,086			5,723
Total Deferred Charges	430,900			461,133			463,472
Total Assets	$	2,009,098		$	1,880,262		$	1,758,131

6

THE LACLEDE GROUP, INC.

CONSOLIDATED BALANCE SHEETS (Continued)

(UNAUDITED)

	Mar. 31,.			Sept. 30,.			Mar. 31,
(Thousands, except share amounts)	2013.			2012.			2012
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock (70,000,000 shares authorized, 22,643,693,     22,539,431, and 22,489,986 shares issued, respectively)	$	22,644		$	22,539		$	22,490
Paid-in capital	172,736			168,607			165,056
Retained earnings	451,114			414,581			425,500
Accumulated other comprehensive loss	(6,491		)	(4,116		)	2,158
Total Common Stock Equity	640,003			601,611			615,204
Long-term debt (less current portion)	464,434			339,416			339,386
Total Capitalization	1,104,437			941,027			954,590
Current Liabilities:
Notes payable	—			40,100			—
Accounts payable	108,648			89,503			73,045
Advance customer billings	—			25,146			—
Current portion of long-term debt	—			25,000			25,000
Wages and compensation accrued	16,175			13,908			13,873
Dividends payable	10,059			9,831			9,697
Customer deposits	7,706			8,565			9,459
Interest accrued	6,191			8,590			8,789
Taxes accrued	44,550			11,304			25,062
Deferred income taxes	—			6,675			6,615
Other	14,015			13,502			16,220
Total Current Liabilities	207,344			252,124			187,760
Deferred Credits and Other Liabilities:
Deferred income taxes	343,016			355,509			335,215
Unamortized investment tax credits	3,006			3,113			3,219
Pension and postretirement benefit costs	191,778			196,558			163,940
Asset retirement obligations	41,512			40,368			28,313
Regulatory liabilities	83,026			56,319			53,267
Other	34,979			35,244			31,827
Total Deferred Credits and Other Liabilities	697,317			687,111			615,781
Commitments and Contingencies (Note 11)
Total Capitalization and Liabilities	$	2,009,098		$	1,880,262		$	1,758,131
See Notes to Consolidated Financial Statements.

7

THE LACLEDE GROUP, INC.

STATEMENTS OF CONSOLIDATED CASH FLOWS

(UNAUDITED)

	Six Months Ended
	March 31,
(Thousands)	2013			2012
Operating Activities:
Net Income	$	55,810		$	54,858
Adjustments to reconcile net income to net cash provided by (used in)       operating activities:
Depreciation, amortization, and accretion	22,913			20,565
Deferred income taxes and investment tax credits	(11,132		)	6,167
Other – net	450			(744		)
Changes in assets and liabilities:
Accounts receivable – net	(71,164		)	(20,355		)
Unamortized purchased gas adjustments	29,635			14,478
Deferred purchased gas costs	43,827			(30,160		)
Accounts payable	23,797			(26,546		)
Delayed customer billings - net	(44,809		)	(28,694		)
Taxes accrued	32,971			12,575
Natural gas stored underground	59,953			57,714
Other assets and liabilities	115			11,601
Net cash provided by operating activities	142,366			71,459
Investing Activities:
Capital expenditures	(62,707		)	(40,658		)
Other investments	(2,126		)	(1,440		)
Net cash used in investing activities	(64,833		)	(42,098		)
Financing Activities:
Issuance of long-term debt	125,000			—
Maturity of first mortgage bonds	(25,000		)	—
Repayment of short-term debt – net	(40,100		)	(46,000		)
Changes in book overdrafts	(1,262		)	357
Issuance of common stock	2,852			2,195
Non-employee directors’ restricted stock awards	—			(565		)
Dividends paid	(19,054		)	(18,314		)
Employees’ taxes paid associated with restricted shares withheld upon vesting	(729		)	(1,165		)
Excess tax benefits from stock-based compensation	636			185
Other	(453		)	(29		)
Net cash provided by (used in) financing activities	41,890			(63,336		)
Net Increase (Decrease) in Cash and Cash Equivalents	119,423			(33,975		)
Cash and Cash Equivalents at Beginning of Period	27,457			43,277
Cash and Cash Equivalents at End of Period	$	146,880		$	9,302
Supplemental Disclosure of Cash Paid (Refunded) During the Period for:
Interest	$	14,569		$	12,521
Income taxes	(3,165		)	2,763
See Notes to Consolidated Financial Statements.

8

THE LACLEDE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These notes are an integral part of the accompanying unaudited consolidated financial statements of The Laclede Group, Inc. (Laclede Group or the Company) and its subsidiaries. In the opinion of Laclede Group, this interim report includes all adjustments (consisting of only normal recurring accruals) necessary for the fair presentation of the results of operations for the periods presented. This Form 10-Q should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s Fiscal Year 2012 Form 10-K.

The consolidated financial position, results of operations, and cash flows of Laclede Group are comprised primarily from the financial position, results of operations, and cash flowsof Laclede Gas Company (Laclede Gas or the Utility). Laclede Gas is a regulated natural gas distribution utility having a material seasonal cycle. As a result, these interim statements of income for Laclede Group are not necessarily indicative of annual results or representative of succeeding quarters of the fiscal year. Due to the seasonal nature of the business of Laclede Gas, earnings are typically concentrated in the November through April period, which generally corresponds with the heating season. Laclede Energy Resources, Inc. (LER) includes its wholly owned subsidiary, LER Storage Services, Inc., which became operational on January 1, 2012.

REVENUE RECOGNITION - Laclede Gas reads meters and bills its customers on monthly cycles. The Utility records its gas utility revenues from gas sales and transportation services on an accrual basis that includes estimated amounts for gas delivered, but not yet billed. The accruals for unbilled revenues are reversed in the subsequent accounting period when meters are actually read and customers are billed. The amounts of accrued unbilled revenues at March 31, 2013 and 2012, for the Utility, were $33.3 million and $13.0 million, respectively. The amount of accrued unbilled revenue at September 30, 2012 was $11.6 million.

GROSS RECEIPTS TAXES - Gross receipts taxes associated with Laclede Gas’ natural gas utility service are imposed on the Utility and billed to its customers. These amounts are recorded gross in the Statements of Consolidated Income. Amounts recorded in Gas Utility Operating Revenues for the quarters ended March 31, 2013 and 2012 were $17.2 million and $15.5 million, respectively. Amounts recorded in Gas Utility Operating Revenues for the six months ended March 31, 2013 and 2012 were $27.5 million and $25.7 million, respectively. Gross receipts taxes are expensed by the Utility and included in the Taxes, other than income taxes line.

NEW ACCOUNTING STANDARDS - In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-05, “Presentation of Comprehensive Income,” to amend ASC Topic 220, “Comprehensive Income,” by changing certain financial statement presentation requirements. Under the amended guidance, entities may either present a single continuous statement of comprehensive income or, consistent with the Company’s current presentation, provide separate but consecutive statements (a statement of income and a statement of comprehensive income). ASU No. 2011-05 would have required that, regardless of the method chosen, reclassification adjustments from other comprehensive income to net income be presented on the face of the financial statements, displaying the effect on both net income and other comprehensive income. However, in December 2011, the FASB issued ASU No. 2011-12 to defer the effective date of this particular requirement while it reconsiders this provision of the guidance. The amendments in these ASUs do not change the items that are required to be reported in other comprehensive income and, accordingly, did not impact total net income, comprehensive income, or earnings per share upon adoption in the first quarter of fiscal year 2013.

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities,” to amend ASC Topic 210, “Balance Sheet,” to require additional disclosures about financial instruments and derivative instruments that have been presented on a net basis (offset) in the balance sheet. Additionally, information about financial instruments and derivative instruments that are subject to enforceable master netting arrangements or similar agreements, irrespective of whether they are presented net in the balance sheet, is required to be disclosed. The ASU impacts disclosures only and will not require any changes to financial statement presentation. The Company will present the new disclosures retrospectively beginning in the first quarter of fiscal year 2014.

In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This ASU amends Accounting Standards Codification (ASC) Topic 220, “Comprehensive Income,” by requiring entities to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to provide information on significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The Company will present the new disclosures prospectively beginning in the first quarter of fiscal year 2014.

9

2.        PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Pension Plans

Laclede Gas has non-contributory, defined benefit, trusteed forms of pension plans covering substantially all employees. Plan assets consist primarily of corporate and U.S. government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments.

Pension costs for quarters ended March 31, 2013 and 2012 were $4.2 million and $7.6 million, respectively, including amounts charged to construction. Pension costs for six months ended March 31, 2013 and 2012 were $8.4 million and $11.8 million, respectively, including amounts charged to construction.

The net periodic pension costs include the following components:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
(Thousands)	2013			2012			2013			2012
Service cost – benefits earned during the period	$	2,311		$	2,301		$	4,622		$	4,613
Interest cost on projected benefit obligation	4,066			4,840			8,132			9,711
Expected return on plan assets	(4,741		)	(4,899		)	(9,482		)	(9,798		)
Amortization of prior service cost	136			148			272			296
Amortization of actuarial loss	2,839			2,259			5,678			4,536
Loss on lump-sum settlement	—			3,407			—			3,407
Sub-total	4,611			8,056			9,222			12,765
Regulatory adjustment	(433		)	(484		)	(867		)	(967		)
Net pension cost	$	4,178		$	7,572		$	8,355		$	11,798

Pursuant to the provisions of the Laclede Gas pension plans, pension obligations may be satisfied by lump-sum cash payments. Pursuant to a Missouri Public Service Commission (MoPSC or Commission) Order, lump-sum payments are recognized as settlements (which can result in gains or losses) only if the total of such payments exceeds 100% of the sum of service and interest costs. There were no lump-sum payments recognized as settlements during the six months ended March 31, 2013. Lump-sum payments recognized as settlements were $6.4 million during the six months ended March 31, 2012.

Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets implemented prospectively over a four-year period. Gains or losses not yet includible in pension cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets. Such excess is amortized over the average remaining service life of active participants. The recovery in rates for the Utility’s qualified pension plans is based on an annual allowance of $15.5 million effective January 1, 2011. The difference between these amounts and pension expense as calculated pursuant to the above and that otherwise would be included in the Statements of Consolidated Income and Statements of Consolidated Comprehensive Income is deferred as a regulatory asset or regulatory liability.

The funding policy of Laclede Gas is to contribute an amount not less than the minimum required by government funding standards, nor more than the maximum deductible amount for federal income tax purposes. Fiscal year 2013 contributions to the pension plans through March 31, 2013 were $8.9 million to the qualified trusts and approximately $0.3 million to the non-qualified plans. Contributions to the pension plans for the remaining six months of fiscal 2013 are anticipated to be at least $14.5 million to the qualified trusts and $0.8 million to the non-qualified plans.

Postretirement Benefits

Laclede Gas provides certain life insurance benefits at retirement. Medical insurance is available after early retirement until age 65. The transition obligation not yet includible in postretirement benefit cost is being amortized over 20 years. Postretirement benefit costs for both the quarters ended March 31, 2013 and 2012 were $2.4 million, including amounts charged to construction. Postretirement benefit costs for both the six months ended March 31, 2013 and 2012 were $4.8 million, including amounts charged to construction.

10

Net periodic postretirement benefit costs consisted of the following components:

	Three Months Ended March 31,						Six Months Ended March 31,
(Thousands)	2013			2012			2013			2012
Service cost – benefits earned during the period	$	2,534		$	2,015		$	5,067		$	4,030
Interest cost on accumulated postretirement benefit obligation	1,279			1,380			2,558			2,760
Expected return on plan assets	(1,081		)	(991		)	(2,162		)	(1,982		)
Amortization of transition obligation	23			34			46			68
Amortization of prior service cost (credit)	1			(518		)	2			(1,036		)
Amortization of actuarial loss	1,325			1,065			2,650			2,130
Sub-total	4,081			2,985			8,161			5,970
Regulatory adjustment	(1,699		)	(604		)	(3,398		)	(1,208		)
Net postretirement benefit cost	$	2,382		$	2,381		$	4,763		$	4,762

Missouri state law provides for the recovery in rates of costs accrued pursuant to GAAP provided that such costs are funded through an independent, external funding mechanism. Laclede Gas established Voluntary Employees’ Beneficiary Association (VEBA) and Rabbi trusts as its external funding mechanisms. VEBA and Rabbi trusts’ assets consist primarily of money market securities and mutual funds invested in stocks and bonds.

Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets implemented prospectively over a four-year period. Gains and losses not yet includible in postretirement benefit cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the accumulated postretirement benefit obligation or the market-related value of plan assets. Such excess is amortized over the average remaining service life of active participants. The recovery in rates for the Utility’s postretirement benefit plans is based on an annual allowance of $9.5 million effective January 1, 2011. The difference between these amounts and postretirement benefit cost based on the above and that otherwise would be included in the Statements of Consolidated Income and Statements of Consolidated Comprehensive Income is deferred as a regulatory asset or regulatory liability.

Laclede Gas’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. Fiscal year 2013 contributions to the postretirement plans through March 31, 2013 were $4.1 million to the qualified trusts and approximately $0.4 million paid directly to participants from Laclede Gas' funds. Contributions to the postretirement plans for the remaining six months of fiscal year 2013 are anticipated to be $12.2 million to the qualified trusts and $0.4 million paid directly to participants from Laclede Gas’ funds.

3.        STOCK-BASED COMPENSATION

Awards of stock-based compensation are made pursuant to The Laclede Group 2006 Equity Incentive Plan (2006 Plan). Refer to Note 3 of the Consolidated Financial Statements included in the Company’s Form 10-K for the fiscal year ended September 30, 2012 for descriptions of the plan.

Restricted Stock Awards

During the six months ended March 31, 2013, the Company granted 108,419 performance-contingent restricted stock units to executive officers and key employees at a weighted average grant date fair value of $34.48 per share. This number represents the maximum shares that can be earned pursuant to the terms of the awards. Most of these stock units have a performance period ending September 30, 2015. While the participants have no interim voting rights on these stock units, dividends accrue during the performance period and are paid to the participants upon vesting, but are subject to forfeiture if the underlying stock units do not vest. The number of stock units that will ultimately vest is dependent upon the attainment of certain levels of earnings and other strategic goals, as well as the Company’s level of total shareholder return (TSR) during the performance period relative to a comparator group of companies. This TSR provision is considered a market condition under GAAP.

11

Activity of restricted stock and restricted stock units subject to performance and/or market conditions during the six months ended March 31, 2013 is presented below:

	Restricted Stock/ Stock Units		Weighted Average Grant Date Fair Value
Nonvested at September 30, 2012	232,403		$	30.89
Granted (maximum shares that can be earned)	108,419		$	34.48
Vested	(37,436	)	$	27.02
Forfeited	(48,782	)	$	25.71
Nonvested at March 31, 2013	254,604		$	33.98

During the six months ended March 31, 2013, the Company granted 58,774 shares of time-vested restricted stock and stock units to executive officers, key employees, and directors at a weighted average grant date fair value of $39.96 per share. Most of these shares were awarded on December 3, 2012 and vest December 3, 2015. In the interim, participants receive full voting rights and dividends, which are not subject to forfeiture.

Time-vested restricted stock and stock unit activity for the six months ended March 31, 2013 is presented below:

	Restricted Stock/ Stock Units		Weighted Average Grant Date Fair Value
Nonvested at September 30, 2012	115,115		$	36.54
Granted	58,774		$	39.96
Vested	(20,200	)	$	30.46
Forfeited	(3,250	)	$	38.18
Nonvested at March 31, 2013	150,439		$	38.65

During the six months ended March 31, 2013, 57,636 shares of restricted stock and stock units (performance-contingent and time-vested), awarded on November 4, 2009, December 1, 2009, and January 4, 2010, vested. The Company withheld 18,744 of the vested shares at a weighted average price of $38.90 per share pursuant to elections by employees to satisfy tax withholding obligations.

Stock Option Awards

Stock option activity for the six months ended March 31, 2013 is presented below:

	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at September 30, 2012	214,000		$	31.02
Granted	—		$	—
Exercised	(49,500	)	$	29.54
Forfeited	—		$	—
Expired	—		$	—
Outstanding at March 31, 2013	164,500		$	31.47	2.1	$	1,848
Fully Vested and Expected to Vest at March 31, 2013	164,500		$	31.47	2.1	$	1,848
Exercisable at March 31, 2013	164,500		$	31.47	2.1	$	1,848

12

The closing price of the Company’s common stock was $42.70 at March 31, 2013.

Equity Compensation Costs

The amounts of compensation cost recognized for share-based compensation arrangements are presented below:

	Three Months Ended March 31,						Six Months Ended March 31,
(Thousands)	2013			2012			2013			2012
Total equity compensation cost	$	1,137		$	684		$	1,759		$	1,351
Compensation cost capitalized	(356		)	(221		)	(539		)	(359		)
Compensation cost recognized in net income	781			463			1,220			992
Income tax benefit recognized in net income	(298		)	(179		)	(467		)	(383		)
Compensation cost recognized in net income, net of income tax	$	483		$	284		$	753		$	609

As of March 31, 2013, there was $7.1 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 2.2 years.

4.        EARNINGS PER COMMON SHARE

	Three Months Ended March 31,				Six Months Ended March 31,
(Thousands, Except Per Share Amounts)	2013		2012		2013		2012
Basic EPS:
Net Income	$	30,242	$	29,684	$	55,810	$	54,858
Less: Income allocated to participating securities	186		167		312		324
Net Income Available to Common Shareholders	$	30,056	$	29,517	$	55,498	$	54,534
Weighted Average Shares Outstanding	22,421		22,254		22,396		22,223
Earnings Per Share of Common Stock	$	1.34	$	1.33	$	2.48	$	2.45
Diluted EPS:
Net Income	$	30,242	$	29,684	$	55,810	$	54,858
Less: Income allocated to participating securities	186		166		311		323
Net Income Available to Common Shareholders	$	30,056	$	29,518	$	55,499	$	54,535
Weighted Average Shares Outstanding	22,421		22,254		22,396		22,223
Dilutive Effect of Stock Options, Restricted Stock,
and Restricted Stock Units	77		82		70		76
Weighted Average Diluted Shares	22,498		22,336		22,466		22,299
Earnings Per Share of Common Stock	$	1.34	$	1.32	$	2.47	$	2.45
Outstanding Shares Excluded from the
Calculation of Diluted EPS Attributable to:
Restricted stock and stock units subject to
performance and/or market conditions	211		203		211		203

13

5.        FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis are as follows:

					Classification of Estimated Fair Value
(Thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of March 31, 2013
Cash and cash equivalents	$	146,880	$	146,880	$	136,826	$	10,054	$	—
Short-term debt	—		—		—		—		—
Long-term debt, including current portion	464,434		539,260		—		539,260		—
As of September 30, 2012
Cash and cash equivalents	$	27,457	$	27,457	$	17,380	$	10,077	$	—
Short-term debt	40,100		40,100		—		40,100		—
Long-term debt, including current portion	364,416		452,768		—		452,768		—
As of March 31, 2012
Cash and cash equivalents	$	9,302	$	9,302	$	4,261	$	5,041	$	—
Short-term debt	—		—		—		—		—
Long-term debt, including current portion	364,386		432,098		—		432,098		—

The carrying amounts for cash and cash equivalents and short-term debt approximate fair value due to the short maturity of these instruments. The fair values of long-term debt are estimated based on market prices for similar issues. Refer to Note 6, Fair Value Measurements, for information on financial instruments measured at fair value on a recurring basis.

14

6.        FAIR VALUE MEASUREMENTS

The following table categorizes the assets and liabilities in the Consolidated Balance Sheets that are accounted for at fair value on a recurring basis in periods subsequent to initial recognition.

(Thousands)	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Effects of Netting and Cash Margin Receivables /Payables			Total
As of March 31, 2013
Assets
U. S. Stock/Bond Mutual Funds	$	13,922	$	—	$	—	$	—		$	13,922
NYMEX/ICE natural gas contracts	11,010		379		—		(8,209		)	3,180
NYMEX gasoline and heating
oil contracts	322		—		—		(192		)	130
Natural gas commodity contracts	—		2,888		117		(289		)	2,716
Total	$	25,254	$	3,267	$	117	$	(8,690	)	$	19,948
Liabilities
NYMEX/ICE natural gas contracts	$	2,447	$	1,342	$	—	$	(3,789	)	$	—
Natural gas commodity contracts	—		990		24		(289		)	725
Interest rate swaps	$	—	$	4,549	$	—	$	—		$	4,549
Total	$	2,447	$	6,881	$	24	$	(4,078	)	$	5,274
As of September 30, 2012
Assets
U. S. Stock/Bond Mutual Funds	$	13,187	$	—	$	—	$	—		$	13,187
NYMEX/ICE natural gas contracts	7,411		994		—		(8,405		)	—
NYMEX gasoline and heating
oil contracts	344		—		—		(344		)	—
Natural gas commodity contracts	—		3,060		113		(299		)	2,874
Total	$	20,942	$	4,054	$	113	$	(9,048	)	$	16,061
Liabilities
NYMEX/ICE natural gas contracts	$	12,253	$	1,891	$	—	$	(14,144	)	$	—
Natural gas commodity contracts	—		428		4		(299		)	133
Total	$	12,253	$	2,319	$	4	$	(14,443	)	$	133
As of March 31, 2012
Assets
U. S. Stock/Bond Mutual Funds	$	17,907	$	—	$	—	$	—		$	17,907
NYMEX/ICE natural gas contracts	5,182		1,310		—		(4,881		)	1,611
NYMEX gasoline and heating
oil contracts	81		—		—		(81		)	—
Natural gas commodity contracts	—		4,362		79		(538		)	3,903
Total	$	23,170	$	5,672	$	79	$	(5,500	)	$	23,421
Liabilities
NYMEX/ICE natural gas contracts	$	37,811	$	2,342	$	—	$	(40,153	)	$	—
Natural gas commodity contracts	—		1,190		21		(538		)	673
Total	$	37,811	$	3,532	$	21	$	(40,691	)	$	673

15

The mutual funds included in Level 1 are valued based on exchange-quoted market prices of identical securities. Derivative instruments included in Level 1 are valued using quoted market prices on the New York Mercantile Exchange (NYMEX). Derivative instruments classified in Level 2 include physical commodity derivatives that are valued using broker or dealer quotation services whose prices are derived principally from, or are corroborated by, observable market inputs. Also included in Level 2 are certain derivative instruments that have values that are similar to, and correlate with, quoted prices for exchange-traded instruments in active markets. Derivative instruments included in Level 3 are valued using generally unobservable inputs that are based upon the best information available and reflect management’s assumptions about how market participants would price the asset or liability. The Company’s policy is to recognize transfers between the levels of the fair value hierarchy, if any, as of the beginning of the interim reporting period in which circumstances change or events occur to cause the transfer. The following is a reconciliation of the Level 3 beginning and ending net derivative balances:

	Three Months Ended March 31,					Six Months Ended March 31,
(Thousands)	2013		2012			2013			2012
Beginning of period	$	30	$	37		$	109		$	13
Settlements	37		(41		)	(29		)	(7		)
Net losses related to derivatives not held   at end of period	—		(1		)	—			(4		)
Net gains related to derivatives still held   at end of period	26		63			13			56
End of period	$	93	$	58		$	93		$	58

The mutual funds are included in the Other investments line of the Consolidated Balance Sheets. Derivative assets and liabilities, including receivables and payables associated with cash margin requirements, are presented net in the Consolidated Balance Sheets when a legally enforceable netting agreement exists between the Company and the counterparty to a derivative contract. For additional information on derivative instruments, see Note 7, Derivative Instruments and Hedging Activities.

7.        DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Laclede Gas has a risk management policy that allows for the purchase of natural gas derivative instruments with the goal of managing price risk associated with purchasing natural gas on behalf of its customers. This policy prohibits speculation and permits the Utility to hedge up to 70% of its normal volumes purchased for up to a 36-month period. Costs and cost reductions, including carrying costs, associated with the Utility’s use of natural gas derivative instruments are allowed to be passed on to the Utility’s customers through the operation of its Purchased Gas Adjustment (PGA) Clause, through which the MoPSC allows the Utility to recover gas supply costs, subject to prudence review by the MoPSC. Accordingly, Laclede Gas does not expect any adverse earnings impact as a result of the use of these derivative instruments. The Utility does not designate these instruments as hedging instruments for financial reporting purposes because gains or losses associated with the use of these derivative instruments are deferred and recorded as regulatory assets or regulatory liabilities pursuant to ASC Topic 980, “Regulated Operations,” and, as a result, have no direct impact on the Statements of Consolidated Income. The timing of the operation of the PGA Clause may cause interim variations in short-term cash flows, because the Utility is subject to cash margin requirements associated with changes in the values of these instruments. Nevertheless, carrying costs associated with such requirements are recovered through the PGA Clause.

From time to time, Laclede Gas purchases NYMEX futures and options contracts to help stabilize operating costs associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and equipment used in the course of its business. At March 31, 2013, Laclede Gas held 0.5 million gallons of gasoline futures contracts at an average price of $2.30 per gallon. Most of these contracts, the longest of which extends to April 2014, are designated as cash flow hedges of forecasted transactions pursuant to ASC Topic 815. The gains or losses on these derivative instruments are not subject to the Utility’s PGA Clause.

16

In the course of its business, Laclede Group’s gas marketing subsidiary, LER, which includes its wholly owned subsidiary LER Storage Services, Inc., enters into commitments associated with the purchase or sale of natural gas. Certain of LER’s derivative natural gas contracts are designated as normal purchases or normal sales and, as such, are excluded from the scope of ASC Topic 815 and are accounted for as executory contracts on an accrual basis. Any of LER’s derivative natural gas contracts that are not designated as normal purchases or normal sales are accounted for at fair value. At March 31, 2013, the fair values of 69.6 million MMBtu of non-exchange traded natural gas commodity contracts were reflected in the Consolidated Balance Sheet. Of these contracts, 59.8 million MMBtu will settle during fiscal year 2013, while the remaining 9.8 million MMBtu will settle during fiscal year 2014. These contracts have not been designated as hedges; therefore, changes in the fair value of these contracts are reported in earnings each period. Furthermore, LER manages the price risk associated with its fixed-priced commitments by either closely matching the offsetting physical purchase or sale of natural gas at fixed prices or through the use of NYMEX or Ice Clear Europe (ICE) futures, swap, and option contracts to lock in margins. At March 31, 2013, LER’s unmatched fixed-price positions were not material to Laclede Group’s financial position or results of operations. LER’s NYMEX and ICE natural gas futures, swap, and option contracts used to lock in margins may be designated as cash flow hedges of forecasted transactions for financial reporting purposes.

The Company’s exchange-traded/cleared derivative instruments consist primarily of NYMEX and ICE positions. The NYMEX is the primary national commodities exchange on which natural gas derivatives are traded. Open NYMEX/ICE natural gas futures and swap positions at March 31, 2013 were as follows:

	Laclede Gas Company			Laclede Energy Resources, Inc.
	MMBtu (millions)	Avg. Price Per MMBtu		MMBtu (millions)	Avg. Price Per MMBtu
Open short futures positions
Fiscal 2013	—	$	—	4.36	$	3.61
Fiscal 2014	—	—		3.26	3.86
Open long futures positions
Fiscal 2013	7.58	$	3.40	0.77	$	3.71
Fiscal 2014	4.87	3.97		0.65	3.01

At March 31, 2013, Laclede Gas and LER also had 14.2 million MMBtu and 1.5 million MMBtu, respectively, of other price mitigation in place through the use of NYMEX natural gas option-based strategies.

In February 2013, Laclede Group entered into certain interest rate swap agreements to effectively lock in interest rates on a portion of the long-term debt it anticipates issuing to finance its pending acquisition of Missouri Gas Energy (MGE). These derivative instruments have been designated as cash flow hedges of forecasted transactions. These forward starting swaps involve the payment of a fixed interest rate and the receipt of a floating interest rate (the London Interbank Offered Rate, also known as LIBOR) over the terms specified in the contracts. At March 31, 2013, the notional amount of interest rate swaps outstanding was $355 million with stated maturities ranging from 2018 to 2043 and fixed interest rates ranging between 1.28% and 3.14%.

Derivative instruments designated as cash flow hedges of forecasted transactions are recognized on the Consolidated Balance Sheets at fair value and the change in the fair value of the effective portion of these hedge instruments is recorded, net of tax, in other comprehensive income (OCI). Accumulated other comprehensive income (AOCI) is a component of Total Common Stock Equity. Amounts are reclassified from AOCI into earnings when the hedged items affect net income, using the same revenue or expense category that the hedged item impacts. Based on market prices at March 31, 2013, it is expected that approximately $3.1 million of pre-tax unrealized losses will be reclassified into the Statements of Consolidated Income during the next twelve months. Cash flows from hedging transactions are classified in the same category as the cash flows from the items that are being hedged in the Statements of Consolidated Cash Flows.

17

The Effect of Derivative Instruments on the Statements of Consolidated Income and Statements of Consolidated Comprehensive Income
		Three Months Ended						Six Months Ended
	Location of Gain (Loss)	March 31,						March 31,
(Thousands)	Recorded in Income	2013			2012			2013			2012
Derivatives in Cash Flow Hedging Relationships
Effective portion of gain (loss) recognized in OCI on derivatives:
NYMEX/ICE natural gas contracts		$	(3,188	)	$	5,023		$	(1,855	)	$	8,020
NYMEX gasoline and heating oil contracts		147			83			203			133
Interest rate swaps		(4,549		)	—			(4,549		)	—
Total		$	(7,590	)	$	5,106		$	(6,201	)	$	8,153
Effective portion of gain (loss) reclassified from AOCI to income:
NYMEX/ICE natural gas contracts	Gas Marketing Operating Revenues	$	302		$	4,048		$	(1,661	)	$	10,788
	Gas Marketing Operating Expenses	(318		)	(4,445		)	(652		)	(8,369		)
Sub-total		(16		)	(397		)	(2,313		)	2,419
NYMEX gasoline and heating oil contracts	Other Gas Utility Operating Expenses	38			(11		)	85			3
Total		$	22		$	(408	)	$	(2,228	)	$	2,422
Ineffective portion of gain (loss) on derivatives recognized in income:
NYMEX/ICE natural gas contracts	Gas Marketing Operating Revenues	$	(87	)	$	50		$	(412	)	$	69
	Gas Marketing Operating Expenses	(44		)	(90		)	(129		)	(196		)
Sub-total		(131		)	(40		)	(541		)	(127		)
NYMEX gasoline and heating oil contracts	Other Gas Utility Operating Expenses	(31		)	28			(132		)	34
Total		$	(162	)	$	(12	)	$	(673	)	$	(93	)
Derivatives Not Designated as Hedging Instruments *
Gain (loss) recognized in income on derivatives:
Natural gas commodity contracts	Gas Marketing Operating Revenues	$	1,745		$	1,557		$	775		$	790
	Gas Marketing Operating Expenses	—			—			—			687
NYMEX/ICE natural gas contracts	Gas Marketing Operating Revenues	(1,679		)	1,478			(612		)	1,548
	Gas Marketing Operating Expenses	—			30			—			30
NYMEX gasoline and heating oil contracts	Other Income and (Income Deductions) - Net	13			12			46			13
Total		$	79		$	3,077		$	209		$	3,068

* Gains and losses on Laclede Gas’ natural gas derivative instruments, which are not designated as hedging instruments for financial reporting purposes, are deferred pursuant to the Utility’s PGA Clause and initially recorded as regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no direct impact on the Statements of Consolidated Income. Such amounts are recognized in the Statements of Consolidated Income as a component of Gas Utility Natural and Propane Gas operating expenses when they are recovered through the PGA Clause and reflected in customer billings.

18

Fair Value of Derivative Instruments in the Consolidated Balance Sheet at March 31, 2013
	Asset Derivatives				Liability Derivatives
(Thousands)	Balance Sheet Location	Fair Value		*	Balance Sheet Location	Fair  Value		*
Derivatives designated as hedging instruments
NYMEX/ICE natural gas contracts	Accounts Receivable - Other	$	520		Accounts Receivable - Other	$	2,993
NYMEX/ICE natural gas contracts	Other Deferred Charges	5			Other Deferred Charges	—
NYMEX gasoline and heating oil contracts	Derivative Instrument Assets	312			Derivative Instrument Assets	—
Interest rate swaps	Other Current Liabilities	—			Other Current Liabilities	4,549
Sub-total		837				7,542
Derivatives not designated as hedging instruments
NYMEX/ICE natural gas contracts	Derivative Instrument Assets	10,862			Derivative Instrument Assets	339
	Accounts Receivable – Other	2			Accounts Receivable – Other	457
Natural gas commodity contracts	Derivative Instrument Assets	2,943			Derivative Instrument Assets	227
	Other Current Liabilities	62			Other Current Liabilities	787
NYMEX gasoline and heating oil contracts	Derivative Instrument Assets	10			Derivative Instrument Assets	—
Sub-total		13,879				1,810
Total derivatives		$	14,716			$	9,352
Fair Value of Derivative Instruments in the Consolidated Balance Sheet at September 30, 2012
	Asset Derivatives				Liability Derivatives
(Thousands)	Balance Sheet Location	Fair Value		*	Balance Sheet Location	Fair Value		*
Derivatives designated as hedging instruments
NYMEX/ICE natural gas contracts	Accounts Receivable - Other	$	405		Accounts Receivable - Other	$	3,413
NYMEX gasoline and heating oil contracts	Accounts Receivable - Other	334			Accounts Receivable - Other	—
Sub-total		739				3,413
Derivatives not designated as hedging instruments
NYMEX/ICE natural gas contracts	Accounts Receivable - Other	8,000			Accounts Receivable - Other	10,731
Natural gas commodity contracts	Derivative Instrument Assets	3,150			Derivative Instrument Assets	295
	Other Current Liabilities	4			Other Current Liabilities	137
	Other Deferred Charges	19			Other Deferred Charges	—
NYMEX gasoline and heating oil contracts	Accounts Receivable - Other	10			Accounts Receivable - Other	—
Sub-total		11,183				11,163
Total derivatives		$	11,922			$	14,576

19

Fair Value of Derivative Instruments in the Consolidated Balance Sheet at March 31, 2012
	Asset Derivatives				Liability Derivatives
(Thousands)	Balance Sheet Location	Fair Value		*	Balance Sheet Location	Fair Value		*
Derivatives designated as hedging instruments
NYMEX/ICE natural gas contracts	Derivative Instrument Assets	$	3,545		Derivative Instrument Assets	$	3,242
NYMEX gasoline and heating oil contracts	Accounts Receivable - Other	72			Accounts Receivable - Other	—
Sub-total		3,617				3,242
Derivatives not designated as hedging instruments
NYMEX/ICE natural gas contracts	Accounts Receivable - Other	709			Accounts Receivable - Other	36,437
	Derivative Instrument Assets	2,238			Derivative Instrument Assets	474
Natural gas commodity contracts	Derivative Instrument Assets	4,176			Derivative Instrument Assets	490
	Other Deferred Charges	217			Other Deferred Charges	—
	Other Current Liabilities	48			Other Current Liabilities	721
NYMEX gasoline and heating oil contracts	Accounts Receivable - Other	9			Accounts Receivable - Other	—
Sub-total		7,397				38,122
Total derivatives		$	11,014			$	41,364

* The fair values of Asset Derivatives and Liability Derivatives exclude the fair value of cash margin receivables or payables with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the Consolidated Balance Sheets. As such, the gross balances presented in the table above are not indicative of the Company’s net economic exposure. Refer to Note 6, Fair Value Measurements, for information on the valuation of derivative instruments.

Following is a reconciliation of the amounts in the tables above to the amounts presented in the Consolidated Balance Sheets:

(Thousands)	Mar. 31, 2013			Sept. 30, 2012			Mar. 31, 2012
Fair value of asset derivatives presented above	$	14,716		$	11,922		$	11,014
Fair value of cash margin receivables offset with derivatives	2,928			5,478			35,648
Netting of assets and liabilities with the same counterparty	(11,618		)	(14,526		)	(41,148		)
Total	$	6,026		$	2,874		$	5,514
Derivative Instrument Assets, per Consolidated Balance Sheets:
Derivative instrument assets	$	6,021		$	2,855		$	5,297
Other deferred charges	5			19			217
Total	$	6,026		$	2,874		$	5,514
Fair value of liability derivatives presented above	$	9,352		$	14,576		$	41,364
Fair value of cash margin payables offset with derivatives	7,540			83			457
Netting of assets and liabilities with the same counterparty	(11,618		)	(14,526		)	(41,148		)
Derivative instrument liabilities, per Consolidated Balance Sheets*