Table of Contents










UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.


FORM 10-Q

QUARTERLY REPORT

For the Quarterly Period Ended June 30, 2016









     

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q10-Q
(Mark One)
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30,December 31, 2016
 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
 
Name of Registrant, Address of Principal Executive Offices and
Telephone Number
 State of Incorporation I.R.S. Employer Identification Number
1-16681 
Spire Inc.
700 Market Street
St. Louis, MO 63101
Telephone Number 314-342-0500
 Missouri 74-2976504
1-1822 
Laclede Gas Company
700 Market Street
St. Louis, MO 63101
Telephone Number 314-342-0500
 Missouri 43-0368139
2-38960 
Alabama Gas Corporation
2101 6th Avenue North
Birmingham, Alabama 35203
Telephone Number 205-326-8100
 Alabama 63-0022000

Indicate by check mark whether each 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.

Spire Inc.Yes [ X ]No [ ]
Laclede Gas CompanyYes [ X ]No [ ]
Alabama Gas CorporationYes [ X ]No [ ]
Spire Inc.Yes [ X ]No [ ]
Laclede Gas CompanyYes [ X ]No [ ]
Alabama Gas CorporationYes [ X ]No [ ]

Indicate by check mark whether each registrant 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).

Spire Inc.Yes [ X ]No [ ]
Laclede Gas CompanyYes [ X ]No [ ]
Alabama Gas CorporationYes [ X ]No [ ]
Spire Inc.Yes [ X ]No [ ]
Laclede Gas CompanyYes [ X ]No [ ]
Alabama Gas CorporationYes [ X ]No [ ]

Indicate by check mark whether the registrant 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
 
Accelerated
filer
 
Non-
accelerated
filer
 
Smaller
reporting
company
Spire Inc.X      
Laclede Gas Company    X  
Alabama Gas Corporation    X  

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Spire Inc.Yes [ ]No [ X ]
Spire Inc.Yes [ ]No [ X ]
Laclede Gas CompanyYes [ ]No [ X ]
Alabama Gas CorporationYes [ ]No [ X ]
Laclede Gas CompanyYes [ ]No [ X ]
Alabama Gas CorporationYes [ ]No [ X ]
The number of shares outstanding of each registrant’s common stock as of July 29, 2016January 30, 2017 was as follows:
Spire Inc. Common Stock, par value $1.00 per share 45,640,58045,738,897
Laclede Gas Company Common Stock, par value $1.00 per share
(all (all owned by Spire Inc.)		 24,577
Alabama Gas Corporation Common Stock, par value $0.01 per share
(all (all owned by Spire Inc.)		 1,972,052

Laclede Gas Company and Alabama Gas Corporation meet the conditions set forth in General Instructions H(1)(a) and (b) to Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format specified in General Instructions H(2) to Form 10-Q.

This combined Form 10-Q represents separate filings by Spire Inc., Laclede Gas Company and Alabama Gas Corporation. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants, except that information relating to Laclede Gas Company and Alabama Gas Corporation are also attributed to Spire Inc.
     

TABLE OF CONTENTSPage No.
    
GLOSSARY
 
2
   
PART I. FINANCIAL INFORMATION
   
Item 1
Financial Statements (Unaudited):
 
 Spire Inc.  
  
Condensed Consolidated Statements of Income
 
4
  
Condensed Consolidated Statements of Comprehensive Income
 
5
  
Condensed Consolidated Balance Sheets
 
6
  
Condensed Consolidated Statements of Common Shareholders'Shareholders’ Equity
 
8
  
Condensed Consolidated Statements of Cash Flows
 
9
 Laclede Gas Company  
  
Condensed Statements of Income
 
10
  
Condensed Statements of Comprehensive Income
 
11
  
Condensed Balance Sheets
 
12
  
Condensed Statements of Common Shareholder'sShareholder’s Equity
 
14
  
Condensed Statements of Cash Flows
 
15
 Alabama Gas Corporation  
  
Condensed Statements of Income
 
16
  
Condensed Balance Sheets
 
17
  
Condensed Statements of Common Shareholder'sShareholder’s Equity
 
19
  
Condensed Statements of Cash Flows
 
20
 Notes to Financial Statements 
21
  
Note 1. Summary of Significant Accounting Policies
 
21
  
Note 2. Earnings Per Common Share
 
24
  
Note 3. Regulatory Matters
 
25
  
Note 4. Financing Arrangements
28
Note 5. Fair Value of Financial Instruments
 
28
  
Note 5.6. Fair Value Measurements
 
29
  
Note 6.7. Concentrations of Credit Risk
 
3233
  
Note 7.8. Pension Plans and Other Postretirement Benefits
 
33
  
Note 8.9. Information by Operating Segment
 
35
Note 9. Commitments and Contingencies
3836
  
Note 10. Subsequent EventCommitments and Contingencies
 
4038
   
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
41
     
Item 3
Quantitative and Qualitative Disclosures About Market Risk
6055
     
Item 4
Controls and Procedures
6055
    
PART II. OTHER INFORMATION
 
    
Item 1
Legal Proceedings
6156
    
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
6156
   
Item 6
Exhibits
6156
    
SIGNATURES
6257
    
EXHIBIT INDEX
6358

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Table of Contents

GLOSSARY OF KEY TERMS AND ABBREVIATIONS
Alabama UtilityUtilitiesAlabamaAlagasco and Mobile Gas, Corporation or Alagasco; the utilityutilities serving the Alabama regionLERLaclede Energy Resources, Inc.GasLaclede Gas Company, or Missouri Utilities
AlagascoAlabama Gas Corporation or Alabama UtilityMDNRMissouri Department of Natural Resources
AOCAOCIAdministrative Order on ConsentAccumulated other comprehensive income or lossMGEMissouri Gas Energy
APSCAlabama Public Service CommissionMGPManufactured Gas Plantgas plant
ASCAccounting Standards CodificationMissouri UtilitiesLaclede Gas Company including MGE;(including MGE), the utilities serving the Missouri region
ASUAccounting Standards UpdateMMBtuMillion British thermal units
BcfBillion cubic feetMobile GasMobile Gas Service Corporation
BVCPBrownfields/Voluntary Cleanup ProgramMoPSCMissouri Public Service Commission
BVCPCERCLABrownfields/Voluntary Cleanup ProgramComprehensive Environmental Response, Compensation, and Liability Act of 1980MSPSCMississippi Public Service Commission
CCMDegree daysCost Control MechanismThe average of a day’s high and low temperature below 65, subtracted from 65, multiplied by the number of days impactedNSRNegative Salvage RebalancingNYSENew York Stock Exchange
CERCLAEnergySouthComprehensive Environment Response, Compensation and Liability ActEnergySouth, Inc.NTSBNational Transportation Safety Board
EPAUS Environmental Protection AgencyNYMEXNew York Mercantile Exchange, Inc.
EPSEPAEarnings per shareUS Environmental Protection AgencyO&MOperations and Maintenance
FASBFinancial Accounting Standards BoardOPCMissouri Office of the Public Counsel
FERCEPSFederal Energy Regulatory CommissionEarnings per shareOTCBBOver-the-Counter Bulletin Board
FOIAFASBFreedom of Information ActFinancial Accounting Standards BoardPGAPurchased Gas Adjustment
FERCFederal Energy Regulatory CommissionPRPPotentially responsible party
GAAPAccounting principles generally accepted in the United States of AmericaPRPPotential Responsible PartyRSERate Stabilization and Equalization
Gas MarketingOperating segment including LER, a subsidiarySpire Marketing, which is engaged in the non-regulated marketing of natural gas and related activitiesRSERate Stabilization and Equalization
Gas UtilityOperating segment including the regulated operations of Laclede Gas Company and Alabama Gas CorporationSECUS Securities and Exchange Commission
GRTGas UtilityGross receipts taxesSegment including the regulated operations of the UtilitiesStaffMissouri Public Service Commission StaffSpire MarketingSpire Marketing Inc. (formerly known as Laclede Energy Resources, Inc., or LER)
GSAGas Supply AdjustmentUSUnited States
ICEIntercontinental ExchangeUtilitiesCollective operations of Laclede Gas Company and Alabama Gas Corporation
ISRSInfrastructure System Replacement SurchargeVEBAVoluntary Employees' Beneficiary Association
Laclede GasUtilitiesLaclede Gas Company, or Missouri UtilitiesAlabama Gas Corporation, and the subsidiaries of EnergySouth, Inc.
ISRS
Infrastructure System Replacement
Surcharge
 Willmut GasWillmut Gas & Oil Company
    
    
    
    
    
    
    
    

2


Table of Contents

PART I. FINANCIAL INFORMATION
The interim financial statements included herein have been prepared by three separate registrants — Spire Inc. (Spire or the Company), Laclede Gas Company (Laclede Gas or Missouri Utilities) and Alabama Gas Corporation (Alagasco or Alabama Utility) — 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 each registrant'sregistrant’s respective Form 10-K for the fiscal year ended September 30, 2015.2016.
The Financial Information in this Part I includes separate financial statements (i.e., balance sheets, statements of income and comprehensive income, statements of common shareholders'shareholders’ equity and statements of cash flows) for Spire, Laclede Gas and Alagasco. The Notes to Financial Statements and Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations are also included and presented herein on a combined basis for Spire, Laclede Gas and Alagasco.

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Item 1. Financial Statements

SPIRE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
(In Millions, Except Per Share Amounts)2016 2015 2016 2015
(In millions, except per share amounts)2016 2015
Operating Revenues:     
     
Gas Utility$253.2
 $260.2
 $1,263.5
 $1,688.6
$472.3
 $398.8
Gas Marketing and other(3.9) 15.0
 (5.5) 83.6
22.8
 0.6
Total Operating Revenues249.3
 275.2
 1,258.0
 1,772.2
495.1
 399.4
Operating Expenses:          
Gas Utility          
Natural and propane gas54.1
 57.7
 463.7
 844.8
193.8
 148.5
Other operation and maintenance expenses91.8
 90.6
 277.7
 291.5
99.4
 91.6
Depreciation and amortization34.2
 32.5
 101.5
 96.7
37.7
 33.5
Taxes, other than income taxes27.4
 26.2
 99.5
 119.9
33.4
 28.2
Total Gas Utility Operating Expenses207.5
 207.0
 942.4
 1,352.9
364.3
 301.8
Gas Marketing and other6.5
 32.2
 25.6
 138.3
41.7
 10.6
Total Operating Expenses214.0
 239.2
 968.0
 1,491.2
406.0
 312.4
Operating Income35.3
 36.0
 290.0
 281.0
89.1
 87.0
Other Income1.6
 0.5
 3.8
 2.6
0.5
 1.4
Interest Charges:          
Interest on long-term debt16.6
 16.3
 50.2
 50.0
19.1
 16.9
Other interest charges2.8
 1.5
 7.5
 6.1
3.0
 2.1
Total Interest Charges19.4
 17.8
 57.7
 56.1
22.1
 19.0
Income Before Income Taxes17.5
 18.7
 236.1
 227.5
67.5
 69.4
Income Tax Expense6.8
 4.6
 77.7
 71.9
22.3
 22.5
Net Income$10.7
 $14.1
 $158.4
 $155.6
$45.2
 $46.9
          
Weighted Average Number of Common Shares Outstanding:          
Basic44.4
 43.2
 43.6
 43.1
45.5
 43.2
Diluted44.6
 43.3
 43.8
 43.2
45.7
 43.4
Basic Earnings Per Share of Common Stock$0.24
 $0.32
 $3.62
 $3.59
$0.99
 $1.08
Diluted Earnings Per Share of Common Stock$0.24
 $0.32
 $3.60
 $3.59
$0.99
 $1.08
Dividends Declared Per Share of Common Stock$0.49
 $0.46
 $1.47
 $1.38
$0.53
 $0.49
          
See the accompanying Notes to Financial Statements.          


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Table of Contents

SPIRE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

 Three Months Ended June 30, Nine Months Ended June 30,
(In Millions)2016 2015 2016 2015
Net Income$10.7
 $14.1
 $158.4
 $155.6
Other Comprehensive (Loss) Income, Before Tax:       
Cash flow hedging derivative instruments:       
Net hedging (losses) gains arising during the period(4.3) 0.3
 (5.6) (6.2)
Reclassification adjustment for (gains) losses included in net income(1.5) 1.3
 0.2
 3.5
Net unrealized (losses) gains on cash flow hedging derivative instruments(5.8) 1.6
 (5.4) (2.7)
Net defined benefit pension and other postretirement plans—
 0.1
 0.1
 0.3
Other Comprehensive (Loss) Income, Before Tax(5.8) 1.7
 (5.3) (2.4)
Income Tax (Benefit) Expense Related to Items of Other Comprehensive Income(2.2) 0.7
 (2.0) (0.9)
Other Comprehensive (Loss) Income, Net of Tax(3.6) 1.0
 (3.3) (1.5)
Comprehensive Income$7.1
 $15.1
 $155.1
 $154.1
        
See the accompanying Notes to Financial Statements.       
 Three Months Ended December 31,
(In millions)2016 2015
Net Income$45.2
 $46.9
Other Comprehensive (Loss) Income, Before Tax:   
Cash flow hedging derivative instruments:   
Net hedging gains (losses) arising during the period11.5
 (0.7)
Reclassification adjustment for losses included in net income0.2
 1.2
Net unrealized gains on cash flow hedging derivative instruments11.7
 0.5
Net gains on defined benefit pension and other postretirement plans0.1
 0.1
Net unrealized losses on available for sale securities(0.1) (0.1)
Other Comprehensive Income, Before Tax11.7
 0.5
Income Tax Expense Related to Items of Other Comprehensive Income4.3
 0.2
Other Comprehensive Income, Net of Tax7.4
 0.3
Comprehensive Income$52.6
 $47.2
    
See the accompanying Notes to Financial Statements.   


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SPIRE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

June 30, September 30, June 30,December 31, September 30, December 31,
(Dollars in Millions, Except Per Share Amounts)2016 2015 2015
(Dollars in millions, except per share amounts)2016 2016 2015
ASSETS
Utility Plant$4,339.5
 $4,234.5
 $4,108.4
$4,893.2
 $4,793.6
 $4,220.6
Less: Accumulated depreciation and amortization1,311.5
 1,307.0
 1,239.1
1,561.4
 1,506.4
 1,267.3
Net Utility Plant3,028.0
 2,927.5
 2,869.3
3,331.8
 3,287.2
 2,953.3
Non-utility Property (net of accumulated depreciation and amortization of $7.9, $7.5 and $7.4 at June 30, 2016, September 30, 2015, and June 30, 2015, respectively)13.8
 13.7
 12.2
Non-utility Property (net of accumulated depreciation and amortization of $8.2, $8.1 and $7.7 at December 31, 2016, September 30, 2016, and December 31, 2015, respectively)19.7
 13.7
 13.9
Goodwill946.0
 946.0
 946.0
1,161.4
 1,164.9
 946.0
Other Investments62.4
 59.9
 63.1
61.9
 62.1
 60.8
Total Other Property and Investments1,022.2
 1,019.6
 1,021.3
1,243.0
 1,240.7
 1,020.7
Current Assets:          
Cash and cash equivalents4.9
 13.8
 5.7
10.6
 5.2
 4.6
Accounts receivable:          
Utility133.1
 138.1
 139.7
310.4
 127.8
 224.7
Other82.7
 86.7
 86.7
133.4
 113.4
 85.5
Allowance for doubtful accounts(20.2) (14.2) (15.7)(21.1) (20.5) (12.7)
Delayed customer billings3.5
 2.6
 21.9
5.3
 1.6
 8.7
Inventories:          
Natural gas116.6
 188.6
 136.7
161.9
 174.0
 176.6
Propane gas12.0
 12.0
 12.0
12.0
 12.0
 12.0
Materials and supplies15.3
 14.8
 14.6
16.6
 16.3
 14.9
Natural gas receivable17.5
 17.3
 19.8
8.4
 9.7
 20.1
Derivative instrument assets9.0
 4.6
 3.6
18.7
 11.4
 4.3
Unamortized purchased gas adjustments5.4
 12.9
 —
52.2
 49.7
 44.6
Other regulatory assets37.5
 27.6
 27.0
82.3
 44.2
 31.7
Prepayments and other36.1
 25.3
 31.0
24.9
 24.8
 21.0
Total Current Assets453.4
 530.1
 483.0
815.6
 569.6
 636.0
Deferred Charges:          
Regulatory assets730.7
 737.6
 644.6
786.4
 838.0
 727.0
Other76.6
 75.4
 64.7
133.3
 128.9
 61.8
Total Deferred Charges807.3
 813.0
 709.3
919.7
 966.9
 788.8
Total Assets$5,310.9
 $5,290.2
 $5,082.9
$6,310.1
 $6,064.4
 $5,398.8

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SPIRE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(UNAUDITED)

June 30, September 30, June 30,December 31, September 30, December 31,
2016 2015 20152016 2016 2015
CAPITALIZATION AND LIABILITIESCAPITALIZATION AND LIABILITIES      
Capitalization:          
Common stock (par value $1.00 per share; 70.0 million shares authorized;
45.6 million and 43.3 million shares issued and outstanding at June 30, 2016 and for both September 30, 2015 and June 30, 2015, respectively)
$45.6
 $43.3
 $43.3
Common stock (par value $1.00 per share; 70.0 million shares authorized; 45.7 million, 45.6 million, and 43.4 million shares issued and outstanding at December 31, 2016, September 30, 2016 and December 31, 2015, respectively)$45.7
 $45.6
 $43.4
Paid-in capital1,173.5
 1,038.1
 1,035.6
1,175.7
 1,175.9
 1,038.7
Retained earnings588.6
 494.2
 532.9
572.1
 550.9
 519.9
Accumulated other comprehensive loss(5.3) (2.0) (3.2)
Accumulated other comprehensive income (loss)3.2
 (4.2) (1.7)
Total Common Stock Equity1,802.4
 1,573.6
 1,608.6
1,796.7
 1,768.2
 1,600.3
Long-term debt (less current portion)1,851.7
 1,771.5
 1,736.4
1,821.3
 1,820.7
 1,838.9
Total Capitalization3,654.1
 3,345.1
 3,345.0
3,618.0
 3,588.9
 3,439.2
Current Liabilities:          
Current portion of long-term debt—
 80.0
 80.0
250.0
 250.0
 —
Notes payable97.6
 338.0
 211.4
506.4
 398.7
 377.1
Accounts payable135.8
 146.5
 148.1
273.8
 210.9
 159.5
Advance customer billings53.0
 44.3
 12.9
60.2
 70.2
 59.3
Wages and compensation accrued36.5
 32.7
 30.5
29.6
 39.8
 25.4
Dividends payable22.3
 21.1
 20.9
24.8
 23.5
 22.3
Customer deposits31.9
 32.1
 34.2
35.7
 34.9
 33.0
Interest accrued19.7
 14.3
 19.4
22.3
 14.8
 19.5
Taxes accrued41.4
 51.7
 45.0
39.7
 55.2
 32.9
Deferred income taxes—
 —
 7.4
Unamortized purchased gas adjustments—
 28.2
 52.3
1.4
 1.7
 14.3
Other regulatory liabilities22.4
 32.4
 29.4
42.8
 28.9
 41.5
Other31.2
 32.5
 36.3
55.5
 32.7
 55.3
Total Current Liabilities491.8
 853.8
 720.4
1,342.2
 1,161.3
 847.5
Deferred Credits and Other Liabilities:          
Deferred income taxes574.1
 482.1
 487.7
636.5
 607.3
 495.3
Pension and postretirement benefit costs246.9
 253.4
 233.3
296.3
 303.7
 250.7
Asset retirement obligations164.6
 159.2
 102.7
208.7
 206.4
 161.0
Regulatory liabilities105.7
 119.3
 114.9
132.1
 130.7
 129.1
Other73.7
 77.3
 78.9
76.3
 66.1
 76.0
Total Deferred Credits and Other Liabilities1,165.0
 1,091.3
 1,017.5
1,349.9
 1,314.2
 1,112.1
Commitments and Contingencies (Note 9)

 
 
Commitments and Contingencies (Note 10)

 
 
Total Capitalization and Liabilities$5,310.9
 $5,290.2
 $5,082.9
$6,310.1
 $6,064.4
 $5,398.8
          
See the accompanying Notes to Financial Statements.          


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Table of Contents

SPIRE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS'SHAREHOLDERS’ EQUITY
(UNAUDITED)

 Common Stock Outstanding Paid-in Capital Retained Earnings 
Accumulated
Other
Comprehensive Loss
  
(Dollars In Millions)Shares Amount    Total
Balance at September 30, 201443,178,405
 $43.2
 $1,029.4
 $437.5
 $(1.7) $1,508.4
Net income—
 —
 —
 155.6
 —
 155.6
Dividend reinvestment plan6,999
 —
 1.2
 —
 —
 1.2
Stock-based compensation costs—
 —
 1.4
 —
 —
 1.4
Equity Incentive Plan131,409
 0.1
 3.0
 —
 —
 3.1
Tax benefit – stock compensation—
 —
 0.6
 —
 —
 0.6
Dividends declared:           
Common stock—
 —
 —
 (60.2) —
 (60.2)
Other comprehensive loss, net of tax—
 —
 —
 —
 (1.5) (1.5)
Balance at June 30, 201543,316,813
 $43.3
 $1,035.6
 $532.9
 $(3.2) $1,608.6
            
Balance at September 30, 201543,335,012
 $43.3
 $1,038.1
 $494.2
 $(2.0) $1,573.6
Net income—
 —
 —
 158.4
 —
 158.4
Common stock offering2,185,000
 2.2
 131.0
 —
 —
 133.2
Dividend reinvestment plan17,454
 —
 1.0
 —
 —
 1.0
Stock-based compensation costs—
 —
 0.4
 —
 —
 0.4
Equity Incentive Plan98,262
 0.1
 3.0
 —
 —
 3.1
Dividends declared:           
Common stock—
 —
 —
 (64.0) —
 (64.0)
Other comprehensive loss, net of tax—
 —
 —
 —
 (3.3) (3.3)
Balance at June 30, 201645,635,728
 $45.6
 $1,173.5
 $588.6
 $(5.3) $1,802.4
            
See the accompanying Notes to Financial Statements.          
 Common Stock Outstanding Paid-in Capital Retained Earnings AOCI*  
(Dollars in millions)Shares Amount    Total
Balance at September 30, 201543,335,012
 $43.3
 $1,038.1
 $494.2
 $(2.0) $1,573.6
Net income—
 —
 —
 46.9
 —
 46.9
Dividend reinvestment plan5,866
 —
 0.3
 —
 —
 0.3
Stock-based compensation costs—
 —
 1.7
 —
 —
 1.7
Stock issued under stock-based compensation plans106,306
 0.1
 0.2
 —
 —
 0.3
Employee’s tax withholding for stock-based compensation(29,083) —
 (1.6) —
 —
 (1.6)
Dividends declared—
 —
 —
 (21.2) —
 (21.2)
Other comprehensive income, net of tax—
 —
 —
 —
 0.3
 0.3
Balance at December 31, 201543,418,101
 $43.4
 $1,038.7
 $519.9
 $(1.7) $1,600.3
            
Balance at September 30, 201645,650,642
 $45.6
 $1,175.9
 $550.9
 $(4.2) $1,768.2
Net income—
 —
 —
 45.2
 —
 45.2
Dividend reinvestment plan5,610
 —
 0.3
 —
 —
 0.3
Stock-based compensation costs—
 —
 1.7
 —
 —
 1.7
Stock issued under stock-based compensation plans110,136
 0.1
 (0.1) —
 —
 —
Employee’s tax withholding for stock-based compensation(33,615) —
 (2.1) —
 —
 (2.1)
Dividends declared—
 —
 —
 (24.0) —
 (24.0)
Other comprehensive income, net of tax—
 —
 —
 —
 7.4
 7.4
Balance at December 31, 201645,732,773
 $45.7
 $1,175.7
 $572.1
 $3.2
 $1,796.7
            
* Accumulated other comprehensive income (loss)          
            
See the accompanying Notes to Financial Statements.          
            


8


Table of Contents

SPIRE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Nine Months Ended June 30,Three Months Ended December 31,
(In Millions)2016 2015
(In millions)2016 2015
Operating Activities:      
Net Income$158.4
 $155.6
$45.2
 $46.9
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, amortization, and accretion102.0
 97.4
37.8
 33.7
Deferred income taxes and investment tax credits77.7
 70.4
22.1
 22.4
Changes in assets and liabilities:      
Accounts receivable6.7
 (5.2)(186.8) (77.6)
Unamortized purchased gas adjustments(20.7) 83.9
(2.8) (45.7)
Deferred purchased gas costs9.4
 (16.6)7.9
 12.6
Accounts payable(6.4) (26.1)85.5
 18.0
Delayed/advance customer billings – net7.8
 (30.4)(13.7) 8.9
Taxes accrued(10.9) (18.6)(16.9) (18.8)
Inventories71.5
 106.9
11.8
 11.9
Other assets and liabilities(38.5) (58.7)18.5
 20.3
Other(0.1) 7.7
1.7
 0.9
Net cash provided by operating activities356.9
 366.3
10.3
 33.5
Investing Activities:      
Capital expenditures(195.3) (202.9)(89.3) (62.4)
Payments for final reconciliation of acquisitions—
 (8.6)
Settlement for acquisition of EnergySouth3.8
 —
Other(1.5) (0.4)(0.4) (0.4)
Net cash used in investing activities(196.8) (211.9)(85.9) (62.8)
Financing Activities:      
Issuance of long-term debt80.0
 —
—
 80.0
Repayment of long-term debt(80.0) (34.7)—
 (80.0)
Repayment of short-term debt - net(240.4) (75.8)
Issuance of short-term debt - net107.7
 39.1
Issuance of common stock136.1
 3.6
0.1
 1.1
Dividends paid(62.9) (59.1)(22.8) (19.9)
Other(1.8) 1.2
(4.0) (0.2)
Net cash used in financing activities(169.0) (164.8)
Net Decrease in Cash and Cash Equivalents(8.9) (10.4)
Net cash provided by financing activities81.0
 20.1
Net Increase (Decrease) in Cash and Cash Equivalents5.4
 (9.2)
Cash and Cash Equivalents at Beginning of Period13.8
 16.1
5.2
 13.8
Cash and Cash Equivalents at End of Period$4.9
 $5.7
$10.6
 $4.6
      
Supplemental disclosure of cash (paid) refunded for:   
Supplemental disclosure of cash paid for:   
Interest$(48.2) $(48.3)$(14.3) $(12.9)
Income taxes3.9
 0.3
(0.1) (0.1)
      
See the accompanying Notes to Financial Statements.      

9


Table of Contents


LACLEDE GAS COMPANY
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)

Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
(In Millions)2016 2015 2016 2015
(In millions)2016 2015
Operating Revenues: 
    
  
 
  
Utility$179.3
 $187.5
 $943.2
 $1,265.6
$363.6
 $317.2
Total Operating Revenues179.3
 187.5
 943.2
 1,265.6
363.6
 317.2
Operating Expenses:          
Utility          
Natural and propane gas48.0
 57.5
 440.6
 743.6
191.3
 149.8
Other operation and maintenance expenses58.4
 54.3
 178.7
 188.7
60.5
 58.8
Depreciation and amortization22.3
 20.7
 66.0
 61.4
22.7
 21.8
Taxes, other than income taxes21.2
 20.5
 76.4
 92.0
24.6
 21.7
Total Operating Expenses149.9
 153.0
 761.7
 1,085.7
299.1
 252.1
Operating Income29.4
 34.5
 181.5
 179.9
64.5
 65.1
Other Income (Income Deductions)1.0
 (0.2) 2.2
 1.1
Other Income0.1
 0.8
Interest Charges:          
Interest on long-term debt8.1
 8.2
 24.7
 24.8
8.3
 8.4
Other interest charges1.0
 0.4
 3.2
 2.6
1.4
 0.9
Total Interest Charges9.1
 8.6
 27.9
 27.4
9.7
 9.3
Income Before Income Taxes21.3
 25.7
 155.8
 153.6
54.9
 56.6
Income Tax Expense7.4
 5.7
 48.2
 44.7
16.9
 17.2
Net Income$13.9
 $20.0
 $107.6
 $108.9
$38.0
 $39.4
          
See the accompanying Notes to Financial Statements.          


10


Table of Contents

LACLEDE GAS COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
(In Millions)2016 2015 2016 2015
(In millions)2016 2015
Net Income$13.9
 $20.0
 $107.6
 $108.9
$38.0
 $39.4
Other Comprehensive Income (Loss), Before Tax:          
Cash flow hedging derivative instruments:          
Net hedging losses (gains) arising during the period0.1
 0.2
 (0.1) (1.1)
Net hedging gains (losses) arising during the period0.3
 (0.1)
Reclassification adjustment for losses included in net income—
 0.3
 0.4
 0.7
—
 0.3
Net unrealized gains (losses) on cash flow hedging derivative instruments0.1
 0.5
 0.3
 (0.4)
Net defined benefit pension and other postretirement plans0.1
 0.2
 0.2
 0.3
Other Comprehensive Income (Loss), Before Tax0.2
 0.7
 0.5
 (0.1)
Net unrealized gains on cash flow hedging derivative instruments0.3
 0.2
Net (losses) gains on defined benefit pension and other postretirement plans(0.1) 0.1
Net unrealized gains (losses) on available for sale securities0.1
 (0.1)
Other Comprehensive Income, Before Tax0.3
 0.2
Income Tax Expense Related to Items of Other Comprehensive Income0.1
 0.3
 0.2
 —
0.1
 0.1
Other Comprehensive Income (Loss), Net of Tax0.1
 0.4
 0.3
 (0.1)
Other Comprehensive Income, Net of Tax0.2
 0.1
Comprehensive Income$14.0
 $20.4
 $107.9
 $108.8
$38.2
 $39.5
          
See the accompanying Notes to Financial Statements.          


11


Table of Contents

LACLEDE GAS COMPANY
CONDENSED BALANCE SHEETS
(UNAUDITED)

June 30, September 30, June 30,December 31, September 30, December 31,
(Dollars in Millions, Except Per Share Amounts)2016 2015 2015
(Dollars in millions, except per share amounts)2016 2016 2015
ASSETS          
Utility Plant$2,659.7
 $2,579.1
 $2,527.4
$2,794.7
 $2,718.5
 $2,580.6
Less: Accumulated depreciation and amortization595.4
 590.0
 581.2
646.4
 604.5
 573.1
Net Utility Plant2,064.3
 1,989.1
 1,946.2
2,148.3
 2,114.0
 2,007.5
Goodwill210.2
 210.2
 210.2
210.2
 210.2
 210.2
Other Property and Investments56.5
 55.3
 58.4
57.1
 57.3
 56.0
Total Other Property and Investments266.7
 265.5
 268.6
267.3
 267.5
 266.2
Current Assets:          
Cash and cash equivalents1.5
 1.7
 3.0
4.0
 2.1
 1.3
Accounts receivable:          
Utility101.0
 103.4
 103.4
221.0
 87.9
 167.3
Other10.5
 25.2
 28.2
12.2
 11.4
 24.6
Allowance for doubtful accounts(16.5) (10.0) (10.6)(17.1) (16.1) (8.7)
Receivables from associated companies1.3
 2.5
 2.9
5.3
 2.2
 4.6
Delayed customer billings3.5
 2.6
 21.9
5.3
 1.6
 8.7
Inventories:          
Natural gas78.2
 138.2
 89.9
118.2
 127.3
 125.5
Propane gas12.0
 12.0
 12.0
12.0
 12.0
 12.0
Materials and supplies9.2
 9.3
 9.3
9.3
 9.2
 9.3
Derivative instrument assets5.1
 —
 —
2.2
 4.9
 —
Unamortized purchased gas adjustments0.6
 12.9
 —
33.8
 43.1
 44.6
Other regulatory assets23.7
 16.2
 17.5
59.7
 23.9
 20.9
Prepayments and other20.4
 12.5
 19.0
15.5
 14.5
 12.8
Total Current Assets250.5
 326.5
 296.5
481.4
 324.0
 422.9
Deferred Charges:          
Regulatory assets562.6
 573.6
 558.0
543.4
 589.8
 563.9
Other9.4
 12.8
 7.8
2.4
 1.1
 6.4
Total Deferred Charges572.0
 586.4
 565.8
545.8
 590.9
 570.3
Total Assets$3,153.5
 $3,167.5
 $3,077.1
$3,442.8
 $3,296.4
 $3,266.9
  

    

  

12


Table of Contents

LACLEDE GAS COMPANY
CONDENSED BALANCE SHEETS (Continued)
(UNAUDITED)

June 30, September 30, June 30,December 31, September 30, December 31,
2016 2015 20152016 2016 2015
CAPITALIZATION AND LIABILITIES          
Capitalization:          
Paid-in capital and common stock (par value $1.00 per share;
50,000 authorized; 24,577 shares issued and outstanding)
$750.9
 $748.3
 $747.3
$753.1
 $752.0
 $749.5
Retained earnings333.9
 291.2
 314.8
341.6
 318.3
 309.4
Accumulated other comprehensive loss(1.4) (1.7) (2.0)(1.6) (1.8) (1.6)
Total Common Stock Equity1,083.4
 1,037.8
 1,060.1
1,093.1
 1,068.5
 1,057.3
Long-term debt 808.3
 808.1
 808.1
804.3
 804.1
 803.6
Total Capitalization1,891.7
 1,845.9
 1,868.2
1,897.4
 1,872.6
 1,860.9
Current Liabilities:          
Notes payable97.6
 233.0
 135.2
312.9
 243.7
 274.1
Notes payable – associated companies38.8
 —
 —
Accounts payable49.7
 61.5
 57.0
104.3
 67.6
 64.6
Accounts payable – associated companies4.1
 5.5
 6.9
9.4
 5.4
 4.5
Advance customer billings35.2
 25.2
 —
38.8
 49.1
 36.8
Wages and compensation accrued28.7
 26.8
 26.4
22.1
 29.9
 19.7
Dividends payable22.4
 19.9
 19.9
14.7
 14.0
 21.2
Customer deposits13.3
 13.0
 14.7
13.6
 13.5
 13.0
Interest accrued9.4
 7.6
 9.4
9.5
 7.7
 9.4
Taxes accrued21.0
 25.4
 39.0
16.4
 29.1
 10.2
Unamortized purchased gas adjustments—
 —
 20.8
Other regulatory liabilities1.3
 0.6
 —
Deferred income taxes—
 —
 12.3
Regulatory liabilities2.7
 1.3
 1.1
Other9.1
 18.5
 20.2
35.2
 9.9
 37.9
Total Current Liabilities330.6
 437.0
 349.5
579.6
 471.2
 504.8
Deferred Credits and Other Liabilities:          
Deferred income taxes548.8
 485.2
 466.7
578.2
 556.9
 493.5
Pension and postretirement benefit costs191.9
 207.8
 200.4
202.8
 211.8
 204.2
Asset retirement obligations75.0
 72.4
 73.8
76.1
 75.2
 73.3
Regulatory liabilities65.7
 70.6
 70.9
67.3
 67.3
 81.4
Other49.8
 48.6
 47.6
41.4
 41.4
 48.8
Total Deferred Credits and Other Liabilities931.2
 884.6
 859.4
965.8
 952.6
 901.2
Commitments and Contingencies (Note 9)

 
 
Commitments and Contingencies (Note 10)

 
 
Total Capitalization and Liabilities$3,153.5
 $3,167.5
 $3,077.1
$3,442.8
 $3,296.4
 $3,266.9
          
See the accompanying Notes to Financial Statements.          



13


Table of Contents

LACLEDE GAS COMPANY
CONDENSED STATEMENTS OF COMMON SHAREHOLDER'SSHAREHOLDER’S EQUITY
(UNAUDITED)

 Common Stock Outstanding Paid-in Capital Retained Earnings 
Accumulated
Other
Comprehensive (Loss) Income
  
(Dollars in Millions)Shares Amount    Total
Balance at September 30, 201424,577
 $0.1
 $744.0
 $265.6
 $(1.9) $1,007.8
Net income—
 —
 —
 108.9
 —
 108.9
Stock-based compensation costs—
 —
 2.7
 —
 —
 2.7
Tax benefit – stock compensation—
 —
 0.5
 —
 —
 0.5
Dividends declared:           
Common stock—
 —
 —
 (59.7) —
 (59.7)
Other comprehensive loss, net of tax—
 —
 —
 —
 (0.1) (0.1)
Balance at June 30, 201524,577
 $0.1
 $747.2
 $314.8
 $(2.0) $1,060.1
            
Balance at September 30, 201524,577
 $0.1
 $748.2
 $291.2
 $(1.7) $1,037.8
Net income—
 —
 —
 107.6
 —
 107.6
Stock-based compensation costs—
 —
 2.6
 —
 —
 2.6
Dividends declared:           
Common stock—
 —
 —
 (64.9) —
 (64.9)
Other comprehensive income, net of tax—
 —
 —
 —
 0.3
 0.3
Balance at June 30, 201624,577
 $0.1
 $750.8
 $333.9
 $(1.4) $1,083.4
            
See the accompanying Notes to Financial Statements.          
 Common Stock Outstanding Paid-in Capital Retained Earnings AOCI*  
(Dollars in millions)Shares Amount    Total
Balance at September 30, 201524,577
 $0.1
 $748.2
 $291.2
 $(1.7) $1,037.8
Net income—
 —
 —
 39.4
 —
 39.4
Stock-based compensation costs—
 —
 1.2
 —
 —
 1.2
Dividends declared—
 —
 —
 (21.2) —
 (21.2)
Other comprehensive income, net of tax—
 —
 —
 —
 0.1
 0.1
Balance at December 31, 201524,577
 $0.1
 $749.4
 $309.4
 $(1.6) $1,057.3
            
Balance at September 30, 201624,577
 $0.1
 $751.9
 $318.3
 $(1.8) $1,068.5
Net income—
 —
 —
 38.0
 —
 38.0
Stock-based compensation costs—
 —
 1.1
 —
 —
 1.1
Dividends declared—
 —
 —
 (14.7) —
 (14.7)
Other comprehensive income, net of tax—
 —
 —
 —
 0.2
 0.2
Balance at December 31, 201624,577
 $0.1
 $753.0
 $341.6
 $(1.6) $1,093.1
            
* Accumulated other comprehensive income (loss)          
           
See the accompanying Notes to Financial Statements.          


14


Table of Contents

LACLEDE GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Nine Months Ended June 30,Three Months Ended December 31,
(In Millions)2016 2015
(In millions)2016 2015
Operating Activities:      
Net Income$107.6
 $108.9
$38.0
 $39.4
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization66.0
 61.4
22.7
 21.8
Deferred income taxes and investment tax credits48.2
 34.0
16.9
 17.2
Changes in assets and liabilities:      
Accounts receivable24.6
 7.0
(136.0) (66.9)
Unamortized purchased gas adjustments12.3
 74.8
9.3
 (31.8)
Deferred purchased gas costs9.4
 (16.6)7.9
 12.6
Accounts payable(7.3) (11.1)50.3
 8.6
Delayed / advance customer billings – net9.1
 (26.5)
Delayed/advance customer billings – net(14.0) 5.6
Taxes accrued(4.5) (4.8)(12.6) (15.2)
Inventories60.1
 99.4
9.0
 12.6
Other assets and liabilities(29.4) (24.9)16.7
 17.7
Other0.7
 1.5
0.5
 0.3
Net cash provided by operating activities296.8
 303.1
8.7
 21.9
Investing Activities:      
Capital expenditures(138.8) (142.4)(61.2) (43.4)
Other0.9
 0.5
0.1
 (0.1)
Net cash used in investing activities(137.9) (141.9)(61.1) (43.5)
Financing Activities:      
Repayment of short-term debt - net(135.4) (103.5)
Borrowings from Spire38.8
 18.4
Repayment of borrowings from Spire—
 (18.4)
Dividends paid to Spire(62.5) (58.8)
Issuance of short-term debt69.2
 41.1
Dividends paid(14.0) (19.9)
Other—
 0.4
(0.9) —
Net cash used in financing activities
(159.1) (161.9)
Net Decrease in Cash and Cash Equivalents(0.2) (0.7)
Net cash provided by financing activities54.3
 21.2
Net Increase (Decrease) in Cash and Cash Equivalents1.9
 (0.4)
Cash and Cash Equivalents at Beginning of Period1.7
 3.7
2.1
 1.7
Cash and Cash Equivalents at End of Period$1.5
 $3.0
$4.0
 $1.3
      
Supplemental disclosure of cash (paid) refunded for:   
Supplemental disclosure of cash paid for:   
Interest$(22.1) $(22.0)$(7.9) $(4.1)
Income taxes2.1
 (0.6)—
 —
      
See the accompanying Notes to Financial Statements.      


15


Table of Contents


ALABAMA GAS CORPORATION
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)

Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
(In Millions)2016 2015 2016 2015
(In millions)2016 2015
Operating Revenues: 
    
  
 
  
Utility$74.0
 $73.7
 $322.3
 $427.0
$86.7
 $82.3
Total Operating Revenues74.0
 73.7
 322.3
 427.0
86.7
 82.3
Operating Expenses:          
Utility          
Natural gas13.1
 15.7
 55.4
 158.5
16.8
 12.1
Operation and maintenance33.5
 36.6
 99.7
 103.6
31.2
 33.1
Depreciation and amortization11.9
 11.8
 35.5
 35.3
12.3
 11.7
Taxes, other than income taxes6.2
 5.7
 23.1
 27.9
6.6
 6.5
Total Operating Expenses64.7
 69.8
 213.7
 325.3
66.9
 63.4
Operating Income9.3
 3.9
 108.6
 101.7
19.8
 18.9
Other Income0.5
 0.5
 1.5
 1.5
0.4
 0.5
Interest Charges:          
Interest on long-term debt2.8
 2.8
 8.5
 8.8
2.8
 3.0
Other interest charges0.6
 0.5
 1.9
 1.8
0.8
 0.5
Total Interest Charges3.4
 3.3
 10.4
 10.6
3.6
 3.5
Income Before Income Taxes6.4
 1.1
 99.7
 92.6
16.6
 15.9
Income Tax Expense2.4
 0.4
 37.7
 35.0
6.3
 6.0
Net Income$4.0
 $0.7
 $62.0
 $57.6
$10.3
 $9.9
          
See the accompanying Notes to Financial Statements.          


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ALABAMA GAS CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)

June 30, September 30, June 30,December 31, September 30, December 31,
(Dollars in Millions, Except Per Share Amounts)2016 2015 2015
(Dollars in millions, except per share amounts)2016 2016 2015
ASSETS          
Utility Plant$1,679.8
 $1,655.4
 $1,581.0
$1,750.2
 $1,729.6
 $1,640.0
Less: Accumulated depreciation and amortization716.1
 717.0
 657.8
768.0
 756.6
 694.1
Net Utility Plant963.7
 938.4
 923.2
982.2
 973.0
 945.9
Current Assets:          
Cash and cash equivalents—
 7.2
 0.2
—
 —
 0.1
Accounts receivable:          
Utility32.2
 34.7
 36.3
77.5
 34.0
 57.4
Other5.3
 5.2
 5.7
6.1
 7.2
 5.9
Allowance for doubtful accounts(3.7) (4.2) (5.1)(2.4) (3.3) (4.0)
Inventories:          
Natural gas28.3
 40.4
 35.3
28.4
 34.6
 40.0
Materials and supplies6.0
 5.4
 5.1
6.1
 5.9
 5.4
Deferred income taxes5.0
 6.2
 3.6
—
 —
 5.7
Unamortized purchased gas adjustments4.8
 —
 —
17.1
 5.6
 —
Other regulatory assets13.8
 11.4
 9.5
14.4
 14.9
 10.8
Prepayments and other6.1
 4.6
 6.4
5.4
 5.1
 4.2
Total Current Assets97.8
 110.9
 97.0
152.6
 104.0
 125.5
Deferred Charges:          
Regulatory assets167.5
 163.6
 86.6
229.5
 230.7
 162.5
Deferred income taxes211.0
 248.4
 245.2
215.1
 221.4
 242.8
Other60.1
 57.7
 51.3
61.8
 60.8
 55.7
Total Deferred Charges438.6
 469.7
 383.1
506.4
 512.9
 461.0
Total Assets$1,500.1
 $1,519.0
 $1,403.3
$1,641.2
 $1,589.9
 $1,532.4

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ALABAMA GAS CORPORATION
CONDENSED BALANCE SHEETS (Continued)
(UNAUDITED)

June 30, September 30, June 30,December 31, September 30, December 31,
2016 2015 20152016 2016 2015
CAPITALIZATION AND LIABILITIES          
Capitalization:          
Paid-in capital and common stock (par value $0.01 per share;
3.0 million shares authorized; 2.0 million shares issued and outstanding)
451.9
 480.9
 481.1
$451.9
 $451.9
 $471.9
Retained earnings432.2
 393.7
 403.3
419.0
 415.4
 396.1
Total Common Stock Equity884.1
 874.6
 884.4
870.9
 867.3
 868.0
Long-term debt 250.0
 170.0
 135.0
247.7
 247.6
 247.6
Total Capitalization1,134.1
 1,044.6
 1,019.4
1,118.6
 1,114.9
 1,115.6
Current Liabilities:          
Current portion of long-term debt—
 80.0
 80.0
Notes payable—
 31.0
 8.5
102.5
 82.0
 43.0
Notes payable – associated companies37.8
 —
 —
Accounts payable26.6
 21.8
 33.6
48.7
 34.3
 34.9
Accounts payable – associated companies1.3
 0.2
 1.7
1.9
 0.4
 1.7
Advance customer billings17.8
 19.1
 12.9
21.4
 21.1
 22.5
Wages and compensation accrued7.8
 5.8
 4.0
5.7
 7.8
 5.7
Customer deposits18.6
 19.1
 19.5
18.8
 18.2
 20.0
Interest accrued3.6
 3.5
 3.2
3.4
 3.3
 3.3
Taxes accrued19.8
 26.0
 25.0
18.9
 21.6
 22.5
Unamortized purchased gas adjustments—
 28.2
 31.5
—
 —
 14.3
Other regulatory liabilities21.1
 31.8
 28.8
37.4
 22.7
 40.4
Other5.1
 5.4
 6.7
5.0
 6.3
 5.1
Total Current Liabilities159.5
 271.9
 255.4
263.7
 217.7
 213.4
Deferred Credits and Other Liabilities:          
Pension and postretirement benefit costs55.0
 45.6
 32.9
75.6
 74.3
 46.5
Asset retirement obligations89.4
 86.6
 28.7
121.4
 120.1
 87.5
Regulatory liabilities40.0
 48.7
 44.3
40.6
 41.7
 47.7
Other22.1
 21.6
 22.6
21.3
 21.2
 21.7
Total Deferred Credits and Other Liabilities206.5
 202.5
 128.5
258.9
 257.3
 203.4
Commitments and Contingencies (Note 9)
     
Commitments and Contingencies (Note 10)
     
Total Capitalization and Liabilities$1,500.1
 $1,519.0
 $1,403.3
$1,641.2
 $1,589.9
 $1,532.4
          
See the accompanying Notes to Financial Statements.          


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ALABAMA GAS CORPORATION
CONDENSED STATEMENTS OF COMMON SHAREHOLDER'SSHAREHOLDER’S EQUITY
(UNAUDITED)

Common Stock Outstanding Paid-in Capital Retained Earnings  Common Stock Outstanding Paid-in Capital Retained Earnings  
(Dollars in Millions)Shares Amount Total
Balance at September 30, 20141,972,052
 $—
 $503.9
 $345.7
 $849.6
Net income—
 —
 —
 57.6
 57.6
Purchase accounting adjustments—
 —
 4.2
 —
 4.2
Return of capital to Spire—
 —
 (27.0) —
 (27.0)
Balance at June 30, 20151,972,052
 $—
 $481.1
 $403.3
 $884.4
         
(Dollars in millions)Shares Amount Paid-in Capital Retained Earnings Total
Balance at September 30, 20151,972,052
 $—
 $480.9
 $393.7
 $874.6
1,972,052
 $—
 $874.6
Net income—
 —
 —
 62.0
 62.0
—
 —
 —
 9.9
 9.9
Return of capital to Spire—
 —
 (29.0) —
 (29.0)—
 —
 (9.0) —
 (9.0)
Dividends declared—
 —
 —
 (23.5) (23.5)—
 —
 —
 (7.5) (7.5)
Balance at June 30, 20161,972,052
 $—
 $451.9
 $432.2
 $884.1
Balance at December 31, 20151,972,052
 $—
 $471.9
 $396.1
 $868.0
         
Balance at September 30, 20161,972,052
 $—
 $451.9
 $415.4
 $867.3
Net income—
 —
 —
 10.3
 10.3
Dividends declared—
 —
 —
 (6.7) (6.7)
Balance at December 31, 20161,972,052
 $—
 $451.9
 $419.0
 $870.9
                  
See the accompanying Notes to Financial Statements.                  


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ALABAMA GAS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Nine Months Ended June 30,Three Months Ended December 31,
(In Millions)2016 2015
(In millions)2016 2015
Operating Activities:      
Net Income$62.0
 $57.6
$10.3
 $9.9
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization35.5
 35.3
12.3
 11.7
Deferred income taxes and investment tax credits37.7
 35.0
6.3
 6.0
Changes in assets and liabilities:      
Accounts receivable(6.4) (11.1)(28.1) (14.2)
Unamortized purchased gas adjustments(33.0) 9.1
(11.5) (13.9)
Accounts payable4.3
 (0.4)17.0
 13.1
Advance customer billings - net(1.3) (3.8)0.3
 3.3
Taxes accrued(6.2) (5.0)(2.7) (3.5)
Inventories11.5
 12.6
5.9
 0.4
Other assets and liabilities(7.0) (12.0)(1.1) 1.5
Other(0.7) 2.5
0.3
 0.6
Net cash provided by operating activities96.4
 119.8
9.0
 14.9
Investing Activities:      
Capital expenditures(56.1) (56.7)(21.8) (18.7)
Other(1.8) (0.5)(0.6) (0.3)
Net cash used in investing activities(57.9) (57.2)(22.4) (19.0)
Financing Activities:      
Issuance of long-term debt80.0
 —
—
 80.0
Redemption and maturity of long-term debt(80.0) (34.7)—
 (80.0)
Repayment of short-term debt(31.0) —
Borrowings from Spire37.8
 —
Issuance of short-term debt20.5
 12.0
Return of capital to Spire(29.0) (27.0)—
 (9.0)
Dividends paid to Spire(23.5) (7.5)
Dividends paid(6.7) (7.5)
Other—
 1.2
(0.4) 1.5
Net cash used in financing activities(45.7) (68.0)
Net cash provided by (used in) financing activities13.4
 (3.0)
Net Decrease in Cash and Cash Equivalents(7.2) (5.4)—
 (7.1)
Cash and Cash Equivalents at Beginning of Period7.2
 5.6
—
 7.2
Cash and Cash Equivalents at End of Period$—
 $0.2
$—
 $0.1
      
Supplemental disclosure of cash (paid) refunded for:   
Supplemental disclosure of cash paid for:   
Interest$(9.2) $(9.9)$(3.1) $(3.2)
Income taxes0.8
 —
—
 —
      
See the accompanying Notes to Financial Statements.      


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SPIRE INC., LACLEDE GAS COMPANY AND ALABAMA GAS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in millions, except per share amounts)
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION – These notes are an integral part of the accompanying unaudited financial statements of Spire Inc. (Spire or the Company), as well as Laclede Gas Company (Laclede Gas or the Missouri Utilities) and Alabama Gas Corporation (Alagasco or the Alabama Utility)(Alagasco). Spire was formerly known as The Laclede Group, Inc., which changed its name to Spire Inc. effective April 28, 2016. Laclede Gas, which includes the operations of Missouri Gas Energy (MGE), and Alagasco are wholly owned subsidiaries of the Company. Collectively, Laclede Gas, Alagasco and Alagascothe subsidiaries of EnergySouth, Inc. (EnergySouth) are collectively referred to as the Utilities. The subsidiaries of EnergySouth are Mobile Gas Service Corporation (Mobile Gas) and Willmut Gas & Oil Company (Willmut Gas).
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions to Form 10-Q and Rule 10-01 of Regulation S‑X. Accordingly, they do not include all of the disclosures required for complete financial statements. In the opinion of management, the accompanying unaudited financial statements include all adjustments (consisting of only normal recurring accruals)adjustments) 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 Financial Statements contained in Spire's,Spire’s, Laclede Gas'Gas’, and Alagasco'sAlagasco’s Annual Reports on Form 10-K for the fiscal year ended September 30, 2015.2016.
The consolidated financial position, results of operations, and cash flows of Spire are primarily derived from the financial position, results of operations, and cash flows of the Utilities. In compliance with GAAP, transactions between the UtilitiesLaclede Gas and Alagasco and their affiliates, as well as intercompany balances on the Utilities'their balance sheets, have not been eliminated from the Utilities'their separate financial statements. Spire’s September 12, 2016 acquisition of EnergySouth are included in the results of operations since the acquisition and impact the comparability of financial statement periods presented for the Company.
NATURE OF OPERATIONS – Spire Inc. (NYSE: SR), headquartered in St. Louis, Missouri, is a public utility holding company. ItThe Company has two reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment is comprisedconsists of the regulated natural gas distribution operations of the Company and is the core business segment of Spire in terms of revenue and earnings generation. The Gas Utility segment is comprised of the operations of: the Missouri Utilities, and the Alabama Utility which serveserving St. Louis and eastern Missouri, Kansas City and western Missouri and(through MGE); Alagasco, serving central and northern Alabama.Alabama; and the subsidiaries of EnergySouth, serving southern Alabama and south-central Mississippi. Spire’s primary non-utility business, Spire Marketing Inc. (Spire Marketing) was formerly known as Laclede Energy Resources, Inc. (LER), which changed its name on December 12, 2016. Spire Marketing is included in the Gas Marketing segment and provides non-regulated natural gas services. The activities of other subsidiaries are described in Note 89, Information by Operating Segment, and are reported as Other. Laclede Gas and Alagasco each have a single reportable segment.
The Company'sCompany’s earnings are primarily derived from its Gas Utility segment. Due to the seasonal nature of the Utilities,Utilities’ business, earnings are typically concentrated during the heating season of November through April each fiscal year. As a result, the interim statements of income for Spire, Laclede Gas and Alagasco are not necessarily indicative of annual results or representative of succeeding quarters of the fiscal year.
GOODWILL – Goodwill is 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. The changes in the carrying amount of goodwill by reportable segment are shown below, reflecting the effect of a $3.8 cash payment to Spire related to the EnergySouth acquisition, offset by immaterial adjustments to assets acquired.
 Gas Utility Gas Marketing Other Total
Balance as of September 30, 2016$210.2
 $—
 $954.7
 $1,164.9
Adjustments related to the acquisition of EnergySouth—
 —
 (3.5) (3.5)
Balance as of December 31, 2016$210.2
 $—
 $951.2
 $1,161.4

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REVENUE RECOGNITION – The Utilities read meters and bill customers on monthly cycles. The Missouri Utilities record their 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 for Laclede Gas at June 30,December 31, 2016, September 30, 2015,2016, and June 30,December 31, 2015 were $28.5, $27.6,$103.5, $26.1, and $26.4,$74.6, respectively.
Alagasco records natural gas distribution revenues in accordance with the tariff established by the Alabama Public Service Commission (APSC). The amount of accrued unbilledUnbilled revenues for Alagasco, which isare not recorded as revenue until billed, for Alagasco at June 30,December 31, 2016, September 30, 2015,2016, and June 30,December 31, 2015 were $6.4, $6.4,$22.0, $5.9, and $5.4,$16.4, respectively.
Spire'sThe subsidiaries of EnergySouth record natural gas revenues in accordance with tariffs established by the APSC and the Mississippi Public Service Commission (MSPSC). Their unbilled revenues are accrued as described for Laclede Gas above.
Spire’s other subsidiaries, including LER,Spire Marketing, record revenues when earned, either when the product is delivered or when services are performed.
In the course of its business, LERSpire Marketing enters into commitments associated with the purchase or sale of natural gas. Certain of LER’stheir derivative natural gas contracts are designated as normal purchases or normal sales and, as such, are excluded from the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 815, “Derivatives and Hedging.” Those contracts are accounted for as executory contracts and recorded on an accrual basis. Revenues and expenses from such contracts are recorded using a gross presentation. Contracts not designated as normal purchases or normal sales are recorded as derivatives with changes in fair value recognized in earnings in the periods prior to physical delivery. Certain of LER’sSpire Marketing’s wholesale purchase and sale transactions are classified as trading activities for financial reporting purposes. Under GAAP, revenues and expenses associated with trading activities are presented on a net basis in Gas Marketing Operating Revenues in the Condensed Consolidated Statements of Income. This net presentation has no effect on operating income or net income.

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GROSS RECEIPTS TAXES – Gross receipts taxes associated with the Utilities'Company’s natural gas utility services are imposed on the Utilities and billed to their customers. The revenue and expense amounts are recorded gross in the "Operating Revenues"“Operating Revenues” and "Taxes,“Taxes, other than income taxes"taxes” lines, respectively, in the statements of income. The following table presents gross receipts taxes recorded as revenues.
Three Months Ended June 30,Nine Months Ended June 30,Three Months Ended December 31,
2016 20152016 20152016 2015
Spire$14.8
 $14.6
$65.0
 $87.0
$19.4
 $17.9
Laclede Gas11.1
 11.1
49.7
 66.9
14.1
 13.9
Alagasco3.7
 3.5
15.3
 20.1
4.2
 4.0
REGULATED OPERATIONS – The Utilities account for their regulated operations in accordance with FASB ASC Topic 980, “Regulated Operations.” This Topictopic sets forth the application of GAAP for those companies whose rates are established by or are subject to approval by an independent third-party regulator. The provisions of this accounting guidance require, among other things, that financial statements of a regulated enterprise reflect the actions of regulators, where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are different than non-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet (regulatory assets) and recorded as expenses when those amounts are reflected in rates. In addition, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that are expected to be incurred in the future (regulatory liabilities). Management believes that the current regulatory environment supports the continued use of these regulatory accounting principles and that all regulatory assets and regulatory liabilities are recoverable or refundable through the regulatory process.
As authorized by the Missouri Public Service Commission (MoPSC), MSPSC and APSC, the Purchased Gas Adjustment (PGA) clauses and Gas Supply Adjustment (GSA) riders allow the Missouri Utilities to flowpass through to customers subject to prudence review by the MoPSC, the cost of purchased gas supplies. Similarly, Alagasco's rate schedules for natural gas distribution charges contain a Gas Supply Adjustment (GSA) rider, which permits the pass-through to customers of changes in the cost of gas supply. Regulatory assets and liabilities related to the PGA clauses and the GSA rider are both labeled Unamortized Purchased Gas Adjustments herein. See additional discussion on regulated operationsinformation about regulatory assets and liabilities in Note 3, Regulatory Matters.

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TRANSACTIONS WITH AFFILIATES – Transactions between affiliates of the Company have been eliminated from the consolidated financial statements of Spire. Other than borrowings from Spire reflected in Alagasco'sAlagasco’s Condensed Balance Sheets and Condensed Statements of Cash Flows and normal intercompany shared services transactions, there were no transactions between Alagasco and affiliates during the ninethree months ended June 30,December 31, 2016 and June 30,December 31, 2015. Laclede Gas'Gas’ transactions with affiliates included:
 Three Months Ended June 30, Nine Months Ended June 30,
 2016 2015 2016 2015
Purchases of natural gas from LER$6.7
 $15.2
 $31.5
 $56.5
Sales of natural gas to LER—
 0.9
 1.7
 3.8
 Three Months Ended December 31,
 2016 2015
Purchases of natural gas from Spire Marketing$20.5
 $13.2
Sales of natural gas to Spire Marketing3.6
 0.7
Transportation services received from Laclede Pipeline Company0.3
 0.3
Insurance services received from Laclede Insurance Risk Services1.1
 0.2
UTILITY PLANT – Laclede Gas had accrued capital expenditures of $5.3, $9.6,$6.8, $14.8, and $5.3$4.6 as of June 30,December 31, 2016, September 30, 2015,2016, and June 30,December 31, 2015, respectively. Alagasco had accrued capital expenditures of $4.6,$5.6, $6.8, and $3.1 and $5.0 as of June 30,December 31, 2016, September 30, 2015,2016, and June 30,December 31, 2015, respectively. Accrued capital expenditures are excluded from the capital expenditures shown in the statements of cash flows.
FINANCEFINANCING RECEIVABLES – Alagasco finances third-party contractor sales of merchandise including gas furnaces and appliances. The Company’s financeappliances, and related financing receivables totaled approximately $11.4,$11.8, $11.8, and $11.2 and $10.9 as of June 30,December 31, 2016, September 30, 2015,2016, and June 30,December 31, 2015, respectively. Financing is available only to qualified customers who meet creditworthiness thresholds for customer payment history and external agency credit reports. Alagasco relies upon ongoing payments as the primary indicator of credit quality during the term of each contract. The allowance for credit losses is recognized using an estimate of write-off percentages based on historical experience applied to an aging of the financefinancing receivable balance. Delinquent accounts are evaluated on a case-by-case basis and, absent evidence of debt repayment after 90 days, are due in full and assigned to a third-party collection agency. The remaining financefinancing receivable is written off approximately 12 months after being assigned to the third-party collection agency. Alagasco's financeAlagasco’s financing receivables that were at least 90 days past due totaled $0.4 as of June 30,December 31, 2016, September 30, 2015,2016, and June 30,December 31, 2015. Alagasco recorded corresponding reserves for credit losses at each of those dates. Mobile Gas also finances customer purchases of gas heating and cooling systems, but related financing receivables are not material.

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RECLASSIFICATIONS – Certain prior period amounts have been reclassified to conform to the current period presentation. Net income and total equity were not affected by these reclassifications.
NEW ACCOUNTING PRONOUNCEMENTSPRONOUNCEMENT – In May 2014,April 2015, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The core principle of the standard is when an entity transfers goods or services to customers it will recognize revenue in an amount that reflects the consideration the entity expects to be entitled to for those goods or services. ASU No. 2014-09 also requires disclosures that will enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, which made the guidance in ASU No. 2014-09 effective for fiscal years beginning after December 15, 2017 and interim periods within those years, but companies may choose to adopt it one year earlier. In 2016, the FASB issued related ASU Nos. 2016-08, 2016-10, 2016-11 and 2016-12, which further modified the standards for accounting for revenue. The Company, Laclede Gas and Alagasco are currently assessing the available transition methods and the potential impacts of the updates, which must be adopted by the first quarter of fiscal year 2019.
In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, to requireCosts. Under prior GAAP, debt issuance costs were recorded as a deferred charge (asset), while debt discount and debt premium costs were recorded as a liability adjustment. This amendment requires that debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company, Laclede Gas and Alagasco adopted this ASU as of December 31, 2016, and retrospectively adjusted the comparative balance sheets as of September 30, 2016 and December 31, 2015. The amounts reclassified from other deferred charges to reduce long-term debt are currently assessingshown in the timing and impacts of adopting this standard, which must be adopted by the first quarter of fiscal year 2017.
In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. This standard provides guidance for the subsequent measurement of inventory and requires that inventory that is measured using average cost be measured at the lower of cost and net realizable value. The Company, Laclede Gas and Alagasco are currently evaluating the impact of the adoption of this new standard, which must be adopted by the first quarter of fiscal year 2018.
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, to require that deferred tax liabilities and assets be classified entirely as non-current. This amended guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted, and the amended guidance may be applied prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company, Laclede Gas and Alagasco are currently evaluating the effects and timing of the adoption of this new standard, which must be adopted by the first quarter of fiscal year 2018.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which provides revised guidance concerning certain matters involving the recognition, measurement, and disclosure of financial instruments. It is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company, Laclede Gas and Alagasco are currently assessing the timing and impacts of adopting this standard, which must be adopted by the first quarter of fiscal year 2019.
In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires lessees to recognize a right-of-use asset and lease liability for almost all lease contracts based on the present value of lease payments. There is an exemption for short-term leases.following table. The ASU provides new guidelines for identifyingdoes not address the presentation of debt issuance costs related to line-of-credit arrangements, and classifying a lease, and classification affects the pattern and income statement line item for the related expense. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company, Laclede Gas and Alagasco are currently assessing the timing and impacts of adopting this standard, which mustcontinue to be adopted by the first quarter of fiscal year 2020.reported as deferred charges.
In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company, Laclede Gas and Alagasco are currently assessing the timing and impacts of adopting this standard, which must be adopted by the first quarter of fiscal year 2018.
On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The standard introduces new guidance for the accounting for credit losses on instruments within its scope, including trade receivables. It is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, but may be adopted up to two years earlier. The Company, Laclede Gas and Alagasco are currently assessing the timing and impacts of adopting this standard, which must be adopted by the first quarter of fiscal year 2021.
 December 31, 2016 September 30, 2016 December 31, 2015
Spire$12.5
 $13.0
 $12.6
Laclede Gas4.1
 4.2
 4.6
Alagasco2.3
 2.4
 2.4


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2. EARNINGS PER COMMON SHARE
Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
2016 2015 2016 20152016 2015
Basic EPS:          
Net Income$10.7
 $14.1
 $158.4
 $155.6
$45.2
 $46.9
Less: Income allocated to participating securities—
 0.1
 0.5
 0.5
0.1
 0.2
Net Income Available to Common Shareholders$10.7
 $14.0
 $157.9
 $155.1
$45.1
 $46.7
Weighted Average Shares Outstanding (in millions)44.4
 43.2
 43.6
 43.1
45.5
 43.2
Basic Earnings Per Share of Common Stock$0.24
 $0.32
 $3.62
 $3.59
$0.99
 $1.08
          
Diluted EPS:          
Net Income$10.7
 $14.1
 $158.4
 $155.6
$45.2
 $46.9
Less: Income allocated to participating securities—
 0.1
 0.5
 0.5
0.1
 0.2
Net Income Available to Common Shareholders$10.7
 $14.0
 $157.9
 $155.1
$45.1
 $46.7
Weighted Average Shares Outstanding (in millions)44.4
 43.2
 43.6
 43.1
45.5
 43.2
Dilutive Effect of Stock Options, Restricted Stock and Restricted Stock Units (in millions)0.2
 0.1
 0.2
 0.1
Dilutive Effect of Restricted Stock, Restricted Stock Units, and Stock Options (in millions)0.2
 0.2
Weighted Average Diluted Shares (in millions)44.6
 43.3
 43.8
 43.2
45.7
 43.4
Diluted Earnings Per Share of Common Stock$0.24
 $0.32
 $3.60
 $3.59
$0.99
 $1.08
          
Outstanding Shares (in millions) Excluded from
the Calculation of Diluted EPS Attributable to:
 
  
     
  
Restricted stock and stock units subject to
performance and/or market conditions
0.5
 0.3
 0.5
 0.3
0.4
 0.4
Spire'sSpire’s 2014 2.0% Series Equity Units issued in June 2014 were anti-dilutive for the three and nine months ended June 30,December 31, 2016 and 2015; accordingly, they were excluded from the calculation of weighted average diluted shares for those periods.

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Table of Contents

3. REGULATORY MATTERS
As explained in Note 1, Summary of Significant Accounting Policies, Laclede Gas and Alagasco account for regulated operations in accordance with FASB ASC Topic 980, "Regulated“Regulated Operations."” The following regulatory assets and regulatory liabilities, including purchased gas adjustments, were reflected in the balance sheets of the Company and the Utilities as of June 30,December 31, 2016, September 30, 20152016 and June 30,December 31, 2015.
June 30, September 30, June 30,December 31, September 30, December 31,
Spire2016 2015 20152016 2016 2015
Regulatory Assets:          
Current:          
Pension and postretirement benefit costs$26.9
 $22.0
 $21.6
$63.2
 $27.0
 $26.7
Unamortized purchased gas adjustments5.4
 12.9
 —
52.2
 49.7
 44.6
Other10.6
 5.6
 5.4
19.1
 17.2
 5.0
Total Regulatory Assets (current)42.9
 40.5
 27.0
134.5
 93.9
 76.3
Non-current:          
Future income taxes due from customers146.4
 134.5
 130.3
155.5
 151.3
 138.7
Pension and postretirement benefit costs434.4
 448.7
 424.6
439.2
 487.9
 441.3
Cost of removal81.2
 78.9
 19.5
131.6
 130.6
 79.4
Purchased gas costs14.7
 24.1
 20.9
4.7
 12.6
 11.5
Energy efficiency24.4
 22.3
 21.3
26.0
 25.5
 23.0
Other29.6
 29.1
 28.0
29.4
 30.1
 33.1
Total Regulatory Assets (non-current)730.7
 737.6
 644.6
786.4
 838.0
 727.0
Total Regulatory Assets$773.6
 $778.1
 $671.6
$920.9
 $931.9
 $803.3
          
Regulatory Liabilities:          
Current:          
Rate Stabilization and Equalization (RSE) adjustment$2.9
 $12.2
 $10.3
$3.8
 $7.5
 $11.1
Unbilled service margin6.4
 6.4
 5.4
22.0
 5.9
 16.4
Refundable negative salvage9.3
 10.8
 10.8
9.0
 9.3
 10.5
Unamortized purchased gas adjustments—
 28.2
 52.3
1.4
 1.7
 14.3
Other3.8
 3.0
 2.9
8.0
 6.2
 3.5
Total Regulatory Liabilities (current)22.4
 60.6
 81.7
44.2
 30.6
 55.8
Non-current:          
Postretirement liabilities27.2
 28.9
 24.5
28.3
 28.9
 28.4
Refundable negative salvage9.3
 16.2
 16.2
8.9
 9.4
 15.8
Accrued cost of removal55.4
 58.7
 59.1
74.7
 74.8
 58.6
Other13.8
 15.5
 15.1
20.2
 17.6
 26.3
Total Regulatory Liabilities (non-current)105.7
 119.3
 114.9
132.1
 130.7
 129.1
Total Regulatory Liabilities$128.1
 $179.9
 $196.6
$176.3
 $161.3
 $184.9


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June 30, September 30, June 30,December 31, September 30, December 31,
Laclede Gas2016 2015 20152016 2016 2015
Regulatory Assets:          
Current:          
Pension and postretirement benefit costs$20.2
 $15.5
 $15.2
$56.3
 $20.2
 $20.2
Unamortized purchased gas adjustments0.6
 12.9
 —
33.8
 43.1
 44.6
Other3.5
 0.7
 2.3
3.4
 3.7
 0.7
Total Regulatory Assets (current)24.3
 29.1
 17.5
93.5
 67.0
 65.5
Non-current:          
Future income taxes due from customers146.4
 134.5
 130.3
155.5
 151.3
 138.7
Pension and postretirement benefit costs352.1
 368.0
 362.9
333.3
 375.7
 362.2
Purchased gas costs14.7
 24.1
 20.9
4.7
 12.6
 11.5
Energy efficiency24.4
 22.3
 21.3
26.0
 25.5
 23.0
Other25.0
 24.7
 22.6
23.9
 24.7
 28.5
Total Regulatory Assets (non-current)562.6
 573.6
 558.0
543.4
 589.8
 563.9
Total Regulatory Assets$586.9
 $602.7
 $575.5
$636.9
 $656.8
 $629.4
          
Regulatory Liabilities:          
Current:          
Unamortized purchased gas adjustments$—
 $—
 $20.8
Other1.3
 0.6
 0.6
$2.7
 $1.3
 $1.1
Total Regulatory Liabilities (current)1.3
 0.6
 21.4
2.7
 1.3
 1.1
Non-current:          
Accrued cost of removal55.4
 58.7
 59.1
54.8
 55.1
 58.6
Other10.3
 11.9
 11.8
12.5
 12.2
 22.8
Total Regulatory Liabilities (non-current)65.7
 70.6
 70.9
67.3
 67.3
 81.4
Total Regulatory Liabilities$67.0
 $71.2
 $92.3
$70.0
 $68.6
 $82.5

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Table of Contents

June 30, September 30, June 30,December 31, September 30, December 31,
Alagasco2016 2015 20152016 2016 2015
Regulatory Assets:          
Current:          
Pension and postretirement benefit costs$6.7
 $6.5
 $6.4
$6.8
 $6.8
 $6.5
Unamortized purchased gas adjustments4.8
 —
 —
17.1
 5.6
 —
Other7.1
 4.9
 3.1
7.6
 8.1
 4.3
Total Regulatory Assets (current)18.6
 11.4
 9.5
31.5
 20.5
 10.8
Non-current:          
Pension and postretirement benefit costs82.3
 80.7
 61.7
96.8
 98.9
 79.1
Cost of removal81.2
 78.9
 19.5
131.6
 130.6
 79.4
Other4.0
 4.0
 5.4
1.1
 1.2
 4.0
Total Regulatory Assets (non-current)167.5
 163.6
 86.6
229.5
 230.7
 162.5
Total Regulatory Assets$186.1
 $175.0
 $96.1
$261.0
 $251.2
 $173.3
          
Regulatory Liabilities:          
Current:          
RSE adjustment$2.9
 $12.2
 $10.3
$3.8
 $5.0
 $11.1
Unbilled service margin6.4
 6.4
 5.4
22.0
 5.9
 16.4
Refundable negative salvage9.3
 10.8
 10.8
9.0
 9.3
 10.5
Unamortized purchased gas adjustments—
 28.2
 31.5
—
 —
 14.3
Other2.5
 2.4
 2.3
2.6
 2.5
 2.4
Total Regulatory Liabilities (current)21.1
 60.0
 60.3
37.4
 22.7
 54.7
Non-current:          
Postretirement liabilities27.2
 28.9
 24.5
28.3
 28.9
 28.4
Refundable negative salvage9.3
 16.2
 16.2
8.9
 9.4
 15.8
Other3.5
 3.6
 3.6
3.4
 3.4
 3.5
Total Regulatory Liabilities (non-current)40.0
 48.7
 44.3
40.6
 41.7
 47.7
Total Regulatory Liabilities$61.1
 $108.7
 $104.6
$78.0
 $64.4
 $102.4
A portion of the Company'sCompany’s and Laclede Gas'Gas’ regulatory assets are not earning a return, as shown in the schedule below:
Spire Laclede GasSpire Laclede Gas
June 30, September 30, June 30, June 30, September 30, June 30,December 31, September 30, December 31, December 31, September 30, December 31,
($ Millions)2016 2015 2015 2016 2015 2015
Regulatory Assets Not Earning a Return:           
2016 2016 2015 2016 2016 2015
Future income taxes due from customers$146.4
 $134.5
 $130.3
 $146.4
 $134.5
 $130.3
$155.5
 $151.3
 $138.7
 $155.5
 $151.3
 $138.7
Pension and postretirement benefit costs203.8
 223.7
 221.2
 203.8
 223.7
 221.2
231.4
 240.6
 217.7
 231.4
 240.6
 217.7
Other13.2
 14.2
 14.6
 13.2
 14.2
 14.6
12.2
 12.9
 13.5
 12.2
 12.9
 13.5
Total Regulatory Assets Not Earning a Return$363.4
 $372.4
 $366.1
 $363.4
 $372.4
 $366.1
$399.1
 $404.8
 $369.9
 $399.1
 $404.8
 $369.9
Like all the Company'sCompany’s regulatory assets, these regulatory assets are expected to be recovered from customers in future rates. The Company and Laclede Gas expect these items to be recovered over a period not to exceed 15 years consistent with precedent set by the MoPSC. The portion of regulatory assets related to pensions and other postemployment benefits that pertains to unfunded differences between the projected benefit obligation and plan assets also does not earn a rate of return. Alagasco does not have any regulatory assets that are not earning a return.


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Table of Contents

4. FINANCING ARRANGEMENTS
On December 14, 2016, Spire, Laclede Gas, and Alagasco entered into a new syndicated revolving credit facility pursuant to a loan agreement with 11 banks, expiring December 14, 2021. The largest portion provided by a single bank under the line is 12.3%.
The loan agreement replaces Spire’s and Laclede Gas’ existing loan agreements dated as of September 3, 2013 and amended September 3, 2014, which were set to expire on September 3, 2019, and Alagasco’s existing loan agreement dated September 2, 2014, which was set to expire September 2, 2019. All three agreements were terminated on December 14, 2016.
The loan agreement has an aggregate credit commitment of $975.0, including sublimits of $300.0 for Spire, $475.0 for Laclede Gas, and $200.0 for Alagasco. These sublimits may be reallocated from time to time among the three borrowers within the $975.0 aggregate commitment. Spire may use its line to provide for the funding needs of various subsidiaries. Spire, Laclede Gas, and Alagasco expect to use the loan agreement for general corporate purposes, including short-term borrowings and letters of credit.
The agreement also contains financial covenants limiting each borrower’s consolidated total debt, including short-term debt, to no more than 70% of its total capitalization. As defined in the line of credit, on December 31, 2016, total debt was 59% of total capitalization for the consolidated Company, 51% for Laclede Gas and 29% for Alagasco.
On December 21, 2016, Spire established a commercial paper program (Program) pursuant to which Spire may issue short-term, unsecured commercial paper notes (Notes). Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the Program at any time not to exceed $975.0. The Notes will have maturities of up to 365 days from date of issue. The net proceeds of the issuances of the Notes are expected to be used for general corporate purposes, including to provide working capital for both utility and non-utility subsidiaries. No Notes were outstanding under the Program as of December 31, 2016.

5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of 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 56, Fair Value Measurements, for information on financial instruments measured at fair value on a recurring basis.
Spire
The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis for the Company are as follows:
    Classification of Estimated Fair Value    Classification of Estimated Fair Value
Carrying
Amount
 
Fair
Value
 
Quoted
Prices in Active Markets
(Level 1)
 
Significant Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Carrying
Amount
 
Fair
Value
 
Quoted
Prices in Active Markets
(Level 1)
 
Significant Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
As of June 30, 2016         
Cash and cash equivalents$4.9
 $4.9
 $4.9
 $—
 $—
Short-term debt97.6
 97.6
 —
 97.6
 —
Long-term debt1,851.7
 2,014.3
 —
 2,014.3
 —
         
As of September 30, 2015         
As of December 31, 2016         
Cash and cash equivalents$13.8
 $13.8
 $13.8
 $—
 $—
$10.6
 $10.6
 $10.6
 $—
 $—
Short-term debt338.0
 338.0
 —
 338.0
 —
506.4
 506.4
 —
 506.4
 —
Long-term debt, including current portion1,851.5
 1,944.2
 —
 1,944.2
 —
2,071.3
 2,258.1
 —
 2,258.1
 —
                  
As of June 30, 2015         
As of September 30, 2016         
Cash and cash equivalents$5.7
 $5.7
 $5.7
 $—
 $—
$5.2
 $5.2
 $5.2
 $—
 $—
Short-term debt211.4
 211.4
 —
 211.4
 —
398.7
 398.7
 —
 398.7
 —
Long-term debt, including current portion1,816.4
 1,888.4
 —
 1,888.4
 —
2,070.7
 2,257.1
 —
 2,257.1
 —
         
As of December 31, 2015         
Cash and cash equivalents$4.6
 $4.6
 $4.6
 $—
 $—
Short-term debt377.1
 377.1
 —
 377.1
 —
Long-term debt1,838.9
 1,916.5
 —
 1,916.5
 —


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Table of Contents

Laclede Gas
The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis for Laclede Gas are as follows:
     Classification of Estimated Fair Value
 
Carrying
Amount
 
Fair
Value
 
Quoted
Prices in Active Markets
(Level 1)
 
Significant Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
As of June 30, 2016         
Cash and cash equivalents$1.5
 $1.5
 $1.5
 $—
 $—
Short-term debt136.4
 136.4
 —
 136.4
 —
Long-term debt808.3
 901.8
 —
 901.8
 —
          
As of September 30, 2015         
Cash and cash equivalents$1.7
 $1.7
 $1.7
 $—
 $—
Short-term debt233.0
 233.0
 —
 233.0
 —
Long-term debt808.1
 880.2
 —
 880.2
 —
          
As of June 30, 2015         
Cash and cash equivalents$3.0
 $3.0
 $3.0
 $—
 $—
Short-term debt135.2
 135.2
 —
 135.2
 —
Long-term debt808.1
 868.5
 —
 868.5
 —

28


Table of Contents

     Classification of Estimated Fair Value
 
Carrying
Amount
 
Fair
Value
 
Quoted
Prices in Active Markets
(Level 1)
 
Significant Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
As of December 31, 2016         
Cash and cash equivalents$4.0
 $4.0
 $4.0
 $—
 $—
Short-term debt312.9
 312.9
 —
 312.9
 —
Long-term debt804.3
 910.7
 —
 910.7
 —
          
As of September 30, 2016         
Cash and cash equivalents$2.1
 $2.1
 $2.1
 $—
 $—
Short-term debt243.7
 243.7
 —
 243.7
 —
Long-term debt804.1
 900.4
 —
 900.4
 —
          
As of December 31, 2015         
Cash and cash equivalents$1.3
 $1.3
 $1.3
 $—
 $—
Short-term debt274.1
 274.1
 —
 274.1
 —
Long-term debt803.6
 858.5
 —
 858.5
 —
Alagasco
The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis for Alagasco are as follows:
    Classification of Estimated Fair Value    Classification of Estimated Fair Value
Carrying
Amount
 
Fair
Value
 
Quoted
Prices in Active Markets
(Level 1)
 
Significant Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Carrying
Amount
 
Fair
Value
 
Quoted
Prices in Active Markets
(Level 1)
 
Significant Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
As of June 30, 2016         
As of December 31, 2016         
Cash and cash equivalents$—
 $—
 $—
 $—
 $—
$—
 $—
 $—
 $—
 $—
Short-term debt37.8
 37.8
 —
 37.8
 —
102.5
 102.5
 —
 102.5
 —
Long-term debt250.0
 272.5
 —
 272.5
 —
247.7
 269.3
 —
 269.3
 —
                  
As of September 30, 2015         
As of September 30, 2016         
Cash and cash equivalents$7.2
 $7.2
 $7.2
 $—
 $—
$—
 $—
 $—
 $—
 $—
Short-term debt31.0
 31.0
 —
 31.0
 —
82.0
 82.0
 —
 82.0
 —
Long-term debt, including current portion250.0
 263.2
 —
 263.2
 —
Long-term debt247.6
 275.5
 —
 275.5
 —
                  
As of June 30, 2015         
As of December 31, 2015         
Cash and cash equivalents$0.2
 $0.2
 $0.2
 $—
 $—
$0.1
 $0.1
 $0.1
 $—
 $—
Short-term debt8.5
 8.5
 —
 8.5
 —
43.0
 43.0
 —
 43.0
 —
Long-term debt, including current portion215.0
 226.7
 —
 226.7
 —
Long-term debt247.6
 256.5
 —
 256.5
 —

5.6. FAIR VALUE MEASUREMENTS
The information presented below categorizes the assets and liabilities in the balance sheets that are accounted for at fair value on a recurring basis in periods subsequent to initial recognition.
The mutual funds included in Level 1 are valued based on exchange-quoted market prices of individual securities. The mutual funds included in Level 2 are valued based on the closing net asset value per unit.
Derivative instruments included in Level 1 are valued using quoted market prices on the New York Mercantile Exchange (NYMEX) or the Intercontinental Exchange (ICE). Derivative instruments classified in Level 2 include physical commodity derivatives that are valued using Over-the-Counter Bulletin Board (OTCBB), 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

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prices for exchange-traded instruments in active markets and derivative instruments with settlement dates more than one year into the future. 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 Level 3 balances as of June 30,December 31, 2016, September 30, 20152016 and June 30,December 31, 2015 consisted of gas commodity contracts. The Company’s and the Utilities'Utilities’ 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 mutual funds are included in "Other Investments"“Other Investments” on the Company'sCompany’s balance sheets and in "Other“Other Property and Investments"Investments” on Laclede Gas'Gas’ balance sheets. Derivative assets and liabilities, including receivables and payables associated with cash margin requirements, are presented net in the balance sheets when a legally enforceable netting agreement exists between the Company, Laclede Gas, or Alagasco and the counterparty to a derivative contract.

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Spire
 
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 June 30, 2016         
ASSETS         
Gas Utility         
U. S. stock/bond mutual funds$16.4
 $4.0
 $—
 $—
 $20.4
NYMEX/ICE natural gas contracts8.2
 —
 —
 (3.1) 5.1
Subtotal24.6
 4.0
 —
 (3.1) 25.5
Gas Marketing         
NYMEX/ICE natural gas contracts0.6
 5.5
 —
 (5.6) 0.5
Natural gas commodity contracts—
 6.3
 0.3
 (0.6) 6.0
Total$25.2
 $15.8
 $0.3
 $(9.3) $32.0
LIABILITIES         
Gas Utility         
OTCBB natural gas contracts$—
 $0.6
 $—
 $—
 $0.6
Subtotal—
 0.6
 —
 —
 0.6
Gas Marketing         
NYMEX/ICE natural gas contracts6.5
 2.5
 —
 (9.0) —
Natural gas commodity contracts—
 3.4
 —
 (0.5) 2.9
Other         
Interest rate swaps—
 4.0
 —
 —
 4.0
Total$6.5
 $10.5
 $—
 $(9.5) $7.5
          
As of September 30, 2015         
ASSETS         
Gas Utility         
U. S. stock/bond mutual funds$15.5
 $4.0
 $—
 $—
 $19.5
NYMEX/ICE natural gas contracts1.3
 —
 —
 (1.3) —
Subtotal16.8
 4.0
 —
 (1.3) 19.5
Gas Marketing         
NYMEX/ICE natural gas contracts6.3
 4.3
 —
 (6.6) 4.0
Natural gas commodity contracts—
 1.5
 0.2
 (0.5) 1.2
Total$23.1
 $9.8
 $0.2
 $(8.4) $24.7
LIABILITIES         
Gas Utility         
NYMEX/ICE natural gas contracts$16.4
 $—
 $—
 $(16.4) $—
OTCBB natural gas contracts—
 5.9
 —
 —
 5.9
NYMEX gasoline and heating oil contracts0.3
 —
 —
 (0.3) —
Subtotal16.7
 5.9
 —
 (16.7) 5.9
Gas Marketing         
NYMEX/ICE natural gas contracts1.2
 3.9
 —
 (5.1) —
Natural gas commodity contracts—
 2.2
 —
 (0.5) 1.7
Total$17.9
 $12.0
 $—
 $(22.3) $7.6

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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 June 30, 2015         
ASSETS         
Gas Utility         
U. S. stock/bond mutual funds$16.0
 $4.0
 $—
 $—
 $20.0
NYMEX/ICE natural gas contracts1.7
 —
 —
 (1.7) —
Subtotal17.7
 4.0
 —
 (1.7) 20.0
Gas Marketing         
NYMEX/ICE natural gas contracts2.7
 2.6
 —
 (4.1) 1.2
Natural gas commodity contracts—
 2.4
 0.7
 (0.5) 2.6
Total$20.4
 $9.0
 $0.7
 $(6.3) $23.8
LIABILITIES         
Gas Utility         
NYMEX/ICE natural gas contracts$9.5
 $—
 $—
 $(9.5) $—
OTCBB natural gas contracts—
 7.1
 —
 —
 7.1
NYMEX gasoline and heating oil contracts0.4
 —
 —
 (0.4) —
Subtotal9.9
 7.1
 —
 (9.9) 7.1
Gas Marketing         
NYMEX/ICE natural gas contracts0.4
 2.9
 —
 (3.3) —
Natural gas commodity contracts—
 0.9
 —
 (0.5) 0.4
Total$10.3
 $10.9
 $—
 $(13.7) $7.5

Laclede Gas
 
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 June 30, 2016         
ASSETS         
U. S. stock/bond mutual funds$16.4
 $4.0
 $—
 $—
 $20.4
NYMEX/ICE natural gas contracts8.2
 —
 —
 (3.1) 5.1
Total$24.6
 $4.0
 $—
 $(3.1) $25.5
LIABILITIES         
OTCBB natural gas contracts$—
 $0.6
 $—
 $—
 $0.6
Total$—
 $0.6
 $—
 $—
 $0.6
As of September 30, 2015         
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 December 31, 2016         
ASSETS                  
U. S. stock/bond mutual funds$15.5
 $4.0
 $—
 $—
 $19.5
Gas Utility         
US stock/bond mutual funds$17.2
 $4.0
 $—
 $—
 $21.2
NYMEX/ICE natural gas contracts1.3
 —
 —
 (1.3) —
8.8
 —
 —
 (6.6) 2.2
Gasoline and heating oil contracts0.7
 —
 —
 —
 0.7
Subtotal26.7
 4.0
 —
 (6.6) 24.1
Gas Marketing         
NYMEX/ICE natural gas contracts0.7
 4.5
 —
 (4.9) 0.3
Natural gas commodity contracts—
 9.8
 —
 (0.3) 9.5
Other         
Interest rate swaps—
 8.2
 —
 —
 8.2
Total$16.8
 $4.0
 $—
 $(1.3) $19.5
$27.4
 $26.5
 $—
 $(11.8) $42.1
LIABILITIES                  
Gas Utility         
NYMEX/ICE natural gas contracts$0.2
 $—
 $—
 $(0.2) $—
Subtotal0.2
 —
 —
 (0.2) —
Gas Marketing         
NYMEX/ICE natural gas contracts5.1
 4.8
 —
 (9.9) —
Natural gas commodity contracts—
 3.8
 —
 (0.3) 3.5
Total$5.3
 $8.6
 $—
 $(10.4) $3.5
         
As of September 30, 2016         
ASSETS         
Gas Utility         
US stock/bond mutual funds$16.8
 $4.1
 $—
 $—
 $20.9
NYMEX/ICE natural gas contracts5.3
 —
 —
 (0.4) 4.9
Gasoline and heating oil contracts0.4
 —
 —
 (0.3) 0.1
Subtotal22.5
 4.1
 —
 (0.7) 25.9
Gas Marketing         
NYMEX/ICE natural gas contracts0.4
 3.4
 —
 (3.4) 0.4
Natural gas commodity contracts—
 8.7
 0.2
 (0.9) 8.0
Total$22.9
 $16.2
 $0.2
 $(5.0) $34.3
LIABILITIES         
Gas Utility         
NYMEX/ICE natural gas contracts$16.4
 $—
 $—
 $(16.4) $—
$1.6
 $—
 $—
 $(1.6) $—
OTCBB natural gas contracts—
 5.9
 —
 —
 5.9
—
 0.2
 —
 —
 0.2
NYMEX gasoline and heating oil contracts0.3
 —
 —
 (0.3) —
Subtotal1.6
 0.2
 —
 (1.6) 0.2
Gas Marketing         
NYMEX/ICE natural gas contracts3.5
 1.6
 —
 (5.1) —
Natural gas commodity contracts—
 2.6
 —
 (0.9) 1.7
Other         
Interest rate swaps—
 3.0
 —
 —
 3.0
Total$16.7
 $5.9
 $—
 $(16.7) $5.9
$5.1
 $7.4
 $—
 $(7.6) $4.9

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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
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 June 30, 2015         
As of December 31, 2015         
ASSETS                  
U. S. stock/bond mutual funds$16.0
 $4.0
 $—
 $—
 $20.0
NYMEX natural gas contracts1.7
 —
 —
 (1.7) —
Gas Utility         
US stock/bond mutual funds$15.9
 $4.0
 $—
 $—
 $19.9
NYMEX/ICE natural gas contracts0.1
 —
 —
 (0.1) —
Subtotal16.0
 4.0
 —
 (0.1) 19.9
Gas Marketing         
NYMEX/ICE natural gas contracts4.1
 5.8
 —
 (6.9) 3.0
Natural gas commodity contracts—
 1.9
 0.2
 (0.3) 1.8
Total$17.7
 $4.0
 $—
 $(1.7) $20.0
$20.1
 $11.7
 $0.2
 $(7.3) $24.7
LIABILITIES                  
Gas Utility         
NYMEX/ICE natural gas contracts$9.5
 $—
 $—
 $(9.5) $—
$17.3
 $—
 $—
 $(17.3) $—
OTCBB natural gas contracts—
 7.1
 —
 —
 7.1
—
 4.6
 —
 —
 4.6
Gasoline and heating oil contracts0.4
 —
 —
 (0.4) —
NYMEX gasoline and heating oil contracts0.1
 —
 —
 (0.1) —
Subtotal17.4
 4.6
 —
 (17.4) 4.6
Gas Marketing         
NYMEX/ICE natural gas contracts1.5
 3.5
 —
 (5.0) —
Natural gas commodity contracts—
 1.4
 —
 (0.3) 1.1
Total$9.9
 $7.1
 $—
 $(9.9) $7.1
$18.9
 $9.5
 $—
 $(22.7) $5.7
Laclede Gas
 
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 December 31, 2016         
ASSETS         
US stock/bond mutual funds$17.2
 $4.0
 $—
 $—
 $21.2
NYMEX/ICE natural gas contracts8.8
 —
 —
 (6.6) 2.2
Gasoline and heating oil contracts0.5
 —
 —
 —
 0.5
Total$26.5
 $4.0
 $—
 $(6.6) $23.9
LIABILITIES         
NYMEX/ICE natural gas contracts$0.2
 $—
 $—
 $(0.2) $—
Total$0.2
 $—
 $—
 $(0.2) $—
As of September 30, 2016         
ASSETS         
US stock/bond mutual funds$16.8
 $4.1
 $—
 $—
 $20.9
NYMEX/ICE natural gas contracts5.3
 —
 —
 (0.4) 4.9
Gasoline and heating oil contracts0.3
 —
 —
 (0.3) —
Total$22.4
 $4.1
 $—
 $(0.7) $25.8
LIABILITIES         
NYMEX/ICE natural gas contracts$1.6
 $—
 $—
 $(1.6) $—
OTCBB natural gas contracts—
 0.2
 —
 —
 0.2
Total$1.6
 $0.2
 $—
 $(1.6) $0.2

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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 December 31, 2015         
ASSETS         
US stock/bond mutual funds$15.9
 $4.0
 $—
 $—
 $19.9
NYMEX/ICE natural gas contracts0.1
 —
 —
 (0.1) —
Total$16.0
 $4.0
 $—
 $(0.1) $19.9
LIABILITIES         
NYMEX/ICE natural gas contracts$17.3
 $—
 $—
 $(17.3) $—
OTCBB natural gas contracts—
 4.6
 —
 —
 4.6
NYMEX gasoline and heating oil contracts0.1
 —
 —
 (0.1) —
Total$17.4
 $4.6
 $—
 $(17.4) $4.6
Alagasco
During the fiscal second quarter of 2016 Alagasco commenced a gasoline derivative program to stabilize the cost of fuel used in operations. As of June 30,December 31, 2016, the fair value of related gasoline contracts was not significant.

6.7. CONCENTRATIONS OF CREDIT RISK
Other than in LER (the GasSpire Marketing, segment), Spire has no significant concentrations of credit risk.
A significant portion of LER’sSpire Marketing’s transactions are with (or are associated with) energy producers, utility companies, and pipelines. The concentration of transactions with these counterparties has the potential to affect the Company’s overall exposure to credit risk, either positively or negatively, in that each of these three groups may be affected similarly by changes in economic, industry, or other conditions. To manage this risk, as well as credit risk from significant counterparties in these and other industries, LERSpire Marketing has established procedures to determine the creditworthiness of its counterparties. These procedures include obtaining credit ratings and credit reports, analyzing counterparty financial statements to assess financial condition, and considering the industry environment in which the counterparty operates. This information is monitored on an ongoing basis. In some instances, LERSpire Marketing may require credit assurances such as prepayments, letters of credit, or parental guarantees. In addition, LERthey may enter into netting arrangements to mitigate credit risk with counterparties in the energy industry from which LERSpire Marketing both sells and purchases natural gas. Sales are typically made on an unsecured credit basis with payment due the month following delivery. Accounts receivable amounts are closely monitored and provisions for uncollectible amounts are accrued when losses are probable. LERSpire Marketing records accounts receivable, accounts payable, and prepayments for physical sales and purchases of natural gas on a gross basis. The amount included in LER'sits accounts receivable attributable to energy producers and their marketing affiliates totaled $10.1$21.1 at June 30, 2016. Net receivable amounts from these customers on the same date,December 31, 2016 ($13.5 reflecting netting arrangements, were $6.5. LER'sarrangements). Spire Marketing’s accounts receivable attributable to utility companies and their marketing affiliates were $40.9$53.8 at June 30,December 31, 2016 while net receivable amounts from these customers,($48.5 reflecting netting arrangements, were $39.0.arrangements).
LERSpire Marketing also has concentrations of credit risk with certain individually significant counterparties and with pipeline companies associated with its natural gas receivable amounts. At June 30,December 31, 2016, the amounts included in accounts receivable from LER’sits five largest counterparties (in terms of net accounts receivable exposure) totaled $20.6. These$30.5 ($27.7 reflecting netting arrangements). Four of these five counterparties are all investment-grade rated companies. Net receivable amounts from these five customers on the same date, reflecting netting arrangements, were $19.5.The fifth is not rated.

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Table of Contents

7.8. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Pension Plans
The pension plans of Spire consist of plans for employees at the Missouri Utilities, and plans covering employees of Alagasco.Alagasco, and plans for employees of EnergySouth since September 12, 2016.
The Missouri Utilities have non-contributory, defined benefit, trusteed forms of pension plans covering the majority of their employees. Plan assets consist primarily of corporate and United States (US) government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments and investments in diversified mutual funds.instruments.

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Table of Contents

Alagasco has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its employees. Qualified plan assets are comprised of US equities consisting of mutual and commingled funds with varying strategies, global equities consisting of mutual funds, alternative investments of limited partnerships and commingled and mutual funds, and fixed income investments.
The net periodic pension cost included the following components:
Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
2016 2015 2016 20152016 2015
Spire          
Service cost – benefits earned during the period$3.8
 $4.4
 $11.5
 $13.0
$5.3
 $3.9
Interest cost on projected benefit obligation6.9
 7.4
 21.0
 22.3
6.9
 7.1
Expected return on plan assets(8.6) (9.4) (26.3) (28.1)(9.9) (8.9)
Amortization of prior service cost0.1
 0.1
 0.3
 0.3
0.2
 0.1
Amortization of actuarial loss1.9
 1.8
 5.9
 5.7
3.4
 2.0
Loss on lump-sum settlements0.2
 12.5
 2.4
 12.5
Special termination benefits—
 —
 1.6
 —
—
 1.6
Subtotal4.3
 16.8
 16.4
 25.7
5.9
 5.8
Regulatory adjustment4.4
 (6.3) 11.1
 3.4
4.6
 5.0
Net pension cost$8.7
 $10.5
 $27.5
 $29.1
$10.5
 $10.8
Laclede Gas          
Service cost – benefits earned during the period$2.5
 $2.9
 $7.5
 $8.6
$3.3
 $2.5
Interest cost on projected benefit obligation5.4
 5.8
 16.2
 17.6
4.8
 5.4
Expected return on plan assets(6.7) (7.3) (20.1) (21.9)(7.3) (6.7)
Amortization of prior service cost0.1
 0.1
 0.3
 0.3
0.2
 0.1
Amortization of actuarial loss1.9
 1.8
 5.9
 5.7
2.9
 2.0
Loss on lump-sum settlements—
 12.5
 —
 12.5
Special termination benefits—
 —
 1.6
 —
—
 1.6
Subtotal3.2
 15.8
 11.4
 22.8
3.9
 4.9
Regulatory adjustment3.0
 (7.8) 8.8
 (1.0)2.8
 3.5
Net pension cost$6.2
 $8.0
 $20.2
 $21.8
$6.7
 $8.4
Alagasco          
Service cost – benefits earned during the period$1.3
 $1.5
 $4.0
 $4.4
$1.6
 $1.4
Interest cost on projected benefit obligation1.5
 1.6
 4.8
 4.7
1.5
 1.7
Expected return on plan assets(1.9) (2.1) (6.2) (6.2)(1.8) (2.2)
Loss on lump-sum settlements0.2
 —
 2.4
 —
Amortization of actuarial loss0.5
 —
Subtotal1.1
 1.0
 5.0
 2.9
1.8
 0.9
Regulatory adjustment1.4
 1.5
 2.3
 4.4
1.6
 1.5
Net pension cost$2.5
 $2.5
 $7.3
 $7.3
$3.4
 $2.4
Pursuant to the provisions of the Missouri Utilities'Utilities’ and Alagasco'sAlagasco’s pension plans, pension obligations may be satisfied by monthly annuities, lump-sum cash payments, or special termination benefits. 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 in a specific year. Special termination benefits, when offered, are also recognized as settlements which can result in gains or losses. In the

33


Table of Contents

quarters ended March 31 and June 30, 2016, an Alagasco plan met the criteria for settlement recognition, requiring remeasurements of the obligation under the plan using updated census data and assumptions for discount rate and mortality. The lump sum payments recognized as settlements for the Alagasco remeasurements totaled $12.6. The lump-sum settlement resulted in a loss of $2.2 and $0.2 in the quarters ended March 31 and June 30, 2016, respectively.In the quarter ended December 31, 2015, the Laclede Gas pension plans provided qualified employees with voluntary early retirement packages that qualified as special termination benefits, resulting in a charge of $1.6.
The funding policy of the Utilities 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 20162017 contributions to Laclede Gas'Gas’ pension plans through June 30,December 31, 2016 were $20.2$12.3 to the qualified trusts and $0.4$0.1 to the non-qualified plans. There were no fiscal 20162017 contributions to the Alagasco pension plans through June 30,December 31, 2016.

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Table of Contents

Contributions to the Missouri Utilities'Utilities’ pension plans for the remainder of fiscal 20162017 are anticipated to be $5.8$16.7 to the qualified trusts and $0.1$0.5 to the non-qualified plans. No contributions to Alagasco'sAlagasco’s pension plans are expected to be required for the remainder of fiscal 2016.2017.
Postretirement Benefits
The Utilities provide certain life insurance benefits at retirement. Laclede Gas plans provide for medical insurance after early retirement until age 65. For retirements prior to January 1, 2015, the MGE plans provided medical insurance after retirement until death. For retirements after January 1, 2015, the MGE plans provide medical insurance after early retirement until age 65. Under the Alagasco plans, medical insurance is currently available upon retirement until death for certain retirees depending on the type of employee and the date the employee was originally hired.
Net periodic postretirement benefit cost for the Company consisted of the following components:
Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
2016 2015 2016 20152016 2015
Spire          
Service cost – benefits earned during the period$2.7
 $3.2
 $8.2
 $9.6
$2.8
 $2.8
Interest cost on accumulated postretirement benefit obligation2.6
 2.8
 7.6
 8.4
2.1
 2.5
Expected return on plan assets(3.3) (3.3) (10.1) (9.9)(3.4) (3.4)
Amortization of prior service credit0.1
 0.2
 0.2
 0.6
—
 0.1
Amortization of actuarial loss0.9
 1.3
 2.7
 3.8
0.6
 0.9
Special termination benefits—
 —
 2.6
 —
Special termination benefit—
 2.6
Subtotal3.0
 4.2
 11.2
 12.5
2.1
 5.5
Regulatory adjustment(1.7) (2.8) (7.6) (8.2)(0.8) (4.2)
Net postretirement benefit cost$1.3
 $1.4
 $3.6
 $4.3
$1.3
 $1.3
Laclede Gas          
Service cost – benefits earned during the period$2.6
 $3.0
 $7.9
 $9.2
$2.6
 $2.7
Interest cost on accumulated postretirement benefit obligation2.1
 2.2
 6.1
 6.5
1.7
 2.0
Expected return on plan assets(2.1) (2.0) (6.4) (6.1)(2.3) (2.1)
Amortization of prior service credit0.1
 0.2
 0.2
 0.6
0.1
 0.1
Amortization of actuarial loss1.0
 1.3
 2.9
 3.8
0.6
 1.0
Special termination benefits—
 —
 2.6
 —
Special termination benefit—
 2.6
Subtotal3.7
 4.7
 13.3
 14.0
2.7
 6.3
Regulatory adjustment(1.2) (2.3) (6.2) (6.9)(0.4) (3.8)
Net postretirement benefit cost$2.5
 $2.4
 $7.1
 $7.1
$2.3
 $2.5
Alagasco   
Service cost – benefits earned during the period$0.1
 $0.1
Interest cost on accumulated postretirement benefit obligation0.4
 0.5
Expected return on plan assets(1.1) (1.3)
Amortization of prior service credit(0.1) —
Amortization of actuarial gain—
 (0.1)
Subtotal(0.7) (0.8)
Regulatory adjustment(0.4) (0.4)
Net postretirement benefit income$(1.1) $(1.2)

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Alagasco       
Service cost – benefits earned during the period$0.1
 $0.2
 $0.3
 $0.4
Interest cost on accumulated postretirement benefit obligation0.5
 0.6
 1.5
 1.9
Expected return on plan assets(1.2) (1.3) (3.7) (3.8)
Amortization of prior service credit—
 —
 —
 —
Amortization of actuarial gain(0.1) —
 (0.2) —
Subtotal(0.7) (0.5) (2.1) (1.5)
Regulatory adjustment(0.5) (0.5) (1.4) (1.3)
Net postretirement benefit income$(1.2) $(1.0) $(3.5) $(2.8)
Missouri and Alabama 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. The Utilities have established Voluntary Employees’ Beneficiary Association (VEBA) and Rabbi Trusts as external funding mechanisms. The assets of the VEBA and Rabbi Trusts consist primarily of money market securities and mutual funds invested in stocks and bonds. During the quarter ended December 31, 2015, the Laclede Gas post-retirement plan offered qualified employees voluntary enhanced early retirement packages that resulted in a special termination benefits charge of $2.6.
The Utilities'Utilities’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. There were $10.8 inno fiscal year 20162017 contributions to the postretirement plans through June 30,December 31, 2016 for the Missouri Utilities. Contributions to the postretirement plans for the remainder of fiscal year 20162017 are anticipated to be $3.5$10.3 to the qualified trusts and $0.3$0.4 paid directly to participants from the Missouri Utilities'Utilities’ funds. For Alagasco, there were no contributions to the postretirement plans during the first ninethree months of fiscal year 2016,2017, and none are expected to be required for the remainder of the fiscal year.

8.9. INFORMATION BY OPERATING SEGMENT
The Company has two reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment is the aggregation of three operating segments: (1) the eastern Missouri service territoryregulated operations of Laclede Gas, (2) the western Missouri service territory of Laclede Gas (MGE), and (3) Alagasco.Utilities. The Gas Marketing segment includes the results of LER,Spire Marketing, a subsidiary engaged in the non-regulated marketing of natural gas and related activities, including utilizing natural gas storage contracts for providing natural gas sales. Other includes:
unallocated corporate items,costs, including certain debt and associated interest costs,costs;
Laclede Pipeline Company, a subsidiary which operates a propane pipeline under Federal Energy Regulatory Commission (FERC) jurisdiction, and Spire STL Pipeline LLC, a subsidiary that plans to build, own, operate and maintainof Spire planning construction of a pipeline interconnecting with the Rockies Express70-mile Federal Energy Regulatory Commission (FERC)-regulated pipeline to deliver natural gas to the St. Louis, Missouri area under FERC jurisdiction,into eastern Missouri; and
Spire’s subsidiaries that are engaged in the operation of a propane pipeline, compression of natural gas oil production, real estate development,and risk management, and financial investments in other enterprises, among other activities. All subsidiaries are wholly owned.
Accounting policies are described in Note 1, Summary of Significant Accounting Policies. Intersegment transactions include sales of natural gas from LERSpire Marketing to Laclede Gas and from Laclede Gas to LER, propane storageSpire Marketing, insurance services provided by Laclede GasInsurance Risk Services to Laclede Pipeline Company,Gas, and propane transportation services provided by Laclede Pipeline Company to Laclede Gas, and insurance services provided by Laclede Risk Insurance Services to Laclede Gas.
Management evaluates the performance of the operating segments based on the computation of net economic earnings. Net economic earnings exclude from reported net income the after-tax impacts of net unrealized gains and losses and other timing differences associated with energy-related transactions. Net economic earnings also exclude the after-tax impacts related to acquisition, divestiture, and restructuring activities.

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Gas Utility Gas Marketing Other Eliminations ConsolidatedGas Utility Gas Marketing Other Eliminations Consolidated
Three Months Ended June 30, 2016         
Three Months Ended December 31, 2016         
Operating Revenues:                  
Revenues from external customers$253.2
 $(4.3) $0.4
 $—
 $249.3
$472.3
 $21.7
 $1.1
 $—
 $495.1
Intersegment revenues0.1
 6.6
 0.5
 (7.2) —
4.4
 —
 0.7
 (5.1) —
Total Operating Revenues253.3
 2.3
 0.9
 (7.2) 249.3
476.7
 21.7
 1.8
 (5.1) 495.1
Operating Expenses:                  
Gas Utility                  
Natural and propane gas61.1
 —
 —
 (7.0) 54.1
214.5
 —
 —
 (20.7) 193.8
Other operation and maintenance91.9
 —
 —
 (0.1) 91.8
100.5
 —
 —
 (1.1) 99.4
Depreciation and amortization34.2
 —
 —
 —
 34.2
37.7
 —
 —
 —
 37.7
Taxes, other than income taxes27.4
 —
 —
 —
 27.4
33.4
 —
 —
 —
 33.4
Total Gas Utility Operating Expenses214.6
 —
 —
 (7.1) 207.5
386.1
 —
 —
 (21.8) 364.3
Gas Marketing and Other—
 3.9
 2.7
 (0.1) 6.5
—
 23.0
 2.0
 16.7
 41.7
Total Operating Expenses214.6
 3.9
 2.7
 (7.2) 214.0
386.1
 23.0
 2.0
 (5.1) 406.0
Operating Income (Loss)$38.7
 $(1.6) $(1.8) $—
 $35.3
$90.6
 $(1.3) $(0.2) $—
 $89.1
Net Economic Earnings (Loss)$18.0
 $1.8
 $(5.2) $—
 $14.6
$51.8
 $1.4
 $(5.7) $—
 $47.5
                  
Three Months Ended June 30, 2015         
Three Months Ended December 31, 2015         
Operating Revenues:                  
Revenues from external customers$260.2
 $14.5
 $0.5
 $—
 $275.2
$398.8
 $0.2
 $0.4
 $—
 $399.4
Intersegment revenues1.0
 14.4
 0.5
 (15.9) —
0.7
 12.6
 0.4
 (13.7) —
Total Operating Revenues261.2
 28.9
 1.0
 (15.9) 275.2
399.5
 12.8
 0.8
 (13.7) 399.4
Operating Expenses:                  
Gas Utility                  
Natural and propane gas73.2
 —
 —
 (15.5) 57.7
161.9
 —
 —
 (13.4) 148.5
Other operation and maintenance90.9
 —
 —
 (0.3) 90.6
91.9
 —
 —
 (0.3) 91.6
Depreciation and amortization32.5
 —
 —
 —
 32.5
33.5
 —
 —
 —
 33.5
Taxes, other than income taxes26.2
 —
 —
 —
 26.2
28.2
 —
 —
 —
 28.2
Total Gas Utility Operating Expenses222.8
 —
 —
 (15.8) 207.0
315.5
 —
 —
 (13.7) 301.8
Gas Marketing and Other—
 27.4
 4.9
 (0.1) 32.2
—
 9.0
 1.6
 —
 10.6
Total Operating Expenses222.8
 27.4
 4.9
 (15.9) 239.2
315.5
 9.0
 1.6
 (13.7) 312.4
Operating Income (Loss)$38.4
 $1.5
 $(3.9) $—
 $36.0
$84.0
 $3.8
 $(0.8) $—
 $87.0
Net Economic Earnings (Loss)$16.5
 $0.5
 $(5.9) $—
 $11.1
$50.0
 $(0.3) $(4.6) $—
 $45.1


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 Gas Utility Gas Marketing Other Eliminations Consolidated
Nine Months Ended June 30, 2016 
  
  
  
  
Operating Revenues:         
Revenues from external customers$1,263.5
 $(6.7) $1.2
 $—
 $1,258.0
Intersegment revenues2.0
 29.8
 1.4
 (33.2) —
Total Operating Revenues1,265.5
 23.1
 2.6
 (33.2) 1,258.0
Operating Expenses:         
Gas Utility         
Natural and propane gas496.0
 —
 —
 (32.3) 463.7
Other operation and maintenance278.4
 —
 —
 (0.7) 277.7
Depreciation and amortization101.5
 —
 —
 —
 101.5
Taxes, other than income taxes99.5
 —
 —
 —
 99.5
Total Gas Utility Operating Expenses975.4
 —
 —
 (33.0) 942.4
Gas Marketing and Other—
 18.4
 7.4
 (0.2) 25.6
Total Operating Expenses975.4
 18.4
 7.4
 (33.2) 968.0
Operating Income (Loss)$290.1
 $4.7
 $(4.8) $—
 $290.0
Net Economic Earnings (Loss)$170.5
 $4.5
 $(11.8) $—
 $163.2
          
Nine Months Ended June 30, 2015 
  
  
  
  
Operating Revenues:         
Revenues from external customers$1,688.6
 $82.3
 $1.3
 $—
 $1,772.2
Intersegment revenues4.0
 52.9
 1.5
 (58.4) —
Total Operating Revenues1,692.6
 135.2
 2.8
 (58.4) 1,772.2
Operating Expenses:         
Gas Utility         
Natural and propane gas902.1
 —
 —
 (57.3) 844.8
Other operation and maintenance292.3
 —
 —
 (0.8) 291.5
Depreciation and amortization96.7
 —
 —
 —
 96.7
Taxes, other than income taxes119.9
 —
 —
 —
 119.9
Total Gas Utility Operating Expenses1,411.0
 —
 —
 (58.1) 1,352.9
Gas Marketing and Other—
 129.5
 9.1
 (0.3) 138.3
Total Operating Expenses1,411.0
 129.5
 9.1
 (58.4) 1,491.2
Operating Income (Loss)$281.6
 $5.7
 $(6.3) $—
 $281.0
Net Economic Earnings (Loss)$162.8
 $3.0
 $(11.4) $—
 $154.4


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The Company'sCompany’s total assets by segment were as follows:
June 30, September 30, June 30,December 31, September 30, December 31,
2016 2015 20152016 2016 2015
Total Assets:
Gas Utility$4,653.7
 $4,686.2
 $4,480.1
$5,375.6
 $5,184.7
 $4,799.0
Gas Marketing167.8
 160.6
 151.2
225.0
 205.0
 163.8
Other1,597.7
 1,560.2
 1,560.6
1,848.7
 1,836.6
 1,545.5
Eliminations(1,108.3) (1,116.8) (1,109.0)(1,139.2) (1,161.9) (1,109.5)
Total Assets$5,310.9
 $5,290.2
 $5,082.9
$6,310.1
 $6,064.4
 $5,398.8

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The following table reconciles the Company'sCompany’s net economic earnings to the most comparable GAAP measure, net income.
Three Months Ended June 30, Nine Months Ended June 30,Three Months Ended December 31,
2016 2015 2016 20152016 2015
Net Income$10.7
 $14.1
 $158.4
 $155.6
$45.2
 $46.9
Adjustments, pre-tax:          
Unrealized loss (gain) on energy-related derivative contracts4.9
 (2.9) 2.9
 (3.5)3.8
 (4.9)
Lower of cost or market inventory adjustments(0.1) (0.4) 0.6
 —
(0.1) 0.6
Realized (gain) loss on economic hedges prior to sale of the physical commodity(0.3) 2.5
 (0.9) 2.6
Realized gain on economic hedges prior to sale of the physical commodity(0.1) (0.1)
Acquisition, divestiture and restructuring activities1.8
 3.5
 5.1
 6.5
0.1
 1.3
Gain on sale of property—
 (7.6) —
 (7.6)
Income tax effect of adjustments(2.4) 1.9
 (2.9) 0.8
(1.4) 1.3
Net Economic Earnings$14.6
 $11.1
 $163.2
 $154.4
$47.5
 $45.1

9.10. COMMITMENTS AND CONTINGENCIES
Commitments
The Company and the Utilities have entered into contracts with various counterparties, expiring on dates through 2024,2031, for the storage, transportation, and supply of natural gas. Minimum payments required under the contracts in place at June 30,December 31, 2016 are estimated at approximately $1,316.9, $494.0,$1,463.4, $614.8, and $371.4$340.0 for the Company, Laclede Gas, and Alagasco, respectively. Additional contracts are generally entered into prior to or during the heating season of November through April. The Missouri Utilities recover their costs from customers in accordance with their PGA clause and Alagasco recovers its cost through its GSA rider.
Contingencies
The Company and the Utilities account for environmental liabilities and other contingencies in accordance with accounting standards under the loss contingency guidance of ASC Topic 450, "Contingencies,"“Contingencies,” when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
The Company and the Utilities own and operate natural gas distribution, transmission, and storage facilities, the operations of which are subject to various environmental laws, regulations, and interpretations. While environmental issues resulting from such operations arise in the ordinary course of business, such issues have not materially affected the Company’s Laclede Gas', or Alagasco'sUtilities’ financial position and results of operations. As environmental laws, regulations, and their interpretations change, the Company Laclede Gas, or Alagascothe Utilities may incur additional environmental liabilities that may result in additional costs, which may be required to incur additional costs.material.
In addition to matters noted below, the Company, Laclede Gas, and Alagasco are involved in other litigation, claims, and investigations arising in the normal course of business. Management, after discussion with counsel, believes that the final outcome will not have a material effect on the consolidated statements of income, balance sheets, and statements of cash flows of the Company, Laclede Gas, or Alagasco. However, there is uncertainty in the valuation of pending claims and prediction of litigation results.

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Laclede Gas
In the natural gas industry, many gas distribution companies like Laclede Gas have incurred environmental liabilities associated with sites they or their predecessor companies formerly owned or operated where manufactured gas operations took place. At this time, Laclede Gas has identified threeThe Utilities each have former manufactured gas plant (MGP) operations in their respective service territories.
Laclede Gas
Laclede Gas has identified four former MGP sites in eastern Missouri where costs have been incurred and claims have been asserted: one in Shrewsbury, Missouri and twothree in the Citycity of St. Louis, Missouri.Missouri (City). Laclede Gas has enrolled two of the two sites in the City of St. Louis in the Missouri Department of Natural Resources Brownfields/Voluntary Cleanup Program (BVCP). The third site in the City is the result of a new claim assertion by the United States Environmental Protection Agency (EPA) and such claim is currently being investigated. In Laclede Gas'Gas’ western service area, MGE has enrolled all of its owned former manufactured gas plant sites in the BVCP.

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With regard to the former MGP site located in Shrewsbury, Missouri, Laclede Gas and state and federal environmental regulators agreed upon certain remedial actions to a portion of the site in a 1999 Administrative Order on Consent (AOC), which actions have been completed. On September 22, 2008, Environmental Protection Agency (EPA)the EPA Region VII issued a letter of Termination and Satisfaction terminating the AOC. However, if after this termination of the AOC, regulators require additional remedial actions, or additional claims are asserted, Laclede Gas may incur additional costs.
In conjunction with redevelopment of one of the sites located in the City, of St. Louis, Laclede Gas and another former owner of the site entered into an agreement (Remediation Agreement) with the City development agencies, the developer, and an environmental consultant that obligates one of the City agencies and the environmental consultant to remediate the site and obtain a No Further Action letter from the Missouri Department of Natural Resources (MDNR). The Remediation Agreement also provides for a release of Laclede Gas and the other former site owner from certain liabilities related to the past and current environmental condition of the site and requires the developer and the environmental consultant to maintain certain insurance coverage, including remediation cost containment, premises pollution liability, and professional liability. The operative provisions of the Remediation Agreement were triggered on December 20, 2010, on which date Laclede Gas and the other former site owner, as full consideration under the Remediation Agreement, paid a small percentage of the cost of remediation of the site. The amount paid by Laclede Gas did not materially impact the financial condition, results of operations, or cash flows of the Company.
Laclede Gas has not owned the other site located in the City of St. Louis for many years. In a letter dated June 29, 2011, the Attorney General for the state of Missouri informed Laclede Gas that the MDNR had completed an investigation of the site. The Attorney General requested that Laclede Gas participate in the follow up investigations of the site. In a letter dated January 10, 2012, Laclede Gas stated that it would participate in future environmental response activities at the site in conjunction with other potentially responsible parties (PRPs) that are willing to contribute to such efforts in a meaningful and equitable fashion. Accordingly, Laclede Gas entered into a cost sharing agreement for remedial investigation with other PRPs. Pending MDNR approval which has not occurred as of the date of filing, the remedial investigation of the site will begin.
Additionally, in correspondence dated November 30, 2016, Region 7 of the EPA has asserted that Laclede Gas is liable under section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) for alleged coal gas waste contamination at a site in the northern portion of the City on which Laclede Gas operated a manufactured gas plant. Laclede Gas has not owned or operated the site (also known as Station “B”) for over 70 years. Laclede Gas is currently preparing a response to the EPA and is anticipating the participation of former owners and operators of the site as PRPs.
Laclede Gas has notified its insurers that it seeks reimbursement for costs incurred in the past and future potential liabilities associated with the MGP sites. While some of the insurers have denied coverage and reserved their rights, Laclede Gas continues to discuss potential reimbursements with them.
On March 10, 2015, Laclede Gas received a Section 104(e) information request from EPA Region VII7 regarding the former Thompson Chemical/Superior Solvents site in St. Louis, Missouri.the City. In turn, Laclede Gas issued a Freedom of Information Act (FOIA) request to the EPA on April 3, 2015, in an effort to identify the basis of the inquiry. The FOIA response from the EPA was received on July 15, 2015 and a response was provided to the EPA on August 15, 2015.
MGE has seven owned MGP sites enrolled in the BVCP, including Joplin MGP #1, St. Joseph MGP #1, Kansas City Coal Gas Station B, Kansas City Station A Railroad area, Kansas City Coal Gas Station A North, Kansas City Coal Gas Station A South, and Independence MGP #2. Source removal has been conducted at all of the owned sites since 2003 with the exception of Joplin, which is inJoplin. On September 15, 2016, a request was made with the early stages of site analysis and characterization.MDNR for a restrictive covenant use limitation with respect to Joplin. Remediation efforts at thesethe seven sites are at various stages of completion, ranging from groundwater monitoring and sampling following source removal activities to early site characterizationthe aforementioned request in respect to Joplin. As part of its participation in the BVCP, MGE communicates regularly with the MDNR with respect to its remediation efforts and monitoring activities at these sites. On May 11, 2015, the MDNR approved the next phase of investigation at the Kansas City Station A North and Railroad area.

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To date, costs incurred for all Missouri Utilities'Utilities’ MGP sites for investigation, remediation and monitoring these sites have not been material. However, the amount of costs relative to future remedial actions at these and other sites is unknown and may be material. The actual future costs that Laclede Gas may incur could be materially higher or lower depending upon several factors, including whether remediation actions will be required, final selection and regulatory approval of any remedial actions, changing technologies and government regulations, the ultimate ability of other potential responsible partiesPRPs to pay, the successful completion of remediation efforts required by the Remediation Agreement described above, and any insurance recoveries.

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In 2013, Laclede Gas retained an outside consultant to conduct probabilistic cost modeling of 19 former MGP sites owned or operated by Laclede Gas in eastern Missouri or MGE in western Missouri. The purpose of this analysis was to develop an estimated range of probabilistic future liability for each site. That analysis, completed in August 2014, provided a range of demonstrated possible future expenditures to investigate, monitor and remediate all 19 MGP sites. Laclede Gas has recorded its best estimate of the probable expenditures that relate to these matters. The amount is not material.
Costs associated with environmental remediation activities are accrued when such costs are probable and reasonably estimable. To the extent such costs (less any amounts received from insurance proceeds or as contributions from other PRPs), are incurred prior to a rate case, Laclede Gas would request from the MoPSC authority to defer such costs and collect them in the next rate case. Laclede Gas and the Company do not expect potential liabilities that may arise from remediating these sites to have a material impact on their future financial condition or results of operations.
Alagasco
Alagasco is in the chain of title of nine former MGP sites, four of which it still owns, and five former manufactured gas distribution sites, one of which it still owns. As of June 30,December 31, 2016, Alagasco does not foresee a probable or reasonably estimable loss associated with these nine former MGP sites. Alagasco and the Company do not expect potential liabilities that may arise from remediating these sites to have a material impact on their future financial conditionscondition or results of operations.
In 2012, Alagasco responded to an EPA Request for Information Pursuant to Section 104 of the Comprehensive Environment Response, Compensation, and Liability Act (CERCLA)CERCLA relating to the 35th Avenue Superfund Site located in North Birmingham, Jefferson County, Alabama. Alagasco was identified as a PRP under CERCLA for the cleanup of the site or costs the EPA incurs in cleaning up the site. At this point, Alagasco has not been provided information that would allow it to determine the extent, if any, of its potential liability with respect to the 35th Avenue Superfund Site and vigorously denies its inclusion as a PRP.
On December 17, 2013, an incident occurred at a Housing Authority apartment complex in Birmingham, Alabama that resulted in one fatality, personal injuries and property damage. Alagasco cooperated with the National Transportation Safety Board (NTSB) which investigated the incident. The NTSB report of findings was issued on March 30, 2016 and no safety recommendations, fines, or penalties were contained therein. Alagasco has been named as a defendant in several lawsuits arising from the incident, and additional lawsuits and claims may be filed against Alagasco.

Mobile Gas
10. PENDING ACQUISITION
On April 26, 2016, the Company announced an agreement with Sempra Global, a unit of Sempra Energy, to acquire Mobile Gas serving 85,000 natural gas utility customersis in the chain of title of one former MGP site which it still owns in Mobile, Alabama. On September 15, 2010, Mobile Gas filed an application to enroll the site into the Alabama Department of Environmental Management’s (ADEM) Voluntary Cleanup Program (VCP). This application was accepted by ADEM on November 16, 2010. Investigation and Willmuttesting have been completed. As of September 30, 2016, Mobile Gas with 19,000 customershas an approved remediation plan from ADEM which is currently in Mississippi. Spire is acquiring 100 percentthe process of the outstanding equity of EnergySouth, Inc., the parent ofbeing executed. Mobile Gas and Willmutthe Company do not expect potential liabilities that may arise from remediating this site to have a material impact on their future financial condition or results of operations.
Since April 2012, a total of 14 lawsuits have been filed against Mobile Gas in Mobile County Circuit Court alleging that in the first half of 2008, Mobile Gas spilled tert-butyl mercaptan, an odorant added to natural gas for $344. All non-utility businessessafety reasons, in EnergySouth will be retained by Sempra. AfterEight Mile, Alabama. Eleven of the inclusionlawsuits have been settled. The remaining three lawsuits, which include approximately 270 individual plaintiffs, allege nuisance, fraud and negligence causes of working capital adjustmentsactions, and seek unspecified compensatory and punitive damages. A claim has been made against the insurance carriers for Mobile Gas requesting reimbursement for costs accrued in respect to this spill, and a related receivable has been recorded. Mobile Gas and the assumptionCompany do not expect potential liabilities that may arise from these lawsuits to have a material impact on their future financial condition or results of $67 in debt, the transaction is expected to result in total cash consideration of $323. Spire has received confirmation of the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. On May 20, 2016, Spire Inc., Sempra, EnergySouth, and Willmut jointly filed with the Mississippi Public Service Commission (MSPSC) to request approval of the indirect change of control of Willmut Gas. Closing on the transaction is expected to occur shortly after all conditions have been met, including MSPSC approval.

operations.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions, except per share amounts)
This section analyzes the financial condition and results of operations of Spire Inc. (Spire or the Company), Laclede Gas Company (Laclede Gas)Gas or the Missouri Utilities), and Alabama Gas Corporation (Alagasco). Spire was formerly known as The Laclede Group, Inc., which changed its name to Spire Inc. effective April 28, 2016. Laclede Gas, Alagasco, and AlagascoEnergySouth, Inc. (EnergySouth) are wholly owned subsidiaries of the Company. Collectively, Laclede Gas, Alagasco and Alagascothe subsidiaries of EnergySouth, are collectively referred to as the Utilities. The subsidiaries of EnergySouth are Mobile Gas Service Corporation (Mobile Gas) and Willmut Gas & Oil Company (Willmut Gas). This section includes management’s view of factors that affect the respective businessbusinesses of the Company, Laclede Gas, and Alagasco, explanations of past financial results including changes in earnings and costs from the prior periods, and the effects of such factors on the Company's,Company’s, Laclede Gas',Gas’ and Alagasco'sAlagasco’s overall financial condition and liquidity.
Certain matters discussed in this report, excluding historical information, include forward-looking statements. Certain words, such as “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “seek,” and similar words and expressions identify forward-looking statements that involve uncertainties and risks. Future developments may not be in accordance with our current expectations or beliefs and the effect of future developments may not be those anticipated. Among the factors that may cause results to differ materially from those contemplated in any forward-looking statement are:
Weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country;
Volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on margin deposits associated with the use of natural gas derivative instruments;
The impact of changes and volatility in natural gas prices on our competitive position in relation to suppliers of alternative heating sources, such as electricity;
Changes in gas supply and pipeline availability, including decisions by natural gas producers to reduce production or shut in producing natural gas wells, expiration of existing supply and transportation arrangements that are not replaced with contracts with similar terms and pricing, as well as other changes that impact supply for and access to the markets in which our subsidiaries transact business;
AcquisitionsThe recent acquisitions may not achieve their intended results, including anticipated cost savings;
Legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those affecting:
▪allowed rates of return,
▪incentive regulation,
▪industry structure,
▪purchased gas adjustment provisions,
▪rate design structure and implementation,
▪regulatory assets,
▪non-regulated and affiliate transactions,
▪franchise renewals,
▪environmental or safety matters, including the potential impact of legislative and regulatory actions related to climate change and pipeline safety,
▪taxes,
▪pension and other postretirement benefit liabilities and funding obligations, or
▪accounting standards;
•The results of litigation;
The availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to the capital markets;
Retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
Our ability to comply with all covenants in our indentures and credit facilities any violations of which, if not cured in a timely manner, could trigger a default of our obligation;
Capital and energy commodity market conditions, including the ability to obtain funds with reasonable terms for necessary capital expenditures and general operations and the terms and conditions imposed for obtaining sufficient gas supply;
Discovery of material weakness in internal controls; and
Employee workforce issues, including but not limited to labor disputes and future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and Laclede Gas'Gas’ and Alagasco'sAlagasco’s Condensed Financial Statements and the Notes thereto.


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RESULTS OF OPERATIONS
Overview
The Company has two reportablekey business segments: Gas Utility and Gas Marketing. Spire’s earnings are primarily derived from its Gas Utility segment, which reflects the regulated activities of the Utilities. The Gas Utility segment consists of the regulated businesses of Laclede Gas, Alagasco and Alagasco.the subsidiaries of EnergySouth. Due to the seasonal nature of the Utilities'Utilities’ business, earnings of Spire, Laclede Gas and Alagasco are typically concentrated during the heating season of November through April each fiscal year, though the rate design for the Missouri Utilities lessens the impact of weather volatility on Laclede Gas' customers during cold winters and tends to stabilize its earnings.year.
Gas Utility - Laclede Gas
Laclede Gas is Missouri’s largest natural gas distribution company and is regulated by the Missouri Public Service Commission (MoPSC). Laclede Gas serves St. Louis and eastern Missouri as "Laclede Gas"through Laclede Gas and serves Kansas City and western Missouri as "Missourithrough Missouri Gas Energy." Energy (MGE). Laclede Gas delivers natural gas to retail customers at rates and in accordance with tariffs authorized by the MoPSC. The earnings of Laclede Gas are primarily generated by the sale of heating energy. The rate design for each service territory serves to lessen the impact of weather volatility on its customers during cold winters and stabilize Laclede Gas’ earnings.
Gas Utility - Alagasco
Alagasco is the largest natural gas distribution utility in the state of Alabama and is regulated by the Alabama Public Service Commission (APSC).Alabama. Alagasco’s service territory is located in central and northern Alabama. Among the cities served by Alagasco are Birmingham, the center of the largest metropolitan area in Alabama, and Montgomery, the state capital. The Utilities purchaseAlagasco is regulated by the Alabama Public Service Commission (APSC). Alagasco purchases natural gas through interstate and intrastate suppliers and distributedistributes the purchased gas through theirits distribution facilities for sale to residential, commercial, and industrial customers and other end-users of natural gas at rates and in accordance with tariffs authorized by their regulators, and their earnings are primarily generated by the sale of heating energy. The Utilitiesgas. Alagasco also provideprovides transportation services to large industrial and commercial customers located on its distribution system. These transportation customers, using the UtilitiesAlagasco as their agent or acting on their own, purchase gas directly from marketers or suppliers and arrange for delivery of the gas into the Utilities’Alagasco distribution system. The Utilities chargeAlagasco charges a fee to transport such customer-owned gas through its distribution system to the customers’ facilities.
Gas Marketing
Spire’s primary non-utility business, Spire Marketing Inc. (Spire Marketing), which changed its name from Laclede Energy Resources, Inc. (LER)on December 12, 2016, is engaged in the marketing of natural gas and related activities on a non-regulated basis and is reported in the Gasbasis. Spire Marketing segment. LER markets natural gas across the country with the core of its footprint located in and around the central US. It holds firm transportation and storage contracts in order to effectively manage its customer base, which consists of producers, pipelines, power generators, storage operators, municipalities, utility transportation customerscompanies, and large retailcommercial and wholesale customers across the Midwest. LER’s operations and customer base are more subject to fluctuations in market conditions than the Utilities. LER has a contract for 1 Bcf of natural gas storage expiring August 1, 2023 and has contracts for an additional 3.75 Bcf of storage that expire at various times through March 31, 2019.industrial customers.
Other
In addition to the Gas Utility and Gas Marketing segments, the Company'sCompany’s business includes certain other non-utility activities reported as Other. Other includes:
unallocated corporate costs, including certain debt and associated interest costs,costs;
Laclede Pipeline Company, a subsidiary which operates a propane pipeline under Federal Energy Regulatory Commission (FERC) jurisdiction, and Spire STL Pipeline LLC, a subsidiary that plans to build, own, operate and maintainof Spire planning construction of a pipeline interconnecting with the Rockies Express70-mile Federal Energy Regulatory Commission (FERC) regulated pipeline to deliver natural gas to the St. Louis, Missouri area under FERC jurisdiction,into eastern Missouri; and
Spire'sSpire’s subsidiaries that are engaged in the operation of a propane pipeline, compression of natural gas oil production, real estate development,and risk management, and financial investments in other enterprises, among other activities. All subsidiaries are wholly owned.


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EARNINGS
Net income reported by Spire, Laclede Gas and Alagasco is determined in accordance with accounting principles generally accepted in the United States of America (GAAP). Management also uses the non-GAAP measures of net economic earnings, net economic earnings per share and operating margin when internally evaluating and reporting results of operations. These non-GAAP operating metrics should not be considered as an alternative to, or more meaningful than, GAAP measures such as net income.

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Non-GAAP Measures – Net Economic Earnings and Net Economic Earnings Per Share
Net economic earnings and net economic earnings per share are non-GAAP measures that exclude from net income the after-tax impacts of fair value accounting and timing adjustments associated with energy-related transactions as well as acquisition, divestiture, and restructuring activities. These fair value and timing adjustments are made in instances where the accounting treatment differs from the economic substance of the underlying transaction, including the following:
Net unrealized gains and losses on energy-related derivatives that are required by GAAP fair value accounting associated with current changes in the fair value of financial and physical transactions prior to their completion and settlement. These unrealized gains and losses result primarily from two sources:
1)changes in the fair values of physical and/or financial derivatives prior to the period of settlement; and,
2)ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due to differences in commodity price changes between the locations of the forecasted physical purchase or sale transactions and the locations of the underlying hedge instruments;
Lower of cost or market adjustments to the carrying value of commodity inventories resulting when the market price of the commodity falls below its original cost, to the extent that those commodities are economically hedged; and
Realized gains and losses resulting from the settlement of economic hedges prior to the sale of the physical commodity.
These adjustments eliminate the impact of timing differences and the impact of current changes in the fair value of financial and physical transactions prior to their completion and settlement. Unrealized gains or losses are recorded in each period until being replaced with the actual gains or losses realized when the associated physical transaction(s)transactions occur. While management uses these non-GAAP measures to evaluate both the Utilities and LER,Spire Marketing, the net effect of adjustments on the Utilities'Utilities’ earnings are minimal. This is due to gains or losses on Laclede Gas'Gas’ natural gas derivative instruments being deferred pursuant to its PGAPurchased Gas Adjustment (PGA) clause, as authorized by the MoPSC.
Management believes that excluding the earnings volatility caused by recognizing changes in fair value prior to settlement and other timing differences associated with related purchase and sale transactions provides a useful representation of the economic effects of only the actual settled transactions and their effects on results of operations. In addition, management excludes the impact related to unique acquisition, divestiture, and restructuring activities when evaluating on-going performance, and therefore excludes these impacts from net economic earnings. Management believes that this presentation provides a useful representation of operating performance by facilitating comparisons of year-over-year results. The definition and measurement of net economic earnings provided above is consistent with that used by management and the Board of Directors in assessing the Company's,Company’s, Laclede Gas',Gas’ and Alagasco'sAlagasco’s performance as well as determining performance under the Company's,Company’s, Laclede Gas',Gas’ and Alagasco'sAlagasco’s incentive compensation plans. Further, the Company believes this better enables an investor to view the Company's,Company’s, Laclede Gas',Gas’ and Alagasco'sAlagasco’s performance in that period on a basis that would be comparable to prior periods.
Reconciliations of net economic earnings and net economic earnings per share to the Company'sCompany’s most directly comparable GAAP measures are provided on the following pages.
Non-GAAP Measure – Operating Margin
In addition to operating revenues and operating expenses, management also uses the non-GAAP measure of operating margin when evaluating results of operations, as shown in the table below. The Utilities pass to their customers (subject to prudence review by, as applicable, the MoPSC, APSC, or APSC)MSPSC) increases and decreases in the wholesale cost of natural gas in accordance with their PGA clauses (Missouri Utilities) and GSA rider (Alabama Utility).or Gas Supply Adjustment (GSA) rider. The volatility of the wholesale natural gas market results in fluctuations from period to period in the recorded levels of, among other items, revenues and natural gas cost expense. Nevertheless, increases and decreases in (1) the cost of gas associated with system gas sales volumes and (2) gross receipts tax expense, which isare calculated as a percentage of revenues, with the same amounts (excludingamount, excluding immaterial timing differences)differences, included in revenues, havehas no direct effect on operating income. As these costs are included in revenue and operating expenses and management does not have any control over these amounts for the Utilities, management believes that beginning with operating margin providesmargins is a more useful supplemental measure. In addition, it is management'smanagement’s belief that separatingoperating margins and the remaining operating expenses that calculate operating income are useful assessing the Company’s and the Utilities’ performance as management has more ability to influence control over these revenues and expenses.

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operating margin from the remaining operating expenses that determine operating income is a more useful approach to assessing the Company's and the Utilities' performance, as management has more ability to influence control over these revenues and expenses.
THREE MONTHS ENDED JUNE 30, 2016
SPIRE
Net Income and Net Economic Earnings
The following tables reconcile the Company'sCompany’s net economic earnings to the most comparable GAAP number, net income.
 Gas Utility Gas Marketing  Other Consolidated Per Diluted Share**
Three Months Ended June 30, 2016         
 Net Income (Loss) (GAAP)$17.9
 $(1.0) $(6.2) $10.7
 $0.24
 Adjustments, pre-tax:         
 Unrealized loss on energy-related derivatives—
 4.9
 —
 4.9
 0.11
 Lower of cost or market inventory adjustments—
 (0.1) —
 (0.1) —
 
Realized gain on economic hedges prior
     to the sale of the physical commodity
—
 (0.3) —
 (0.3) (0.01)
 Acquisition, divestiture and restructuring activities0.2
 —
 1.6
 1.8
 0.04
 Income tax effect of adjustments*(0.1) (1.7) (0.6) (2.4) (0.06)
 Weighted average shares adjustment—
 —
 —
 —
 0.01
 Net Economic Earnings (Loss) (Non-GAAP)**$18.0
 $1.8
 $(5.2) $14.6
 $0.33
        ��  
Three Months Ended June 30, 2015         
 Net Income (Loss) (GAAP)$20.7
 $1.0
 $(7.6) $14.1
 $0.32
 Adjustments, pre-tax:         
 Unrealized gain on energy-related derivatives—
 (2.9) —
 (2.9) (0.07)
 Lower of cost or market inventory adjustments—
 (0.4) —
 (0.4) (0.01)
 
Realized loss on economic hedges prior
     to the sale of the physical commodity
—
 2.5
 —
 2.5
 0.06
 Acquisition, divestiture and restructuring activities0.8
 —
 2.7
 3.5
 0.08
 Gain on sale of property(7.6) —
 —
 (7.6) (0.17)
 Income tax effect of adjustments*2.6
 0.3
 (1.0) 1.9
 0.04
 Net Economic Earnings (Loss) (Non-GAAP)**$16.5
 $0.5
 $(5.9) $11.1
 $0.25
 Gas Utility Gas Marketing  Other Consol-idated Per Diluted Share**
Three Months Ended December 31, 2016         
 Net Income (Loss) (GAAP)$51.7
 $(0.8) $(5.7) $45.2
 $0.99
 Adjustments, pre-tax:         
 Unrealized loss on energy-related derivatives—
 3.8
 —
 3.8
 0.08
 Lower of cost or market inventory adjustments—
 (0.1) —
 (0.1) —
 
Realized gain on economic hedges prior
     to the sale of the physical commodity
—
 (0.1) —
 (0.1) —
 Acquisition, divestiture and restructuring activities0.1
 —
 —
 0.1
 —
 Income tax effect of adjustments*—
 (1.4) —
 (1.4) (0.03)
 Net Economic Earnings (Loss) (Non-GAAP)**$51.8
 $1.4
 $(5.7) $47.5
 $1.04
           
Three Months Ended December 31, 2015         
 Net Income (Loss) (GAAP)$49.3
 $2.3
 $(4.7) $46.9
 $1.08
 Adjustments, pre-tax:         
 Unrealized gain on energy-related derivatives(0.1) (4.8) —
 (4.9) (0.11)
 Lower of cost or market inventory adjustments—
 0.6
 —
 0.6
 0.01
 
Realized loss on economic hedges prior
     to the sale of the physical commodity
—
 (0.1) —
 (0.1) —
 Acquisition, divestiture and restructuring activities1.2
 —
 0.1
 1.3
 0.03
 Income tax effect of adjustments*(0.4) 1.7
 —
 1.3
 0.03
 Net Economic Earnings (Loss) (Non-GAAP)**$50.0
 $(0.3) $(4.6) $45.1
 $1.04
*Income taxes are calculated by applying effective federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items.
**Fiscal 2016 net economic earnings per share exclude the impact of the May 2016 equity issuance to fund a portion of the acquisition described in Note 10 to the financial statements in Item 1. The weighted average diluted shares used in the net economic earnings per share calculation for the three months ended June 30, 2016 was 43.5 million compared to 44.6 million in the GAAP diluted EPS calculation. Fiscal 2015 netNet economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted EPS calculation.
Consolidated
Spire’s net income was $10.7$45.2 for the three months ended June 30,December 31, 2016, compared with $14.1$46.9 for the three months ended June 30,December 31, 2015. Basic and diluted earnings per share for the three months ended June 30,December 31, 2016 were $0.24,$0.99, compared with basic and diluted earnings per share of $0.32$1.08 for the three months ended June 30,December 31, 2015. Net income decreased $3.4$1.7 as the effect of a $4.7 after-tax gain on the sale of property$2.4 increase in the prior year was only partiallyUtilities earnings were more than offset by growthlower income in the utility business. Spire'sGas Marketing and higher interest expense in Other. Spire’s net economic earnings were $14.6$47.5 ($0.331.04 per diluted share) for the three months ended June 30,December 31, 2016, equal to an increase of $3.5$2.4 from the $11.1$45.1 ($0.251.04 per diluted share) reported for the same period last year. The increase in net economic earnings is primarily attributable to stronger results delivered by the Gas Utility and Gas Marketing segments, as described below. Net economic earnings per share did not increase due to the 2,185,000 shares issued in May 2016 to help finance the EnergySouth acquisition.
Gas Utility
For the three months ended December 31, 2016, Gas Utility net income increased by $2.4 versus the prior-year quarter. The $3.4 of net income delivered by the EnergySouth acquisition, along with small net income growth from Alagasco were partially offset by $1.4 lower earnings versus the prior year quarter from the Missouri Utilities. Net economic earnings increased by $1.8 versus the prior-year quarter.
Gas Marketing
The Gas Marketing segment reported a net loss totaling $0.8 for the three months ended December 31, 2016, versus net income of $2.3 in the prior year quarter. The result was driven by unfavorable fair market value adjustments

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Gas Utility
For the three months ended June 30, 2016, Gas Utility net income decreased by $2.8 versus the prior-year quarter. Stronger operating results delivered in the current-year quarter were more than offset by the inclusion of a $4.7 gain on the sale of property in the prior-year quarter's net income. Net economic earningsrelating to increased by $1.5 versus the prior-year quarter. The increase in net economic earnings, which excludes the gain on the sale of property, was driven by lower bad debt expenses and lower other operating expenses, partially offset by higher depreciation expense and higher income taxes. The changes in operating margin and operating expenses are further described below.
Gas Marketing
The Gas Marketing segment reported a net loss totaling $1.0 for the three months ended June 30, 2016, versus net income of $1.0 in the prior year. The result was driven by unfavorable fair market value adjustments,price volatility at contract expiry, primarily on energy-related derivatives, incurred in the current-year quarter. Net economic earnings for the three months ended June 30,December 31, 2016 increased $1.3$1.7 compared with the three months ended June 30,December 31, 2015, reflecting higher overall volumes and stronger value associated withincreased trading and storage activity, partially offset by the effect of a narrowing spread reflective of the current market.optimization.
Operating Revenues and Operating Expenses
Reconciliations of the Company'sCompany’s operating margin to the most directly comparable GAAP measure are shown below.
 Gas Utility Gas Marketing Other Eliminations Consolidated
Three Months Ended June 30, 2016         
 Operating revenues$253.3
 $2.3
 $0.9
 $(7.2) $249.3
 Natural and propane gas expense61.1
 2.5
 —
 (6.9) 56.7
 Gross receipts tax expense15.3
 —
 —
 —
 15.3
 Operating margin (non-GAAP)176.9
 (0.2) 0.9
 (0.3) 177.3
 Depreciation and amortization34.2
 0.1
 0.1
 —
 34.4
 Other operating expenses104.0
 1.3
 2.6
 (0.3) 107.6
 Operating income (loss) (GAAP)$38.7
 $(1.6) $(1.8) $—
 $35.3
           
Three Months Ended June 30, 2015 
  
  
    
 Operating revenues$261.2
 $28.9
 $1.0
 $(15.9) $275.2
 Natural and propane gas expense73.2
 25.7
 0.1
 (15.6) 83.4
 Gross receipts tax expense15.1
 0.1
 —
 —
 15.2
 Operating margin (non-GAAP)172.9
 3.1
 0.9
 (0.3) 176.6
 Depreciation and amortization32.5
 0.1
 0.1
 —
 32.7
 Other operating expenses102.0
 1.5
 4.7
 (0.3) 107.9
 Operating income (loss) (GAAP)$38.4
 $1.5
 $(3.9) $—
 $36.0
 Gas Utility Gas Marketing Other Eliminations Consolidated
Three Months Ended December 31, 2016         
 Operating revenues$476.7
 $21.7
 $1.8
 $(5.1) $495.1
 Natural and propane gas expense214.5
 21.5
 —
 (3.9) 232.1
 Gross receipts tax expense19.0
 —
 —
 —
 19.0
 Operating margin (non-GAAP)243.2
 0.2
 1.8
 (1.2) 244.0
 Depreciation and amortization37.7
 —
 0.1
 —
 37.8
 Other operating expenses114.9
 1.5
 1.9
 (1.2) 117.1
 Operating income (loss) (GAAP)$90.6
 $(1.3) $(0.2) $—
 $89.1
           
Three Months Ended December 31, 2015 
  
  
    
 Operating revenues$399.5
 $12.8
 $0.8
 $(13.7) $399.4
 Natural and propane gas expense161.9
 7.4
 —
 (13.4) 155.9
 Gross receipts tax expense17.5
 —
 —
 —
 17.5
 Operating margin (non-GAAP)220.1
 5.4
 0.8
 (0.3) 226.0
 Depreciation and amortization33.5
 —
 0.2
 —
 33.7
 Other operating expenses102.6
 1.6
 1.4
 (0.3) 105.3
 Operating income (loss) (GAAP)$84.0
 $3.8
 $(0.8) $—
 $87.0
Consolidated
As shown in the table above, Spire reported an operating revenue decreasesincrease 0f $95.7 for the three months ended June 30,December 31, 2016 compared with the same period last year, with decreasesincreases in both Gas Utility and Gas Marketing. Spire's thirdSpire’s first quarter operating margin increased $0.7$18.0 compared with last year due primarily to increases in the Gas Utility segment, principally due to the EnergySouth acquisition. The increase in Gas Utility was partly offset by lower results in the Gas Marketing segment. Depreciation and amortization expenses were up in the Gas Utility segment, reflecting the higher levels ofEnergySouth acquisition and capital investment undertaken inby the past fifteen months.Missouri Utilities and Alagasco. Other operating expenses and operating income forin the third quarter were comparable to last year as the effects of some reduced cost were offset by the effect of$11.8 higher than the prior year's gain on sale of property.year quarter, due primarily to the $10.4 in additional costs resulting from the EnergySouth acquisition. These fluctuations are described in more detail below.

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Gas Utility
Operating Revenues – Gas Utility operating revenues for the three months ended June 30,December 31, 2016 were $253.3,$476.7, or $7.9 less$77.2 higher than the same period last year. The net decreaseincrease in Gas Utility operating revenues was attributable to the following factors:
Lower wholesale gas costs passed on to customers$(16.5)
Higher system sales volumes4.3
EnergySouth acquisition revenues$26.5
Weather / volumetric usage14.0
Higher wholesale gas costs passed on to customers21.7
Higher Missouri Utilities off-system sales and capacity release10.8
Missouri Utilities – Higher Infrastructure System Replacement Surcharge (ISRS)
3.3
3.3
Alagasco – Lower Rate Stabilization and Equalization (RSE) revenue reduction
2.8
1.2
Lower off-system sales and capacity release(1.8)
Higher gross receipts taxes (GRT)0.3
All other variations(0.3)(0.3)
Total Variation$(7.9)$77.2
As shown, the decreaseincrease was primarily attributable to lowerhigher revenues reflecting the declineEnergySouth acquisition, the increase in wholesale gas costs, and lowerhigher off-system sales. These decreases were partially offset by the effects of higher volumes due to slightly colder weather (higher degree days),sales, higher ISRS charges within the Missouri Utilities, and the adjustments under the RSE rate-setting process. Under the RSE, the APSC conducts quarterly reviewsIt should be noted that a significant portion of the expected rate of return on average common equity for the full year,off-system sales and reductions in rates can be made quarterly to bring the projected return to within the allowed range. The net reduction recorded in the third quarter of fiscal 2016 was $2.8 less than in last year's third quarter.weather/volumetric revenue increases were offset by higher regulatory costs and did not impact margin.
Operating Margin – Gas Utility operating margin was $176.9$243.2 for the three months ended June 30,December 31, 2016, a $4.0$23.1 increase over the same period last year. The net increase was attributable to the following factors:
EnergySouth acquisition margin$19.4
Missouri Utilities – Higher Infrastructure System Replacement Surcharge (ISRS)
$3.3
3.3
Alagasco – Lower Rate Stabilization and Equalization (RSE) revenue reduction
2.8
1.2
Other variations, including timing of gas cost recoveries(2.1)(0.8)
Total Variation$4.0
$23.1
TheAs shown, the increase in operating margin was primarily attributable to $3.3the margin contributed by the EnergySouth acquisition, the higher ISRS charges within the Missouri Utilities for the current quarter, and Alagasco'sa lower revenue reduction from Alagasco’s RSE adjustment versus the prior year. The Missouri Utilities experienced mild weather this quarter with degree days 16% warmer than normal, compared to the prior year that was $2.8 less27% warmer than normal. In the Alagasco territory, weather was 29% warmer than normal this year, compared to 37% warmer than normal in the prior year. These favorable impactsTemperatures across the regions were partly offset by a $2.4 unfavorable effect fromalso much more volatile than both the timingprior year and normal. The combined impact of gas cost recoveriesthese weather conditions resulted in the quarter. While lower gas costs negatively impact revenues, their impact on operating margin is minimal due to weather being marginally lower than the related pass-through mechanisms, including the PGA clause for the Missouri Utilities and the GSA rider for the Alabama Utility.prior year quarter.
Operating Expenses – Depreciation and amortization expenses for the three months ended June 30,December 31, 2016 increased $1.7$4.2 from last year, primarily due to $2.7 from the EnergySouth acquisition and higher levels of capital expenditures undertaken overby the last fifteen months.Missouri Utilities and Alagasco. Other operating expenses for the three months ended June 30,December 31, 2016 are $2.0$12.3 higher than the same period in the prior year, largely due to $10.4 resulting from the prior year including the $7.6 gain on the sale of property. Excluding this gain, other operatingEnergySouth acquisition. The remaining $1.9 net increase in Gas Utility expenses were $5.6 below prior year levels due to lower bad debtwas driven by higher property tax expense (reflecting the impact of warmer weather experienced during the heating season)and professional fees, partially offset by a decrease in integration costs and employee-related costs.
Gas Marketing
Operating Revenues – Operating revenues decreased $26.6increased $8.9 versus the prior-year period, as theperiod. The effect of higher total volumes was more thanvolume and storage activity, combined with higher general levels of pricing, were only partly offset by lower general pricing levels, the effect of increased trading activities and unfavorable mark-to-market adjustments on derivatives. Under GAAP, revenues associated with trading activities are presented net of related costs. Average pricing for the quarter ended June 30,December 31, 2016 was approximately $2.031/$2.898/MMBtu versus approximately $2.705/$2.149/MMBtu for the quarter ended June 30,December 31, 2015.
Operating Margin – Gas Marketing operating margin during the three months ended June 30,December 31, 2016 decreased $3.3$5.2 from the same period last year. The decrease in operating margin is primarily due to the negative $5.3 mark-to-market impact of fair value adjustments and narrowing spread, partially offset by the favorable impact of higher overall volumes and strongerincreased trading and storage activity being more than offset by the negative $7.9 mark-to-market impact of fair value associated with storage activity.adjustments.
Interest Charges
Consolidated interest charges during the three months ended June 30, 2016 increased by $1.6 from the same period last year. The increase was driven by charges related to a temporary bridge facility secured and liquidated during the third quarter of this year, combined with higher interest rates on the $250.0 senior floating notes. Also, for the three months ended June 30, 2016 and 2015, average short-term borrowings were $208.5 and $205.4, respectively, and the average interest rates on these borrowings were 0.9% and 0.8%, respectively.

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Interest Charges
Consolidated interest charges during the three months ended December 31, 2016 increased by $3.1 from the same period last year. The increase was primarily driven by the debt incurred and assumed as a result of the EnergySouth acquisition, combined with marginally higher interest rates on floating rate debt. Also, for the three months ended December 31, 2016 and 2015, average short-term borrowings were $475.0 and $374.2, respectively, and the average interest rates on these borrowings were 1.1% and 0.7%, respectively.
Income Taxes
Consolidated income tax expense during the three months ended June 30,December 31, 2016 increased $2.2was flat versus the prior-yearprior year quarter. The effective tax rate for the current quarter was 38.9%33.0% versus 24.6%32.4% in the prior-year period. The effective tax rate for the current-year quarter includes tax expense associated with a valuation allowance on deferred tax assets. The effective tax rate for the prior-year quarter reflects the benefit of adjustments fromis slightly higher than the prior year tax return filing.quarter due to a higher estimate of pre-tax book income for the current fiscal year.
LACLEDE GAS
Three Months Ended June 30,Three Months Ended December 31,
2016 20152016 2015
Operating revenues$179.3
 $187.5
$363.6
 $317.2
Natural and propane gas expense48.0
 57.5
191.3
 149.8
Gross receipts tax expense11.5
 11.6
14.1
 13.5
Operating margin (non-GAAP)119.8
 118.4
158.2
 153.9
Depreciation and amortization22.3
 20.7
22.7
 21.8
Other operating expenses68.1
 63.2
71.0
 67.0
Operating income (GAAP)$29.4
 $34.5
$64.5
 $65.1
Net Income$13.9
 $20.0
$38.0
 $39.4
Operating revenues for the three months ended June 30,December 31, 2016 decreased $8.2increased $46.4 from the same period last year primarily due to $12.3$17.6 in lowerhigher wholesale gas costs passed on to customers, and $1.8higher gas usage of $15.3, $10.8 in lowerhigher off-system sales and capacity release. These decreases were partially offset byrelease, and a $3.3 increase in ISRS charges and the $2.9 favorable impact of higher gas usage by customers.charges. Operating margin for the three months ended June 30,December 31, 2016 increased $1.4$4.3 from the same period last year.year, largely due to the $3.3 increase in ISRS charges. The revenue increases attributable to the higher gas costs, higher off-system sales and customer usage were mostly offset by corresponding regulatory cost adjustments resulting in only a slightly positive impact on operating margin. Other operating expenses for the three months ended June 30,December 31, 2016 increased $4.9,$4.0, largely attributable to a $7.6 gain on the sale ofhigher property in the prior year. Excluding this gain, other operating expenses declined $2.7 versus the prior year due primarily to favorabletax expense, professional fees, and bad debt experienceexpense, offset in part by lower integration and lower employee-related expenses.costs. Depreciation and amortization increased $1.6$0.9 in the current quarter versus the prior year quarter due to higher capital investments. Interest charges increased $0.4, due primarily to higher interest rates on short term borrowings. Other operating income decreased by $0.7. Resulting net income for the three months ended June 30,December 31, 2016 decreased $6.1$1.4 from the same period last year.
Temperatures in Laclede Gas’ service areas during the three months ended June 30,December 31, 2016 were 18.0%15% colder than the same period last year, resulting in higher usage on a year-over-year comparative basis. However, temperatures versus normal (the basis but 11% warmer than normal.of Laclede Gas’ rate design) were 16% higher, which constrained margin growth. The Missouri Utilities'Utilities’ total system therms sold and transported were 237.3570.2 million for the three months ended MarchDecember 31, 2016, compared with 218.3494.4 million for the same period last year, including a 1.4 million decrease in off-system sales.year. Total off-system therms sold and transported were 15.585.6 million for the three months ended MarchDecember 31, 2016, compared with 16.977.6 million for the same period last year.

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ALAGASCO
Three Months Ended June 30,Three Months Ended December 31,
2016 20152016 2015
Operating revenues$74.0
 $73.7
$86.7
 $82.3
Natural gas expense13.1
 15.7
16.8
 12.1
Gross receipts tax expense3.8
 3.5
4.2
 4.0
Operating margin (non-GAAP)57.1
 54.5
65.7
 66.2
Depreciation and amortization11.9
 11.8
12.3
 11.7
Other operating expenses35.9
 38.8
33.6
 35.6
Operating income (GAAP)$9.3
 $3.9
$19.8
 $18.9
Net Income$4.0
 $0.7
$10.3
 $9.9
Operating revenues for the three months ended June 30,December 31, 2016 increased $0.3$4.4 from the same period last year. A $2.8 reduction in RSE adjustments compared to the prior year quarter, a $1.4$4.1 increase in customer usage, and a $0.3 increase in gross receipts taxesgas costs passed through to customers, combined with a favorable RSE adjustment of $1.2 were largelyonly partly offset by $4.2 lower gas prices passed through to customers.$1.3 weather impact. Operating margin increased $2.6 asdecreased $0.5 due principally to milder weather conditions and the effectvolatility of lower gas prices wastemperatures during the current year more than offset byoffsetting the favorable timing of gas cost recovery and the lower RSE adjustments.adjustment. Depreciation and amortization expenses for the three months ended June 30,December 31, 2016 were comparable toslightly higher than the same period last year. Other operating expenses were $2.9$2.0 lower, primarily due to lower employeeemployee-related costs and favorable bad debt experience. Net income during the three months ended June 30,December 31, 2016 increased $3.3$0.4 from the same period last year, primarily due to the factors discussed above.
Temperatures in Alagasco'sAlagasco’s service area during the three months ended June 30,December 31, 2016 were 34%14% colder than a year ago, but 26% warmer thanstill 29% above normal. Alagasco'sThis variability and volatility relative to normal temperatures were the critical factors in Alagasco’s operating margin decrease versus the prior year. Alagasco’s total system therms sold and transported were 191.3221.5 million for the three months ended June 30,December 31, 2016, compared with 170.5188.6 million for the same period last year.
For further information on the GSA and RSE mechanisms, please see Note 1, Summary of Significant Accounting Policies, and Note 15, Regulatory Matters, of Alagasco'sAlagasco’s Annual Report on Form 10-K for the period ended September 30, 2015.


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NINE MONTHS ENDED JUNE 30, 2016
SPIRE
Net Income and Net Economic Earnings
The following tables reconcile the Company's net economic earnings to the most comparable GAAP number, net income.
 Gas Utility Gas Marketing  Other 
 
Total
 Per Diluted Share**
Nine Months Ended June 30, 2016         
 Net Income (Loss) (GAAP)$169.6
 $2.8
 $(14.0) $158.4
 $3.60
 Adjustments, pre-tax:         
 Unrealized (gain) loss on energy-related derivatives(0.1) 3.0
 —
 2.9
 0.07
 Lower of cost or market inventory adjustments—
 0.6
 —
 0.6
 0.01
 
Realized gain on economic hedges prior
     to the sale of the physical commodity
—
 (0.9) —
 (0.9) (0.02)
 Acquisition, divestiture and restructuring activities1.6
 —
 3.5
 5.1
 0.12
 Income tax effect of adjustments*(0.6) (1.0) (1.3) (2.9) (0.07)
 Weighted average shares adjustment—
 —
 —
 —
 0.03
 Net Economic Earnings (Loss) (Non-GAAP)$170.5
 $4.5
 $(11.8) $163.2
 $3.74
           
Nine Months Ended June 30, 2015         
 Net Income (Loss) (GAAP)$166.5
 $3.5
 $(14.4) $155.6
 $3.59
 Adjustments, pre-tax:         
 Unrealized gain on energy-related derivatives(0.1) (3.4) —
 (3.5) (0.09)
 
Realized loss on economic hedges prior
     to the sale of the physical commodity
—
 2.6
 —
 2.6
 0.06
 Acquisition, divestiture and restructuring activities1.7
 —
 4.8
 6.5
 0.15
 Gain on sale of property(7.6) —
 —
 (7.6) (0.17)
 Income tax effect of adjustments*2.3
 0.3
 (1.8) 0.8
 0.02
 Net Economic Earnings (Loss) (Non-GAAP)$162.8
 $3.0
 $(11.4) $154.4
 $3.56
*Income taxes are calculated by applying effective federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items.
**Fiscal 2016 net economic earnings per share exclude the impact of the May 2016 equity issuance to fund a portion of the acquisition described in Note 10 to the financial statements in Item 1. The weighted average diluted shares used in the net economic earnings per share calculation for the nine months ended June 30, 2016 was 43.5 million compared to 43.8 million in the GAAP diluted EPS calculation. Fiscal 2015 net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted EPS calculation.
Consolidated
Spire’s net income was $158.4 for the nine months ended June 30, 2016, compared with $155.6 for the nine months ended June 30, 2015. Basic and diluted earnings per share for the nine months ended June 30, 2016 were $3.62 and $3.60, respectively, compared with basic and diluted earnings per share of $3.59 for the nine months ended June 30, 2015. Net income increased $2.8, including the effect of the $4.7 after-tax gain on sale of property in the prior year, driven by higher income in the Gas Utility segment. Net economic earnings were $163.2 ($3.74 per diluted share) for the nine months ended June 30, 2016, up from $154.4 ($3.56 per diluted share) for the same period last year, reflecting improvements for both Gas Utility and Gas Marketing. These fluctuations are described in more detail below.
Gas Utility
Gas Utility net income and net economic earnings increased by $3.1 and $7.7, respectively, for the nine months ended June 30, 2016, compared with the nine months ended June 30, 2015. The change in net income was smaller primarily due to the $4.7 after-tax gain on sale of property in the prior year. As discussed in more detail below, improvements in both measures were primarily due to decreases in other operating expenses, partially offset by lower operating margin and higher income taxes.

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Gas Marketing
The Gas Marketing segment reported net income totaling $2.8 for the nine months ended June 30, 2016, a decrease of $0.7 compared with the same period last year due to less favorable mark-to-market activity in the current year. Net economic earnings for the nine months ended June 30, 2016 increased $1.5 from the same period last year, driven by increased volumes and stronger value associated with storage activity, partially offset by the effect of a narrowing spread.
Operating Revenues and Operating Expenses
Reconciliations of the Company's operating margin to the most directly comparable GAAP measure are shown in the table below:
 Gas Utility Gas Marketing Other Eliminations 
 
Consolidated
Nine Months Ended June 30, 2016         
 Operating revenues$1,265.5
 $23.1
 $2.6
 $(33.2) $1,258.0
 Natural and propane gas expense496.0
 13.9
 —
 (32.3) 477.6
 Gross receipts tax expense65.0
 0.1
 —
 —
 65.1
 Operating margin (non-GAAP)704.5
 9.1
 2.6
 (0.9) 715.3
 Depreciation and amortization101.5
 0.1
 0.4
 —
 102.0
 Other operating expenses312.9
 4.3
 7.0
 (0.9) 323.3
 Operating income (loss) (GAAP)$290.1
 $4.7
 $(4.8) $—
 $290.0
           
Nine Months Ended June 30, 2015 
  
  
    
 Operating revenues$1,692.6
 $135.2
 $2.8
 $(58.4) $1,772.2
 Natural and propane gas expense902.1
 124.8
 0.3
 (57.6) 969.6
 Gross receipts tax expense86.1
 0.2
 —
 —
 86.3
 Operating margin (non-GAAP)704.4
 10.2
 2.5
 (0.8) 716.3
 Depreciation and amortization96.7
 0.3
 0.4
 —
 97.4
 Other operating expenses326.1
 4.2
 8.4
 (0.8) 337.9
 Operating income (loss) (GAAP)$281.6
 $5.7
 $(6.3) $—
 $281.0
Consolidated
As shown in the table above, Spire's operating revenues for the nine months ended June 30, 2016 decreased at both Gas Utility and Gas Marketing, largely due to lower gas prices. Spire's operating margin decreased $1.0 compared with the same nine-month period last year due primarily to lower Gas Marketing results. Depreciation and amortization expenses were higher in the Gas Utility segment. Other operating expenses decreased, primarily due to lower operating expenses within the Missouri Utilities, resulting in higher operating income in the current year. These fluctuations are described in more detail below.
Gas Utility
Operating Revenues – Gas Utility operating revenues for the nine months ended June 30, 2016 were $1,265.5, or $427.1 less than the same period last year. The decrease in Gas Utility operating revenues was attributable to the following factors:
Lower wholesale gas costs passed on to customers$(251.0)
Lower system sales volumes(145.6)
Lower off-system sales and capacity release(26.3)
Lower gross receipts taxes (GRT)(22.0)
Missouri Utilities – Higher Infrastructure System Replacement Surcharge (ISRS)
9.8
Alagasco – Lower Rate Stabilization and Equalization (RSE) revenue reduction
9.7
Other variations(1.7)
Total Variation$(427.1)

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As shown, the decrease was primarily attributable to the decline in natural gas pricing, lower sales volumes due to warmer weather, and the related decrease in gross receipts taxes. These decreases were partially offset by higher ISRS charges within the Missouri Utilities and lower RSE adjustments at Alagasco.
Operating Margin – Gas Utility operating margin was $704.5 for the nine months ended June 30, 2016, a $0.1 increase over the same period last year. The increase was attributable to the following factors:
Lower system sales volumes$(28.9)
Missouri Utilities – Higher Infrastructure System Replacement Surcharge (ISRS)
9.8
Alagasco – Lower Rate Stabilization and Equalization (RSE) revenue reduction9.7
Other variations, including timing of gas cost recoveries9.5
Total Variation$0.1
The negative volume impact that resulted from the warmer weather in the current year was mitigated by the favorable impacts of the Missouri Utilities' ISRS charges, Alagasco's lower RSE adjustments, and the timing of gas cost recoveries. Since gas costs and GRT are passed through to customers, their impact on operating margin is minimal.
Operating Expenses – Depreciation and amortization expenses for the nine months ended June 30, 2016 increased $4.8 from the same period last year due to the increased capital investments over the past year. Other operating expenses for the nine months ended June 30, 2016 decreased $13.2 from last year, partially attributable to the warmer weather, with lower employee-related expenses at both the Missouri and Alabama Utilities and lower bad debt expense in the current year.
Gas Marketing
Operating Revenues – Gas Marketing operating revenues during the nine months ended June 30, 2016 decreased $112.1 from the same period last year, as the effect of higher total volumes was more than offset by lower general pricing levels, the effect of increased trading activities, and unfavorable mark-to-market adjustments on derivatives. Under GAAP, revenues associated with trading activities are presented net of related costs. Overall commodity pricing in the current year is $1.139/MMBtu below the prior year.
Operating Margin – Gas Marketing operating margin during the nine months ended June 30, 2016 decreased $1.1 from the same period last year. The decrease in operating margin is primarily due to a narrowing spread and $3.5 unfavorable fair value adjustments, partially offset by the favorable impact of higher overall volumes and stronger value associated with storage activity.
Interest Charges
Consolidated interest charges during the nine months ended June 30, 2016 are $1.6 higher than the same period last year. Interest expense reductions from the refinancing of $115.0 in Alagasco long-term debt in September and December of 2015 have been offset by higher charges on short-term borrowings and charges related to a temporary bridge facility secured and liquidated during the third quarter of this year. For the nine months ended June 30, 2016 and 2015, average short-term borrowings were $297.9 and $307.1, respectively, and the average interest rates on these borrowings were 0.9% and 0.7%, respectively.
Income Taxes
Consolidated income tax expense during the nine months ended June 30, 2016 increased $5.8 from the same period last year primarily as a result of higher pre-tax book income and an effective tax rate of 32.9% in the current year versus 31.6% in the prior-year period. The higher current-year rate includes tax expense associated with a valuation allowance on deferred tax assets. The effective tax rate for the prior-year period reflects the benefit of adjustments from the prior year tax return filing.

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LACLEDE GAS
 Nine Months Ended June 30,
 2016 2015
Operating revenues$943.2
 $1,265.6
Natural and propane gas expense440.6
 743.6
Gross receipts tax expense49.7
 66.0
Operating margin (non-GAAP)452.9
 456.0
Depreciation and amortization66.0
 61.4
Other operating expenses205.4
 214.7
Operating income (GAAP)$181.5
 $179.9
Net Income$107.6
 $108.9
Operating revenues during the nine months ended June 30, 2016 decreased $322.4 from the same period last year primarily due to $196.0 lower wholesale gas costs passed on to customers, a $91.0 volume decrease related to the current year's warmer weather, $26.3 lower off-system sales and capacity release and lower gross receipts tax collections of $17.2. These impacts were only slightly offset by ISRS charges totaling $9.8. Operating margin decreased $3.1 primarily due to lower volume, offset partly by higher ISRS charges. Other operating expenses during the nine months ended June 30, 2016 decreased $9.3 from the same period last year, partly offset by higher depreciation. Excluding the benefit of last year's gain on sale of property, the other operating expense decrease was $16.9. The decrease in other operating expenses was driven by lower employee-related costs and lower bad debts. Income tax expense in the current year increased $3.5 due to slightly higher pre-tax book income and a higher effective tax rate. Net income decreased $1.3, primarily due to the factors discussed above.
Temperatures in Laclede Gas’ service areas during the nine months ended June 30, 2016 were 20% warmer than the same period last year, resulting in lower gas usage and operating revenues on a year-over-year comparative basis, and 19% warmer than normal. The Missouri Utilities' total system therms sold and transported were 1,490.4 million for the nine months ended June 30, 2016, compared with 1,714.1 million for the same period last year, including a 12.0 million decrease in off-system sales. Total off-system therms sold and transported were 180.0 million for the nine months ended June 30, 2016, compared with 192.0 million for the same period last year.
ALAGASCO
 Nine Months Ended June 30,
 2016 2015
Operating revenues$322.3
 $427.0
Natural gas expense55.4
 158.5
Gross receipts tax expense15.3
 20.1
Operating margin (non-GAAP)251.6
 248.4
Depreciation and amortization35.5
 35.3
Other operating expenses107.5
 111.4
Operating income (GAAP)$108.6
 $101.7
Net Income$62.0
 $57.6

Operating revenues for the nine months ended June 30, 2016 decreased $104.7 from the same period last year. The primary drivers were $55.0 lower natural gas prices passed on to customers, the $54.6 impact of lower cycle customer usage due to the warmer weather, and $4.8 lower gross receipts taxes, offset partly by RSE adjustments. Operating margin increased $3.2 versus the prior period due to RSE adjustments and favorable timing of gas cost recoveries offsetting the impacts of the lower volume. Other operating expenses for the nine months ended June 30, 2016 decreased $3.9 from the same period last year primarily driven by decreases in labor and employee-related expenses. Net income for the nine months ended June 30, 2016 increased $4.4 from the same period last year, primarily due to the factors discussed above.
Temperatures in Alagasco's service area during the nine months ended June 30, 2016 were 30% warmer than the same period last year and 24% warmer than normal. Alagasco's total system therms sold and transported were 673.7 million for the nine months ended June 30, 2016, compared with 710.6 million for the same period last year.

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For further information on the GSA and RSE mechanisms, please see Note 1, Summary of Significant Accounting Policies, and Note 3, Regulatory Matters, of Alagasco's Annual Report on Form 10-K for the year ended September 30, 2015.2016.

REGULATORY AND OTHER MATTERS
Please see the Environmental Matters section for information relative to environmental matters. Spire, Laclede Gas and Alagasco are involved in other litigation, claims, and investigations arising in the normal course of business. Management, after discussion with counsel, believes that the final outcomes of these matters will not have a material effect on the consolidated financial position, results of operations, or cash flows of the Company, Laclede Gas or Alagasco.
Laclede Gas
On November 12, 2015, the MoPSC approved an incremental ISRS amount of $4.4 for Laclede Gas'Gas’ eastern Missouri service territory and $1.9 for MGE, effective December 1, 2015,2015. On January 15, 2016, the Missouri Office of the Public Counsel (OPC) filed an appeal to Missouri’s Western District Court of Appeals of the MoPSC’s decision permitting Laclede Gas to update its ISRS applications during the pendency of the case. On September 27, 2016, the Western District affirmed the report and order of the MoPSC. On December 20, 2016, the Missouri Supreme Court declined to hear a further appeal, bringing total annualized ISRS revenuethe matter to $19.6 for Laclede Gas' eastern Missouri service territory and $6.7 for MGE's service territory. a close.
On May 19, 2016, the MoPSC approved an incremental ISRS amount of $5.4 for Laclede Gas’ eastern Missouri service territory and $3.6 for MGE, effective May 31, 2016. This brings the total annualized ISRS revenues to $25.0 and $10.3 respectively.
On January 15,June 30, 2016, the Missouri Office of the Public Counsel (OPC)OPC filed an appeal to Missouri’s Western District Court of Appeals of the Commission’s November 12 ISRSMoPSC’s decision approving the process of updatingpermitting Laclede Gas to update its ISRS applications during the pendency of the case. On May 18, OPC filed its initial brief before the Court and on June 17, 2016, the Company filed its initial brief. In the next ISRS case, the OPC raised the same issue and the Commission came to the same result. On June 30, 2016, the OPC filed a similar appeal to Missouri's Western Court of Appeals related to the May 19 decision. Laclede Gas believes the Commission’sMoPSC’s decision in both ISRS cases was lawful and reasonable, and intends to vigorously opposebelieves the appeals.updating process will again be upheld by the Western District.
On October 28, 2015,September 30, 2016, Laclede Gas filed to increase its ISRS revenues, by $5.0 for Laclede Gas’ eastern Missouri service territory and $3.4 for MGE, bothrelated to ISRS investments from March 2016 through October 2016. The MoPSC suspended the tariff until January 28, 2017, and directed the MoPSC Staff (Staff) to file a recommendation. On November 29, 2016, Staff recommended $3.4 for MGE and $4.5 for Laclede Gas’ eastern Missouri service territory based on updates filed by the company. On December 9, 2016, OPC filed a motion to deny the rate

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increases and, alternatively, for PGA reductions thata hearing on five issues, three of which were approvedwithdrawn before the scheduled hearing date. On January 3, 2017, the MoPSC held a hearing to decide the two remaining issues. On January 18, 2017, the MoPSC issued an order setting the ISRS increases at $4.5 and became effective November 6, 2015, which decreased the average residential customer's bill by 9% and 5%, respectively. On March 4, 2016,$3.2, respectively, bringing total annualized ISRS revenue to $29.5 for Laclede Gas’ eastern Missouri service territory and MGE both filed$13.5 for PGA reductions thatMGE’s service territory. Rates were approved and became effective March 21, 2016, which decreased the average residential customer's bill by 3.5% and 3.3%, respectively.January 28, 2017.
On April 15, 2015, Laclede Gas filed for a new financing authorizationpreviously had authority from the MoPSC to issue long-term debt securities and preferred stock, including on a private placement basis, as well as to issue common stock, receive paid-in capital, and enter into capital lease agreements, through Septemberall for a total of up to $518.0. This authority was scheduled to expire June 30, 2018,2015. On April 15, 2015, Laclede Gas applied to the MoPSC for a new financing authorization in the amount of $550.0.$550.0, and on June 24, 2015, the MoPSC granted an extension of the current authorization until the pending application was resolved. On February 10, 2016, the MoPSC issued an order, by a 3-2 vote, authorizing Laclede Gas long-term financing authority for $300.0 for financings placed any time before September 30, 2018. Laclede Gas filed an application for rehearing, which was denied on March 9, 2016. On March 31, 2016, Laclede Gas filed an appeal with Missouri'sMissouri’s Western District Court of Appeals challengingconcerning this matter. After parties filed their briefs in September and October, oral arguments were heard on November 17, 2016. Laclede Gas has issued no securities under this authorization since the leveldecision and $300.0 remained available for issuance as of authority.January 30, 2017.
On June 16, 2016, the OPC filed a motion to open an investigation of the announced acquisition of EnergySouth and the completed acquisition of Alagasco by Spire, to determine whether or not the proposed or completed transactions are likely to be detrimental to the public interest and the interests of Missouri ratepayers. On June 27, 2016, Spire filed a response opposing OPC’s motion asserting, among other things, that the MoPSC lacked jurisdiction over those transactions. On July 11, 2016, the Staff filed a response asserting that the MoPSC did have jurisdiction and requested that MoPSC open a docket for the investigation of the acquisition of Alagasco and the announced acquisition of EnergySouth by Spire, to determine whether they are, or are likely to be, detrimental to the public interest and the interests of Missouri ratepayers. On July 20, 2016, the CompanyMoPSC granted the Staff’s motion and, while making no finding on the MoPSC’s jurisdiction over the transaction, ordered Staff to file a report. On September 1, 2016, the Staff filed its initial briefreport alleging that Spire was in violation of its holding company stipulation by not seeking MoPSC approval of such transactions. Staff also summarized certain “potential detriments” to ratepayers and noted that it will pursue a complaint for the violation in the appeal.
holding company case. On April 26,September 6, 2016, OPCSpire filed a complaintresponse to address whether the gas rates of the Missouri Utilities are just and reasonable. OPC allegedinvestigation report noting that the Missouri Utilities were overearning based on an unadjusted return on equity for fiscal 2015. We believeStaff’s summary was incorrect and directly conflicted with the views in the Staff report expressed by its own experts that complaint lacks merit and is flawed in several respects, and we will vigorously defend our position that our rates are just and reasonable.failed to identify any detriments associated with the transactions. On May 20,September 7, 2016, the MoPSC Staff (Staff) filedclosed the file without sanctioning a response stating that “OPC has not adequately supported its claims of overearning by Laclede and MGE,” and asked the Commission to deny OPC’s request tocomplaint or making a determination on jurisdiction. No further formal actions have Staff do an investigation. On May 31, 2016, Laclede filed its answer as well as a motion to dismiss. On July 12, 2016, the Commission issued an order denying the motion to dismiss but also relieving Staff of the duty to perform an investigation. On July 22, Laclede filed a motion for reconsideration and, in the alternative, motion to stay the complaint.taken place at this time.
Alagasco
Alagasco is subject to regulation by the APSC which established the Rate Stabilization and Equalization (RSE) rate-setting process in 1983 (see1983. Alagasco’s current RSE order has a term extending beyond September 30, 2018, unless the 2015 Form 10-K for more detail)APSC enters an order to the contrary in a manner consistent with law. In the event of unforeseen circumstances, whether physical or economic, of the nature of force majeure and including a change in control, the APSC and Alagasco will consult in good faith with respect to modifications, if any. Effective January 1, 2014, Alagasco’s allowed range of return on average common equity is 10.5% to 10.95% with an adjusting point of 10.8%. Alagasco is eligible to receive a performance-based adjustment of 5 basis points to the return on equity adjusting point, based on meeting certain customer satisfaction criteria. Under RSE, the APSC conducts quarterly reviews to determine whether Alagasco’s return on average common equity at the end of the rate year will be within the allowed range of return. Reductions in rates can be made quarterly to bring the projected return within the allowed range; increases, however, are allowed only once each rate year, effective December 1, and cannot exceed 4% of prior-year revenues.The RSE reduction for the July 31, 2016 quarterly point of test reductions from rate year 2015was $4.8 and went into effect October 1, 20152016, and for $4.4 andthe quarterly point of test at September 30, 2016, Alagasco recorded a $2.7 RSE reduction effective December 1, 20152016. As part of the annual update for $12.2.RSE, on November 30, 2016, Alagasco filed a $4.6 reduction for rate year 2016,2017 of $2.5 that also became effective December 1, 2015. There was no RSE reduction for the January 31, 2016 quarterly point of test. Related to the April 30, 2016 quarterly point of test, Alagasco recorded a $5.8 RSE reduction to operating revenues, which the APSC ordered, dated June 20, 2016, be applied to the Gas Supply Adjustment (GSA) balance. As of June 30, 2016, Alagasco recorded an estimated $4.5 RSE reduction to operating revenues to bring the expected rate of return on average common equity at the end of the year to within the allowed range of return.

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The inflation-based Cost Control Mechanism (CCM), established by the APSC, allows for annual increases to operations and maintenance (O&M) expense, with savings below a defined level shared 50/50 with the customer and three-quarters of costs above a defined level returned to customers (see the 2015 Form 10-K for more detail). A CCM benefit to the company for such cost saving of $4.7 related to, and accrued in, fiscal 2015 went into rates effective December 1, 2015. For GAAP purposes, as of June 30, 2016, Alagasco accrued an estimated CCM benefit for Rate Year 2016 of $6.0.2016.
On June 28, 2010, the APSC approved a reduction in depreciation rates, effective June 1, 2010, and a regulatory liability set uprecorded for Alagasco. Refunds from such negative salvage liability will be passed back to eligible customers on a declining basis through lower tariff rates through rate year 2019 pursuant to the terms of thisthe Negative Salvage Rebalancing (NSR) rider (see the 20152016 Form 10-K for more detail). Through June 30, 2016, $8.3 of the customer refund has been returned to customers, and $18.7 is remaining to be refunded to customers.
Alagasco’s rate schedules for natural gas distribution charges contain a Gas Supply Adjustment (GSA) rider, established in 1993, which permits the pass-through to customers of changes in the cost of gas supply. Alagasco’s tariff provides a Temperature Adjustment Rider mechanism, also included in the GSA, which is designed to moderate the impact of departures from normal temperatures on Alagasco’s earnings (see the 2015 Form 10-K for more detail). Effective December 1, 2015, adjustments to the GSA will provide customers a refund of approximately $13.0 on an annualized basis. As of June 30, 2016, a $27.4 temperature adjustment has been booked to the GSA account reflecting weather that has been 24% warmer than normal. Effective July 1, 2016, adjustments were made to the GSA, reflecting a $19.3 increase on an annualized basis, to recover the deferred amounts related to the warmer than normal weather.
On March 25, 2016, Alagasco filed an application with the APSC for an intercompany revolving credit agreement allowing Alagasco to borrow from Spire in a principalThe amount not to exceed $200.0 at any time outstanding in combination with its bank line of credit, and to loan to Spire in a principal amount not to exceed $25.0 at any time outstanding. Borrowings may be usedpassed back for the following purposes: (a) increasing working capital requirements; (b) financing construction requirements related to additions, extensions, and replacementsfirst quarter of the distribution systems; and (c) financing other expenditures that may arise from time to timefiscal 2017 was $0.7, leaving $18.0 as of December 31, 2016, of which approximately $8.6 will be reflected in the normal courserates effective January through March 2017.

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Spire
In addition to the matters described above, Spire initiated the following regulatory interactions during the nine months ended June 30, 2016.
On May 20, 2016, Spire Inc., Sempra, EnergySouth and Willmut Gas jointly filed with the Mississippi Public Service Commission to request approval of the indirect change of control of Willmut Gas, as discussed further in Note 10 to the financial statements in Item 1.matter affects Spire.
On July 22, 2016, the proposed project of Spire STL Pipeline LLC, a wholly owned subsidiary of Spire, Inc., was accepted into the pre-filing process at the FERC. The proposal outlined the plan to build, own, operate, and maintain a pipeline interconnecting with the Rockies Express pipeline to deliver natural gas to the St. Louis, Missouri area. As an interstate project, the Spire STL Pipeline will be reviewed for siting and permitting by the FERC, which will be the lead agency for other federal, state, and local permitting authorities. A precedent agreement between Spire STL Pipeline and Laclede Gas was executed on January 25, 2017. Thereafter, on January 26, 2017, Spire STL Pipeline filed an application with the FERC requesting issuance of a certificate of convenience and necessity authorizing it to construct, own, and operate an interstate pipeline.



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CRITICAL ACCOUNTING POLICIESESTIMATES
Our discussion and analysis of our financial condition, results of operations, liquidity, and capital resources isare based upon our financial statements, which have been prepared in accordance with GAAP. GAAP requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Our critical accounting policiesestimates used in the preparation of our financial statements are described in Item 7 of the Company's,Company’s, Laclede Gas'Gas’, and Alagasco'sAlagasco’s Annual Reports on Form 10-K for the fiscal year ended September 30, 20152016 and include the following:
Regulatoryregulatory accounting,
Revenue recognition,
Goodwill,
Employee goodwill, and employee benefits and postretirement obligations, and
Asset retirement obligations.
There were no significant changes to these critical accounting policiesestimates during the ninethree months ended June 30,December 31, 2016.
For discussion of other significant accounting policies, see Note 1 of the Notes to Financial Statements included in this Form 10-Q as well as Note 1 of the Notes to Financial Statements included in the Company’s, Laclede Gas'Gas’, and Alagasco'sAlagasco’s Annual Reports on Form 10-K for the fiscal year ended September 30, 2015.2016.

ACCOUNTING PRONOUNCEMENTS
The Company, Laclede Gas and Alagasco have evaluated or are in the process of evaluating the impact that recently issued accounting standards will have on the companies'companies’ financial position or results of operations upon adoption. For disclosures related to the adoption of new accounting standards, see the New Accounting PronouncementsPronouncement section ofin Note 1 of the Notes to Financial Statements.

FINANCIAL CONDITION
Cash Flows
Spire
The Company’s short-term borrowing requirements typically peak during colder months when the Utilities borrow money to cover the lag between purchases ofwhen they purchase natural gas and customer paymentswhen their customers pay for that gas. Changes in the wholesale cost of natural gas (including cash payments for margin deposits associated with the Missouri Utilities’Laclede Gas’ use of natural gas derivative instruments), variations in the timing of collections of gas cost under the Missouri Utilities’Laclede Gas’ PGA clausesclause and Alagasco'sAlagasco’s GSA rider, the seasonality of accounts receivable balances, and the utilization of storage gas inventories cause short-term cash requirements to vary during the year and from year to year, and canmay cause significant variations in the Utilities'Company’s cash provided by or used in operating activities.
Nine Months Ended 
 June 30,		Three Months Ended 
 December 31,
Cash Flow Summary2016 20152016 2015
Net cash provided by operating activities$356.9
 $366.3
$10.3
 $33.5
Net cash used in investing activities(196.8) (211.9)(85.9) (62.8)
Net cash used in financing activities(169.0) (164.8)
Net cash provided by financing activities81.0
 20.1

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For the ninethree months ended June 30,December 31, 2016, net cash provided by operating activities declined $9.4$23.2 from the corresponding period of fiscal 2015.2016. The change is primarily due to fluctuations in working capital, as mentioned above, largely driven by the relative weather conditions and gas prices during the periods.
For the ninethree months ended June 30,December 31, 2016, net cash used in investing activities was $15.1 less$23.1 greater than the same period in the prior year partially as a result of an $8.6 payment last year for the final reconciliation amount associated with the Alagasco acquisition. In addition,year. This increase was driven by capital expenditures were $7.6 lowerexpenditure activity that was $26.9 higher in the first ninethree months of fiscal 20162017 compared to the same period of fiscal 2015. Despite the lower2016. The higher spending to this point in the fiscal year is consistent with the Company expectsCompany’s capital expenditures to total approximately $310 forexpenditure expectations, and reflects the year ending September 30, 2016, or roughly $20 higher than fiscal 2015.

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EnergySouth.
Lastly, for the ninethree months ended June 30,December 31, 2016, net cash used inprovided by financing activities was $4.2$60.9 higher than for the ninethree months ended June 30,December 31, 2015. This change primarily reflects the combination of a significant$68.6 increase in seasonal short-term borrowing repayments largelyborrowings and the addition of EnergySouth activity, partially offset by the May 2016 common stock issuance discussed below.slightly higher dividend payments and certain other financing activities.

LIQUIDITY AND CAPITAL RESOURCES
Cash and Cash Equivalents
Spire had short-term investments ranging from $0 to $100.0 in the nine months ended June 30, 2016, but none outstanding at the endNone of the period. The invested funds included a portion of the proceeds from the issuance and sale by the Company of 2,185,000 shares of the Company's common stock in preparation for the EnergySouth acquisition described in Note 10 to the financial statements in Item 1. Due to lower yields available to Spire, on short-term investments, the Company elected to provide a portion of Laclede Gas' and Alagasco's short-term funding through intercompany lending during the nine months ended June 30, 2016.
Neither Laclede Gas, noror Alagasco had any short-term investments as of or infor the ninethree months ended June 30,December 31, 2016.
Bank deposits were used to support working capital needs of the business.
Short-term Debt
The Utilities'Utilities’ short-term borrowing requirements typically peak during the colder months.months, while the Company’s needs are less seasonal. These short-term cash requirements can be met through the sale of commercial paper supported by lines of credit with banks or through direct use of the lines of credit. At June 30,
On December 14, 2016, Spire, Laclede Gas, hadand Alagasco entered into a new syndicated line ofrevolving credit of $450.0 in placefacility pursuant to a loan agreement with nine11 banks, that matures on September 3, 2019.expiring December 14, 2021. The largest portion provided by a single bank under the line is 15.6%12.3%.
The loan agreement replaces Spire’s and Laclede Gas’ existing loan agreements dated as of September 3, 2013 and amended September 3, 2014, which were set to expire on September 3, 2019, and Alagasco’s existing loan agreement dated September 2, 2014, which was set to expire September 2, 2019. All three agreements were terminated on December 14, 2016.
The loan agreement has an aggregate credit commitment of $975.0, including sublimits of $300.0 for Spire, $475.0 for Laclede Gas, and $200.0 for Alagasco. These sublimits may be reallocated from time to time among the three borrowers within the $975.0 aggregate commitment. Spire may use its line to provide for the funding needs of credit includes a covenantvarious subsidiaries. Spire, Laclede Gas, and Alagasco expect to use the loan agreement for general corporate purposes, including short-term borrowings and letters of credit.
The agreement also contains financial covenants limiting each borrower’s consolidated total debt, including short-term debt, to no more than 70% of its total capitalization. As defined in the line of credit, on December 31, 2016, total debt was 47%59% of total capitalization on June 30, 2016.for the consolidated Company, 51% for Laclede Gas and 29% for Alagasco.
On September 2, 2014, Alagasco entered intoDecember 21, 2016, Spire established a $150.0 syndicated line of creditcommercial paper program (Program) pursuant to which Spire may issue short-term, unsecured commercial paper notes (Notes). Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with twelve banks and extinguished the line that was in place prior to its acquisition by Spire. The largest portion provided by a single bank is 10%. The line of credit, which matures on September 2, 2019, has a covenant limiting total debt to 70% of Alagasco's total capital. As defined in the line of credit, total debt was 25% of total capitalization on June 30, 2016.
Short-term cash requirements outsideaggregate face or principal amount of the UtilitiesNotes outstanding under the Program at any time not to exceed $975.0. The Notes will have generally been funded by internally generated funds or borrowings by Spirematurities of up to 365 days from date of issue. The net proceeds of the issuances of the Notes are expected to be used for general corporate purposes, including to provide working capital for both utility and non-utility subsidiaries. No Notes were outstanding under its $150.0 syndicated line of credit with nine banks maturing on September 3, 2019, with the largest portion provided by a single bank being 15.6%. The line of credit has a covenant limiting the total consolidated debt of Spire to no more than 70% of its total consolidated capitalization. As defined in the line of credit, this ratio stood at 52% on June 30, 2016.
Spire
Information about Spire's consolidated short-term borrowings (excluding any current portion of long-term debt) during the nine months ended June 30, 2016 andProgram as of June 30, 2016, is presented below:
 
Spire
Bank Line
Borrowings
Laclede Gas
Commercial Paper
Borrowings
Alagasco
Bank Line
Borrowings
Total
Short-Term
Borrowings
Nine Months Ended June 30, 2016    
Weighted average borrowings outstanding$50.8$212.3$34.8$297.9
Weighted average interest rate1.6%0.7%1.4%0.9%
Range of borrowings outstanding$0.0 - $74.0$43.0 - $307.2$0.0 - $61.0$73.1 - $427.2
As of June 30, 2016    
Borrowings outstanding at end of period$—$97.6$—$97.6
Weighted average interest rate—%0.8%—%0.8%
Based on average short-term borrowings for the nine months ended June 30, 2016, an increase in the average interest rate of 100 basis points would decrease the Company's pre-tax earnings and cash flows by approximately $3.0 on an annual basis, portions of which may be offset through the application of PGA carrying costs.December 31, 2016.

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Laclede Gas
Information about Laclede Gas'regarding consolidated short-term borrowingborrowings during the ninethree months ended June 30,December 31, 2016 and as of June 30,December 31, 2016, is presented below:
Laclede Gas Commercial Paper Borrowings
Laclede Gas
Borrowings
from Spire
Total
Short-Term Borrowings
Spire
Bank Line
Borrowings
Laclede Gas
Commercial Paper
Borrowings
Alagasco
Bank Line
Borrowings
Total
Short-Term
Borrowings
Nine Months Ended June 30, 2016   
Three Months Ended December 31, 2016   
Weighted average borrowings outstanding$212.3$11.8$224.1$86.9$300.3$87.8$475.0
Weighted average interest rate0.7%0.8%0.7%1.8%0.8%1.6%1.1%
Range of borrowings outstanding$43.0 - $307.2$0.0 - $114.2$127.8 - $307.2$73.0 - $99.0$243.7 - $329.7$74.0 - $102.5$398.7 - $527.7
As of June 30, 2016  
As of December 31, 2016   
Borrowings outstanding at end of period$97.6$38.8$136.4$91.0$312.9$102.5$506.4
Weighted average interest rate0.8%2.0%1.1%1.8%1.4%
 
Annual decrease in pre-tax earnings and cash flows resulting from a 100-basis-point average rate change on average short-term borrowings*$0.9$3.0$0.9$4.8
Based on average short-term borrowings for the nine months ended June 30, 2016, an increase in the average interest rate of 100 basis points would decrease Laclede Gas' pre-tax earnings and cash flows by approximately $2.2 on an annual basis, portions of which*Portions may be offset through the Utilities application of PGA and GSA carrying costs.
Alagasco
Information about Alagasco's short-term borrowing (excluding the current portion of long-term debt) during the nine months ended June 30, 2016 and as of June 30, 2016, is presented below:
 
Alagasco
Bank Line
Borrowings
Alagasco
Borrowings
from Spire
Total
Short-Term Borrowings
Nine Months Ended June 30, 2016   
Weighted average borrowings outstanding$34.8$3.1$37.9
Weighted average interest rate1.4%1.4%1.4%
Range of borrowings outstanding$0.0 - $61.0$0.0 - $39.6$19.0 - $61.0
As of June 30, 2016   
Borrowings outstanding at end of period$—$37.8$37.8
Weighted average interest rate—%1.4%1.4%
Based on average short-term borrowings for the nine months ended June 30, 2016, an increase in the average interest rate of 100 basis points would decrease Alagasco's pre-tax earnings and cash flows by approximately $0.4 on an annual basis, portions of which may be offset through the application of SGA carrying costs.costs
Long-term Debt and Equity
Spire
At June 30,December 31, 2016, including the current portion but excluding unamortized discounts, debt issuance costs, and net hedging gains, Spire had fixed-rate long-term debt totaling $1,603.8$1,835.8 and floating rate debt totaling $250.0, of which $810.0 was issued by Laclede Gas and $250.0 was issued by Alagasco. With the exception of the $250.0 floating rate senior notes issued by Spire in August 2014, the long-term debt issues are fixed-rate and are subject to changes in their fair value as market interest rates change. However, increases or decreases in fair value would impact earnings and cash flows only if the Company were to reacquire any of these issues in the open market prior to maturity. Under GAAP applicable to the Utilities'Utilities’ regulated operations, losses or gains on early redemptions of long-term debt have beenwould typically be deferred as regulatory assets or regulatory liabilities and amortized over a future period. Of the Company's $1,710.0Company’s $1,942.0 senior long-term debt, $25.0 has no call options, $710.0$937.0 has make-whole call options, $725.0 isare callable at par one to six months prior to maturity and $250.0 is$255.0 are callable at par one year prior to maturity.currently. The remainder of the Company'sCompany’s long-term debt is $143.8 of junior subordinated notes associated with itsthe equity units. None of the debt has any put options.
Spire entered into a master note purchase agreement on June 20, 2016 with certain institutional purchasers pursuant to which Spire has committed to issue a total of $165.0 unsecured notes in the private placement market. These notes are beingwere issued to fundin September 2016 and funded a portion of the purchase price for the EnergySouth acquisition described in Note 10 to the financial statements in Item 1, and will settle on or about the date that the acquisition closes. The interest rate to be paid on the notes will depend

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on the settlement date.acquisition. Tranche A of the notes for $35.0 will mature on September 1, 2021, and will bearbears interest between 2.49% and 2.61%.of 2.52%; Tranche B for $130.0 will mature 10 years from the settlement dateSeptember 1, 2026 and will bearbears interest between 3.11% and 3.19%.
On May 17, 2016, the Company completed a public offering of 2,185,000 shares of its common stock, generating $133.2 of proceeds net of issuance costs, which are to be used to fund a portion of the purchase price of the EnergySouth acquisition.3.13%.
Spire has a shelf registration statement on Form S-3 on file with the SEC for the issuance and sale of up to 168,698 shares of its common stock under its Dividend Reinvestment and Direct Stock Purchase Plan. There were 111,959100,925 and 107,30795,914 shares at June 30,December 31, 2016 and July 31, 2016,January 30, 2017, respectively, remaining available for issuance under its Form S-3. Spire also has a shelf registration statement on Form S-3 on file with the SEC for the issuance of equity and debt securities, which expires August 6, 2016.September 23, 2019. The amount, timing, and type of additional financing to be issued under this shelf registration will depend on cash requirements and market conditions.
Consolidated capitalization at June 30,December 31, 2016 consisted of 49.7% of Spire common stock equity and 50.3% of long-term debt, compared to 49.3% of Spire common stock equity and 50.7% of long-term debt compared to 47.0% of Spire common stock equity and 53.0% of long-term debt at September 30, 2015.2016.
Laclede Gas
Of Laclede Gas'Gas’ $810.0 in long-term debt, $25.0 has no call option, $435.0 has make-whole call options, and $350.0 are callable at par one to six months prior to maturity. None of the debt has any put options.
Laclede Gas has authority from the MoPSC to issue debt securities and preferred stock, including on a private placement basis, as well as to issue common stock, receive paid-in capital, and enter into capital lease agreements, all for a total of up to $300.0, through September 30, 2018.$300.0. This authority became effective March 11, 2016, and will expire September 30, 2018,

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but is under appeal by Laclede Gas, as discussed under Regulatory and Other Matters above. Laclede Gas has not issued no securities under this new authorization.authorization as of January 30, 2017, and $300.0 remains available.
Laclede Gas hasfiled a shelf registration on Form S-3 on file with the SEC on September 23, 2016, for issuance of first mortgage bonds, unsecured debt, and preferred stock, which expires August 6, 2016.on September 23, 2019. The amount, timing, and type of additional financing to be issued under this shelf registration will depend on cash requirements and market conditions, as well as future MoPSC authorizations.
Laclede Gas capitalization at June 30,December 31, 2016 consisted of 57.3%57.6% of common stock equity and 42.7%42.4% of long-term debt compared to 56.2%57.1% of common stock equity and 43.8%42.9% of long-term debt at September 30, 2015.2016.
Alagasco
All of Alagasco'sAlagasco’s $250.0 long-term debt issues have make-whole call options. None of the debt has any put options.
Alagasco has no standing authority to issue long-term debt and must petition the APSC for each planned issuance.issuances. On February 3, 2015, Alagasco received authorization and approval from the APSC to borrow $80.0 for the purpose of refinancing $80.0 of existing debt scheduled to mature on December 1, 2015. Pursuant to this authorization and an earlier authorization for a $35.0 debt issuance, Alagasco entered into a master note purchase agreement on June 5, 2015 with certain institutional purchasers pursuant to which Alagasco committed to issue $115.0 unsecured notes in the private placement market: $35.0 at a rate of 3.21% for 10 years which settledissued on September 15, 2015, and $80.0 at a rate of 4.31% for 30 years which settled onsettling December 1, 2015. Alagasco used the net proceeds of the private placements to refinance existing indebtedness and for general corporate purposes.
Alagasco'sAlagasco’s capitalization at June 30,December 31, 2016 consisted of 78.0%77.9% of common stock equity and 22.0%22.1% of long-term debt compared to 83.7%77.8% of common stock equity and 16.3%22.2% of long-term debt at September 30, 2015.2016.
The Company’s, Laclede Gas',Gas’ and Alagasco'sAlagasco’s access to capital markets, including the commercial paper market, and their respective financing costs, may depend on the credit rating of the entity that is accessing the capital markets. The credit ratings of the Company, Laclede Gas and Alagasco are considered to beremain at investment grade, but are subject to review and change by the rating agencies.
It is management’s view that the Company, Laclede Gas, and Alagasco have adequate access to capital markets and will have sufficient capital resources, both internal and external, to meet anticipated capital requirements, which primarily include capital expenditures, interest payments of long-term debt, scheduled maturities of long-term debt, short-term seasonal needs, and dividends.

CONTRACTUAL OBLIGATIONS
During the ninethree months ended June 30,December 31, 2016, there were no material changes outside the ordinary course of business to the estimated contractual obligations from the disclosure provided in the Company's, Laclede Gas', and Alagasco'sCompany’s Form 10-K for the period ended September 30, 2015.2016.


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MARKET RISK
There were no material changes in the Company'sCompany’s commodity price risk or counterparty credit risk as of June 30,December 31, 2016 relative to the corresponding information provided as of September 30, 20152016 in the Company'sCompany’s Annual Report on Form 10-K. Information on concentrations of credit risk, including how Spire Marketing manages these risks, is included in Note 7, Concentrations of Credit Risk, of the Notes to Financial Statements under Item 1.
During the second quarter of fiscal 2016, Spire entered into five-year interest rate swap transactions with a fixed interest rate of 1.776% and a notional amount of $105.0 to protect itself against adverse movement in interest rates in anticipation of the issuance of long-term debt in 2017. During the third quarter of 2016, the Company entered into seven-year swap transactions with an average fixed interest rate of 1.501% and a notional amount of $120.0 to hedge against additional debt expected to be issued in 2017 or early 2018. As a result, $2.2 and $4.0An $11.2 mark-to-market losses weregain on these swaps was recognized for the three and nine months ended June 30, 2016, respectively.
December 31, 2016. The fair values of related derivative instruments are shown in Note 56, Fair Value Measurements, and information on concentrations of credit risk, including how LER manages these risks, is included in Note 6, Concentrations of Credit Risk, of the Notes to Financial Statements under Item 1.Measurements. Information about the Company'sCompany’s short-term and long-term debt is included under the heading "Liquidity“Liquidity and Capital Resources"Resources” in this Item 2.


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ENVIRONMENTAL MATTERS
The Missouri Utilities and Alagasco own and operate natural gas distribution, transmission and storage facilities, the operations of which are subject to various environmental laws, regulations, and interpretations. While environmental issues resulting from such operations arise in the ordinary course of business, such issues have not materially affected the Company’s, Laclede Gas'Gas’, or Alagasco'sAlagasco’s financial position and results of operations. As environmental laws, regulations, and their interpretations change, however, Laclede Gas and Alagascothe Utilities may be required to incur additional costs. For information relative to environmental matters, see Note 910, Commitments and Contingencies, of the Notes to Financial Statements included in Item 1.

OFF-BALANCE SHEET ARRANGEMENTS
At June 30,December 31, 2016, the Company had no off-balance-sheet financing arrangements, other than operating leases and letters of credit entered into in the ordinary course of business. The Company does not expect to engage in any significant off-balance-sheet financing arrangements in the near future.


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Item 3. Quantitative and Qualitative Disclosures About Market Risk
For this discussion, see Part I., Item 2., Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk.

Item 4. Controls and Procedures
Spire
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
ThereEffective September 12, 2016, we acquired EnergySouth, Inc. As the acquisition occurred during the last 12 months, the scope of our assessment of the effectiveness of disclosure controls and procedures does not include the internal control over financial reporting of EnergySouth, Inc. This exclusion is in accordance with the SEC’s general guidance that an assessment of a recently acquired business may be omitted from the scope of our assessment of the effectiveness of disclosure controls and procedures that are also part of internal control over financial reporting in the year following the acquisition. EnergySouth, Inc.’s business constituted 5.2 percent and 4.9 percent of Spire’s net and total assets, respectively, as of December 31, 2016, and 5.3 percent of revenues for the three months ended December 31, 2016.
After the acquisition of EnergySouth, Inc. on September 12, 2016, management has begun to integrate some controls of EnergySouth, Inc. with those of the Company’s corporate level controls, although a complete integration is not expected and EnergySouth, Inc. will retain distinct controls in some areas. Except for the activities described above, there were no changes in the Company'sCompany’s internal control over financial reporting that occurred during the quarter ended June 30,December 31, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Laclede Gas
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
There were no changes in Laclede Gas’ internal control over financial reporting that occurred during the quarter ended June 30,December 31, 2016 that have materially affected, or are reasonably likely to materially affect, Laclede Gas’ internal control over financial reporting.
Alagasco
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
There were no changes in Alagasco'sAlagasco’s internal control over financial reporting that occurred during the quarter ended June 30,December 31, 2016 that have materially affected, or are reasonably likely to materially affect, Alagasco'sAlagasco’s internal control over financial reporting.


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PART II. OTHER INFORMATION

Item 1. Legal Proceedings
For a description of environmental matters and legal proceedings, see Note 910, Commitments and Contingencies, of the Notes to Financial Statements in Item 1 of Part 1. For a description of pending regulatory matters, see Regulatory and Other Matters under Note 3Part I, Item 2., Regulatory Matters.
The registrants are involved in litigation, claims and investigations arising in the normal course of business. Management, after discussion with counsel, believes that the final outcomes of these matters will not have a material effect on any registrant'sregistrant’s financial position or results of operations reflected in the financial statements presented herein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The only repurchase of Spire'sSpire’s common stock in the quarter would bewere pursuant to elections by employees to have shares of stock withheld to cover employee tax withholding obligations upon the vesting of performance-based and time-vested restricted stock and stock units. During the three months ended June 30, 2016, there were no such repurchases of Spire's common stock.The following table provides information on those repurchases.
Period
(a)
Total Number of Shares Purchased
(b)
Average Price Paid Per Share
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
October 1, 2016 -
October 31, 2016
—$———
November 1, 2016 -
November 30, 2016
—$———
December 1, 2016 -
December 31, 2016
33,615$63.67——
Total33,615$63.67——
Laclede Gas'Gas’ outstanding first mortgage bonds contain restrictions on its ability to pay cash dividends on its common stock. As of June 30,December 31, 2016, all of Laclede Gas'Gas’ retained earnings were free from such restrictions.

Item 6. Exhibits
See Exhibit Index.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrantregistrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

   Spire Inc.
    
Date:August 3, 2016February 1, 2017 By: /s/ Steven P. Rasche
    Steven P. Rasche
    
Executive Vice President,
Chief Financial Officer
    
(Authorized Signatory and
Principal Financial Officer)

   Laclede Gas Company
    
Date:August 3, 2016February 1, 2017 By: /s/ Steven P. Rasche
    Steven P. Rasche
    Chief Financial Officer
    
(Authorized Signatory and
Principal Financial Officer)

   Alabama Gas Corporation
    
Date:August 3, 2016February 1, 2017 By: /s/ Steven P. Rasche
    Steven P. Rasche
    Chief Financial Officer
    
(Authorized Signatory and
Principal Financial Officer)


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EXHIBIT INDEX
Exhibit No. Description
10.1 
Loan Agreement, dated December 14, 2016, by and among Spire Inc., Alabama Gas Corporation, Laclede Gas Company, and the several banks party thereto, including Wells Fargo Bank, National Association, as Administrative Agent; JPMorgan Chase Bank, N.A. and U.S. Bank National Association, as Co-Syndication Agents; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., and U.S. Bank National Association, as Joint Lead Arrangers and Joint Bookrunners; and Bank of America, N.A., Credit Suisse AG, Cayman Islands Branch, Morgan Stanley Bank, N.A., Regions Bank, Royal Bank of Canada, and TD Bank, N.A., as Documentation Agents; filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed December 16, 2016.

10.2
Commercial Paper Dealer Agreement, dated December 21, 2016, between Spire Inc. and Wells Fargo Securities, LLC.

10.3Commercial Paper Dealer Agreement, dated December 21, 2016, between Spire Inc. and Credit Suisse Securities (USA) LLC.
10.4Engagement Agreement, dated December 21, 2016, between Spire Inc. and L. Craig Dowdy.
31.1 CEO and CFO Certifications under Exchange Act Rule 13a-14(a) of Spire Inc.
31.2 CEO and CFO Certifications under Exchange Act Rule 13a-14(a) of Laclede Gas Company.
31.3 CEO and CFO Certifications under Exchange Act Rule 13a-14(a) of Alabama Gas Corporation.
32.1 CEO and CFO Section 1350 Certifications of Spire Inc.
32.2 CEO and CFO Section 1350 Certifications of Laclede Gas Company.
32.3 CEO and CFO Section 1350 Certifications of Alabama Gas Corporation.
101.INS XBRL Instance Document. (1)
101.SCH XBRL Taxonomy Extension Schema. (1)
101.CAL XBRL Taxonomy Extension Calculation Linkbase. (1)
101.DEF XBRL Taxonomy Extension Definition Linkbase. (1)
101.LAB XBRL Taxonomy Extension Label Linkbase. (1)
101.PRE XBRL Taxonomy Extension Presentation Linkbase. (1)

(1)
Attached as Exhibit 101 to this Quarterly Report are the following documents for each registrant formatted in extensible business reporting language (XBRL): (i) Document and Entity Information; (ii) unaudited Condensed Consolidated Statements of Income and Condensed Statements of Income for the three and nine months ended June 30,December 31, 2016 and 2015; (iii) unaudited Condensed Consolidated Statements of Comprehensive Income and Condensed Statements of Comprehensive Income for the three and nine months ended June 30,December 31, 2016 and 2015; (iv) unaudited Condensed Consolidated Balance Sheets and Condensed Balance Sheets at June 30,December 31, 2016, September 30, 20152016 and June 30,December 31, 2015; (v) unaudited Condensed Consolidated Statements of Common Shareholders'Shareholders’ Equity and Condensed Statements of Common Shareholder'sShareholder’s Equity for the ninethree months ended June 30,December 31, 2016 and 2015; (vi) unaudited Condensed Consolidated Statements of Cash Flows and Condensed Statements of Cash Flows for the ninethree months ended June 30,December 31, 2016 and 2015, and (vii) combined Notes to Financial Statements. We also make available on our website the Interactive Data Files submitted as Exhibit 101 to this Quarterly Report.



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