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## ALGONQUIN POWER & UTILITIES CORP. 

Notes to the Consolidated Financial Statements December 31, 2012 and 2011 

(in thousands of Canadian dollars except as noted and amounts per share) 

## 3. Business acquisitions and development projects (continued) 

(b) Acquisition of Midwest Gas Utilities (continued) 

Goodwill represents the excess of the fair value of the consideration paid over the fair value of net assets acquired. The contributing factors to the amount recorded as goodwill include expected future cash flows, potential operational synergies, the utilization of technology, and cost savings opportunities in the delivery of certain shared administrative and other services. The goodwill related to Midwest Gas Utilities has been allocated to the Liberty Utilities (Central) segment. 

Property, plant & equipment are amortized in accordance with regulatory requirements over the estimated useful life of the asset using the straight line method. The weighted average life is 30 years. 

All transaction costs related to the acquisition have been expensed through the Consolidated Statement of Operations. 

Midwest Gas Utilities contributed revenue of $25,936 and net earnings of $1,229 to the Company’s results in 2012. Pro forma financial information is disclosed in note 3 (c). 

(c) Pro forma financial information 

The supplemental pro forma financial information below was prepared using the acquisition method of accounting and is based on the historical financial information of APUC, Granite State, EnergyNorth and the Midwest Gas Utilities, reflecting results of operations for the years ended December 31, 2012 and 2011 on a comparative basis as though the aforementioned companies were combined as of the beginning of fiscal year 2011. The estimated acquirees’ pre-acquisition results have been added to APUC’s historical results, and the totals have been adjusted for the pro forma effects of acquisition-related costs, interest expense related to the financing of the business combinations, and related income taxes. 

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The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what the results would have been had the acquisition closed on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. 

