Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) (only applicable for Spire Inc.):

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended December 31,
(In millions, except per share amounts)	2019		2018
Operating Revenues:
Gas Utility	$	530.6	$	573.8
Gas Marketing and other		36.3		28.2
Total Operating Revenues		566.9		602.0
Operating Expenses:
Gas Utility
Natural and propane gas		214.6		251.7
Operation and maintenance		106.0		102.5
Depreciation and amortization		46.4		43.7
Taxes, other than income taxes		37.9		39.2
Total Gas Utility Operating Expenses		404.9		437.1
Gas Marketing and other		59.7		59.8
Total Operating Expenses		464.6		496.9
Operating Income		102.3		105.1
Interest Expense, Net		26.7		25.9
Other Income, Net		5.7		2.8
Income Before Income Taxes		81.3		82.0
Income Tax Expense		14.3		14.7
Net Income		67.0		67.3
Provision for preferred dividends		3.7		—
Income allocated to participating securities		0.1		0.1
Net Income Available to Common Shareholders	$	63.2	$	67.2

Weighted Average Number of Common Shares Outstanding:
Basic		50.9		50.6
Diluted		51.1		50.8
Basic Earnings Per Common Share	$	1.24	$	1.33
Diluted Earnings Per Common Share	$	1.24	$	1.32

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Three Months Ended December 31,
(In millions, except per share amounts) 2017 2016
Operating Revenues:
Gas Utility $ 541.9
$ 472.3
Gas Marketing and other 19.9
22.8
Total Operating Revenues 561.8
495.1
Operating Expenses:
Gas Utility
Natural and propane gas 240.8
193.8
Operation and maintenance 97.9
99.4
Depreciation and amortization 40.3
37.7
Taxes, other than income taxes 36.7
33.4
Total Gas Utility Operating Expenses 415.7
364.3
Gas Marketing and other 41.0
41.7
Total Operating Expenses 456.7
406.0
Operating Income 105.1
89.1
Other Income 2.2
0.5
Interest Charges:
Interest on long-term debt 20.7
19.1
Other interest charges 3.7
3.0
Total Interest Charges 24.4
22.1
Income Before Income Taxes 82.9
67.5
Income Tax (Benefit) Expense (33.1 ) 22.3
Net Income $ 116.0
$ 45.2

Weighted Average Number of Shares Outstanding:
Basic 48.2
45.5
Diluted 48.4
45.7
Basic Earnings Per Share $ 2.40
$ 0.99
Diluted Earnings Per Share $ 2.39
$ 0.99
Dividends Declared Per Share $ 0.5625
$ 0.525

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended December 31,
(In millions)	2019			2018
Net Income	$	67.0		$	67.3
Other Comprehensive Income (Loss), Before Tax:
Cash flow hedging derivative instruments:
Net hedging gain (loss) arising during the period		18.9			(10.4	)
Amounts reclassified into net income		(0.3	)		(0.3	)
Net gain (loss) on cash flow hedging derivative instruments		18.6			(10.7	)
Other Comprehensive Income (Loss), Before Tax		18.6			(10.7	)
Income Tax Expense (Benefit) Related to Items of Other Comprehensive Income (Loss)		4.2			(2.5	)
Other Comprehensive Income (Loss), Net of Tax		14.4			(8.2	)
Comprehensive Income	$	81.4		$	59.1

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Three Months Ended December 31,
(In millions) 2017 2016
Net Income $ 116.0
$ 45.2
Other Comprehensive Income (Loss), Before Tax:
Cash flow hedging derivative instruments:
Net hedging gains arising during the period 0.1
11.5
Reclassification adjustment for (gains) losses included in net income (0.4 ) 0.2
Net unrealized (losses) gains on cash flow hedging derivative instruments (0.3 ) 11.7
Net gains on defined benefit pension and other postretirement plans 0.1
0.1
Net unrealized losses on available for sale securities (0.1 ) (0.1 )
Other Comprehensive (Loss) Income, Before Tax (0.3 ) 11.7
Income Tax (Benefit) Expense Related to Items of Other Comprehensive Income (0.1 ) 4.3
Other Comprehensive (Loss) Income, Net of Tax (0.2 ) 7.4
Comprehensive Income $ 115.8
$ 52.6

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	December 31,			September 30,			December 31,
(Dollars in millions, except per share amounts)	2019			2019			2018
ASSETS
Utility Plant	$	6,256.1		$	6,146.5		$	5,754.8
Less: Accumulated depreciation and amortization		1,823.8			1,794.5			1,709.5
Net Utility Plant		4,432.3			4,352.0			4,045.3
Non-utility Property (net of accumulated depreciation and amortization of $13.9, $12.7 and $11.1 at December 31, 2019, September 30, 2019, and December 31, 2018, respectively)		518.7			477.8			254.5
Other Investments		74.7			72.3			69.5
Total Other Property and Investments		593.4			550.1			324.0
Current Assets:
Cash and cash equivalents		21.5			5.8			8.4
Accounts receivable:
Utility		282.0			139.8			339.2
Other		195.6			172.8			242.1
Allowance for doubtful accounts		(26.3	)		(23.0	)		(24.6	)
Delayed customer billings		6.6			4.3			10.9
Inventories:
Natural gas		149.1			162.6			176.2
Propane gas		10.7			10.7			12.0
Materials and supplies		25.8			23.3			24.5
Regulatory assets		67.9			78.6			63.4
Prepayments		30.8			29.1			25.7
Other		12.7			10.5			27.5
Total Current Assets		776.4			614.5			905.3
Deferred Charges and Other Assets:
Goodwill		1,171.6			1,171.6			1,171.6
Regulatory assets		750.5			767.6			655.1
Other		236.8			163.4			130.9
Total Deferred Charges and Other Assets		2,158.9			2,102.6			1,957.6
Total Assets	$	7,961.0		$	7,619.2		$	7,232.2

~~(UNAUDITED)~~

December 31, September 30, December 31,
(Dollars in millions, except per share amounts) 2017 2017 2016
ASSETS
Utility Plant $ 5,351.7
$ 5,278.4
$ 4,893.2
Less: Accumulated depreciation and amortization 1,641.0
1,613.2
1,561.4
Net Utility Plant 3,710.7
3,665.2
3,331.8
Non-utility Property (net of accumulated depreciation and amortization of $8.6, $8.6 and $8.2 at December 31, 2017, September 30, 2017, and December 31, 2016, respectively) 105.3
52.0
19.7
Goodwill 1,171.6
1,171.6
1,161.4
Other Investments 66.3
64.2
61.9
Total Other Property and Investments 1,343.2
1,287.8
1,243.0
Current Assets:
Cash and cash equivalents 6.7
7.4
10.6
Accounts receivable:
Utility 333.6
140.5
310.4
Other 135.3
149.2
133.4
Allowance for doubtful accounts (21.3 ) (18.3 ) (21.1 )
Delayed customer billings 7.5
3.4
5.3
Inventories:
Natural gas 171.6
194.9
161.9
Propane gas 12.0
12.0
12.0
Materials and supplies 21.3
18.9
16.6
Natural gas receivable 3.5
1.9
8.4
Derivative instrument assets 4.7
5.9
18.7
Unamortized purchased gas adjustments 77.9
102.6
52.2
Other regulatory assets 71.4
72.9
82.3
Prepayments and other 28.3
34.2
24.9
Total Current Assets 852.5
725.5
815.6
Deferred Charges:
Regulatory assets 716.6
791.1
786.4
Other 78.1
77.1
133.3
Total Deferred Charges 794.7
868.2
919.7
Total Assets $ 6,701.1
$ 6,546.7
$ 6,310.1

~~Table of Contents~~

SPIRE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(UNAUDITED)

	December 31,			September 30,			December 31,
	2019			2019			2018
CAPITALIZATION AND LIABILITIES
Capitalization:
Preferred stock ($25.00 par value per share; 10.0 million depositary shares authorized, issued and outstanding at December 31, 2019 and September 30, 2019)	$	242.0		$	242.0		$	—
Common stock (par value $1.00 per share; 70.0 million shares authorized; 51.1 million, 51.0 million, and 50.7 million shares issued and outstanding at December 31, 2019, September 30, 2019, and December 31, 2018, respectively)		51.1			51.0			50.7
Paid-in capital		1,506.7			1,505.8			1,482.8
Retained earnings		803.1			775.5			752.9
Accumulated other comprehensive loss		(16.9	)		(31.3	)		(1.8	)
Total Shareholders' Equity		2,586.0			2,543.0			2,284.6
Temporary equity		4.1			3.4			—
Long-term debt (less current portion)		2,484.4			2,082.6			1,992.0
Total Capitalization		5,074.5			4,629.0			4,276.6
Current Liabilities:
Current portion of long-term debt		45.3			40.0			175.0
Notes payable		518.9			743.2			626.1
Accounts payable		307.9			301.5			430.9
Advance customer billings		31.4			32.6			19.8
Wages and compensation accrued		35.4			45.7			32.8
Customer deposits		36.5			35.6			36.1
Taxes accrued		43.8			68.5			44.6
Regulatory liabilities		50.0			60.8			37.0
Other		183.3			140.9			161.1
Total Current Liabilities		1,252.5			1,468.8			1,563.4
Deferred Credits and Other Liabilities:
Deferred income taxes		475.3			451.4			453.2
Pension and postretirement benefit costs		260.7			264.8			182.1
Asset retirement obligations		340.9			337.6			324.5
Regulatory liabilities		417.8			399.0			363.4
Other		139.3			68.6			69.0
Total Deferred Credits and Other Liabilities		1,634.0			1,521.4			1,392.2
Commitments and Contingencies (Note 11)
Total Capitalization and Liabilities	$	7,961.0		$	7,619.2		$	7,232.2

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

December 31, September 30, December 31,
2017 2017 2016
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock (par value $1.00 per share; 70.0 million shares authorized; 48.3 million, 48.3 million and 45.7 million shares issued and outstanding at December 31, 2017, September 30, 2017 and December 31, 2016, respectively) $ 48.3
$ 48.3
$ 45.7
Paid-in capital 1,324.9
1,325.6
1,175.7
Retained earnings 703.0
614.2
572.1
Accumulated other comprehensive income 3.0
3.2
3.2
Total Equity Attributable to Spire Shareholders 2,079.2
1,991.3
1,796.7
Noncontrolling interest 6.5
—
—
Total Equity 2,085.7
1,991.3
1,796.7
Long-term debt (less current portion) 2,030.0
1,995.0
1,821.3
Total Capitalization 4,115.7
3,986.3
3,618.0
Current Liabilities:
Current portion of long-term debt 105.5
100.0
250.0
Notes payable 583.6
477.3
506.4
Accounts payable 245.6
257.1
273.8
Advance customer billings 27.3
32.0
60.2
Wages and compensation accrued 29.6
38.7
29.6
Dividends payable 28.1
26.6
24.8
Customer deposits 35.9
34.9
35.7
Interest accrued 26.3
14.6
22.3
Taxes accrued 36.0
61.0
39.7
Unamortized purchased gas adjustments 1.0
1.0
1.4
Other regulatory liabilities 20.5
21.6
42.8
Other 71.9
33.1
55.5
Total Current Liabilities 1,211.3
1,097.9
1,342.2
Deferred Credits and Other Liabilities:
Deferred income taxes 441.0
707.5
636.5
Pension and postretirement benefit costs 233.6
237.4
296.3
Asset retirement obligations 299.7
296.6
208.7
Regulatory liabilities 335.1
157.2
132.1
Other 64.7
63.8
76.3
Total Deferred Credits and Other Liabilities 1,374.1
1,462.5
1,349.9
Commitments and Contingencies (Note 10)

Total Capitalization and Liabilities $ 6,701.1
$ 6,546.7
$ 6,310.1

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

	Common Stock					Preferred		Paid-in			Retained
(Dollars in millions)	Shares			Par		Stock		Capital			Earnings			AOCI*			Total
Three Months Ended December 31, 2019:
Balance at September 30, 2019		50,973,515		$	51.0	$	242.0	$	1,505.8		$	775.5		$	(31.3	)	$	2,543.0
Net income		—			—		—		—			67.0			—			67.0
Dividend reinvestment plan		28,764			—		—		2.3			—			—			2.3
Stock-based compensation costs		—			—		—		1.6			—			—			1.6
Stock issued under stock-based compensation plans		99,126			0.1		—		(0.1	)		—			—			—
Employees’ tax withholding for stock-based compensation		(37,945	)		—		—		(2.9	)		—			—			(2.9	)
Temporary equity adjustment to redemption value		—			—		—		—			(0.1	)		—			(0.1	)
Dividends declared:
Common stock ($0.6225 per share)		—			—		—		—			(31.9	)		—			(31.9	)
Preferred stock ($0.7375 per depositary share)		—			—		—		—			(7.4	)		—			(7.4	)
Other comprehensive income, net of tax		—			—		—		—			—			14.4			14.4
Balance at December 31, 2019		51,063,460		$	51.1	$	242.0	$	1,506.7		$	803.1		$	(16.9	)	$	2,586.0

~~(UNAUDITED)~~

Three Months Ended December 31, 2018:
Balance at September 30, 2018	50,671,903		$	50.7		$	—	$	1,482.7		$	715.6		$	6.4		$	2,255.4
Net income	—			—			—		—			67.3			—			67.3
Dividend reinvestment plan	5,063			—			—		0.4			—			—			0.4
Stock-based compensation costs	—			—			—		2.0			—			—			2.0
Stock issued under stock-based compensation plans	74,835			0.1			—		(0.1	)		—			—			—
Employees’ tax withholding for stock-based compensation	(27,633	)		(0.1	)		—		(2.2	)		—			—			(2.3	)
Dividends declared:
Common stock ($0.5925 per share)	—			—			—		—			(30.0	)		—			(30.0	)
Other comprehensive loss, net of tax	—			—			—		—			—			(8.2	)		(8.2	)
Balance at December 31, 2018	50,724,168		$	50.7		$	—	$	1,482.8		$	752.9		$	(1.8	)	$	2,284.6

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.

Common Stock Outstanding Paid-in Capital Retained Earnings AOCI* Total Equity Attributable to Spire Shareholders
Noncon-
trolling
Interest
Total
(Dollars in millions) Shares Par
Balance at September 30, 2016 45,650,642
$ 45.6
$ 1,175.9
$ 550.9
$ (4.2 ) $ 1,768.2
$ —
$ 1,768.2
Net income —
—
—
45.2
—
45.2
—
45.2
Dividend reinvestment plan 5,610
—
0.3
—
—
0.3
—
0.3
Stock-based compensation costs —
—
1.7
—
—
1.7
—
1.7
Stock issued under stock-based compensation plans 110,136
0.1
(0.1 ) —
—
—
—
—
Employee’s tax withholding for stock-based compensation (33,615 ) —
(2.1 ) —
—
(2.1 ) —
(2.1 )
Dividends declared —
—
—
(24.0 ) —
(24.0 ) —
(24.0 )
Other comprehensive income, net of tax —
—
—
—
7.4
7.4
—
7.4
Balance at December 31, 2016 45,732,773
$ 45.7
$ 1,175.7
$ 572.1
$ 3.2
$ 1,796.7
$ —
$ 1,796.7

Balance at September 30, 2017 48,263,243
$ 48.3
$ 1,325.6
$ 614.2
$ 3.2
$ 1,991.3
$ —
$ 1,991.3
Net income —
—
—
116.0
—
116.0
—
116.0
Business combination —
—
—
—
—
—
6.5
6.5
Dividend reinvestment plan 4,618
—
0.3
—
—
0.3
—
0.3
Stock-based compensation costs —
—
1.9
—
—
1.9
—
1.9
Stock issued under stock-based compensation plans 105,434
0.1
(0.1 ) —
—
—
—
—
Employee’s tax withholding for stock-based compensation (33,581 ) (0.1 ) (2.8 ) —
—
(2.9 ) —
(2.9 )
Dividends declared —
—
—
(27.2 ) —
(27.2 ) —
(27.2 )
Other comprehensive loss, net of tax —
—
—
—
(0.2 ) (0.2 ) —
(0.2 )
Balance at December 31, 2017 48,339,714
$ 48.3
$ 1,324.9
$ 703.0
$ 3.0
$ 2,079.2
$ 6.5
$ 2,085.7

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended December 31,
(In millions)	2019			2018
Operating Activities:
Net Income	$	67.0		$	67.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		47.5			44.2
Deferred income taxes and investment tax credits		14.3			12.7
Changes in assets and liabilities:
Accounts receivable		(162.5	)		(260.5	)
Inventories		11.1			(2.5	)
Regulatory assets and liabilities		45.6			44.7
Accounts payable		42.6			158.0
Delayed/advance customer billings, net		(3.5	)		(6.9	)
Taxes accrued		(24.9	)		(19.1	)
Other assets and liabilities		30.3			32.9
Other		(3.0	)		(0.4	)
Net cash provided by operating activities		64.5			70.4
Investing Activities:
Capital expenditures		(192.3	)		(206.8	)
Business acquisitions		—			(7.9	)
Other		(0.3	)		(1.5	)
Net cash used in investing activities		(192.6	)		(216.2	)
Financing Activities:
Issuance of long-term debt		510.0			100.0
Repayment of long-term debt		(100.0	)		(9.1	)
(Repayment) issuance of short-term debt, net		(224.2	)		72.5
Issuance of common stock		2.3			0.4
Dividends paid on common stock		(34.7	)		(28.8	)
Dividends paid on preferred stock		(3.7	)		—
Other		(5.9	)		(2.2	)
Net cash provided by financing activities		143.8			132.8
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		15.7			(13.0	)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		5.8			21.4
Cash and Cash Equivalents at End of Period	$	21.5		$	8.4

Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	$	(11.6	)	$	(13.9	)
Income taxes		—			—

~~(UNAUDITED)~~

Three Months Ended December 31,
(In millions) 2017 2016
Operating Activities:
Net Income $ 116.0
$ 45.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 40.4
37.8
Deferred income taxes and investment tax credits (33.6 ) 22.1
Changes in assets and liabilities:
Accounts receivable (176.7 ) (186.8 )
Unamortized purchased gas adjustments 34.6
5.1
Accounts payable (2.1 ) 85.5
Delayed/advance customer billings – net (8.7 ) (13.7 )
Taxes accrued (25.0 ) (16.9 )
Inventories 20.9
11.8
Other assets and liabilities 50.3
18.5
Other 1.8
1.7
Net cash provided by operating activities 17.9
10.3
Investing Activities:
Capital expenditures (110.8 ) (89.3 )
Business acquisitions (16.0 ) 3.8
Other 0.1
(0.4 )
Net cash used in investing activities (126.7 ) (85.9 )
Financing Activities:
Issuance of long-term debt 30.0
—
Issuance of short-term debt – net 106.3
107.7
Issuance of common stock 0.3
0.1
Dividends paid (25.8 ) (22.8 )
Other (2.7 ) (4.0 )
Net cash provided by financing activities 108.1
81.0
Net (Decrease) Increase in Cash and Cash Equivalents (0.7 ) 5.4
Cash and Cash Equivalents at Beginning of Period 7.4
5.2
Cash and Cash Equivalents at End of Period $ 6.7
$ 10.6

Supplemental disclosure of cash (paid) refunded for:
Interest, net of amounts capitalized $ (13.3 ) $ (14.3 )
Income taxes —
(0.1 )

See the accompanying Notes to Financial Statements.

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE MISSOURI INC.

~~CONDENSED STATEMENTS OF INCOME~~

~~(UNAUDITED)~~

Three Months Ended December 31,
(In millions) 2017 2016
Operating Revenues:

Utility $ 392.3
$ 363.6
Total Operating Revenues 392.3
363.6
Operating Expenses:
Utility
Natural and propane gas 206.2
191.3
Operation and maintenance 60.3
60.5
Depreciation and amortization 24.8
22.7
Taxes, other than income taxes 26.2
24.6
Total Operating Expenses 317.5
299.1
Operating Income 74.8
64.5
Other Income 1.2
0.1
Interest Charges:
Interest on long-term debt 9.9
8.3
Other interest charges 1.7
1.4
Total Interest Charges 11.6
9.7
Income Before Income Taxes 64.4
54.9
Income Tax (Benefit) Expense (25.0 ) 16.9
Net Income $ 89.4
$ 38.0

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

~~SPIRE MISSOURI INC.~~

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended December 31,
(In millions)	2019		2018
Operating Revenues:
Utility	$	374.0	$	413.2
Total Operating Revenues		374.0		413.2
Operating Expenses:
Utility
Natural and propane gas		185.8		223.4
Operation and maintenance		65.5		63.1
Depreciation and amortization		29.0		27.2
Taxes, other than income taxes		26.7		28.1
Total Operating Expenses		307.0		341.8
Operating Income		67.0		71.4
Interest Expense, Net		13.2		12.1
Other Income (Expense), Net		1.0		(0.7	)
Income Before Income Taxes		54.8		58.6
Income Tax Expense		6.8		7.4
Net Income		48.0		51.2
Other Comprehensive Income, Net of Tax		0.1		—
Comprehensive Income	$	48.1	$	51.2

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Three Months Ended December 31,
(In millions) 2017 2016
Net Income $ 89.4
$ 38.0
Other Comprehensive Income, Net of Tax —
0.2
Comprehensive Income $ 89.4
$ 38.2

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE MISSOURI INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

	December 31,			September 30,			December 31,
(Dollars in millions, except per share amounts)	2019			2019			2018
ASSETS
Utility Plant	$	3,718.9		$	3,643.2		$	3,395.8
Less: Accumulated depreciation and amortization		780.1			764.1			720.4
Net Utility Plant		2,938.8			2,879.1			2,675.4
Other Property and Investments		56.8			53.3			53.6
Current Assets:
Cash and cash equivalents		9.3			2.6			4.9
Accounts receivable:
Utility		193.8			94.6			227.4
Associated companies		4.8			1.4			4.7
Other		23.7			26.5			17.7
Allowance for doubtful accounts		(17.9	)		(14.9	)		(18.1	)
Delayed customer billings		6.6			4.3			10.9
Inventories:
Natural gas		92.7			100.1			129.3
Propane gas		10.7			10.7			12.0
Materials and supplies		15.2			13.3			14.3
Regulatory assets		29.4			29.4			29.7
Prepayments		17.8			18.2			14.7
Total Current Assets		386.1			286.2			447.5
Deferred Charges and Other Assets:
Goodwill		210.2			210.2			210.2
Regulatory assets		491.1			507.5			427.6
Other		88.1			85.6			51.9
Total Deferred Charges and Other Assets		789.4			803.3			689.7
Total Assets	$	4,171.1		$	4,021.9		$	3,866.2

~~(UNAUDITED)~~

December 31, September 30, December 31,
(Dollars in millions, except per share amounts) 2017 2017 2016
ASSETS
Utility Plant $ 3,141.2
$ 3,091.8
$ 2,794.7
Less: Accumulated depreciation and amortization 696.1
681.6
646.4
Net Utility Plant 2,445.1
2,410.2
2,148.3
Goodwill 210.2
210.2
210.2
Other Property and Investments 60.1
59.4
57.1
Total Other Property and Investments 270.3
269.6
267.3
Current Assets:
Cash and cash equivalents 4.1
2.5
4.0
Accounts receivable:
Utility 238.3
101.7
221.0
Associated companies 7.3
3.3
5.3
Other 20.0
15.0
12.2
Allowance for doubtful accounts (16.8 ) (14.1 ) (17.1 )
Delayed customer billings 7.5
3.4
5.3
Inventories:
Natural gas 127.1
138.2
118.2
Propane gas 12.0
12.0
12.0
Materials and supplies 12.5
11.3
9.3
Derivative instrument assets —
0.1
2.2
Unamortized purchased gas adjustments 38.5
57.4
33.8
Other regulatory assets 38.2
38.2
59.7
Prepayments and other 15.6
19.6
15.5
Total Current Assets 504.3
388.6
481.4
Deferred Charges:
Regulatory assets 484.1
557.8
543.4
Other 5.6
5.3
2.4
Total Deferred Charges 489.7
563.1
545.8
Total Assets $ 3,709.4
$ 3,631.5
$ 3,442.8

~~Table of Contents~~

SPIRE MISSOURI INC.

CONDENSED BALANCE SHEETS (Continued)

(UNAUDITED)

	December 31,			September 30,			December 31,
	2019			2019			2018
CAPITALIZATION AND LIABILITIES
Capitalization:
Paid-in capital and common stock (par value $1.00 per share; 50.0 million shares authorized; 24,577 shares issued and outstanding)	$	765.1		$	765.1		$	761.6
Retained earnings		613.3			576.6			542.5
Accumulated other comprehensive loss		(2.3	)		(2.4	)		(1.6	)
Total Shareholder's Equity		1,376.1			1,339.3			1,302.5
Long-term debt (less current portion)		1,098.6			925.0			924.5
Total Capitalization		2,474.7			2,264.3			2,227.0
Current Liabilities:
Current portion of long-term debt		—			—			50.0
Notes payable – associated companies		288.1			386.4			308.0
Accounts payable		76.3			75.7			101.5
Accounts payable – associated companies		11.2			5.5			17.4
Advance customer billings		20.7			20.8			9.1
Wages and compensation accrued		25.0			34.5			25.3
Customer deposits		13.6			13.4			13.3
Taxes accrued		14.6			36.4			14.6
Regulatory liabilities		42.4			52.3			20.6
Other		65.7			26.4			65.7
Total Current Liabilities		557.6			651.4			625.5
Deferred Credits and Other Liabilities:
Deferred income taxes		376.2			364.6			373.7
Pension and postretirement benefit costs		189.3			192.4			137.7
Asset retirement obligations		175.3			173.5			175.9
Regulatory liabilities		345.5			326.5			279.7
Other		52.5			49.2			46.7
Total Deferred Credits and Other Liabilities		1,138.8			1,106.2			1,013.7
Commitments and Contingencies (Note 11)
Total Capitalization and Liabilities	$	4,171.1		$	4,021.9		$	3,866.2

~~(UNAUDITED)~~

December 31, September 30, December 31,
2017 2017 2016
CAPITALIZATION AND LIABILITIES
Capitalization:
Paid-in capital and common stock (par value $1.00 per share;
50,000,000 authorized; 24,577 shares issued and outstanding) $ 757.3
$ 756.2
$ 753.1
Retained earnings 492.4
416.5
341.6
Accumulated other comprehensive loss (1.7 ) (1.7 ) (1.6 )
Total Equity 1,248.0
1,171.0
1,093.1
Long-term debt 874.1
873.9
804.3
Total Capitalization 2,122.1
2,044.9
1,897.4
Current Liabilities:
Current portion of long-term debt 100.0
100.0
—
Notes payable —
—
312.9
Notes payable – associated companies 275.6
203.0
—
Accounts payable 73.5
89.9
104.3
Accounts payable – associated companies 8.9
5.4
9.4
Advance customer billings 10.5
13.3
38.8
Wages and compensation accrued 22.9
29.6
22.1
Dividends payable 13.5
—
14.7
Customer deposits 13.4
13.3
13.6
Interest accrued 11.6
8.0
9.5
Taxes accrued 12.3
34.1
16.4
Regulatory liabilities 2.7
2.7
2.7
Other 48.4
8.5
35.2
Total Current Liabilities 593.3
507.8
579.6
Deferred Credits and Other Liabilities:
Deferred income taxes 382.2
623.8
578.2
Pension and postretirement benefit costs 167.8
173.0
202.8
Asset retirement obligations 160.3
158.6
76.1
Regulatory liabilities 241.2
81.2
67.3
Other 42.5
42.2
41.4
Total Deferred Credits and Other Liabilities 994.0
1,078.8
965.8
Commitments and Contingencies (Note 10)

Total Capitalization and Liabilities $ 3,709.4
$ 3,631.5
$ 3,442.8

See the accompanying Notes to Financial Statements.

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE MISSOURI INC.

CONDENSED STATEMENTS OF SHAREHOLDER’S EQUITY

(UNAUDITED)

	Common Stock				Paid-in		Retained
(Dollars in millions)	Shares		Par		Capital		Earnings			AOCI*			Total
Three Months Ended December 31, 2019:
Balance at September 30, 2019		24,577	$	0.1	$	765.0	$	576.6		$	(2.4	)	$	1,339.3
Net income		—		—		—		48.0			—			48.0
Dividends declared		—		—		—		(11.3	)		—			(11.3	)
Other comprehensive income, net of tax		—		—		—		—			0.1			0.1
Balance at December 31, 2019		24,577	$	0.1	$	765.0	$	613.3		$	(2.3	)	$	1,376.1

Three Months Ended December 31, 2018:
Balance at September 30, 2018		24,577	$	0.1	$	760.3	$	501.1		$	(1.6	)	$	1,259.9
Net income		—		—		—		51.2			—			51.2
Stock-based compensation costs		—		—		1.2		—			—			1.2
Dividends declared		—		—		—		(9.8	)		—			(9.8	)
Balance at December 31, 2018		24,577	$	0.1	$	761.5	$	542.5		$	(1.6	)	$	1,302.5

~~(UNAUDITED)~~

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.

Common Stock Outstanding Paid-in Capital Retained Earnings AOCI*
(Dollars in millions) Shares Par Total
Balance at September 30, 2016 24,577
$ 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, 2016 24,577
$ 0.1
$ 753.0
$ 341.6
$ (1.6 ) $ 1,093.1

Balance at September 30, 2017 24,577
$ 0.1
$ 756.1
$ 416.5
$ (1.7 ) $ 1,171.0
Net income —
—
—
89.4
—
89.4
Stock-based compensation costs —
—
1.1
—
—
1.1
Dividends declared —
—
—
(13.5 ) —
(13.5 )
Balance at December 31, 2017 24,577
$ 0.1
$ 757.2
$ 492.4
$ (1.7 ) $ 1,248.0

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE MISSOURI INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended December 31,
(In millions)	2019			2018
Operating Activities:
Net Income	$	48.0		$	51.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29.0			27.2
Deferred income taxes and investment tax credits		6.8			7.4
Changes in assets and liabilities:
Accounts receivable		(96.9	)		(124.6	)
Inventories		5.5			(2.5	)
Regulatory assets and liabilities		32.8			32.0
Accounts payable		26.9			50.9
Delayed/advance customer billings, net		(2.4	)		(4.4	)
Taxes accrued		(21.7	)		(17.4	)
Other assets and liabilities		16.9			29.4
Other		0.2			1.2
Net cash provided by operating activities		45.1			50.4
Investing Activities:
Capital expenditures		(102.2	)		(92.0	)
Other		—			0.6
Net cash used in investing activities		(102.2	)		(91.4	)
Financing Activities:
Issuance of long-term debt		275.0			100.0
Repayment of long-term debt		(100.0	)		—
Repayments to Spire, net		(98.3	)		(37.3	)
Dividends paid		(11.3	)		(18.8	)
Other		(1.6	)		—
Net cash used in financing activities		63.8			43.9
Net Increase in Cash and Cash Equivalents		6.7			2.9
Cash and Cash Equivalents at Beginning of Period		2.6			2.0
Cash and Cash Equivalents at End of Period	$	9.3		$	4.9

Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	$	(7.5	)	$	(8.3	)
Income taxes		—			—

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Three Months Ended December 31,
(In millions) 2017 2016
Operating Activities:
Net Income $ 89.4
$ 38.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 24.8
22.7
Deferred income taxes and investment tax credits (25.0 ) 16.9
Changes in assets and liabilities:
Accounts receivable (143.0 ) (136.0 )
Unamortized purchased gas adjustments 28.8
17.2
Accounts payable 1.6
50.3
Delayed/advance customer billings – net (6.9 ) (14.0 )
Taxes accrued (21.7 ) (12.6 )
Inventories 9.9
9.0
Other assets and liabilities 40.7
16.7
Other 1.1
0.5
Net cash (used in) provided by operating activities (0.3 ) 8.7
Investing Activities:
Capital expenditures (70.5 ) (61.2 )
Other (0.2 ) 0.1
Net cash used in investing activities (70.7 ) (61.1 )
Financing Activities:
Issuance of short-term debt —
69.2
Borrowings from Spire – net 72.6
—
Dividends paid —
(14.0 )
Other —
(0.9 )
Net cash provided by financing activities 72.6
54.3
Net Increase in Cash and Cash Equivalents 1.6
1.9
Cash and Cash Equivalents at Beginning of Period 2.5
2.1
Cash and Cash Equivalents at End of Period $ 4.1
$ 4.0

Supplemental disclosure of cash (paid) refunded for:
Interest, net of amounts capitalized $ (7.6 ) $ (7.9 )
Income taxes —
—

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE ALABAMA INC.

CONDENSED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended December 31,
(In millions)	2019		2018
Operating Revenues:
Utility	$	126.2	$	133.5
Total Operating Revenues		126.2		133.5
Operating Expenses:
Utility
Natural gas		47.0		59.5
Operation and maintenance		35.2		34.4
Depreciation and amortization		14.3		13.6
Taxes, other than income taxes		8.8		8.9
Total Operating Expenses		105.3		116.4
Operating Income		20.9		17.1
Interest Expense, Net		5.4		5.1
Other Income, Net		2.2		1.8
Income Before Income Taxes		17.7		13.8
Income Tax Expense		4.5		3.5
Net Income	$	13.2	$	10.3

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Three Months Ended December 31,
(In millions) 2017 2016
Operating Revenues:

Utility $ 120.8
$ 86.7
Total Operating Revenues 120.8
86.7
Operating Expenses:
Utility
Natural gas 49.0
16.8
Operation and maintenance 31.8
31.2
Depreciation and amortization 12.8
12.3
Taxes, other than income taxes 8.2
6.6
Total Operating Expenses 101.8
66.9
Operating Income 19.0
19.8
Other Income 0.4
0.4
Interest Charges:
Interest on long-term debt 2.9
2.8
Other interest charges 1.1
0.8
Total Interest Charges 4.0
3.6
Income Before Income Taxes 15.4
16.6
Income Tax Expense 65.0
6.3
Net (Loss) Income $ (49.6 ) $ 10.3

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE ALABAMA INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

	December 31,			September 30,			December 31,
(Dollars in millions, except per share amounts)	2019			2019			2018
ASSETS
Utility Plant	$	2,174.1		$	2,138.0		$	1,994.5
Less: Accumulated depreciation and amortization		894.2			882.1			841.4
Net Utility Plant		1,279.9			1,255.9			1,153.1
Current Assets:
Accounts receivable:
Utility		71.6			37.5			93.9
Associated companies		0.2			—			—
Other		8.7			8.5			6.3
Allowance for doubtful accounts		(7.4	)		(6.3	)		(4.2	)
Inventories:
Natural gas		30.6			35.1			30.1
Materials and supplies		8.1			7.8			8.2
Regulatory assets		24.4			33.9			18.8
Prepayments		6.6			5.3			4.6
Other		0.4			0.4			2.6
Total Current Assets		143.2			122.2			160.3
Deferred Charges and Other Assets:
Regulatory assets		230.2			231.2			200.2
Deferred income taxes		76.8			81.3			98.3
Other		62.5			53.0			58.4
Total Deferred Charges and Other Assets		369.5			365.5			356.9
Total Assets	$	1,792.6		$	1,743.6		$	1,670.3

~~(UNAUDITED)~~

December 31, September 30, December 31,
(Dollars in millions, except per share amounts) 2017 2017 2016
ASSETS
Utility Plant $ 1,858.5
$ 1,838.0
$ 1,750.2
Less: Accumulated depreciation and amortization 791.7
782.0
768.0
Net Utility Plant 1,066.8
1,056.0
982.2
Current Assets:
Cash and cash equivalents —
0.1
—
Accounts receivable:
Utility 74.7
32.0
77.5
Associated companies 0.7
—
—
Other 6.6
6.2
6.1
Allowance for doubtful accounts (2.6 ) (2.6 ) (2.4 )
Inventories:
Natural gas 25.1
33.9
28.4
Materials and supplies 7.6
6.5
6.1
Unamortized purchased gas adjustments 39.4
45.2
17.1
Other regulatory assets 18.6
19.4
14.4
Prepayments and other 7.7
6.7
5.4
Total Current Assets 177.8
147.4
152.6
Deferred Charges:
Regulatory assets 197.4
197.0
229.5
Deferred income taxes 119.0
185.6
215.1
Other 57.4
57.0
61.8
Total Deferred Charges 373.8
439.6
506.4
Total Assets $ 1,618.4
$ 1,643.0
$ 1,641.2

~~Table of Contents~~

SPIRE ALABAMA INC.

CONDENSED BALANCE SHEETS (Continued)

(UNAUDITED)

	December 31,		September 30,		December 31,
	2019		2019		2018
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)	$	370.9	$	370.9	$	390.9
Retained earnings		466.3		459.1		419.6
Total Shareholder's Equity		837.2		830.0		810.5
Long-term debt (less current portion)		471.7		372.2		322.6
Total Capitalization		1,308.9		1,202.2		1,133.1
Current Liabilities:
Current portion of long-term debt		40.0		40.0		—
Notes payable – associated companies		67.1		128.7		164.2
Accounts payable		51.9		56.2		78.4
Accounts payable – associated companies		3.2		1.6		2.5
Advance customer billings		10.0		10.6		9.9
Wages and compensation accrued		6.5		8.0		5.8
Customer deposits		20.2		19.5		19.5
Taxes accrued		26.1		27.4		26.6
Regulatory liabilities		2.4		3.4		10.2
Other		13.2		9.2		7.8
Total Current Liabilities		240.6		304.6		324.9
Deferred Credits and Other Liabilities:
Pension and postretirement benefit costs		58.7		59.2		36.2
Asset retirement obligations		150.2		148.7		137.1
Regulatory liabilities		22.3		23.0		30.6
Other		11.9		5.9		8.4
Total Deferred Credits and Other Liabilities		243.1		236.8		212.3
Commitments and Contingencies (Note 11)
Total Capitalization and Liabilities	$	1,792.6	$	1,743.6	$	1,670.3

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

December 31, September 30, December 31,
2017 2017 2016
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) $ 420.9
$ 420.9
$ 451.9
Retained earnings 389.4
446.5
419.0
Total Equity 810.3
867.4
870.9
Long-term debt 277.8
247.8
247.7
Total Capitalization 1,088.1
1,115.2
1,118.6
Current Liabilities:
Notes payable —
—
102.5
Notes payable – associated companies 163.1
169.9
—
Accounts payable 55.0
44.4
48.7
Accounts payable – associated companies 3.8
1.6
1.9
Advance customer billings 16.8
18.6
21.4
Wages and compensation accrued 5.4
7.4
5.7
Customer deposits 18.7
17.9
18.8
Interest accrued 3.5
3.3
3.4
Taxes accrued 22.0
23.4
18.9
Regulatory liabilities 11.3
12.0
37.4
Other 2.4
2.9
5.0
Total Current Liabilities 302.0
301.4
263.7
Deferred Credits and Other Liabilities:
Pension and postretirement benefit costs 51.5
50.2
75.6
Asset retirement obligations 129.7
128.4
121.4
Regulatory liabilities 39.0
39.6
40.6
Other 8.1
8.2
21.3
Total Deferred Credits and Other Liabilities 228.3
226.4
258.9
Commitments and Contingencies (Note 10)

Total Capitalization and Liabilities $ 1,618.4
$ 1,643.0
$ 1,641.2

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE ALABAMA INC.

CONDENSED STATEMENTS OF SHAREHOLDER’S EQUITY

(UNAUDITED)

	Common Stock				Paid-in		Retained
(Dollars in millions)	Shares		Par		Capital		Earnings			Total
Three Months Ended December 31, 2019:
Balance at September 30, 2019		1,972,052	$	—	$	370.9	$	459.1		$	830.0
Net income		—		—		—		13.2			13.2
Dividends declared		—		—		—		(6.0	)		(6.0	)
Balance at December 31, 2019		1,972,052	$	—	$	370.9	$	466.3		$	837.2

Three Months Ended December 31, 2018:
Balance at September 30, 2018		1,972,052	$	—	$	390.9	$	417.8		$	808.7
Net income		—		—		—		10.3			10.3
Dividends declared		—		—		—		(8.5	)		(8.5	)
Balance at December 31, 2018		1,972,052	$	—	$	390.9	$	419.6		$	810.5

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Common Stock Outstanding Paid-in Capital Retained Earnings
(Dollars in millions) Shares Par Total
Balance at September 30, 2016 1,972,052
$ —
$ 451.9
$ 415.4
$ 867.3
Net income —
—
—
10.3
10.3
Dividends declared —
—
—
(6.7 ) (6.7 )
Balance at December 31, 2016 1,972,052
$ —
$ 451.9
$ 419.0
$ 870.9

Balance at September 30, 2017 1,972,052
$ —
$ 420.9
$ 446.5
$ 867.4
Net income —
—
—
(49.6 ) (49.6 )
Dividends declared —
—
—
(7.5 ) (7.5 )
Balance at December 31, 2017 1,972,052
$ —
$ 420.9
$ 389.4
$ 810.3

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE ALABAMA INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended December 31,
(In millions)	2019			2018
Operating Activities:
Net Income	$	13.2		$	10.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14.3			13.6
Deferred income taxes and investment tax credits		4.5			3.5
Changes in assets and liabilities:
Accounts receivable		(34.3	)		(52.0	)
Inventories		4.2			3.2
Regulatory assets and liabilities		11.1			11.5
Accounts payable		(0.8	)		29.7
Advance customer billings		(0.6	)		(3.2	)
Taxes accrued		(1.3	)		(1.7	)
Other assets and liabilities		0.6			2.8
Other		(2.7	)		(0.4	)
Net cash provided by operating activities		8.2			17.3
Investing Activities:
Capital expenditures		(38.7	)		(30.1	)
Other		(1.4	)		(0.4	)
Net cash used in investing activities		(40.1	)		(30.5	)
Financing Activities:
Issuance of long-term debt		100.0			—
Repayments to Spire, net		(61.6	)		21.7
Dividends paid		(6.0	)		(8.5	)
Other		(0.5	)		—
Net cash provided by financing activities		31.9			13.2
Net Change in Cash and Cash Equivalents		—			—
Cash and Cash Equivalents at Beginning of Period		—			—
Cash and Cash Equivalents at End of Period	$	—		$	—

Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	$	(2.9	)	$	(3.6	)
Income taxes		—			—

~~(UNAUDITED)~~

See the accompanying Notes to Financial Statements.

Three Months Ended December 31,
(In millions) 2017 2016
Operating Activities:
Net (Loss) Income $ (49.6 ) $ 10.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 12.8
12.3
Deferred income taxes and investment tax credits 65.0
6.3
Changes in assets and liabilities:
Accounts receivable (44.3 ) (28.1 )
Unamortized purchased gas adjustments 5.8
(11.5 )
Accounts payable 14.9
17.0
Advance customer billings (1.8 ) 0.3
Taxes accrued (1.4 ) (2.7 )
Inventories 7.7
5.9
Other assets and liabilities —
(1.1 )
Other —
0.3
Net cash provided by operating activities 9.1
9.0
Investing Activities:
Capital expenditures (24.9 ) (21.8 )
Other —
(0.6 )
Net cash used in investing activities (24.9 ) (22.4 )
Financing Activities:
Issuance of long-term debt 30.0
—
Issuance of short-term debt – net —
20.5
Repayment of borrowings from Spire – net (6.8 ) —
Dividends paid (7.5 ) (6.7 )
Other —
(0.4 )
Net cash provided by financing activities 15.7
13.4
Net Decrease in Cash and Cash Equivalents (0.1 ) —
Cash and Cash Equivalents at Beginning of Period 0.1
—
Cash and Cash Equivalents at End of Period $ —
$ —

Supplemental disclosure of cash (paid) refunded for:
Interest, net of amounts capitalized $ (3.4 ) $ (3.1 )
Income taxes —
—

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

SPIRE INC., SPIRE MISSOURI INC. AND SPIRE ALABAMA INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

(Dollars in millions, except per share amounts)

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~~(“Spire” or the ~~Company), as well as~~“Company”) presented on a consolidated basis, Spire Missouri Inc. ~~(Spire Missouri~~(“Spire Missouri” or the ~~Missouri Utilities)~~“Missouri Utilities”) and Spire Alabama Inc. ~~(Spire Alabama)~~(“Spire Alabama”). Spire Missouri and Spire Alabama are wholly owned subsidiaries of ~~the Company.~~Spire. Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth Inc. ~~(Spire EnergySouth)~~(“Spire EnergySouth”) are collectively referred to as the ~~Utilities.~~“Utilities.” The subsidiaries of Spire EnergySouth are Spire Gulf Inc. and Spire Mississippi Inc.

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 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 Missouri’s and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~

2019.

The consolidated financial position, results of operations, and cash flows of Spire include the accounts of the Company and all its subsidiaries. Transactions and balances between consolidated entities have been eliminated from the consolidated financial statements of Spire. In compliance with GAAP, transactions between Spire Missouri and Spire Alabama and their affiliates, as well as intercompany balances on their balance sheets, have not been eliminated from their separate financial statements.

At the end of December 2017, a subsidiary of the Company acquired an 80% voting interest in Ryckman Creek Resources, LLC, which owns and operates a natural gas storage facility in Wyoming. The transaction was valued at $26.0, subject to customary post-closing adjustments, and was completed with $16.0 of cash and a $10.0 promissory note. A tentative purchase price allocation to the assets acquired and liabilities assumed is reflected in the Company’s consolidated balance sheet as of December 31, 2017. Management is evaluating the fair value accounting impacts, and any related adjustments will be recorded later this year. Results of operations will be included in the Company’s consolidated financial statements beginning in the second quarter of fiscal 2018; results since the acquisition in the first quarter were not material.

NATURE OF OPERATIONS – Spire ~~Inc. (NYSE: SR), headquartered in St. Louis, Missouri, is a public utility holding company. The Company~~ has ~~two~~2 reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment consists 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.~~earnings. The Gas Utility segment is comprised of the operations of: the Missouri Utilities, serving St. Louis and eastern Missouri ~~(Spire~~(“Spire Missouri ~~East)~~East”) and Kansas City and western Missouri ~~(Spire~~(“Spire Missouri ~~West)~~West”); Spire Alabama, serving central and northern Alabama; and the subsidiaries of Spire EnergySouth, serving southern Alabama and south-central Mississippi. The Gas Marketing segment includes Spire’s primary ~~non-utility~~gas-related business, Spire Marketing Inc. ~~(Spire Marketing)~~(“Spire Marketing”), which provides non-regulated natural gas ~~services.~~services, primarily in the central and southern United States (U.S.). The activities of other subsidiaries are reported as Other and are described in Note 910, Information by Operating Segment. Spire Missouri and Spire Alabama each have a single reportable segment.

~~The~~

Nearly all the Company’s earnings are ~~primarily~~ derived from its Gas Utility segment. Due to the seasonal nature of the Utilities’ business and the Spire Missouri rate design, 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, Spire Missouri and Spire Alabama are not necessarily indicative of annual results or representative of succeeding quarters of the fiscal year.

~~REVENUE RECOGNITION~~ – The Utilities read meters and bill customers on monthly cycles. The Missouri Utilities, Spire Gulf and Spire Mississippi 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 Spire Missouri at December 31, 2017, September 30, 2017, and December 31, 2016, were $116.2, $30.1, and $103.5, respectively.

~~Table of Contents~~

Spire Alabama records natural gas distribution revenues in accordance with the tariff established by the Alabama Public Service Commission (APSC). Unbilled revenue is accrued in an amount equal to the related gas cost, as profit margin is not considered earned until billed. The amounts of accrued unbilled revenues for Spire Alabama at December 31, 2017, September 30, 2017, and December 31, 2016 were $13.2, $1.9, and $22.0, respectively.

~~Spire’s other subsidiaries, including Spire Marketing, record revenues when earned, either when the product is delivered or when services are performed.~~

DERIVATIVES – In the course of ~~its~~their business, certain subsidiaries of Spire ~~Marketing enters~~enter into commitments associated with the purchase or sale of natural gas. Certain of their 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.~~gross. 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 Spire 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~~operating revenues (or expenses, if negative) in the Condensed Consolidated Statements of Income. This net presentation has no effect on operating income or net income.

~~GROSS RECEIPTS AND SALES TAXES~~ – Gross receipts taxes associated with the 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” and “Taxes, other than income taxes” lines, respectively, in the statements of income. The following table presents gross receipts and sales taxes recorded as revenues:

Three Months Ended December 31,
2017 2016
Spire $ 23.1
$ 19.4
Spire Missouri 16.2
14.1
Spire Alabama 5.6
4.2

REGULATED OPERATIONS –The Utilities account for their regulated operations in accordance with FASB ASC Topic 980, Regulated Operations. This topic 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), the Mississippi Public Service Commission (MSPSC) and ~~APSC,~~the Alabama Public Service Commission (APSC), the Purchased Gas Adjustment (PGA) clauses and Gas Supply Adjustment (GSA) riders allow the Utilities to pass through to customers the cost of purchased gas supplies. Regulatory assets and liabilities related to the PGA clauses and the GSA riders are both labeled Unamortized Purchased Gas Adjustments herein. See additional information about regulatory assets and liabilities in Note 34, Regulatory Matters.

TRANSACTIONS WITH AFFILIATES –Transactions between affiliates of the Company have been eliminated from the consolidated financial statements of Spire. Spire Missouri and Spire Alabama borrowed funds from the Company and incurred related interest, as reflected in their separate financial statements, and they participated in normal intercompany shared services transactions. In addition, Spire Missouri’s other transactions with affiliates ~~included:~~are presented in the table below:

	Three Months Ended December 31,
	2019		2018
Purchases of natural gas from Spire Marketing Inc.	$	19.5	$	39.8
Transportation services received from Spire STL Pipeline LLC		3.9		—
Sales of natural gas to Spire Marketing Inc.		—		1.4
Transportation services received from Spire NGL Inc.		0.3		0.3

Three Months Ended December 31,
2017 2016
Purchases of natural gas from Spire Marketing $ 22.3
$ 20.5
Sales of natural gas to Spire Marketing 0.1
3.6
Transportation services received from Spire NGL Inc. 0.3
0.3

In the quarter ended December 31, 2019, Spire Alabama had purchases of natural gas from Spire Marketing totaling $3.3.

~~Table of Contents~~

ACCRUED CAPITAL EXPENDITURES – Accrued capital expenditures, shown in the following table, are excluded from capital expenditures in the statements of cash flows until paid.

	December 31,		September 30,		December 31,
	2019		2019		2018
Spire	$	45.8	$	80.6	$	46.2
Spire Missouri		20.2		40.1		18.1
Spire Alabama		9.8		11.9		9.7

December 31, September 30, December 31,
2017 2017 2016
Spire $ 31.8
$ 41.0
$ 15.3
Spire Missouri 15.2
28.9
6.8
Spire Alabama 7.0
9.4
5.6

NEW ACCOUNTING PRONOUNCEMENTS – ~~In May 2014, the FASB issued~~Spire, Spire Missouri and Spire Alabama adopted Accounting Standards Update (ASU) No. ~~2014-09,~~ ~~Revenue from Contracts~~2016-02, Leases, along with ~~Customers~~. Under the new standard, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies may need to use more judgment and make more estimates than under current guidance. 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. Existing alternative revenue program guidance, though excluded by the FASB in updating specific guidance associated with revenue from contracts with customers, was relocated without substantial modification to accounting guidance for rate-regulated entities. It will require separate presentation of such revenues in the statement of income. Entities have the option of using either a full retrospective or modified retrospective approach to adopting this guidance. 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. In 2016 and 2017, the FASB issued related ASU Nos. ~~2016-08, 2016-10, 2016-11, 2016-12, 2016-20,~~2018-01, 2018-10, 2018-11, 2018-20 and ~~2017-14, which further~~2019-01 (collectively, “ASC 842”) using a modified retrospective transition method for leases existing at, or entered into after, October 1, 2019. Under the standards for accounting for revenue. The Company, Spire Missouri and Spire Alabama have nearly completed their evaluation of their sources of revenue and related contracts, plan to adopt the new guidanceselected transition method, comparative periods in the ~~first quarter of fiscal 2019 using the modified retrospective approach, and expect no material effect on their~~ financial ~~position, results of operations, or cash flows.~~

~~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. Unrealized gains and losses on equity securities previously classified as available-for-sale will be recognized immediately in earnings rather than recorded in other comprehensive income. Entities will record a cumulative-effect adjustment as of the beginning of the fiscal year in which the guidance is adopted, which requires amounts reported in accumulated other comprehensive income for such equity securities to be reclassified to retained earnings. Based on an assessment of their current financial instruments, the Company, Spire Missouri and Spire Alabama expect to adopt this standard in the first quarter of fiscal 2019 with no material impact.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~statements are presented under ASC 840 (previous lease accounting guidance). ~~The new standard~~ASC 842 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. The ASU~~It provides new guidelines for identifying and classifying a lease, and classification affects the pattern and income statement line item for the related expense. ~~This update will be applied using~~The Company and its subsidiaries elected a ~~modified retrospective transition approach~~package of three practical expedients permitted by the standard, allowing them not to reassess existing contracts for (1) whether it is or contains a lease, (2) lease classification and (3) initial direct costs. They also elected to use the benefit of hindsight in determining both the lease term and impairments associated with any existing leases, ~~existing at, or entered into after, the beginning~~which resulted in lease terms that best represent management’s expectations with respect to use of the ~~earliest comparative period presented~~underlying asset but did not result in recognition of any impairment. Finally, they elected not to assess whether existing land easements are leases under ASC 842. The adoption of ASC 842 impacted the ~~financial statements. ASU No. 2018-01, issued~~balance sheets through recognition of right-of-use assets and lease liabilities for operating leases but did not result in ~~January 2018, clarifies the related transition~~a cumulative effect adjustment or significant impacts to income or cash flows. For other lease policy elections and ~~accounting for existing and new or modified land easements. The ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company,~~disclosures about leases, see Note 12, Leases.

Spire, Spire Missouri and Spire Alabama ~~are currently assessing~~adopted the ~~timing and impacts of adopting these standards, which must be adopted by the first quarter of fiscal 2020.~~

~~In June 2016, the FASB issued~~guidance in ASU No. ~~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, 2019, including interim periods within those fiscal years, and may be adopted a year earlier. The new guidance will be initially applied through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company, Spire Missouri and Spire Alabama are currently assessing the timing and impacts of adopting this standard, which must be adopted by the first quarter of fiscal 2021.

~~Table of Contents~~

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~, which eliminates Step 2 of the goodwill test, where the measurement of a goodwill impairment loss was determined by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Upon adoption, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance is required for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company and Spire Missouri do not expect this standard change to have a material impact on their financial statements and will adjust their goodwill impairment procedures accordingly upon adoption, no later than their annual tests for fiscal 2021.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. The amended guidance requires that the service cost component of pension and postretirement benefit costs be presented within the same line item in the income statement as other compensation costs (except for the amount being capitalized), while other components are to be presented outside the subtotal of operating income and are no longer eligible for capitalization. The ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amended guidance will be applied retrospectively for income statement presentation and prospectively for capitalization. The Company, Spire Missouri and Spire Alabama are currently assessing the regulatory and other impacts of adopting this standard, which must be adopted by the first quarter of fiscal 2019.

~~In August 2017, the FASB issued ASU No.2017-12,~~ 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities., and related ASU Nos. 2018-16, 2019-04, and 2019-10 in the first quarter of fiscal year 2020. The amendments in this ASU more closely align the results of hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. They ~~are~~did not have a significant impact on the financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which was later supplemented by ASU Nos. 2018-19, 2019-04, 2019-05 and 2019-11. 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, ~~2018, and~~2019, including interim periods within those fiscal ~~years, and early application is permitted.~~years. The ~~Company,~~new guidance will be initially applied through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Spire, Spire Missouri and Spire Alabama are currently assessing the ~~effects~~impacts of adopting this ~~new guidance, as well as~~standard, which must be adopted by the ~~timing~~first quarter of ~~adoption.~~

fiscal 2021.

2. REVENUE

The following tables show revenue disaggregated by source and customer type.

	Three Months Ended December 31,
	2019			2018
Spire
Gas Utility:
Residential	$	368.4		$	393.6
Commercial & industrial		122.5			130.3
Transportation		31.0			29.5
Off-system & other incentive		9.4			14.9
Other customer revenue		2.4			12.7
Total revenue from contracts with customers		533.7			581.0
Changes in accrued revenue under alternative revenue programs		(3.0	)		(5.8	)
Total Gas Utility operating revenues		530.7			575.2
Gas Marketing:
Revenue from contracts with retail customers		32.3			25.8
Revenue from wholesale derivative contracts		—			—
Total Gas Marketing operating revenues		32.3			25.8
Other		11.1			5.4
Total before eliminations		574.1			606.4
Intersegment eliminations (see Note 10, Information by Operating Segment)		(7.2	)		(4.4	)
Total Operating Revenues	$	566.9		$	602.0

Spire Missouri
Residential	$	275.9		$	302.1
Commercial & industrial		80.8			89.1
Transportation		9.0			9.0
Off-system & other incentive		9.4			14.9
Other customer revenue		0.5			2.6
Total revenue from contracts with customers		375.6			417.7
Changes in accrued revenue under alternative revenue programs		(1.6	)		(4.5	)
Total Operating Revenues	$	374.0		$	413.2

Spire Alabama
Residential	$	74.3		$	75.4
Commercial & industrial		31.3			31.4
Transportation		19.6			18.2
Other customer revenue		1.6			9.6
Total revenue from contracts with customers		126.8			134.6
Changes in accrued revenue under alternative revenue programs		(0.6	)		(1.1	)
Total Operating Revenues	$	126.2		$	133.5

Gross receipts taxes associated with the Company’s natural gas utility services are imposed on the Company, Spire Missouri, and Spire Alabama and billed to its customers. The expense amounts (shown in the table below) are reported gross in the “Taxes, other than income taxes” line in the statements of income, and corresponding revenues are reported in “Operating Revenues.”

	Three Months Ended December 31,
	2019		2018
Spire	$	24.6	$	25.9
Spire Missouri		17.2		18.5
Spire Alabama		6.2		6.3

3. EARNINGS PER COMMON SHARE

	Three Months Ended December 31,
	2019		2018
Basic Earnings Per Common Share:
Net Income	$	67.0	$	67.3
Less: Provision for preferred dividends		3.7		—
Income allocated to participating securities		0.1		0.1
Income Available to Common Shareholders	$	63.2	$	67.2
Weighted Average Common Shares Outstanding (in millions)		50.9		50.6
Basic Earnings Per Common Share	$	1.24	$	1.33

Diluted Earnings Per Common Share:
Net Income	$	67.0	$	67.3
Less: Provision for preferred dividends		3.7		—
Income allocated to participating securities		0.1		0.1
Income Available to Common Shareholders	$	63.2	$	67.2
Weighted Average Common Shares Outstanding (in millions)		50.9		50.6
Dilutive Effect of Restricted Stock and Restricted Stock Units (in millions)*		0.2		0.2
Weighted Average Diluted Common Shares (in millions)		51.1		50.8
Diluted Earnings Per Common Share	$	1.24	$	1.32

* Calculation excludes certain outstanding common shares (shown in millions by period at the right) attributable to stock units subject to performance or market conditions and restricted stock, which could have a dilutive effect in the future		0.1		0.4

Three Months Ended December 31,
2017 2016
Basic EPS:
Net Income $ 116.0
$ 45.2
Less: Income allocated to participating securities 0.2
0.1
Net Income Available to Common Shareholders $ 115.8
$ 45.1
Weighted Average Shares Outstanding (in millions) 48.2
45.5
Basic Earnings Per Share of Common Stock $ 2.40
$ 0.99

Diluted EPS:
Net Income $ 116.0
$ 45.2
Less: Income allocated to participating securities 0.2
0.1
Net Income Available to Common Shareholders $ 115.8
$ 45.1
Weighted Average Shares Outstanding (in millions) 48.2
45.5
Dilutive Effect of Restricted Stock and Restricted Stock Units (in millions)* 0.2
0.2
Weighted Average Diluted Shares (in millions) 48.4
45.7
Diluted Earnings Per Share of Common Stock $ 2.39
$ 0.99

* Calculation excludes certain outstanding shares (shown in millions by period at the right) attributable to stock units subject to performance or market conditions and restricted stock, which could have a dilutive effect in the future 0.3
0.4

~~Table of Contents~~

4. REGULATORY MATTERS

As explained in Note 1, Summary of Significant Accounting Policies, the Utilities account for regulated operations in accordance with FASB ASC Topic 980, Regulated Operations. The following regulatory assets and regulatory liabilities ~~including purchased gas adjustments,~~ were reflected in the balance sheets of the Company, Spire Missouri and Spire Alabama as of December 31, ~~2017,~~2019, September 30, ~~2017,~~2019, and December 31, ~~2016.~~2018.


	December 31,		September 30,		December 31,		December 31,		September 30,		December 31,
Spire	2017		2017		2016		2019		2019		2018
Regulatory Assets:
Current:
Pension and postretirement benefit costs	$	43.0	$	42.2	$	63.2	$	30.1	$	30.1	$	30.2
Unamortized purchased gas adjustments	77.9		102.6		52.2			9.1		18.2		3.0
Other	28.4		30.7		19.1			28.7		30.3		30.2
Total Current Regulatory Assets	149.3		175.5		134.5			67.9		78.6		63.4
Noncurrent:
Future income taxes due from customers	113.1		170.5		155.5
Pension and postretirement benefit costs	394.8		404.7		439.2			405.5		416.6		350.0
Cost of removal	123.9		123.3		131.6			152.1		150.9		134.0
Future income taxes due from customers								111.6		108.8		99.1
Energy efficiency								37.2		35.0		33.6
Unamortized purchased gas adjustments	—		9.9		4.7			—		9.1		—
Energy efficiency	30.0		29.0		26.0
Other	54.8		53.7		29.4			44.1		47.2		38.4
Total Noncurrent Regulatory Assets	716.6		791.1		786.4			750.5		767.6		655.1
Total Regulatory Assets	$	865.9	$	966.6	$	920.9	$	818.4	$	846.2	$	718.5
Regulatory Liabilities:
Current:
Rate Stabilization and Equalization (RSE) adjustment	$	1.0	$	1.4	$	3.8
Unbilled service margin	—		—		22.0
Refundable negative salvage	7.9		8.2		9.0
Pension and postretirement benefit costs							$	5.8	$	5.8	$	2.2
Unamortized purchased gas adjustments	1.0		1.0		1.4			19.9		26.2		6.1
Other	11.6		12.0		8.0			24.3		28.8		28.7
Total Current Regulatory Liabilities	21.5		22.6		44.2			50.0		60.8		37.0
Noncurrent:
Deferred taxes due to customers	177.4		—		—			177.0		179.8		169.8
Pension and postretirement benefit costs	31.5		32.2		28.3			147.5		142.3		27.1
Refundable negative salvage	3.8		4.1		8.9
Accrued cost of removal	81.7		83.8		74.7			38.7		41.6		59.4
Unamortized purchased gas adjustments								24.3		—		16.7
Other	40.7		37.1		20.2			30.3		35.3		90.4
Total Noncurrent Regulatory Liabilities	335.1		157.2		132.1			417.8		399.0		363.4
Total Regulatory Liabilities	$	356.6	$	179.8	$	176.3	$	467.8	$	459.8	$	400.4

	December 31,		September 30,		December 31,
Spire Missouri	2019		2019		2018
Regulatory Assets:
Current:
Pension and postretirement benefit costs	$	21.9	$	21.9	$	21.9
Other		7.5		7.5		7.8
Total Current Regulatory Assets		29.4		29.4		29.7
Noncurrent:
Future income taxes due from customers		104.9		102.9		96.7
Pension and postretirement benefit costs		324.7		333.3		279.8
Energy efficiency		37.2		35.0		33.6
Unamortized purchased gas adjustments		—		9.1		—
Other		24.3		27.2		17.5
Total Noncurrent Regulatory Assets		491.1		507.5		427.6
Total Regulatory Assets	$	520.5	$	536.9	$	457.3
Regulatory Liabilities:
Current:
Pension and postretirement benefit costs	$	3.6	$	3.6	$	—
Unamortized purchased gas adjustments		19.0		25.4		5.8
Other		19.8		23.3		14.8
Total Current Regulatory Liabilities		42.4		52.3		20.6
Noncurrent:
Deferred taxes due to customers		159.7		162.5		152.4
Pension and postretirement benefit costs		124.9		119.1		—
Accrued cost of removal		12.1		15.7		35.2
Unamortized purchased gas adjustments		24.3		—		16.7
Other		24.5		29.2		75.4
Total Noncurrent Regulatory Liabilities		345.5		326.5		279.7
Total Regulatory Liabilities	$	387.9	$	378.8	$	300.3

	December 31,		September 30,		December 31,
Spire Alabama	2019		2019		2018
Regulatory Assets:
Current:
Pension and postretirement benefit costs	$	7.2	$	7.3	$	7.3
Unamortized purchased gas adjustments		8.8		17.7		1.6
Other		8.4		8.9		9.9
Total Current Regulatory Assets		24.4		33.9		18.8
Noncurrent:
Pension and postretirement benefit costs		74.9		77.2		63.0
Cost of removal		152.1		150.9		134.0
Other		3.2		3.1		3.2
Total Noncurrent Regulatory Assets		230.2		231.2		200.2
Total Regulatory Assets	$	254.6	$	265.1	$	219.0
Regulatory Liabilities:
Current:
Pension and postretirement benefit costs	$	2.2	$	2.2	$	2.3
Other		0.2		1.2		7.9
Total Current Regulatory Liabilities		2.4		3.4		10.2
Noncurrent:
Pension and postretirement benefit costs		18.4		19.1		27.1
Other		3.9		3.9		3.5
Total Noncurrent Regulatory Liabilities		22.3		23.0		30.6
Total Regulatory Liabilities	$	24.7	$	26.4	$	40.8

~~Table of Contents~~

December 31, September 30, December 31,
Spire Missouri 2017 2017 2016
Regulatory Assets:
Current:
Pension and postretirement benefit costs $ 34.9
$ 34.9
$ 56.3
Unamortized purchased gas adjustments 38.5
57.4
33.8
Other 3.3
3.3
3.4
Total Current Regulatory Assets 76.7
95.6
93.5
Noncurrent:
Future income taxes due from customers 113.1
170.5
155.5
Pension and postretirement benefit costs 315.8
322.7
333.3
Unamortized purchased gas adjustments —
9.9
4.7
Energy efficiency 30.0
29.0
26.0
Other 25.2
25.7
23.9
Total Noncurrent Regulatory Assets 484.1
557.8
543.4
Total Regulatory Assets $ 560.8
$ 653.4
$ 636.9
Regulatory Liabilities:
Current:
Other $ 2.7
$ 2.7
$ 2.7
Total Current Regulatory Liabilities 2.7
2.7
2.7
Noncurrent:
Deferred taxes due to customers 159.2
—
—
Accrued cost of removal 52.0
54.5
54.8
Other 30.0
26.7
12.5
Total Noncurrent Regulatory Liabilities 241.2
81.2
67.3
Total Regulatory Liabilities $ 243.9
$ 83.9
$ 70.0

~~Table of Contents~~

December 31, September 30, December 31,
Spire Alabama 2017 2017 2016
Regulatory Assets:
Current:
Pension and postretirement benefit costs $ 7.2
$ 7.2
$ 6.8
Unamortized purchased gas adjustments 39.4
45.2
17.1
Other 11.4
12.2
7.6
Total Current Regulatory Assets 58.0
64.6
31.5
Noncurrent:
Pension and postretirement benefit costs 70.8
72.6
96.8
Cost of removal 123.9
123.3
131.6
Other 2.7
1.1
1.1
Total Noncurrent Regulatory Assets 197.4
197.0
229.5
Total Regulatory Assets $ 255.4
$ 261.6
$ 261.0
Regulatory Liabilities:
Current:
RSE adjustment $ 1.0
$ 1.4
$ 3.8
Unbilled service margin —
—
22.0
Refundable negative salvage 7.9
8.2
9.0
Other 2.4
2.4
2.6
Total Current Regulatory Liabilities 11.3
12.0
37.4
Noncurrent:
Pension and postretirement benefit costs 31.5
32.2
28.3
Refundable negative salvage 3.9
4.1
8.9
Other 3.6
3.3
3.4
Total Noncurrent Regulatory Liabilities 39.0
39.6
40.6
Total Regulatory Liabilities $ 50.3
$ 51.6
$ 78.0

A portion of the Company’s and Spire Missouri’s regulatory assets are not earning a return, as shown in the table below:

	December 31,		September 30,		December 31,
	2019		2019		2018
Spire
Pension and postretirement benefit costs	$	208.0	$	211.1	$	141.2
Future income taxes due from customers		111.6		108.8		99.1
Other		14.1		14.3		14.3
Total Regulatory Assets Not Earning a Return	$	333.7	$	334.2	$	254.6

Spire Missouri
Pension and postretirement benefit costs	$	208.0	$	211.1	$	141.2
Future income taxes due from customers		104.9		102.9		96.7
Other		14.1		14.3		14.3
Total Regulatory Assets Not Earning a Return	$	327.0	$	328.3	$	252.2

Spire Spire Missouri
December 31, September 30, December 31, December 31, September 30, December 31,
2017 2017 2016 2017 2017 2016
Future income taxes due from customers $ 113.1
$ 170.5
$ 155.5
$ 113.1
$ 170.5
$ 155.5
Pension and postretirement benefit costs 193.8
198.5
231.4
193.8
198.5
231.4
Other 11.2
11.3
12.2
11.2
11.3
12.2
Total Regulatory Assets Not Earning a Return $ 318.1
$ 380.3
$ 399.1
$ 318.1
$ 380.3
$ 399.1

Like all the Company’s regulatory assets, these regulatory assets are expected to be recovered from customers in future rates. The recovery period for the future income taxes due from customers and pension and other postretirement benefit costs could be ~~as long as~~ 20 years or longer, based on current Internal Revenue Service guidelines and average remaining service life of active participants, respectively. The other items not earning a return are expected to be recovered over a period not to exceed 15 years, consistent with precedent set by the MoPSC. Spire Alabama does not have any regulatory assets that are not earning a return.

On March 7, 2018, the MoPSC issued its order in two general rate cases (docketed as GR-2017-0215 and GR-2017-0216), approving new tariffs that became effective on April 19, 2018. Certain provisions of the order allow less future recovery of certain deferred or capitalized costs than estimated based upon previous rate proceedings, and management determined that the related regulatory assets should be written down or off in connection with the preparation of the financial statements for the second quarter of 2018. The charges totaled $38.4 for the year ended September 30, 2018 and are included primarily in operation and maintenance expense on the statements of income and in other cash flows from operating activities on the statements of cash flows. The after-tax reduction to net income and earnings per share was $23.6 and $0.49, respectively. On April 25, 2018, Spire Missouri filed an appeal of the MoPSC’s order related to the disallowance of certain pension costs incurred prior to 1997 ($28.8), real estate sold in 2014 ($1.8), and rate case expenses ($0.9) to Missouri’s Southern District Court of Appeals. On March 15, 2019, the appeal was denied by the Southern District Court of Appeals, and Spire Missouri requested review by the Missouri Supreme Court, which agreed to take the case. Oral arguments were made before the Missouri Supreme Court on January 29, 2020. The charges related to the long-standing pension and real estate assets, totaling $30.6, were excluded in the determination of 2018 net economic earnings.

Spire Missouri filed Infrastructure System Replacement Surcharge (ISRS) applications which were approved by the MoPSC and the costs associated therewith were included in new tariffs that went into effect from our last general rate cases on April 19, 2018. Since the Company’s last rate cases, ISRS filings became effective on October 8, 2018, May 25, 2019 and November 16, 2019, bringing total authorized future annualized ISRS revenues for Spire Missouri to $29.2. On February 3, 2020, Spire Missouri filed new ISRS applications with the MoPSC for a total of $16.3, including $5.3 of ISRS revenues previously disallowed.

As reported last year, on November 19, 2019, the Missouri Western District Court of Appeals issued rulings (“ISRS rulings”) that determined certain capital investments in 2016 through 2018 were not eligible for recovery under the ISRS. The ISRS rulings upheld appeals by the Office of Public Counsel (OPC) that contested recovery of portions of Spire Missouri’s ISRS and overturned the three prior MoPSC decisions.

~~Table~~

Spire Missouri strongly disagrees with the ISRS rulings and plans to vigorously defend its position. On January 2, 2020, Spire Missouri submitted Applications for Transfer to the Missouri Supreme Court. The MoPSC also submitted Applications for Transfer to the Missouri Supreme Court that advanced similar positions as Spire Missouri. The submission of ~~Contents~~

4.the Applications will stay the effectiveness of the ISRS rulings pending the outcome of the Missouri Supreme Court’s decision whether to accept these rulings for review. If the Missouri Supreme Court decides not to review the lower court rulings, the cases would be remanded to the MoPSC, who would then define its process to review the facts and evidence supporting its earlier approval and determine the appropriate process to determine the appropriate refund, if any, that may be required.

Spire Missouri has recorded an estimate of the maximum impact of the ISRS rulings based on its interpretation of the rulings and evidence available. As of September 30, 2019, Spire Missouri recorded an estimated $12.2 regulatory liability for this matter by reducing revenue for fiscal year 2019. There were two components of this provision. The first related to a $4.2 refund ordered by the ISRS rulings for amounts collected prior to the last rate case, after which recoveries of related authorized revenues became part of base rates that went into effect in April 2018. The second component related to an estimate of $8.0 for revenues associated with the June 2018 ISRS filing that was approved by the MoPSC effective October 8, 2018. In the first quarter of fiscal 2020, an additional provision of $2.1 was recorded to the regulatory liability for ISRS revenues related to customer billings recorded during the quarter under this 2018 filing, along with a $0.5 provision for interest due on the entirety of the ISRS revenues in dispute if refunded. The after-tax impact of the first quarter provisions reduced net income by $2.0, which is excluded for the net economic earnings financial measure. In future periods, Spire Missouri will evaluate the need for an adjustment to the provisions based upon new information and further developments.

Similar appeals by both the Company and OPC are with the Missouri Western District Court of Appeals for the ISRS filings in both January 2019 and July 2019.

In January 2020, legislation was introduced in both the Missouri House and Senate to clarify language in the statute governing ISRS mechanism. Specifically, the bills seek to ensure we can continue to upgrade our infrastructure, enhance its safety and reliability, and secure timely recovery of costs incurred.

As part of their annual updates for RSE, on November 25, 2019, Spire Alabama and Spire Gulf filed an increase for rate year 2020 of $5.9 and $1.6, respectively, which became effective December 1, 2019. In addition, Spire Alabama was granted authority to begin an off-system sales and capacity release sharing program similar to the program currently in place at Spire Missouri.

On November 21, 2019, the Federal Energy Regulatory Commission (FERC) issued an Order on Rehearing of its August 3, 2018 order issuing a certificate of public convenience and necessity to Spire STL Pipeline LLC. In the Order on Rehearing, the FERC dismissed or denied the outstanding requests for rehearing filed by several parties, dismissed the request for stay filed by one party and noted the withdrawal of the request for rehearing by another party. On January 21, 2020, two of the rehearing parties timely filed petitions for review of the FERC’s orders with the Court of Appeals for the District of Columbia Circuit.

5. FINANCING ARRANGEMENTS AND LONG-TERM DEBT

~~On December 14, 2016,~~

Spire, Spire Missouri and Spire Alabama ~~entered into~~have a syndicated revolving credit facility pursuant to a loan agreement with 11 banks, expiring ~~December 14, 2021.~~October 31, 2023. The loan agreement has an aggregate credit commitment of $975.0, including sublimits of $300.0 for Spire, $475.0 for Spire Missouri, and $200.0 for Spire Alabama. These sublimits may be reallocated from time to time among the three borrowers within the $975.0 aggregate commitment, with commitments fees applied for each borrower relative to its credit rating. Spire may use its line to provide for the funding needs of various subsidiaries. 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, ~~2017,~~2019, total debt was ~~57%~~55% of total capitalization for the consolidated Company, 50% for Spire Missouri, and ~~35%~~41% for Spire Alabama. There were no0 borrowings against this credit facility as of December 31, ~~2017, or~~2019, September 30, ~~2017, but $193.5 as of~~2019, or December 31, ~~2016.~~2018.

~~On December 21, 2016,~~

Spire ~~established~~has a commercial paper program ~~(Program)~~(“CP Program”) pursuant to which Spire may issue short-term, unsecured commercial paper ~~notes (Notes).~~notes. Amounts available under the CP Program may be borrowed, repaid and re-borrowed from time to time, with the aggregate face or principal amount of the ~~Notes~~notes outstanding under the CP Program at any time not to exceed $975.0. The ~~Notes~~notes may have maturities of up to 365 days from date of issue.

Information about Spire’s consolidated short-term borrowings and about Spire Missouri’s and Spire Alabama’s borrowings from Spire is presented in the following table. As of December 31, ~~2017, Notes outstanding under~~2019, $373.2 of Spire’s short-term borrowings were used to support lending to the ~~Program totaled $583.6. Of that amount, $275.6 and $163.1 were loaned to~~Utilities.

	Spire CP Program Borrowings	Spire Missouri Borrowings from Spire	Spire Alabama Borrowings from Spire
Three Months Ended December 31, 2019
Weighted average borrowings outstanding	$727.7	$331.1	$115.0
Weighted average interest rate	2.2%	2.2%	2.2%
Range of borrowings outstanding	$510.9 – $856.6	$239.4 – $429.5	$43.8 – $161.3
As of December 31, 2019
Borrowings outstanding	$518.9	$288.1	$67.1
Weighted average interest rate	2.1%	2.1%	2.1%
As of September 30, 2019
Borrowings outstanding	$743.2	$386.4	$128.7
Weighted average interest rate	2.3%	2.3%	2.3%
As of December 31, 2018
Borrowings outstanding	$626.1	$308.0	$164.2
Weighted average interest rate	3.1%	3.1%	3.1%

The long-term debt agreements of Spire, Spire Missouri and Spire Alabama ~~respectively, at Spire’s cost. Notes outstanding under the Program totaled $477.3~~contain customary covenants and ~~$0.0 as~~default provisions. As of ~~September 30, 2017, and~~ December 31, ~~2016, respectively.~~2019, there were no events of default under these covenants.

Interest expense shown on Spire’s consolidated statements of income and Spire Missouri’s statements of comprehensive income is net of the capitalized interest amounts shown in the following table.

	Three Months Ended December 31,
	2019		2018
Spire	$	2.2	$	1.2
Spire Missouri		0.3		0.5
Spire Alabama		0.6		—

On November 12, 2019, Spire Missouri issued and sold to certain institutional purchasers in a private placement $275.0 of 2.84% first mortgage bonds due November 15, 2029. Interest is payable semi-annually. The bonds are secured by a mortgage and deed of trust and rank equal in right to payment with all Spire Missouri’s other first mortgage bonds. Spire Missouri used the proceeds to repay its $100.0 floating-rate note and for other general corporate purposes.

On December ~~1, 2017, Spire Alabama entered into the First Supplement to Master Note Purchase Agreement with certain institutional investors. Pursuant to the terms of that supplement, on December 1, 2017,~~2, 2019, Spire Alabama issued and sold ~~$30.0 million~~to certain institutional investors in ~~aggregate principal amount~~a private placement $100.0 of ~~its 4.02%~~2.88% Series ~~2017A~~2019B Senior Notes due January 15, 2058, and on January 12, 2018, issued and sold $45.0 million aggregate principal amount of its 3.92% Series 2017B Senior Notes due January 15, 2048, to those institutional investors. The notes bear interest from the date of issuance,December 1, 2029. Interest is payable ~~semi-annually on the 15th day of July and January of each year, commencing on July 15, 2018.~~semi-annually. The notes are senior unsecured obligations of Spire Alabama and rank equal in right to payment with all its other senior unsecured ~~indebtedness, and have make-whole call options.~~indebtedness. Spire Alabama used the proceeds ~~from the sale of the notes~~ to repay short-term debt and for general corporate purposes.

On December 23, 2019, Spire STL Pipeline issued and sold notes to certain institutional investors in a $135.0 private placement. Interest is payable semi-annually at 2.95%, and principal repayment is scheduled annually in accordance with a 15-year amortization schedule with an average life of 9.2 years. Proceeds were used to repay short-term debt.

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis are shown in the following tables, classified according to the fair value hierarchy. There were no such instruments classified as Level 3 (significant unobservable inputs) as of December 31, ~~2017,~~2019, September 30, ~~2017,~~2019, or December 31, ~~2016.~~

2018.

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 67, Fair Value Measurements, for information on financial instruments measured at fair value on a recurring basis.

					Classification of Estimated Fair Value
	Carrying Amount		Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)
Spire
As of December 31, 2019
Cash and cash equivalents	$	21.5	$	21.5	$	21.5	$	—
Notes payable		518.9		518.9		—		518.9
Long-term debt, including current portion		2,529.7		2,765.9		—		2,765.9
As of September 30, 2019
Cash and cash equivalents	$	5.8	$	5.8	$	5.8	$	—
Notes payable		743.2		743.2		—		743.2
Long-term debt, including current portion		2,122.6		2,373.4		—		2,373.4
As of December 31, 2018
Cash and cash equivalents	$	8.4	$	8.4	$	8.4	$	—
Notes payable		626.1		626.1		—		626.1
Long-term debt, including current portion		2,167.0		2,133.9		—		2,133.9

Spire Missouri
As of December 31, 2019
Cash and cash equivalents	$	9.3	$	9.3	$	9.3	$	—
Notes payable – associated companies		288.1		288.1		—		288.1
Long-term debt		1,098.6		1,234.9		—		1,234.9
As of September 30, 2019
Cash and cash equivalents	$	2.6	$	2.6	$	2.6	$	—
Notes payable – associated companies		386.4		386.4		—		386.4
Long-term debt		925.0		1,065.2		—		1,065.2
As of December 31, 2018
Cash and cash equivalents	$	4.9	$	4.9	$	4.9	$	—
Notes payable – associated companies		308.0		308.0		—		308.0
Long-term debt, including current portion		974.5		997.3		—		997.3

Spire Alabama
As of December 31, 2019
Notes payable – associated companies	$	67.1	$	67.1	$	—	$	67.1
Long-term debt, including current portion		511.7		572.8		—		572.8
As of September 30, 2019
Notes payable – associated companies	$	128.7	$	128.7	$	—	$	128.7
Long-term debt, including current portion		412.2		474.8		—		474.8
As of December 31, 2018
Notes payable – associated companies	$	164.2	$	164.2	$	—	$	164.2
Long-term debt		322.6		311.3		—		311.3

~~Table of Contents~~



		~~Classification of Estimated~~ ~~Fair Value~~
~~Carrying~~ ~~Amount~~	~~Fair~~ ~~Value~~	~~Quoted~~ ~~Prices in Active Markets~~ ~~(Level 1)~~	~~Significant Observable Inputs~~ ~~(Level 2)~~

~~Spire~~

As of December 31, 2017
Cash and cash equivalents $ 6.7
$ 6.7
$ 6.7
$ —
Short-term debt 583.6
583.6
—
583.6
Long-term debt, including current portion 2,135.5
2,280.1
—
2,280.1
As of September 30, 2017
Cash and cash equivalents $ 7.4
$ 7.4
$ 7.4
$ —
Short-term debt 477.3
477.3
—
477.3
Long-term debt, including current portion 2,095.0
2,210.3
—
2,210.3
As of December 31, 2016
Cash and cash equivalents $ 10.6
$ 10.6
$ 10.6
$ —
Short-term debt 506.4
506.4
—
506.4
Long-term debt, including current portion 2,071.3
2,258.1
—
2,258.1

~~Spire Missouri~~

As of December 31, 2017
Cash and cash equivalents $ 4.1
$ 4.1
$ 4.1
$ —
Short-term debt 275.6
275.6
—
275.6
Long-term debt, including current portion 974.1
1,068.6
—
1,068.6
As of September 30, 2017
Cash and cash equivalents $ 2.5
$ 2.5
$ 2.5
$ —
Short-term debt 203.0
203.0
—
203.0
Long-term debt, including current portion 973.9
1,056.9
—
1,056.9
As of December 31, 2016
Cash and cash equivalents $ 4.0
$ 4.0
$ 4.0
$ —
Short-term debt 312.9
312.9
—
312.9
Long-term debt 804.3
910.7
—
910.7

~~Spire Alabama~~

As of December 31, 2017
Cash and cash equivalents $ —
$ —
$ —
$ —
Short-term debt 163.1
163.1
—
163.1
Long-term debt 277.8
303.5
—
303.5
As of September 30, 2017
Cash and cash equivalents $ 0.1
$ 0.1
$ 0.1
$ —
Short-term debt 169.9
169.9
—
169.9
Long-term debt 247.8
269.4
—
269.4
As of December 31, 2016
Cash and cash equivalents $ —
$ —
$ —
$ —
Short-term debt 102.5
102.5
—
102.5
Long-term debt 247.7
269.3
—
269.3

~~Table of Contents~~

7. 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 broker or dealer quotation services whose prices are derived principally from, or are corroborated by, observable market inputs. Also included in Level 2 are certain derivative instruments that have values that are similar to, and correlate with, quoted prices for exchange-traded instruments in active ~~markets and derivative instruments with settlement dates more than one year into the future.~~markets. Derivative instruments included in Level 3 are valued using generally unobservable inputs that are based upon the best information available and reflect management’s assumptions about how market participants would price the asset or liability. The Level 3 balances as of December 31, ~~2017,~~2019, September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, consisted of gas commodity contracts. The Company’s and the 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” on the Company’s balance sheets and in “Other Property and Investments” on Spire Missouri’s 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, Spire Missouri, or Spire Alabama and the counterparty to a derivative contract.

Spire

~~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

	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, 2017
As of December 31, 2019
ASSETS
Gas Utility
US stock/bond mutual funds	$	19.5	$	4.0	$	—	$	—		$	23.5
NYMEX/ICE natural gas contracts	0.5		—		—		(0.5		)	—
Gas Marketing
Gas Utility:
U.S. stock/bond mutual funds												$	21.2	$	—	$	—	$	—		$	21.2
Gas Marketing:
NYMEX/ICE natural gas contracts	2.4		4.0		—		(6.1		)	0.3			0.6		4.9		—		(5.3	)		0.2
Natural gas commodity contracts	—		7.7		—		(4.3		)	3.4			—		20.6		—		(4.4	)		16.2
Other:
U.S. stock/bond mutual funds													16.6		—		—		—			16.6
Total	$	22.4	$	15.7	$	—	$	(10.9	)	$	27.2	$	38.4	$	25.5	$	—	$	(9.7	)	$	54.2
LIABILITIES
Gas Utility
Gas Utility:
NYMEX/ICE natural gas contracts	$	2.7	$	—	$	—	$	(2.7	)	$	—	$	16.0	$	—	$	—	$	(16.0	)	$	—
Gas Marketing
Gas Marketing:
NYMEX/ICE natural gas contracts	1.1		5.9		—		(7.0		)	—			0.4		8.0		—		(8.4	)		—
Natural gas commodity contracts	—		8.9		0.4		(4.3		)	5.0			—		19.5		1.5		(4.4	)		16.6
Other
Other:
Interest rate swaps	—		0.8		—		—			0.8			—		24.5		—		—			24.5
Total	$	3.8	$	15.6	$	0.4	$	(14.0	)	$	5.8	$	16.4	$	52.0	$	1.5	$	(28.8	)	$	41.1

	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 September 30, 2019
ASSETS
Gas Utility:
U.S. stock/bond mutual funds	$	20.5	$	—	$	—	$	—		$	20.5
Gas Marketing:
NYMEX/ICE natural gas contracts		0.9		6.5		—		(6.9	)		0.5
Natural gas commodity contracts		—		16.8		—		(2.5	)		14.3
Other:
U.S. stock/bond mutual funds		15.5		—		—		—			15.5
Total	$	36.9	$	23.3	$	—	$	(9.4	)	$	50.8
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts	$	12.3	$	—	$	—	$	(12.3	)	$	—
Gas Marketing:
NYMEX/ICE natural gas contracts		0.4		8.5		—		(8.9	)		—
Natural gas commodity contracts		—		13.8		0.1		(2.5	)		11.4
Other:
Interest rate swaps		—		43.4		—		—			43.4
Total	$	12.7	$	65.7	$	0.1	$	(23.7	)	$	54.8

As of December 31, 2018
ASSETS
Gas Utility:
U.S. stock/bond mutual funds	$	18.3	$	—	$	—	$	—		$	18.3
NYMEX/ICE natural gas contracts		1.2		—		—		(1.2	)		—
Gas Marketing:
NYMEX/ICE natural gas contracts		0.2		11.9		—		(9.3	)		2.8
Natural gas commodity contracts		—		30.8		—		(8.3	)		22.5
Other:
U.S. stock/bond mutual funds		12.5		—		—		—			12.5
Total	$	32.2	$	42.7	$	—	$	(18.8	)	$	56.1
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts	$	0.9	$	—	$	—	$	(0.9	)	$	—
Gas Marketing:
NYMEX/ICE natural gas contracts		0.6		8.8		—		(9.4	)		—
Natural gas commodity contracts		—		25.1		0.3		(8.3	)		17.1
Other:
Interest rate swaps		—		7.5		—		—			7.5
Total	$	1.5	$	41.4	$	0.3	$	(18.6	)	$	24.6

~~Table of Contents~~

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 September 30, 2017
ASSETS
Gas Utility:
US stock/bond mutual funds $ 18.3
$ 4.1
$ —
$ —
$ 22.4
NYMEX/ICE natural gas contracts 3.4
—
—
(3.4 ) —
NYMEX gasoline and heating oil contracts 0.1
—
—
—
0.1
Gas Marketing:
NYMEX/ICE natural gas contracts 1.3
1.3
—
(2.1 ) 0.5
Natural gas commodity contracts —
6.8
0.1
(1.2 ) 5.7
Total $ 23.1
$ 12.2
$ 0.1
$ (6.7 ) $ 28.7
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts $ 1.9
$ —
$ —
$ (1.9 ) $ —
Gas Marketing:
NYMEX/ICE natural gas contracts 1.8
0.3
—
(2.1 ) —
Natural gas commodity contracts —
8.4
—
(1.2 ) 7.2
Other:
Interest rate swaps —
0.9
—
—
0.9
Total $ 3.7
$ 9.6
$ —
$ (5.2 ) $ 8.1

As of December 31, 2016
ASSETS
Gas Utility:
US stock/bond mutual funds $ 17.2
$ 4.0
$ —
$ —
$ 21.2
NYMEX/ICE natural gas contracts 8.8
—
—
(6.6 ) 2.2
NYMEX gasoline and heating oil contracts 0.7
—
—
—
0.7
Gas Marketing:
NYMEX/ICE natural gas contracts 0.7
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 $ 27.4
$ 26.5
$ —
$ (11.8 ) $ 42.1
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts $ 0.2
$ —
$ —
$ (0.2 ) $ —
Gas Marketing:
NYMEX/ICE natural gas contracts 5.1
4.8
—
(9.9 ) —
Natural gas commodity contracts —
3.8
—
(0.3 ) 3.5
Total $ 5.3
$ 8.6
$ —
$ (10.4 ) $ 3.5

~~Table of Contents~~

Spire Missouri

	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, 2019
ASSETS
U.S. stock/bond mutual funds	$	21.2	$	—	$	—	$	—		$	21.2
LIABILITIES
NYMEX/ICE natural gas contracts	$	16.0	$	—	$	—	$	(16.0	)	$	—

As of September 30, 2019
ASSETS
U.S. stock/bond mutual funds	$	20.5	$	—	$	—	$	—		$	20.5
LIABILITIES
NYMEX/ICE natural gas contracts	$	12.3	$	—	$	—	$	(12.3	)	$	—

As of December 31, 2018
ASSETS
U.S. stock/bond mutual funds	$	18.3	$	—	$	—	$	—		$	18.3
NYMEX/ICE natural gas contracts		1.2		—		—		(1.2	)		—
Total	$	19.5	$	—	$	—	$	(1.2	)	$	18.3
LIABILITIES
NYMEX/ICE natural gas contracts	$	0.9	$	—	$	—	$	(0.9	)	$	—

As of September 30, 2017
ASSETS
US stock/bond mutual funds $ 18.3
$ 4.1
$ —
$ —
$ 22.4
NYMEX/ICE natural gas contracts 3.4
—
—
(3.4 ) —
NYMEX gasoline and heating oil contracts 0.1
—
—
—
0.1
Total $ 21.8
$ 4.1
$ —
$ (3.4 ) $ 22.5
LIABILITIES
NYMEX/ICE natural gas contracts $ 1.9
$ —
$ —
$ (1.9 ) $ —
Total $ 1.9
$ —
$ —
$ (1.9 ) $ —

As of December 31, 2016
ASSETS
US stock/bond mutual funds $ 17.2
$ 4.0
$ —
$ —
$ 21.2
NYMEX/ICE natural gas contracts 8.8
—
—
(6.6 ) 2.2
NYMEX gasoline and heating oil contracts 0.5
—
—
—
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 ) $ —

Spire Alabama

Spire Alabama occasionally utilizes a gasoline derivative program to stabilize the cost of fuel used in operations. As of December 31, ~~2017,~~2019, September 30, 2018, and December 31, 2018, Spire Alabama had no0 outstanding derivative contracts. ~~As of September 30, 2017, and December 31, 2016, the fair value of related gasoline contracts was not significant.~~

~~Table of Contents~~

8. CONCENTRATIONS OF CREDIT RISK

~~Other than~~

Spire’s Gas Utility segment serves 1.7 million customers in ~~Spire Marketing, Spire has no~~3 states across multiple rate classes resulting in a significant ~~concentrations~~amount of ~~credit risk.~~

revenue diversity. Credit risk is mitigated by the high percentage of residential customers as well as the geographic diversity of the Utilities, though customers for each Utility are concentrated in a single state.

A significant portion of Spire 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~~3 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, Spire 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, Spire Marketing may require credit assurances such as prepayments, letters of credit, or parental ~~guarantees.~~guaranties. In addition, Spire Marketing may enter into netting arrangements to mitigate credit risk with counterparties in the energy industry with whom it conducts both sales and purchases of 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. Spire Marketing records accounts receivable, accounts payable, and prepayments for physical sales and purchases of natural gas on a gross basis. The amount included in its accounts receivable attributable to energy producers and their marketing affiliates totaled ~~$19.4~~$20.9 at December 31, ~~2017~~2019 ($~~15.3~~11.7 reflecting netting arrangements). Spire Marketing’s accounts receivable attributable to utility companies and their marketing affiliates totaled ~~$47.5~~$84.2 at December 31, ~~2017~~2019 ($~~45.4~~75.4 reflecting netting arrangements).

Spire Marketing also has concentrations of credit risk with ~~certain individually significant counterparties and with~~ pipeline companies associated with its natural gas receivable ~~amounts.~~and with certain individually significant counterparties. At December 31, ~~2017,~~2019, the amounts included in accounts receivable from its ~~five~~5 largest counterparties (in terms of net accounts receivable exposure) totaled ~~$26.7~~$33.6 ($~~23.9~~30.7 reflecting netting arrangements). ~~Three of~~Of these ~~five~~5 counterparties, 2 are investment-grade rated ~~companies. The remaining two counterparties~~utilities. Of the three that are not rated, ~~but are subsidiaries~~1 has its outstanding credit guaranteed by a creditworthy subsidiary of an investment-grade rated ~~companies.~~

8.company, another is not rated but each of its owners is investment-grade, and the third has its outstanding credit supported by a parental guaranty.

9. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Pension Plans

Spire and the Utilities maintain pension plans for their employees.

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)~~U.S. government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments.

Spire Alabama has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its employees. Qualified plan assets are comprised of mutual and commingled funds consisting of USU.S. equities with varying strategies, global equities, alternative investments, and fixed income investments.

~~Table of Contents~~

The net periodic pension cost included the following components:

	Three Months Ended December 31,
	2019			2018
Spire
Service cost – benefits earned during the period	$	5.5		$	4.8
Interest cost on projected benefit obligation*		5.9			7.1
Expected return on plan assets*		(9.2	)		(9.1	)
Amortization of prior service credit*		(0.6	)		(0.3	)
Amortization of actuarial loss*		3.7			2.3
Subtotal		5.3			4.8
Regulatory adjustment		9.6			9.9
Net pension cost	$	14.9		$	14.7

Spire Missouri
Service cost – benefits earned during the period	$	3.8		$	3.1
Interest cost on projected benefit obligation*		4.2			5.0
Expected return on plan assets*		(6.6	)		(6.4	)
Amortization of prior service cost*		—			0.2
Amortization of actuarial loss*		2.9			2.1
Subtotal		4.3			4.0
Regulatory adjustment		7.7			8.0
Net pension cost	$	12.0		$	12.0

Spire Alabama
Service cost – benefits earned during the period	$	1.5		$	1.5
Interest cost on projected benefit obligation*		1.2			1.5
Expected return on plan assets*		(1.7	)		(1.8	)
Amortization of prior service credit*		(0.6	)		(0.4	)
Amortization of actuarial loss*		0.8			0.2
Subtotal		1.2			1.0
Regulatory adjustment		1.7			1.7
Net pension cost	$	2.9		$	2.7

Three Months Ended December 31,
2017 2016
Spire
Service cost – benefits earned during the period $ 5.2
$ 5.3
Interest cost on projected benefit obligation 6.9
6.9
Expected return on plan assets (9.7 ) (9.9 )
Amortization of prior service (credit) cost (0.3 ) 0.2
Amortization of actuarial loss 3.1
3.4
Subtotal 5.2
5.9
Regulatory adjustment 4.3
4.6
Net pension cost $ 9.5
$ 10.5

Spire Missouri
Service cost – benefits earned during the period $ 3.3
$ 3.3
Interest cost on projected benefit obligation 4.9
4.8
Expected return on plan assets (7.2 ) (7.3 )
Amortization of prior service cost 0.2
0.2
Amortization of actuarial loss 2.6
2.9
Subtotal 3.8
3.9
Regulatory adjustment 2.4
2.8
Net pension cost $ 6.2
$ 6.7

Spire Alabama
Service cost – benefits earned during the period $ 1.6
$ 1.6
Interest cost on projected benefit obligation 1.4
1.5
Expected return on plan assets (1.7 ) (1.8 )
Amortization of prior service credit (0.5 ) —
Amortization of actuarial loss 0.5
0.5
Subtotal 1.3
1.8
Regulatory adjustment 1.7
1.6
Net pension cost $ 3.0
$ 3.4

* Denotes pension expense line items that are recorded below the operating income line in the income statements, in the line item “Other Income (Expense), Net.”

Pursuant to the provisions of the Missouri Utilities’ and Spire Alabama’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 the sum of service and interest costs in a specific year. Special termination benefits, when offered, are also recognized as settlements which can result ingains or losses. In For the first quarter ~~ended December 31, 2017, none~~ of ~~the~~both fiscal 2020 and fiscal 2019, no pension plans ~~of Spire Missouri or Spire Alabama~~ met the criteria for settlement recognition.

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 ~~2018~~2020 contributions to Spire Missouri’s pension plans through December 31, ~~2017,~~2019 were ~~$6.5~~$4.1 to the qualified trusts and ~~none~~0ne to non-qualified plans. There were no$1.6 of fiscal ~~2018~~2020 contributions to the Spire Alabama pension plans through December 31, ~~2017.~~

2019.

Contributions to the qualified trusts of the Missouri Utilities’ pension plans for the remainder of fiscal ~~2018~~2020 are anticipated to be ~~$29.4 to the qualified trusts and $0.5 to the non-qualified plans. No contributions~~$24.9. Contributions to Spire Alabama’s pension plans are expected to be ~~required~~$11.5 for the remainder of fiscal ~~2018.~~

2020.

~~Table of Contents~~

Other Postretirement Benefits

Spire and the Utilities provide certain life insurance benefits at retirement. Spire Missouri plans provide for medical insurance after early retirement until age 65. For retirements prior to January 1, 2015, the Spire Missouri West plans provided medical insurance after retirement until death. The Spire Alabama plans provide medical insurance 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 costs consisted of the following components:

	Three Months Ended December 31,
	2019			2018
Spire
Service cost – benefits earned during the period	$	1.4		$	1.9
Interest cost on accumulated postretirement benefit obligation*		1.6			2.3
Expected return on plan assets*		(4.1	)		(4.1	)
Amortization of prior service credit*		(0.2	)		—
Amortization of actuarial gain*		(0.5	)		(0.1	)
Subtotal		(1.8	)		—
Regulatory adjustment		4.0			2.4
Net postretirement benefit cost	$	2.2		$	2.4

Spire Missouri
Service cost – benefits earned during the period	$	1.3		$	1.7
Interest cost on accumulated postretirement benefit obligation*		1.2			1.7
Expected return on plan assets*		(2.8	)		(2.8	)
Amortization of prior service (credit) cost*		(0.1	)		0.1
Amortization of actuarial gain*		(0.5	)		(0.1	)
Subtotal		(0.9	)		0.6
Regulatory adjustment		4.4			2.9
Net postretirement benefit cost	$	3.5		$	3.5

Spire Alabama
Service cost – benefits earned during the period	$	0.1		$	0.1
Interest cost on accumulated postretirement benefit obligation*		0.3			0.5
Expected return on plan assets*		(1.2	)		(1.2	)
Amortization of prior service credit*		(0.1	)		(0.1	)
Subtotal		(0.9	)		(0.7	)
Regulatory adjustment		(0.4	)		(0.5	)
Net postretirement benefit income	$	(1.3	)	$	(1.2	)

Three Months Ended December 31,
2017 2016
Spire
Service cost – benefits earned during the period $ 2.3
$ 2.8
Interest cost on accumulated postretirement benefit obligation 2.2
2.1
Expected return on plan assets (3.5 ) (3.4 )
Amortization of actuarial loss 0.2
0.6
Subtotal 1.2
2.1
Regulatory adjustment 0.1
(0.8 )
Net postretirement benefit cost $ 1.3
$ 1.3

Spire Missouri
Service cost – benefits earned during the period $ 2.2
$ 2.6
Interest cost on accumulated postretirement benefit obligation 1.8
1.7
Expected return on plan assets (2.4 ) (2.3 )
Amortization of prior service cost 0.1
0.1
Amortization of actuarial loss 0.2
0.6
Subtotal 1.9
2.7
Regulatory adjustment 0.5
(0.4 )
Net postretirement benefit cost $ 2.4
$ 2.3

Spire Alabama
Service cost – benefits earned during the period $ —
$ 0.1
Interest cost on accumulated postretirement benefit obligation 0.4
0.4
Expected return on plan assets (1.0 ) (1.1 )
Amortization of prior service credit (0.1 ) (0.1 )
Subtotal (0.7 ) (0.7 )
Regulatory adjustment (0.4 ) (0.4 )
Net postretirement benefit income $ (1.1 ) $ (1.1 )

* Denotes other postretirement expense line items that are recorded below the operating income line in the income statements, in the line item “Other Income (Expense), Net.”

Missouri and Alabama state ~~law~~laws provide 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.

The 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 have been no 0contributions to the postretirement plans through December 31, ~~2017,~~2019 for the Missouri Utilities. Contributions to the postretirement plans for the remainder of fiscal year 2018 are anticipated to be $6.9 to the qualified trusts and $0.8 paid directly to participants from the Missouri Utilities’ funds. ForUtilities or Spire Alabama, ~~there were no contributions to the postretirement plans during the first three months of fiscal 2018,~~ and ~~none~~0ne are expected to be required for the remainder of the fiscal year.

~~Table of Contents~~

10. INFORMATION BY OPERATING SEGMENT

The Company has ~~two~~2 reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment is the aggregation of the operations of the Utilities. The Gas Marketing segment includes the results of 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:~~components of the Company’s consolidated information include:

•

unallocated corporate items, including certain debt and associated interest costs;

~~unallocated corporate costs, including certain debt and associated interest costs;~~

•

Spire STL Pipeline, a subsidiary of Spire which has constructed and, as of November 2019, operates a 65-mile FERC-regulated pipeline to deliver natural gas into eastern Missouri;

Spire STL Pipeline LLC, a subsidiary of Spire planning construction and operation of a proposed 65-mile Federal Energy Regulatory Commission (FERC)-regulated pipeline to deliver natural gas into eastern Missouri;

•

Spire Storage, a subsidiary of Spire providing physical natural gas storage services; and

•

Spire’s subsidiaries engaged in the operation of a propane pipeline, the compression ~~and storage~~ of natural gas, and risk management, among other activities.

Accounting policies are described in Note 1, Summary of Significant Accounting Policies. Intersegment transactions include sales of natural gas from Spire Marketing to Spire Missouri and Spire Alabama, sales of natural gas from Spire Missouri to Spire Marketing, propane transportation services provided by Spire NGL Inc. to Spire Missouri, and propane storage services provided by Spire Missouri to Spire NGL Inc.

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~~fair value accounting and ~~losses and other~~ timing ~~differences~~adjustments associated with energy-related transactions, ~~and excludes~~ the ~~after-tax~~ impacts ~~related to~~of acquisition, divestiture and restructuring ~~activities. Net economic earnings also exclude~~activities, and the largely non-cash ~~impact~~impacts of other non-recurring or unusual items such as certain regulatory, legislative, or GAAP standard-setting actions. In fiscal 2020, this includes provisions for the ~~recently enacted federal Tax Cuts and Jobs Act, including related amounts that may be subject to regulatory treatment~~.ISRS rulings discussed in Note 4, Regulatory Matters.

	Gas Utility		Gas Marketing		Other			Eliminations			Consolidated
Three Months Ended December 31, 2019
Operating Revenues:
Revenues from external customers	$	530.6	$	32.3	$	4.0		$	—		$	566.9
Intersegment revenues		0.1		—		7.1			(7.2	)		—
Total Operating Revenues		530.7		32.3		11.1			(7.2	)		566.9
Operating Expenses:
Gas Utility
Natural and propane gas		241.5		—		—			(26.9	)		214.6
Operation and maintenance		108.6		—		—			(2.6	)		106.0
Depreciation and amortization		46.4		—		—			—			46.4
Taxes, other than income taxes		37.9		—		—			—			37.9
Total Gas Utility Operating Expenses		434.4		—		—			(29.5	)		404.9
Gas Marketing and Other		—		27.9		9.5			22.3			59.7
Total Operating Expenses		434.4		27.9		9.5			(7.2	)		464.6
Operating Income	$	96.3	$	4.4	$	1.6		$	—		$	102.3
Net Economic Earnings (Loss)	$	69.1	$	6.1	$	(3.4	)	$	—		$	71.8

Gas Utility Gas Marketing Other Eliminations Consolidated
Three Months Ended December 31, 2017
Operating Revenues:
Revenues from external customers $ 541.9
$ 19.6
$ 0.3
$ —
$ 561.8
Intersegment revenues 0.1
—
2.5
(2.6 ) —
Total Operating Revenues 542.0
19.6
2.8
(2.6 ) 561.8
Operating Expenses:
Gas Utility
Natural and propane gas 263.4
—
—
(22.6 ) 240.8
Operation and maintenance 99.8
—
—
(1.9 ) 97.9
Depreciation and amortization 40.3
—
—
—
40.3
Taxes, other than income taxes 36.7
—
—
—
36.7
Total Gas Utility Operating Expenses 440.2
—
—
(24.5 ) 415.7
Gas Marketing and Other —
14.6
4.5
21.9
41.0
Total Operating Expenses 440.2
14.6
4.5
(2.6 ) 456.7
Operating Income (Loss) $ 101.8
$ 5.0
$ (1.7 ) $ —
$ 105.1
Net Economic Earnings (Loss) $ 59.5
$ 3.6
$ (5.2 ) $ —
$ 57.9

	Gas Utility		Gas Marketing		Other			Eliminations			Consolidated
Three Months Ended December 31, 2018
Operating Revenues:
Revenues from external customers	$	573.8	$	25.8	$	2.4		$	—		$	602.0
Intersegment revenues		1.4		—		3.0			(4.4	)		—
Total Operating Revenues		575.2		25.8		5.4			(4.4	)		602.0
Operating Expenses:
Gas Utility
Natural and propane gas		291.8		—		—			(40.1	)		251.7
Operation and maintenance		104.9		—		—			(2.4	)		102.5
Depreciation and amortization		43.7		—		—			—			43.7
Taxes, other than income taxes		39.2		—		—			—			39.2
Total Gas Utility Operating Expenses		479.6		—		—			(42.5	)		437.1
Gas Marketing and Other		—		13.3		8.4			38.1			59.8
Total Operating Expenses		479.6		13.3		8.4			(4.4	)		496.9
Operating Income (Loss)	$	95.6	$	12.5	$	(3.0	)	$	—		$	105.1
Net Economic Earnings (Loss)	$	66.4	$	8.3	$	(8.8	)	$	—		$	65.9

~~Table of Contents~~

Gas Utility Gas Marketing Other Eliminations Consolidated
Three Months Ended December 31, 2016
Operating Revenues:
Revenues from external customers $ 472.3
$ 21.7
$ 1.1
$ —
$ 495.1
Intersegment revenues 4.4
—
0.7
(5.1 ) —
Total Operating Revenues 476.7
21.7
1.8
(5.1 ) 495.1
Operating Expenses:
Gas Utility
Natural and propane gas 214.5
—
—
(20.7 ) 193.8
Operation and maintenance 100.5
—
—
(1.1 ) 99.4
Depreciation and amortization 37.7
—
—
—
37.7
Taxes, other than income taxes 33.4
—
—
—
33.4
Total Gas Utility Operating Expenses 386.1
—
—
(21.8 ) 364.3
Gas Marketing and Other —
23.0
2.0
16.7
41.7
Total Operating Expenses 386.1
23.0
2.0
(5.1 ) 406.0
Operating Income (Loss) $ 90.6
$ (1.3 ) $ (0.2 ) $ —
$ 89.1
Net Economic Earnings (Loss) $ 51.8
$ 1.4
$ (5.7 ) $ —
$ 47.5

The Company’s total assets by segment were as follows:

	December 31,			September 30,			December 31,
	2019			2019			2018
Total Assets:
Gas Utility	$	6,306.0		$	6,094.6		$	5,843.7
Gas Marketing		242.7			212.3			416.7
Other		2,450.5			2,692.7			2,535.6
Eliminations		(1,038.2	)		(1,380.4	)		(1,563.8	)
Total Assets	$	7,961.0		$	7,619.2		$	7,232.2

December 31, September 30, December 31,
2017 2017 2016
Total Assets:
Gas Utility $ 5,611.7
$ 5,551.2
$ 5,375.6
Gas Marketing 233.5
246.2
225.0
Other 2,427.7
2,239.5
1,848.7
Eliminations (1,571.8 ) (1,490.2 ) (1,139.2 )
Total Assets $ 6,701.1
$ 6,546.7
$ 6,310.1

The following table reconciles the Company’s net economic earnings to net income.

	Three Months Ended December 31,
	2019			2018
Net Income	$	67.0		$	67.3
Adjustments, pre-tax:
Provision for ISRS rulings		2.6			—
Unrealized loss (gain) on energy-related derivatives		3.7			(2.2	)
Acquisition, divestiture and restructuring activities		—			0.4
Income tax effect of adjustments		(1.5	)		0.4
Net Economic Earnings	$	71.8		$	65.9

Three Months Ended December 31,
2017 2016
Net Income $ 116.0
$ 45.2
Adjustments, pre-tax:
Unrealized loss on energy-related derivative contracts 0.8
3.8
Lower of cost or market inventory adjustments —
(0.1 )
Realized gain on economic hedges prior to sale of the physical commodity (0.1 ) (0.1 )
Acquisition, divestiture and restructuring activities 1.7
0.1
Income tax effect of adjustments (0.6 ) (1.4 )
Effects of the Tax Cuts and Jobs Act (59.9 ) —
Net Economic Earnings $ 57.9
$ 47.5

~~Table of Contents~~

~~10.~~

11. COMMITMENTS AND CONTINGENCIES

Commitments

The Company and the Utilities have entered into contracts with various counterparties, expiring on dates through ~~2031,~~2032, for the storage, transportation, and supply of natural gas. Minimum payments required under the contracts in place at December 31, ~~2017,~~2019, are estimated at ~~$1,121.2, $483.8,~~$1,554.6, $690.3, and ~~$263.4~~$239.3 for the Company, Spire Missouri, and Spire Alabama, respectively. Additional contracts are generally entered into prior to or during the heating season of November through April. The Utilities recover their costs from customers in accordance with their PGA clauses or GSA riders.

Contingencies

The Company and the Utilities account for contingencies, including environmental liabilities, in accordance with accounting standards under the loss contingency guidance of ASC Topic 450, Contingencies, when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

In addition to matters noted below, the Company and the Utilities 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, Spire Missouri, or Spire Alabama. However, there is uncertainty in the valuation of pending claims and prediction of litigation results.

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 or Utilities’ financial position and results of operations. As environmental laws, regulations, and their interpretations change, the Company or the Utilities may incur additional environmental liabilities that may result in additional costs, which may be material.

In the natural gas industry, many gas distribution companies have incurred environmental liabilities associated with sites they or their predecessor companies formerly owned or operated where manufactured gas operations took place. The Utilities each have former manufactured gas plant (MGP) operations in their respective service territories. To the extent costs are incurred associated with environmental remediation activities, the Utilities would request authority from their respective regulators to defer such costs (less any amounts received from insurance proceeds or as contributions from other potentially responsible parties (PRPs)) and collect them through future rates.

~~Spire~~

On June 14, 2017, Spire filed a lawsuit against Cellular South, Inc. d/b/a C-Spire in federal district court for the Southern District of Alabama, Civil Action 17-00266-KD-N, seeking a declaratory order that Spire’s SPIRE trademarks do not infringe upon Cellular South’s C-SPIRE trademarks, and that Spire is entitled to federal registration of its trademarks. In prior proceedings before the United States Patent and Trademark Office, Cellular South filed oppositions to Spire’s attempts to register the SPIRE name, the SPIRE logo and the SPIRE LOGO + HANDSHAKE trademarks. In answer to Spire’s lawsuit, Cellular South filed counterclaims alleging infringement and unfair business practices, and seeking a declaration of infringement and that SPIRE marks are not registrable by Spire. On September 11, 2017, a federal district court judge denied Cellular South’s motion for a temporary restraining order and an injunction that would have prohibited Spire from using the SPIRE trademarks in Alabama and Mississippi. After consultation with counsel, the Company does not believe that the final resolution of this matter will have a material impact on the Company’s financial condition or results of operations.

Since April 2012, a total of 14 lawsuits encompassing more than 1,600 plaintiffs have been filed against Spire Gulf in Mobile County Circuit Court alleging that in the first half of 2008, Spire Gulf spilled tert-butyl mercaptan, an odorant added to natural gas for safety reasons, in Eight Mile, Alabama. All of the lawsuits have been substantially settled, with the exception of 31 individuals who rejected their settlement offers and whose claims remain pending. Those remaining claims allege nuisance, fraud and negligence causes of actions, and seek unspecified compensatory and punitive damages. A claim has been made against the insurance carriers requesting reimbursement for costs accrued in respect to this spill, and a related receivable has been recorded. The Company does not expect potential liabilities that may arise from these lawsuits to have a material impact on its future financial condition or results of operations.

~~Table of Contents~~

Spire Missouri

Spire Missouri has identified ~~three~~3 former MGP sites in the city of St. Louis, Missouri ~~(City)~~(the “City”) where costs have been incurred and claims have been asserted. Spire Missouri has enrolled ~~two~~2 of the sites in the Missouri Department of Natural Resources (MDNR) Brownfields/Voluntary Cleanup Program (BVCP). The third site is the result of a relatively new claim assertion by the United States Environmental Protection Agency (EPA) ~~and such claim is currently being investigated.~~

In conjunction with redevelopment of one of the sites, Spire Missouri and another former owner of the site entered into an agreement ~~(Remediation Agreement)~~(the “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 MDNR. The Remediation Agreement also provides for a release of Spire Missouri 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 Spire Missouri 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 Spire Missouri did not materially impact the financial condition, results of operations, or cash flows of the Company.

Spire Missouri has not owned the second site for many years. In a letter dated June 29, 2011, the Attorney General for the State of Missouri informed Spire Missouri that the MDNR had completed an investigation of the site. The Attorney General requested that Spire Missouri participate in the follow up investigations of the site. In a letter dated January 10, 2012, Spire Missouri stated that it would participate in future environmental response activities at the site in conjunction with other PRPs that are willing to contribute to such efforts in a meaningful and equitable fashion. Accordingly, Spire Missouri entered into a cost sharing agreement for remedial investigation with other PRPs. ~~Pending~~To date, MDNR ~~approval, which~~ has not ~~occurred to date,~~approved the agreement, so remedial investigation ~~of the site will begin.~~has not yet occurred.

Additionally, in correspondence dated November 30, 2016, Region 7 of the EPA has asserted that Spire Missouri 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 third site in the northern portion of the City on which Spire Missouri operated a MGP. Spire Missouri has not owned or operated the site (also known as Station “B”) for over 70 years. Spire Missouri and the site owner have met with the EPA and reviewed its assertions. Both Spire Missouri and the site owner have notified the EPA that ~~the~~ information and data provided by the EPA to date does not rise to the level of documenting a threat to the public health or environment. As such, Spire Missouri ~~is requesting~~requested more information from the EPA, some of which ~~will~~would also be utilized to identify other former owners and operators of the site that could be added as PRPs. To date, Spire Missouri has not received a response from the EPA.

Spire Missouri has notified its insurers that it seeks reimbursement for costs incurred in the past and future potential liabilities associated with ~~the~~these MGP sites. While some of the insurers have denied coverage and reserved their rights, Spire Missouri ~~continues~~retains the right to ~~discuss~~seek potential reimbursements ~~with~~from them.

On March 10, 2015, Spire Missouri received a Section 104(e) information request under CERCLA from EPA Region 7 regarding the former Thompson Chemical/Superior Solvents site in the City. In turn, Spire Missouri 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. Spire Missouri has received no further inquiry from the EPA regarding this matter.

In its western service area, Spire Missouri has ~~seven~~7 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. On September 15, 2016, a request was made with the MDNR for a restrictive covenant use limitation with respect to Joplin. Remediation efforts at the seven sites are at various stages of completion, ranging from groundwater monitoring and sampling following source removal activities to the aforementioned request in respect to Joplin. As part of its participation in the BVCP, ~~MGE~~Spire Missouri communicates regularly with the MDNR with respect to its remediation efforts and monitoring activities at these sites. On May 11, 2015, MDNR approved the next phase of investigation at the Kansas City Station A North and Railroad areas.

~~Table of Contents~~

To date, costs incurred for all Missouri 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 Spire Missouri 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 PRPs to pay, and any insurance recoveries.

In 2013, Spire Missouri retained an outside consultant to conduct probabilistic cost modeling of 19 former MGP sites owned or operated by Spire 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. Spire Missouri has recorded its best estimate of the probable expenditures that relate to these matters. The amount is not material.

Spire Missouri 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.

Spire Alabama

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. Spire Alabama 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. Spire Alabama has been named as a defendant in several lawsuits arising from the incident, some of which remain pending.

Spire Alabama is in the chain of title of ~~nine~~9 former MGP sites, ~~four~~4 of which it still owns, and ~~five~~5 former manufactured gas distribution sites, ~~one~~1 of which it still owns. Spire Alabama does not foresee a probable or reasonably estimable loss associated with these sites. Spire Alabama 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.

In 2012, Spire Alabama responded to an EPA Request for Information Pursuant to Section 104 of CERCLA relating to the 35th Avenue Superfund Site located in North Birmingham, Jefferson County, Alabama. Spire Alabama 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, Spire Alabama 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.

Spire

In addition to those discussed above for Spire Missouri and Spire Alabama, Spire is aware of the following contingent matter.

In February 2018, the Company was made aware of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by the South Alabama Center for Fair Housing and the National Community Reinvestment Coalition. The complaint alleges that the Company discriminated against unspecified residents of Eight Mile, Alabama, on the basis of race in violation of the Fair Housing Act by failing to adequately address the odorant release that occurred in 2008. The Company believes there is no basis for the complaint, HUD has no jurisdiction in the matter, and there will be no material impact on its future financial condition or results of operations.

12. LEASES

The lease agreement covering the Company’s primary office space in St. Louis extends through February 2035, with an option to renew for an additional five years. Spire Alabama currently has leased office space in 2 buildings in Birmingham; one lease expires in 2020 and the other extends through January 2024. The lease agreement covering Spire Marketing and Spire Storage office space in Houston extends through December 2028, with options to terminate three years earlier or to renew for an additional five years. The St. Louis and Houston renewals are reasonably certain and are included in the lease term used to determine the right-of use assets and lease liabilities. The Company and its subsidiaries have other relatively minor rental arrangements for real estate and equipment with remaining terms of up to eleven years.

Operating lease cost, cash flow and noncash information for the three months ended December 31, 2019 are shown in the following table.

	Spire		Spire Missouri		Spire Alabama
Operating lease cost, including amounts capitalized	$	2.4	$	0.2	$	1.0
Cash flow and noncash information about operating leases:
Operating cash flows representing cash paid for amounts included in the measurement of lease liabilities		2.3		0.2		1.0
Right-of-use assets obtained in exchange for lease liabilities		71.1		2.1		10.0

The following table shows balance sheet and weighted-average information about operating leases as of December 31, 2019.

	Balance sheet classification	Spire			Spire Missouri			Spire Alabama
Right-of-use assets	Deferred Charges and Other Assets: Other	$	69.3		$	1.9		$	9.0
Lease liabilities, current	Current Liabilities, Other		7.3			0.3			2.6
Lease liabilities, noncurrent	Deferred Credits and Other Liabilities: Other		61.8			1.6			6.1
Weighted-average remaining lease term		16.2 years			6.0 years			3.8 years
Weighted-average discount rate			4.1	%		2.5	%		2.2	%

~~Table~~

Following is a maturity analysis by fiscal year for operating lease liabilities as of ~~Contents~~December 31, 2019.

	Spire			Spire Missouri			Spire Alabama
Remainder of 2020	$	5.6		$	0.2		$	2.1
2021		7.2			0.4			2.1
2022		7.2			0.4			2.1
2023		7.2			0.3			2.1
2024		5.8			0.3			0.7
2025		5.1			0.3			—
Thereafter		58.4			0.2			—
Total undiscounted lease payments		96.5			2.1			9.1
Less present value discount		(27.4	)		(0.2	)		(0.4	)
Total current and noncurrent lease liabilities	$	69.1		$	1.9		$	8.7

As of September 30, 2019, the annual minimum rental commitments for operating leases (under ASC 840) were as follows.

	2020		2021		2022		2023		2024		Later		Total
Spire	$	8.2	$	7.0	$	6.8	$	6.1	$	4.8	$	36.5	$	69.4
Spire Missouri		0.5		0.2		—		—		—		—		0.7
Spire Alabama		2.9		2.1		2.1		2.1		0.7		—		9.9

~~11. INCOME TAXES~~

There are no significant finance leases, short-term leases, subleases, variable lease payments, residual value guarantees, restrictions or covenants pertaining to leases.

The ~~Tax Cuts~~Company elected, for all asset classes, not to recognize right-of-use assets and ~~Jobs Act (the TCJA) was signed into law~~lease liabilities for short-term leases. Instead, the lease payments are recognized in profit or loss on ~~December 22, 2017, with an effective date of January 1, 2018, for substantially all of~~a straight-line basis over the ~~provisions. This comprehensive act includes significant reform of the current income tax code including changes in the calculation for business entities~~lease term and a reduction in the corporate federal income tax rate from 35% to 21%. The specific provisions related to regulated public utilities in the TCJA generally allow for the continued deductibility of interest expense, the elimination of full expensing for tax purposes of certain property acquired after September 27, 2017, and the continuation of certain rate normalization requirements for accelerated depreciation benefits.

~~ASC Topic 740,~~ ~~Income Taxes~~ ~~requires that the effects of changes in tax laws be~~variable lease payments are recognized in the period in which the ~~new law~~obligation for those payments is enacted, or the quarter ended December 31, 2017. It also requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. For the Company’s regulated entities, the changes in deferred taxes related to the regulated operations are recorded as either an offset to or creation of a regulatory asset or liability and may be subject to refund to customers in future periods. The changes in deferred taxes that are not associated with rate making (including all changes for the Company’s unregulated operations) are recorded as adjustments to deferred tax expense.

incurred. The Company ~~has recorded TCJA impacts~~elected, for all asset classes, not to separate nonlease components from lease components and reflected those amounts in the December 31, 2017, financial statements. The amounts recorded are based on information known and reasonable estimates used as of the end of the quarter ended December 31, 2017, but are subject to change based on a number of factors, including further actions of regulators, the Company filing its tax returns for the year ended September 30, 2017, and completion of the Company’s interim and annual financial statements for the year ending September 30, 2018. The items recorded include the impact of the federal income tax rate reduction and the revaluation of the deferred tax assets and liabilities. The amounts recorded, which had no impact on cash flows for the quarter ended December 31, 2017, are presented in the table below.

Spire Spire Missouri Spire Alabama
Adjustment to deferred tax assets $ —
$ —
$ (60.8 )
Adjustment to deferred tax liabilities (296.6 ) (264.1 ) —

Adjustment to deferred income tax expense (59.9 ) (43.9 ) 59.2

Adjustment to regulatory assets (59.4 ) (61.0 ) 1.6
Adjustment to regulatory liabilities 177.3
159.2
—

~~As indicated in Note 1, the Company’s regulated operations accounting for income taxes is impacted by ASC 980,~~ ~~Regulated Operations~~. Reductions in deferred income tax balances due to the reduction in the corporate income tax rate will result in amounts previously collected from utility customers for these deferred taxes to be refundable to such customers, generally through reductions in future rates. The TCJA includes provisions that stipulate how these excess deferred taxes are to be passed back to customers for certain accelerated tax depreciation benefits. Potential refunds of other deferred taxes will be determined by state regulators. The Company is also addressing with state regulators the reduction of the corporate income tax rate in the current rates being charged to utility customers. The decrease in tax rate will result in an over-collection of income taxes from January 1, 2018, until the rates are reset. The Company anticipates recording an adjustment to future ratesinstead to account for ~~this matter.~~

each separate lease component and the nonlease components associated with that lease component as a single lease component.

The discount rate used for all the leases is the applicable incremental borrowing rate, which is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. For a subsidiary lessee, the rate applicable to the subsidiary is used unless the lease terms are influenced by parent credit.

~~Table~~

Item 2. Management’s Discussion and Analysis of ~~Contents~~

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Financial Condition and Results of Operations

(Dollars in millions, except per unit and per share amounts)

This section analyzes the financial condition and results of operations of Spire Inc. ~~(Spire or the Company)~~(the “Company”), Spire Missouri Inc. ~~(Spire Missouri or the Missouri Utilities)~~, and Spire Alabama Inc. ~~(Spire Alabama).~~ Spire Missouri, Spire Alabama and Spire EnergySouth ~~Inc. (Spire EnergySouth)~~ are wholly owned subsidiaries of the Company. Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth are collectively referred to as the ~~Utilities.~~“Utilities.” The subsidiaries of Spire EnergySouth are Spire Gulf ~~Inc. (Spire Gulf)~~ and Spire ~~Mississippi Inc. (Spire Mississippi).~~Mississippi. This section includes management’s view of factors that affect the respective businesses of the Company, Spire Missouri and Spire Alabama, explanations of financial results including changes in earnings and costs from the prior periods, and the effects of such factors on the Company’s, Spire Missouri’s and Spire Alabama’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,” “target,” 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 or outcomes 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;~~

~~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;

~~The recent acquisitions may not achieve their intended results, including anticipated cost savings;~~

~~The Spire STL Pipeline project may be hindered or halted by regulatory, legal, or other obstacles;~~

~~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,~~

•

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, and the impact on our competitive position in relation to suppliers of alternative heating sources, such as electricity;

•

Acquisitions may not achieve their intended results;

•

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,

▪

capital structures established for rate-setting purposes,

▪

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~~

▪

taxes,

▪~~accounting standards;~~

▪

pension and other postretirement benefit liabilities and funding obligations, or

•~~The results of litigation;~~

▪

accounting standards;

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;

•

The results of litigation;

~~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;~~

•

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;

•

Energy commodity market conditions;

~~Table of Contents~~

•

Discovery of material weakness in internal controls;

•

The disruption, failure or malfunction of our operational and information technology systems, including due to cyberattacks; and

•

Employee workforce issues, including but not limited to labor disputes, the inability to attract and retain key talent, and future wage and employee benefit costs, including costs resulting from changes in discount rates and returns on benefit plan assets.

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~~ Spire Missouri’s and Spire Alabama’s Condensed Financial Statements, and the notes thereto.

~~RESULTS OF OPERATIONS~~

~~Overview~~

OVERVIEW

The Company has two reportable segments: Gas Utility and Gas Marketing. Nearly all of 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 Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth.~~ Due to the seasonal nature of the Utilities’ business and the Spire Missouri rate design, earnings of Spire ~~Spire Missouri~~ and ~~Spire Alabama~~each of the Utilities are typically concentrated during the heating season of November through April each fiscal year.

Gas Utility - Spire Missouri

Spire Missouri is Missouri’s largest natural gas distribution utility and is regulated by the ~~Missouri Public Service Commission (MoPSC).~~MoPSC. Spire Missouri serves St. Louis and eastern Missouri through Spire Missouri East and serves Kansas City and western Missouri through Spire Missouri West. Spire Missouri purchases natural gas in the wholesale market from producers and marketers and ships the gas through interstate pipelines into its own distribution facilities for sale to residential, commercial and industrial customers. Spire Missouri also transports gas through its distribution system for certain larger customers who buy their own gas on the wholesale market. Spire Missouri delivers natural gas to ~~retail~~ customers at rates and in accordance with tariffs authorized by the MoPSC. The earnings of Spire Missouri 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 Spire Missouri’s earnings.

Gas Utility - Spire Alabama

Spire Alabama is the largest natural gas distribution utility in the state of ~~Alabama.~~Alabama and is regulated by the APSC. Spire Alabama’s service territory is located in central and northern Alabama. Among the cities served by Spire Alabama are Birmingham, the center of the largest metropolitan area in the state, and Montgomery, the state capital. ~~Spire Alabama is regulated by the Alabama Public Service Commission (APSC).~~ Spire Alabama purchases natural gas through interstate and intrastate suppliers and distributes the purchased gas through its distribution facilities for sale to residential, commercial and industrial customers, and other end-users of natural gas. Spire Alabama also provides transportation services to large industrial and commercial customers located on its distribution system. These transportation customers, using Spire Alabama as their agent or acting on their own, purchase gas directly from marketers or suppliers and arrange for delivery of the gas into the Spire Alabama distribution system. Spire Alabama charges a fee to transport such customer-owned gas through its distribution system to the customers’ facilities.

Gas Utility - Spire EnergySouth

Spire Gulf and Spire Mississippi are utilities engaged in the purchase, retail distribution and sale of natural gas to approximately 100,000 customers in southern Alabama and south-central Mississippi. Spire Gulf is regulated by the APSC, and Spire Mississippi is regulated by the MSPSC.

Gas Marketing

Spire Marketing ~~Inc. (Spire Marketing)~~ is engaged in the marketing of natural gas and related activities on a non-regulated basis and is reported in the Gas Marketing segment. Spire Marketing markets natural gas across the ~~country with the core of its footprint located in~~central and ~~around the central United States (US).~~southern U.S. It holds firm transportation and storage contracts in order to effectively manage its ~~customer base,~~transactions with counterparties, which ~~consists of~~primarily include producers, ~~pipelines, power generators, storage operators,~~ municipalities, electric and gas utility companies, and large commercial and industrial customers.

Other

~~In addition to the Gas Utility and Gas Marketing segments, other non-utility activities~~

Other components of the ~~Company~~Company’s consolidated information include:

•

unallocated corporate items, including certain debt and associated interest costs;

~~unallocated corporate costs, including certain debt and associated interest costs;~~

•

Spire STL Pipeline LLC (“Spire STL Pipeline”) and Spire Storage West LLC (“Spire Storage”), described below; and

•

Spire’s subsidiaries engaged in the operation of a propane pipeline, the compression of natural gas, and risk management, among other activities.

Spire STL Pipeline ~~LLC,~~is a wholly owned subsidiary of Spire ~~planning construction~~which owns and ~~operation~~operates a 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire Missouri’s storage facility. The pipeline is under the jurisdiction of ~~a proposed 65-mile~~the Federal Energy Regulatory Commission (FERC) ~~regulated pipeline~~and is capable of delivering up to ~~deliver~~4 million therms per day of natural gas into eastern ~~Missouri;~~Missouri. Spire Missouri is the foundation shipper with a contractual commitment of 3.5 million therms per day. The pipeline was primarily constructed during fiscal 2019. In November 2019, Spire STL Pipeline received final authorization from the FERC and

~~Spire’s subsidiaries~~ placed the pipeline into service.

Spire Storage is engaged in the ~~operation of a propane pipeline, compression and~~ storage of natural gas in the Western region of the United States. The facility consists of two storage fields operating under one FERC market-based rate tariff. We continue to analyze the fields’ capacity and ~~risk management, among other activities.~~

~~Table~~injection/withdrawal capabilities as we invest to ensure reliable operations for this winter and improve profitability. Future development of ~~Contents~~

~~EARNINGS~~

Spire Storage would entail additional investments to increase injection, withdrawal and storage capacity and enhance connectivity within the facilities and with interconnected interstate pipelines.

NON-GAAP MEASURES

Net income, earnings per share and operating income reported by Spire, Spire Missouri and Spire Alabama isare determined in accordance with ~~GAAP. Management~~accounting principles generally accepted in the United States of America (GAAP). Spire, Spire Missouri and Spire Alabama also ~~uses~~provide the non-GAAP financial measures of net economic earnings, net economic earnings per share and contribution ~~margin when internally evaluating~~margin. Management and ~~reporting~~the Board of Directors use non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results ~~of operations.~~across accounting periods, for financial and operational decision making, for planning and forecasting, to determine incentive compensation and to evaluate financial performance. These non-GAAP operating metrics should not be considered as alternatives to, or more meaningful than, the related GAAP ~~measures such as net income, earnings per share and operating income.~~measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are provided on the following pages.

~~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~~the impacts of acquisition, divestiture and restructuring ~~activities. These non-GAAP measures also exclude~~activities, and the largely non-cash ~~impact~~impacts of other non-recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions. In the quarter ended December 31, 2019, this included a provision for refunds to customers of amounts collected under MoPSC-approved orders as a result of the ~~recently enacted federal Tax Cuts and Jobs Act, including related amounts~~November 2019 Infrastructure System Replacement Surcharge (ISRS) rulings discussed in Note 4, Regulatory Matters, of the Notes to Financial Statements in Item 1. In addition, net economic earnings per share excludes the impact, in the fiscal year of issuance, of shares issued to finance acquisitions that ~~may~~have yet to be ~~subject to regulatory treatment~~.

included in net economic earnings.

The fair value and timing adjustments are made in instances where the accounting treatment differs from what management considers 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:

•

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.~~

•

Lower of cost or market adjustments to the carrying value of commodity inventories resulting when the net realizable value 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 transactions occur. While management uses these non-GAAP measures to evaluate both the Utilities and non-utility businesses, the net effect of adjustments on the Utilities’ earnings is minimal because gains or losses on their natural gas derivative instruments are deferred pursuant to state regulation.

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,~~While management ~~excludes~~uses these non-GAAP measures to evaluate both Spire’s Utilities and its other gas-related businesses, the ~~impact related to certain acquisition, divestiture,~~net effect of these fair value and restructuring activities when evaluating on-going performance, and therefore excludes these impacts from net economic earnings. Similarly, net economic earnings per share excludes the impact, in the year of issuance, of shares issued to finance acquisitions. 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, Spire Missouri’s and Spire Alabama’s performance as well as determining performance under the Company’s, Spire Missouri’s and Spire Alabama’s incentive compensation plans. Further, the Company believes this better enables an investor to view the Company’s, Spire Missouri’s and Spire Alabama’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’s most directly comparable GAAP measures are provided~~timing adjustments on the ~~following pages.~~

~~Table of Contents~~

~~Non-GAAP Measure -~~ Utilities’ earnings is minimal because gains or losses on their natural gas derivative instruments are deferred pursuant to state regulation.

Contribution Margin

In addition to operating revenues and operating expenses, management also uses the non-GAAP measure of contribution margin when evaluating results of operations. Contribution margin is defined as operating revenues less natural and propane gas costs and gross receipts tax expense. The Utilities pass to their customers (subject to prudence review by, as applicable, the MoPSC, APSC or MSPSC) increases and decreases in the wholesale cost of natural gas in accordance with their PGA clauses or GSA ~~rider.~~riders. 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 the cost of gas associated with system gas sales volumes and gross receipts tax expense (which are calculated as a percentage of revenues), with the same amount (excluding immaterial timing differences) included in revenues, ~~has~~have no direct effect on operating income. Contribution margin is defined as operating revenues less natural and propane gas costs and gross receipts tax expense. As these items are reflected in both operating revenue and operating expenses and management has little control over these amounts for the Utilities,Therefore, management believes that contribution margin is a useful supplemental ~~measure. In addition, it is management’s belief that contribution margin and~~measure, along with the remaining operating expenses, ~~that calculate operating income are useful in~~for assessing the Company’s and the Utilities’ ~~performance as management has more ability to influence control over these revenues and expenses.~~performance.

EARNINGS – THREE MONTHS ENDED DECEMBER 31, 2019

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 Common Share**
Three Months Ended December 31, 2019
Net Income (Loss) [GAAP]	$	67.1		$	3.3		$	(3.4	)	$	67.0		$	1.24
Adjustments, pre-tax:
Provision for ISRS rulings		2.6			—			—			2.6			0.05
Unrealized loss on energy-related derivatives		—			3.7			—			3.7			0.07
Income tax effect of adjustments*		(0.6	)		(0.9	)		—			(1.5	)		(0.03	)
Net Economic Earnings (Loss) [Non-GAAP]	$	69.1		$	6.1		$	(3.4	)	$	71.8		$	1.33

Three Months Ended December 31, 2018
Net Income (Loss) [GAAP]	$	66.4		$	10.0		$	(9.1	)	$	67.3		$	1.32
Adjustments, pre-tax:
Unrealized gain on energy-related derivatives		—			(2.2	)		—			(2.2	)		(0.04	)
Acquisition, divestiture and restructuring activities		—			—			0.4			0.4			0.01
Income tax effect of adjustments*		—			0.5			(0.1	)		0.4			0.01
Net Economic Earnings (Loss) [Non-GAAP]	$	66.4		$	8.3		$	(8.8	)	$	65.9		$	1.30

Gas Utility Gas Marketing Other Total Per Diluted Share**
Three Months Ended December 31, 2017
Net Income (GAAP) $ 45.2
$ 3.5
$ 67.3
$ 116.0
$ 2.39
Adjustments, pre-tax:
Unrealized loss on energy-related derivatives —
0.8
—
0.8
0.02

Realized gain on economic hedges prior
to the sale of the physical commodity
—
(0.1 ) —
(0.1 ) —
Acquisition, divestiture and restructuring activities —
—
1.7
1.7
0.04
Income tax effect of pre-tax adjustments* —
(0.2 ) (0.4 ) (0.6 ) (0.02 )
Effects of the Tax Cuts and Jobs Act 14.3
(0.4 ) (73.8 ) (59.9 ) (1.24 )
Net Economic Earnings (Loss) (Non-GAAP)** $ 59.5
$ 3.6
$ (5.2 ) $ 57.9
$ 1.19

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 activities 0.1
—
—
0.1
—
Income tax effect of pre-tax adjustments* —
(1.4 ) —
(1.4 ) (0.03 )
Net Economic Earnings (Loss) (Non-GAAP)** $ 51.8
$ 1.4
$ (5.7 ) $ 47.5
$ 1.04

*
*	Income ~~taxes are~~tax effect is calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling ~~items.~~items and then adding any estimated effects of enacted state or local income tax laws for periods before the related effective date.

**
**	Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted ~~EPS calculation.~~earnings per share calculation, which includes reductions for cumulative preferred dividends and participating shares.

~~Table of Contents~~

Note: In the following discussion, all references to earnings (loss) per share and net economic earnings per share refer to earnings (loss) per common share and net economic earnings per common share.

Consolidated

~~Spire’s~~

Spire had net income ~~was $116.0~~of $67.0 for the three months ended December 31, ~~2017,~~2019, compared with ~~$45.2~~net income of $67.3 for the three months ended December 31, ~~2016.~~2018. Basic and diluted earnings per share for the three months ended December 31, ~~2017,~~2019 were ~~$2.40 and $2.39, respectively,~~$1.24, compared with basic earnings per share of $1.33 and diluted earnings per share of ~~$0.99,~~$1.32 for the three months ended December 31, ~~2016.~~2018. Net income ~~increased $70.8, driven primarily~~was flat versus the prior-year period, reflecting a $6.7 decrease in the Gas Marketing segment, mostly offset by a $5.7 lower loss in Other and slightly higher earnings in the ~~$59.9 benefit resulting~~Gas Utility segment. The Gas Marketing decrease represents a $5.9 ($4.5 after-tax) decline related to derivative activity and fair value measurements, combined with lower contribution margin. Other benefited from the passage of the federal Tax Cuts and Jobs Act (the TCJA) in December 2017, which is further described in Note 11 to the Financial Statements in Item 1. Excluding this impact, net income reflects the impact of the return to near-normal weather patternsSTL Pipeline coming online in the current ~~year which benefited both the~~quarter, combined with a smaller loss from Spire Storage, and lower interest expense. Gas Utility ~~and Gas Marketing segments, partly offset~~net income growth was negatively impacted by ~~higher Other expenses.~~ the $2.0 after-tax provision booked for the ISRS rulings provision in the current quarter.

Spire’s net economic earnings were ~~$57.9~~$71.8 ($~~1.19~~1.33 per diluted share) for the three months ended December 31, ~~2017,~~2019, an increase of ~~$10.4~~$5.9 from the ~~$47.5~~$65.9 ($~~1.04~~1.30 per diluted share) reported for the same period ~~last~~in the prior year. For the current quarter both net income per share and net economic earnings per share were reduced by approximately $0.07 per share due to dividends earned from the $250.0 in preferred shares that were issued in May 2019. Dividends on cumulative preferred shares are deducted from net income in the calculation of earnings per common share.

The principal drivers of the increase in net economic earnings were ~~consistent with~~ the ~~drivers of income above.~~$5.4 and $2.7 increases from Other and Gas Utility, respectively, partly offset by a $2.2 decrease in Gas Marketing, as reflected in the table. These impacts are described in further detail below.

Gas Utility

For the three months ended December 31, ~~2017,~~2019, net economic earnings for the Gas Utility segment increased ~~$7.7~~$2.7 from the first quarter ~~last~~of the prior year, ~~with all the Utilities showing improvement. As detailed below, the~~primarily due to a $2.9 increase at Spire Alabama. The increase at Spire Alabama was primarily driven by higher contribution ~~margin due to the return of near-normal weather patterns, and higher Infrastructure System Replacement Surcharge (ISRS) at the Missouri Utilities,~~margins, partly offset by higher operating and maintenance (“O&M”) expenses and depreciation. Net economic earnings at Spire Missouri were essentially flat versus the prior-year quarter, as warmer weather restrained contribution margin and both O&M and depreciation ~~and amortization~~ expenses ~~resulting from~~trended higher in the ~~continued infrastructure investment at all the Utilities.~~

current year. These impacts are discussed in further detail below.

Gas Marketing

For the three months ended December 31, ~~2017,~~2019, net economic earnings for the Gas Marketing segment were $6.1, a decrease of $2.2 compared with the first quarter of the prior year. The decrease in the current-year period was primarily driven by the increased ~~$2.2~~costs of incremental transportation capacity and narrower basis differentials in the market, partly offset by the higher volumes from our continued business expansion.

Other

For the three months ended December 31, 2019, net economic loss for Other decreased $5.4 compared with the first quarter last year. ~~The segment benefited from increased value from regional basis differentials~~This decrease reflects a $2.3 earnings increase due to the Spire STL Pipeline being completed and ~~storage optimization in the current year~~coming online during this quarter, ~~versus the prior-year quarter.~~a $0.7 lower loss associated with Spire Storage and lower interest expense due to lower net debt levels and slightly favorable short-term rates.

Operating Revenues and Expenses and Contribution Margin

Reconciliations of the Company’s contribution margin to the most directly comparable GAAP measure are shown below.

	Gas Utility			Gas Marketing		Other			Eliminations			Consolidated
Three Months Ended December 31, 2019
Operating Income [GAAP]	$	96.3		$	4.4	$	1.6		$	—		$	102.3
Operation and maintenance expenses		108.6			3.1		7.9			(3.0	)		116.6
Depreciation and amortization		46.4			—		1.1			—			47.5
Taxes, other than income taxes		37.9			0.3		0.4			—			38.6
Less: Gross receipts tax expense		(24.6	)		—		—			—			(24.6	)
Contribution Margin [Non-GAAP]		264.6			7.8		11.0			(3.0	)		280.4
Natural and propane gas costs		241.5			24.5		0.1			(4.2	)		261.9
Gross receipts tax expense		24.6			—		—			—			24.6
Operating Revenues	$	530.7		$	32.3	$	11.1		$	(7.2	)	$	566.9

Three Months Ended December 31, 2018
Operating Income (Loss) [GAAP]	$	95.6		$	12.5	$	(3.0	)	$	—		$	105.1
Operation and maintenance expenses		104.9			2.6		7.4			(2.7	)		112.2
Depreciation and amortization		43.7			—		0.5			—			44.2
Taxes, other than income taxes		39.2			0.2		0.4			—			39.8
Less: Gross receipts tax expense		(25.9	)		—		—			—			(25.9	)
Contribution Margin [Non-GAAP]		257.5			15.3		5.3			(2.7	)		275.4
Natural and propane gas costs		291.8			10.5		0.1			(1.7	)		300.7
Gross receipts tax expense		25.9			—		—			—			25.9
Operating Revenues	$	575.2		$	25.8	$	5.4		$	(4.4	)	$	602.0

Gas Utility Gas Marketing Other Eliminations Consolidated
Three Months Ended December 31, 2017
Operating Income (Loss) $ 101.8
$ 5.0
$ (1.7 ) $ —
$ 105.1
Operation and maintenance expenses 99.8
1.6
4.3
(2.3 ) 103.4
Depreciation and amortization 40.3
—
0.1
—
40.4
Taxes, other than income taxes 36.7
—
—
—
36.7
Less: Gross receipts tax expense (23.1 ) —
—
—
(23.1 )
Contribution Margin (Non-GAAP) 255.5
6.6
2.7
(2.3 ) 262.5
Natural and propane gas costs 263.4
13.0
0.1
(0.3 ) 276.2
Gross receipts tax expense 23.1
—
—
—
23.1
Operating Revenues $ 542.0
$ 19.6
$ 2.8
$ (2.6 ) $ 561.8

Three Months Ended December 31, 2016

Operating Income (Loss) $ 90.6
$ (1.3 ) $ (0.2 ) $ —
$ 89.1
Operation and maintenance expenses 100.5
1.4
1.8
(1.2 ) 102.5
Depreciation and amortization 37.7
—
0.1
—
37.8
Taxes, other than income taxes 33.4
0.1
0.1
—
33.6
Less: Gross receipts tax expense (19.0 ) —
—
—
(19.0 )
Contribution Margin (Non-GAAP) 243.2
0.2
1.8
(1.2 ) 244.0
Natural and propane gas costs 214.5
21.5
—
(3.9 ) 232.1
Gross receipts tax expense 19.0
—
—
—
19.0
Operating Revenues $ 476.7
$ 21.7
$ 1.8
$ (5.1 ) $ 495.1

~~Table of Contents~~

Consolidated

As shown in the table above, Spire reported an operating revenue ~~increase 0f $66.7~~of $566.9 for the three months ended December 31, ~~2017,~~2019, a decrease of $35.1 compared with the same period ~~last year, with~~in the ~~Gas Utility segment being the primary driver. Spire’s contribution margin increased $18.5 compared with last year~~prior year. This decrease was due to a ~~$12.3 increase~~$44.5 reduction in the Gas Utility segment, ~~due to improvements at all Utilities and~~which was partly offset by a ~~$6.4 increase from the Gas Marketing Segment. The~~$6.5 increase in Gas Marketing and a $5.7 increase in Other. Spire’s contribution margin ~~was attributable to regional basis differentials~~increased $5.0 compared with last year, as increases in the Gas Utility segment of $7.1 and ~~higher storage optimization.~~$5.7 for Other were partly offset by a $7.5 decrease in the Gas Marketing segment. Depreciation and amortization expenses were up $2.7 in the Gas Utility segment, reflecting the higher overall capital investments across all utilities. ~~Utilities operation and maintenance (O&M)~~Gas Utility O&M expenses in the quarter were ~~$0.7 lower~~$3.7 higher than the prior-year quarter, ~~as lower expenses for Spire Missouri~~primarily driven by a $2.2 increase in field distribution and ~~Spire EnergySouth more than offset the modest~~maintenance expense and an increase ~~experienced by Spire Alabama.~~in bad debt expense. These ~~fluctuations~~impacts are described in ~~more~~further detail below.

Gas Utility

Operating Revenues – Gas Utility operating revenues for the three months ended December 31, ~~2017,~~2019, were ~~$542.0,~~$530.7, or ~~$65.3 higher~~$44.5 lower than the same period ~~last~~in the prior year. The ~~increase~~decrease in Gas Utility operating revenues was attributable to the following factors:

Spire Missouri and Spire Alabama – Lower PGA/GSA cost recoveries	$	(26.2	)
Spire Missouri and Spire Alabama – Volumetric usage (net of weather mitigation)		(23.3	)
Spire Missouri and Spire Alabama – Off-system sales and capacity release, net		(5.3	)
Spire Alabama – RSE: Giveback		4.1
Spire Alabama – RSE: Annual rate renewal		2.8
Spire Missouri – ISRS, net of ISRS rulings provision		2.2
All other factors		1.2
Total Variation	$	(44.5	)

Missouri Utilities and Spire Alabama – Weather/volumetric usage $ 38.4
Missouri Utilities and Spire Alabama – Higher PGA/GSA gas cost recoveries 33.2
Missouri Utilities and Spire Alabama – Higher gross receipts taxes 3.5
Missouri Utilities – Higher ISRS 3.4
All other factors 3.6
Missouri Utilities – Off-system sales and capacity release (16.8 )
Total Variation $ 65.3

~~As shown above, the increase~~

The decrease in revenues was primarily attributable to higher volumetric usage, which was a function of the return of near-normal weather patterns experienced across all the Utilities’ service areas. Across all of the Utilities’ territories, temperatures were 1% warmer than normal this quarter versus 21% warmer than normal in the comparable prior year period. The higherdriven by lower gas cost recoveries, lower volumetric usage, and lower off-system sales at ~~both~~ Spire Missouri ~~and Spire Alabama contributed $33.2 of the increase, while gross receipts taxes and Missouri ISRS charges contributed $3.5 and $3.4, respectively, to the revenue growth. These positive impacts~~that were partly offset by ~~a $16.8 reduction in lower~~the commencement of off-system sales in the quarter by Spire Alabama. These negative impacts were only partly offset by the favorable $4.1 RSE adjustment and ~~capacity release~~$2.8 RSE annual rate renewal at ~~the Missouri Utilities.~~

Spire Alabama, combined with Spire Missouri’s net ISRS revenues (after recording provision for ISRS rulings).

Contribution Margin – Gas Utility contribution margin was ~~$255.5~~$264.6 for the three months ended December 31, ~~2017,~~2019, a ~~$12.3~~$7.1 increase over the same period ~~last~~in the prior year. The ~~net~~ increase was attributable to the following factors:

Spire Alabama – RSE: Giveback	$	3.9
Spire Alabama – RSE: Annual rate renewal		2.5
Spire Missouri – ISRS, net of ISRS rulings provision		2.2
All other factors		2.3
Spire Missouri and Spire Alabama – Volumetric usage (net of weather mitigation)		(3.8	)
Total Variation	$	7.1

Utilities – Weather/volumetric usage $ 7.9
Missouri Utilities – Higher ISRS 3.4
Missouri Utilities – Customer growth 0.3
All other factors 0.7
Total Variation $ 12.3

~~As shown, the~~

The increase in contribution margin was primarily attributable to a prior-year RSE adjustment of $3.9, in conjunction with a $2.5 increase due to RSE annual rate renewal at Spire Alabama, combined with Spire Missouri’s net ISRS amounts (after recording provision for ISRS rulings), partly offset by volumetric usage net of weather mitigation.

Operating Expenses – O&M expenses for the ~~return of near-normal weather patterns in the current year and the positive impacts of~~three months ended December 31, 2019 were $3.7 higher ~~ISRS at the Missouri Utilities. The Missouri Utilities experienced colder weather this quarter with degree days 3% warmer than normal but 14% colder~~ than the ~~prior year. In the Spire Alabama territory, weather was 3% colder than normal this year and 40% colder than~~same period in the prior ~~year.~~

~~Operating Expenses~~ –year primarily driven by higher field distribution, maintenance, and bad debt expense. The increase reflects a $2.4 increase at Spire Missouri, combined with a $0.8 increase at Spire Alabama. Depreciation and amortization expenses for the three months ended December 31, ~~2017, increased $2.6 from last year, due to~~2019 were $2.7 higher ~~levels of capital expenditures by the Missouri Utilities and Spire Alabama. O&M expenses for the three months ended December 31, 2017, were $0.7 lower~~ than the same period in the prior year ~~largely due to decreases at~~primarily driven by higher levels of capital expenditures across all the ~~Missouri Utilities and Spire EnergySouth more than offsetting the modest $0.6 increase at Spire Alabama.~~

~~Table of Contents~~

Utilities.

Gas Marketing

Operating Revenues – Operating revenues ~~decreased $2.1~~increased $6.5 versus the prior-year period as ~~a result of~~ higher ~~total volume being~~volumetric gas sales were partly offset by the impact of lower general pricing ~~levels and~~this quarter versus the ~~effect of changes in trading activities. Under GAAP, revenues associated with trading activities are presented net of related costs.~~prior year quarter. Average pricing for the three months ended December 31, ~~2017,~~2019, was approximately ~~$2.742/~~$2.25/MMBtu versus approximately ~~$2.898/~~$3.51/MMBtu for the quarter ended December 31, ~~2016.~~

2018.

Contribution Margin – Gas Marketing contribution margin during the three months ended December 31, ~~2017, increased $6.4~~2019 decreased $7.5 from the same period ~~last year. The increase in contribution margin is primarily due to greater regional basis differentials (spreads) and increased storage optimization~~ in the ~~current-year quarter versus~~prior year, largely reflecting a $5.9 ($4.5 after-tax) decline in derivative activity and fair value measurements excluded from net economic earnings. Excluding these losses, margins decreased by $1.6 from the prior ~~year.~~

year, as higher volumes associated with the segment’s business expansion were offset by the costs of incremental transportation capacity and the impact of lower basis differentials.

Interest Charges

Consolidated interest charges during the three months ended December 31, ~~2017,~~2019, increased by ~~$2.3~~$0.8 from the same period ~~last~~in the prior year. The increase was primarily driven by ~~Spire Missouri’s issuance of $170.0 in~~net long-term debt ~~in September 2017, marginally higher interest rates on~~issuances at the ~~senior notes issued in March 2017 that were used to retire $250.0 of floating rate debt,~~Gas Utilities and Spire STL Pipeline and higher average levels of short-term borrowings ~~in the current year quarter.~~that were partly offset by lower short-term rates. For the three months ended December 31, ~~2017~~2019 and ~~2016,~~2018, average short-term borrowings were ~~$545.8~~$727.7 and ~~$475.0,~~$622.9, respectively, and the average interest rates on these borrowings were ~~1.6%~~2.2% and ~~1.1%~~2.7%, respectively.

Income Taxes

Consolidated income tax ~~expense during~~for the three months ended December 31, ~~2017, was $55.4~~2019 versus the same period in the prior year reflects slightly lower ~~than during the prior-year quarter, primarily as a result of the TCJA enacted in December. The decrease in~~effective tax rates ~~resulted~~ in ~~a $59.9 reduction~~the current year quarter versus the prior year, along with the change in ~~tax expense, which was only partly offset by the effects of higher~~ pre-tax ~~book~~ income. ~~The TCJA is further described in Note 11 to the Financial Statements in Item 1.~~

Spire Missouri

	Three Months Ended December 31,
	2019			2018
Operating Income [GAAP]	$	67.0		$	71.4
Operation and maintenance expenses		65.5			63.1
Depreciation and amortization		29.0			27.2
Taxes, other than income taxes		26.7			28.1
Less: Gross receipts tax expense		(17.2	)		(18.5	)
Contribution Margin [Non-GAAP]		171.0			171.3
Natural and propane gas costs		185.8			223.4
Gross receipts tax expense		17.2			18.5
Operating Revenues	$	374.0		$	413.2
Net Income	$	48.0		$	51.2

Three Months Ended December 31,
2017 2016
Operating Income $ 74.8
$ 64.5
Operation and maintenance expenses 60.3
60.5
Depreciation and amortization 24.8
22.7
Taxes, other than income taxes 26.2
24.6
Less: Gross receipts tax expense (16.2 ) (14.1 )
Contribution Margin (non-GAAP) 169.9
158.2
Natural and propane gas costs 206.2
191.3
Gross receipts tax expense 16.2
14.1
Operating Revenues $ 392.3
$ 363.6
Net Income $ 89.4
$ 38.0

Operating revenues for the three months ended December 31, ~~2017, increased $28.7~~2019, decreased $39.2 from the same period ~~last~~in the prior year primarily due to ~~$21.9 higher~~$23.3 lower gas cost recoveries ~~$17.0~~and an $11.7 decrease in ~~volumetric/~~volumetric usage ~~impacts~~(net of weather mitigation) resulting from warmer weather in the ~~return~~current year quarter. A further $5.7 reduction was attributable to lower off-system sales in the current year versus the prior-year quarter. A net increase (after ISRS ruling provision of ~~near-normal weather patterns that were only 3% warmer than normal, and a $3.4 increase in~~$2.1) of ISRS ~~charges that was~~revenues totaling $2.2 only partly offset ~~by a $16.8~~these negative ~~impact of lower off-system sales.~~impacts. Contribution margin for the three months ended December 31, ~~2017, increased $11.7~~2019, decreased $0.3 from the same period ~~last~~in the prior year, largely due to the ~~$7.3 increase attributable to volumes and the return~~lower volumetric usage of ~~near-normal weather, a $3.4 increase in~~$2.7, partly offset by ISRS ~~charges and $0.3 resulting from customer growth.~~ amounts mentioned above.

O&M expenses for the three months ended December 31, ~~2017 decreased $0.2, largely attributable~~2019 increased $2.4 primarily due to ~~lower maintenance expenses more than offsetting~~ higher field distribution costs and bad ~~debts.~~debt expense. Depreciation and amortization increased ~~$2.1~~$1.8 in the current quarter versus the prior-year quarter due to higher capital investments. ~~Excluding the impact of the TCJA (described in Note 11 to the Financial Statements in Item 1), net income for the three months ended December 31, 2017 increased $7.5 from the same period last year.~~

~~Table of Contents~~

~~Temperatures~~

Degree days in Spire Missouri’s service areas during the three months ended December 31, ~~2017,~~2019, were 3% ~~warmer~~colder than normal ~~and 14% colder~~but 6% warmer than the same period last year, resulting in ~~higher~~lower usage on a year-over-year comparative basis. ~~Further, temperatures versus normal (the basis of Spire Missouri’ rate design) resulted in margins returning closer to historical norms.~~ The Missouri Utilities’ total system therms sold and transported were ~~526.4~~556.1 million for the three months ended December 31, ~~2017,~~2019, compared with ~~484.4~~589.0 million for the same period ~~last~~in the prior year. Total off-system therms sold and transported were ~~30.6~~8.7 million for the three months ended December 31, ~~2017,~~2019, compared with ~~85.8~~23.1 million for the same period last ~~year, as current year increased system demand of 9% reduced therm availability~~year.

Resulting net income for ~~off-system sales.~~

the quarter ended December 31, 2019 decreased $3.2 versus the prior-year quarter.

Spire Alabama

	Three Months Ended December 31,
	2019			2018
Operating Income [GAAP]	$	20.9		$	17.1
Operation and maintenance expenses		35.2			34.4
Depreciation and amortization		14.3			13.6
Taxes, other than income taxes		8.8			8.9
Less: Gross receipts tax expense		(6.2	)		(6.3	)
Contribution Margin [Non-GAAP]		73.0			67.7
Natural and propane gas costs		47.0			59.5
Gross receipts tax expense		6.2			6.3
Operating Revenues	$	126.2		$	133.5
Net Income	$	13.2		$	10.3

Three Months Ended December 31,
2017 2016
Operating Income $ 19.0
$ 19.8
Operation and maintenance expenses 31.8
31.2
Depreciation and amortization 12.8
12.3
Taxes, other than income taxes 8.2
6.6
Less: Gross receipts tax expense (5.6 ) (4.2 )
Contribution Margin (Non-GAAP) 66.2
65.7
Natural and propane gas costs 49.0
16.8
Gross receipts tax expense 5.6
4.2
Operating Revenues $ 120.8
$ 86.7
Net (Loss) Income $ (49.6 ) $ 10.3

Operating revenues for the three months ended December 31, ~~2017, increased $34.1~~2019, decreased $7.3 from the same period ~~last~~in the prior year. The change in operating revenue was driven principally ~~driven~~ by lower current-year volumetric usage impacts of $11.6, and a ~~$21.4 increase related to volumes and weather, combined with an $11.3 increase~~$2.9 decrease in gas cost recoveries versus the prior ~~year.~~year, offset by a prior-year RSE adjustment of $4.1 that did not repeat and $2.8 due to the RSE annual rate renewal. Contribution margin increased ~~$0.5,~~$5.3, primarily due to ~~the net increase~~$3.9 attributable to the ~~volumetric/weather impact.~~RSE adjustment and $2.5 to the RSE annual rate renewal more than offsetting weather-related impacts.

O&M expenses for the three months ended December 31, 2019 increased only $0.8 versus the prior-year quarter. Depreciation and amortization expenses for the three months ended December 31, ~~2017,~~2019, were ~~$0.5~~$0.7 higher than the same period last year, the result of continued infrastructure investment. ~~O&M expenses were $0.6 higher, primarily due to higher bad debts and customer installation costs only being partly offset by lower maintenance expenses. Excluding~~

For the ~~impact of the TCJA (described in Note 11 to the Financial Statements in Item 1), net income during the three months~~quarter ended December 31, ~~2017 decreased $0.7~~2019 resulting net income increased $2.9 versus the ~~same period last year.~~

~~Temperatures~~prior-year quarter.

As measured in degree days, temperatures in Spire Alabama’s service area during the three months ended December 31, ~~2017,~~2019 were ~~3% below~~14% colder than normal ~~and 40% colder~~but 16% warmer than a year ago. Spire Alabama’s total system therms sold and transported were ~~237.4~~283.1 million for the three months ended December 31, ~~2017,~~2019, compared with ~~221.5~~288.2 million for the same period ~~last~~in the prior year.

REGULATORY ~~AND OTHER~~ MATTERS

~~Please see the~~ ~~Environmental Matters~~ ~~section~~

For discussions of regulatory matters for ~~information relative to environmental matters.~~ Spire, Spire Missouri, and Spire Alabama, 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 flowssee Note 4, Regulatory Matters, of the ~~Company, Spire Missouri or Spire Alabama.~~

~~Table of Contents~~

~~Spire Missouri~~

~~On September 30, 2016, Spire Missouri filed~~Notes to increase its ISRS revenues by $5.0 for Spire Missouri East and $3.4 for Spire Missouri West, related to ISRS investments from March 2016 through October 2016. On November 29, 2016, MoPSC staff recommended $4.5 and $3.4 for Spire Missouri East and Spire Missouri West, respectively, based on updated filings. On January 3, 2017, the MoPSC held a hearing to decide two issues raised by the Missouri Office of the Public Counsel (OPC) pertaining to the ISRS eligibility of hydrostatic testing done by Spire Missouri West and of the replacement of cast iron main interspersed with portions of plastic pipe. On January 18, 2017, the MoPSC foundFinancial Statements in favor of the Missouri Utilities on the interspersed plastics issue, but against Spire Missouri West on hydrostatic testing, and issued an order setting the ISRS increases at $4.5 and $3.2 for Spire Missouri East and Spire Missouri West, respectively. Rates were effective January 28, 2017. On March 3, 2017, the OPC filed an appeal to Missouri’s Western District Court of Appeals of the MoPSC’s decision permitting Spire Missouri to include in the ISRS the replacement of cast iron main interspersed with plastic pipe. On November 21, 2017, the Western District reversed the MoPSC’s decision on the plastics issue and remanded the case to the MoPSC for further proceedings. On January 3, 2018, Spire Missouri and the MoPSC applied for transfer of the case to the Missouri Supreme Court.

On February 3, 2017, Spire Missouri filed to increase its ISRS revenues, by $3.3 for Spire Missouri East and $2.9 for Spire Missouri West, related to ISRS investments from November 2016 through February 2017. Following the submission of updated information, on April 4, 2017, MoPSC staff submitted its recommendation for an increase in rates of approximately $3.0 each, for a cumulative total of $32.6 and $16.4 for Spire Missouri East and Spire Missouri West, respectively. On that same date, the OPC again raised an objection to the ISRS eligibility of replacing cast iron main interspersed with portions of plastic. On April 18, 2017, the parties filed with the MoPSC a unanimous stipulation and agreement proposing to apply the judicial outcome of the OPC’s March 2017 appeal on the plastics issue to both the ISRS cases on appeal and the current ISRS cases. The agreement was approved by the MoPSC on April 26, 2017. ISRS rates for each of the two service territories were increased by the MoPSC staff-recommended amounts, effective June 1, 2017.

On April 11, 2017, both Spire Missouri East and Spire Missouri West filed for a general rate case. The request for Spire Missouri East represents a net rate increase of $25.5. With the $32.6 already being billed in ISRS, the total base rate increase request was $58.1. Spire Missouri West’s request represents a net rate increase of $34.0. With the $16.4 already being billed in ISRS, the total base rate increase request was $50.4. The rates were premised upon a 10.35% return on equity and the details of the filing can be found in MoPSC case numbers GR-2017-0215 and GR-2017-0216 for Spire Missouri East and Spire Missouri West, respectively. Following our initial filing, other parties to the case have filed their testimonies. During December 2017 and January 2018, all parties to the case were involved in evidentiary hearings, filings of briefs and answering remaining data requests including those related to the impacts of tax reform as noted below. A decision by the MoPSC is expected by mid-February, and new rates will likely go into effect in March.

On January 18, 2018, the MoPSC issued an order directing Spire Missouri and the MoPSC Staff to file information regarding adjustments to Spire Missouri’s rates needed to reflect the impact of tax reform under the TCJA. Spire Missouri made its filing on January 22 and the Staff made a reply filing on January 25. A hearing has been set for February 5.

~~Spire Alabama~~

Spire Alabama is subject to regulation by the APSC which established the Rate Stabilization and Equalization (RSE) rate-setting process in 1983. Effective January 1, 2014, Spire Alabama’s allowed range of return on average common equity is 10.5% to 10.95% with an adjusting point of 10.8%. Spire Alabama 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 Spire Alabama’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 September 30, 2017 quarterly point of test was $2.7 to bring the expected rate of return on average common equity at the end of the year to within the allowed range of return, effective December 1, 2017. As part of the annual update for RSE, on November 30, 2017, Spire Alabama filed an increase for rate year 2018 of $8.5, which also became effective December 1, 2017.

The inflation-based Cost Control Measure (CCM), established by the APSC, allows for annual increases to O&M expense. As of September 30, 2017, Spire Alabama recorded a CCM benefit of $10.7 for rate year 2017, which was reflected in rates effective December 1, 2017.

~~Table of Contents~~

On June 28, 2010, the APSC approved a reduction in depreciation rates, effective June 1, 2010, and a regulatory liability recorded for Spire Alabama. Refunds from such negative salvage liability are being passed back to eligible customers on a declining basis through lower tariff rates through rate year 2019 pursuant to the terms of the Negative Salvage Rebalancing (NSR) rider. The total amount refundable to customers is subject to adjustments over the remaining period for charges made to the Enhanced Stability Reserve and other APSC-approved charges. The refunds are due to a re-estimation of future removal costs provided for through the prior depreciation rates. As of September 30, 2017, $12.3 remained to be refunded to customers. The NSR pass back for fiscal 2018 is $8.2 and is being reflected in rates effective December 1, 2017, through March 31, 2018.

~~Spire Alabama is currently working with the APSC to assess the impact of the TCJA and has filed for a rate decrease effective February 1, 2018.~~

~~Spire~~

In July 2016, the proposed project of Spire STL Pipeline LLC, a wholly owned subsidiary of Spire, 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 is being reviewed for siting and permitting by the FERC, which is the lead agency for other federal, state, and local permitting authorities. In January 2017, Spire submitted an application with the FERC requesting issuance of a certificate of convenience and necessity authorizing it to construct, own, and operate an interstate pipeline. In April 2017, Spire STL Pipeline filed an amended certificate application to adjust the preferred route to include a new six-mile segment rather than an existing line, offering a number of benefits including eliminating potential supply disruption risk for Spire Missouri during construction, eliminating uncertainty regarding upgrade costs, and reducing long-term integrity management costs. Several parties have filed interventions and comments regarding the Spire STL Pipeline project. The Company is monitoring these closely and has responded where appropriate. In its Environmental Assessment issued on September 29, 2017, the FERC concluded that approval of the Spire STL Pipeline, with appropriate mitigating measures, would not constitute a major federal action significantly affecting the quality of the human environment. Spire anticipates the FERC will deliver a Final Order early in calendar year 2018.

Item 1.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition, results of operations, liquidity, and capital resources are 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 estimates used in the preparation of our financial statements are described in Item 7 of the Company’s, Spire Missouri’s, and Spire Alabama’s combined Annual ~~Reports~~Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2019, and include regulatory accounting, ~~goodwill, and~~ employee benefits and postretirement ~~obligations.~~obligations, and income taxes. There were no significant changes to ~~these~~ critical accounting estimates during the three months ended December 31, ~~2017.~~

2019.

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, Spire Missouri’s, and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~

2019.

ACCOUNTING PRONOUNCEMENTS

The Company, Spire Missouri and Spire Alabama have evaluated or are in the process of evaluating the impact that recently issued accounting standards will have on the companies’ financial position or results of operations upon adoption. For disclosures related to the adoption of new accounting standards, see the New Accounting Pronouncements section in Note 1 of the Notes to Financial ~~Statements.~~

Statements in Item 1.

~~Table of Contents~~

~~FINANCIAL CONDITION~~

~~Cash Flows~~

LIQUIDITY

The Company’s short-term borrowing requirements typically peak during colder months when the Utilities borrow money to cover the lag between when they purchase natural gas and when their customers pay for that gas. Changes in the wholesale cost of natural gas (including cash payments for margin deposits associated with Spire Missouri’s use of natural gas derivative instruments), variations in the timing of collections of gas cost under the Utilities’ PGA clauses and GSA riders, 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 may cause significant variations in the Company’s cash provided by or used in operating activities.

	Three Months Ended December 31,
Cash Flow Summary	2019			2018
Net cash provided by operating activities	$	64.5		$	70.4
Net cash used in investing activities		(192.6	)		(216.2	)
Net cash provided by financing activities		143.8			132.8

Three Months Ended
December 31,
Cash Flow Summary 2017 2016
Net cash provided by operating activities $ 17.9
$ 10.3
Net cash used in investing activities (126.7 ) (85.9 )
Net cash provided by financing activities 108.1
81.0

For the three months ended December 31, ~~2017,~~2019, net cash provided by operating activities ~~increased $7.6~~decreased $5.9 from the corresponding period of fiscal ~~2017.~~2019. The change was ~~primarily~~ due principally to the ~~increase in net income, as adjusted for the non-cash impact~~timing of ~~deferred taxes. The change was also affected by~~accounts receivable and fluctuations in working capital items, as ~~mentioned~~discussed above.

For the three months ended December 31, ~~2017,~~2019, net cash used in investing activities was ~~$40.8 more~~$23.6 less than for the same period in the prior year, driven by a ~~$21.5 increase~~$14.5 decrease in capital expenditures and ~~a $19.8 change in acquisition~~$7.9 less outflows relating to acquisition-related activity. The ~~higher~~lower capital spending ~~to this point~~ in the ~~fiscal~~current year is consistent with the Company’s capital expenditure expectations and reflects ~~progress on~~more infrastructure upgrades at the ~~Spire STL Pipeline project, as well as investment to~~Utilities, support of customer growth, new business development initiatives, partly offset by lower expenditures related to Spire Storage and the ~~continued commitment to infrastructure upgrades at~~completion in the ~~Utilities.~~current quarter of Spire STL Pipeline. Total capital expenditures for the full fiscal year ~~2018~~2020 are expected to be approximately $490, with approximately $415 for the Utilities. Cash paid for the acquisition of a majority interest in a natural gas storage operation in December 2017 was $16.0 (as described in Note 1 to the Financial Statements in Item 1), while the prior year’s first quarter included the receipt of a $3.8 cash settlement related to the acquisition of Spire EnergySouth.

$610.

Lastly, for the three months ended December 31, ~~2017,~~2019, net cash provided by financing activities was ~~$27.1 higher than~~$143.8, versus net cash provided of $132.8 for the three months ended December 31, ~~2016.~~2018. This change primarily reflects ~~the effect of Spire Alabama’s~~ issuance of ~~$30.0~~long-term debt of ~~notes, described under Long-term Debt and Equity~~$510.0 this year versus $100.0 in the ~~following section. That cash inflow was partially~~prior year, offset by a combined $387.6 higher short- and long-term borrowing repayments in the current year, and an increase in common stock and preferred stock dividends paid of $5.9 and ~~a smaller increase in short-term debt.~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~Cash and Cash Equivalents~~

~~Bank deposits were used to support working capital needs of the business~~. ~~Spire had no short-term investments as of or during the three months ended December 31, 2017.~~

~~Short-term Debt~~

The Utilities’ short-term borrowing requirements typically peak during the colder months, while the Company’s needs are less seasonal. These short-term cash requirements can be met through the sale of commercial paper or through the use of a revolving credit facility.

On December 14, 2016, Spire, Spire Missouri, and Spire Alabama entered into a syndicated revolving credit facility pursuant to a loan agreement with 11 banks, expiring December 14, 2021. The loan agreement has an aggregate credit commitment of $975.0, including sublimits of $300.0 for Spire, $475.0 for Spire Missouri, and $200.0 for Spire Alabama. The agreement 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$3.7, respectively, in the ~~line of credit, on December 31, 2017, total debt was 57% of total capitalization for the consolidated Company, 50% for Spire Missouri, and 35% for Spire Alabama.~~

~~Table of Contents~~

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 may have maturities of up to 365 days from date of issue.

Information regarding Spire’s consolidated short-term borrowings is presented in the following table. Based on weighted average short-term borrowings outstanding, a 100-basis-point increase in the weighted average interest rate would decrease pre-tax earnings and cash flows by approximately $5.5 on an annual basis, a portion of which may be offset through the Utilities’ application of PGA and GSA carrying costs.

Commercial
Paper
Borrowings
Revolving
Credit Facility
Borrowings
Total
Short-term
Borrowings
Three Months Ended December 31, 2017
Weighted average borrowings outstanding $545.5 $0.3 $545.8
Weighted average interest rate 1.6% 2.8% 1.6%
Range of borrowings outstanding $477.3 - $632.9 $0.0 - $25.0 $477.3 - $632.9
As of December 31, 2017
Borrowings outstanding $583.6 $— $583.6
Weighted average interest rate 2.0% —% 2.0%

Of Spire’s $583.6 borrowings outstanding as of December 31, 2017, $547.8 was used to provide funding to its subsidiaries, including Spire Missouri ($275.6), Spire Alabama ($163.1), Spire STL Pipeline LLC and natural gas storage ($58.3), Spire EnergySouth and subsidiaries ($15.5), and others ($35.3).

~~Long-term Debt and Equity~~

current year.

CAPITAL RESOURCES

The Company’s, Spire Missouri’s and Spire Alabama’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~~Our debt is rated by two rating agencies: Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service (“Moody’s”). As of December 31, 2019, the debt ratings of the Company, Spire Missouri and Spire Alabama, shown in the following table, remain at investment grade ~~but are subject to review and change by the rating agencies.~~with a stable outlook.

	S&P	Moody’s
Spire Inc. senior unsecured long-term debt	BBB+	Baa2
Spire Inc. preferred stock	BBB	Ba1
Spire Inc. short-term debt	A-2	P-2
Spire Missouri senior secured long-term debt	A	A1
Spire Alabama senior unsecured long-term debt	A-	A2

It is management’s view that the Company, Spire Missouri and Spire Alabama 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 on long-term debt, scheduled maturities of long-term debt, short-term seasonal needs and dividends.

Cash and Cash Equivalents

Bank deposits were used to support working capital needs of the business. Spire had no temporary cash investments as of or during the three months ended December 31, 2019.

Short-term Debt

The Utilities’ short-term borrowing requirements typically peak during the colder months, while most of the Company’s other needs are less seasonal. These short-term cash requirements can be met through the sale of commercial paper or through the use of a revolving credit facility. For information about these resources, see Note 5, Financing Arrangements and Long-term Debt, of the Notes to Financial Statements in Item 1.

Long-term Debt and Equity

At December 31, ~~2017,~~2019, including the current portion but excluding unamortized discounts and debt issuance costs, Spire had ~~fixed-rate~~ long-term debt totaling ~~$2,152.0,~~$2,547.0, of which ~~$980.0~~$1,105.0 was issued by Spire Missouri, ~~$280.0~~$515.0 was issued by Spire Alabama, and ~~$77.0~~$237.0 was issued by other subsidiaries. ~~All~~For more information about long-term debt, ~~bears fixed rates~~see Note 5 of the Notes to Financial Statements in Item 1.

Spire Missouri was authorized by the MoPSC to issue registered securities (first mortgage bonds, unsecured debt and ~~is subject~~preferred stock), common stock, and private placement debt in an aggregate amount of up to ~~changes in fair value as market interest rates change. However, increases and decreases in fair value would impact earnings and cash flows only if the Company were~~$500.0 for financings placed any time before September 30, 2021. As of December 31, 2019, $125.0 remained available under this authorization. Spire Alabama has no standing authority to ~~reacquire any of these issues in the open market prior to maturity. Under GAAP applicable to the Utilities’ regulated operations, losses or gains on early redemptions of~~issue long-term debt ~~typically would be deferred as regulatory assets or regulatory liabilities~~ and ~~amortized over a future period. Of~~must petition the ~~Company’s $2,152.0~~APSC for each planned issuance. On July 9, 2019, the APSC approved $100.0 of additional long-term debt (including the current portion), $25.0 has no call options, $1,067.0 has make-whole call options, $1,045.0 is callable at par one to six months prior to maturity, and $15.0 is callable at par currently. Including the current portion of long-term debt, the Company’s consolidated capitalization atfinancing, which was ultimately issued by Spire Alabama on December ~~31, 2017 consisted of 49.4% common stock equity and 50.6% long-term debt, compared to 48.7% common stock equity and 51.3% long-term debt at September 30, 2017.~~

2, 2019.

Spire has a shelf registration statement on Form S-3 on file with the USU.S. Securities and Exchange Commission (SEC) for the issuance and sale of up to 250,000 shares of ~~its~~ common stock under its Dividend Reinvestment and Direct Stock Purchase Plan. There were ~~239,512~~129,609 and ~~235,105~~125,449 shares at December 31, ~~2017,~~2019 and January ~~29, 2018,~~31, 2020, respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also ~~has~~have a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which expires ~~September 23, 2019.~~on May 14, 2022.

On February 6, 2019, Spire ~~Missouri has a shelf registration on Form S-3 on file with~~entered into an “at-the-market” equity distribution agreement, supplemented as of May 14, 2019, pursuant to which the ~~SEC for issuance~~Company may offer and sell, from time to time, shares of ~~first mortgage bonds, unsecured debt, and preferred stock, which expires on September 23, 2019.~~

~~Table of Contents~~

~~Spire Missouri has authority from the MoPSC to issue debt securities and preferred stock, including on a private placement basis, as well as to issue~~its common stock ~~receive paid-in capital, and enter into capital lease agreements, all for a total~~having an aggregate offering price of up to ~~$300.0 for financings placed any time before~~$150.0. Those shares are issued pursuant to Spire’s universal shelf registration statement referenced above and a prospectus supplement dated May 14, 2019. In the year ended September 30, ~~2018.~~2019, Spire ~~Missouri has~~ issued ~~$170.0 in securities~~179,630 shares under this ~~authorization, so as~~program, generating $14.4 of proceeds net of issuance costs. In the quarter ended December 31, ~~2017, $130.0 remains available~~2019, Spire did not issue shares under this program.

Including the current portion of long-term debt, the Company’s long-term consolidated capitalization at December 31, 2019 consisted of 51% equity, compared to ~~be issued.~~

On October 3, 2017, Spire Alabama received authorization and approval from the APSC to borrow up to $75.0 for general corporate purposes and to retire short-term debt. On December 1, 2017, Spire Alabama entered into the First Supplement to Master Note Purchase Agreement with certain institutional investors. Pursuant to the terms of that supplement, on December 1, 2017, Spire Alabama issued and sold $30 million in aggregate principal amount of its 4.02% Series 2017A Senior Notes due January 15, 2058, and on January 12, 2018, issued and sold $45 million aggregate principal amount of its 3.92% Series 2017B Senior Notes due January 15, 2048, to those institutional investors. The notes bear interest from the date of issuance, payable semi-annually on the 15th day of July and January of each year, commencing on July 15, 2018. The notes are senior unsecured obligations of Spire Alabama, rank equal in right to payment with all its other senior unsecured indebtedness, and have make-whole call options. Spire Alabama used the proceeds from the sale of the notes to repay short-term debt and for general corporate purposes.

55% equity at September 30, 2019.

CONTRACTUAL OBLIGATIONS

During the three months ended December 31, ~~2017,~~2019, there were no material changes outside the ordinary course of business to the estimated contractual obligations from the disclosure provided in the Company’s Form 10-K for the fiscal year ended September 30, ~~2017.~~

2019.

MARKET RISK

There were no material changes in the Company’s commodity price risk or counterparty credit risk as of December 31, ~~2017,~~2019, relative to the corresponding information provided in the Company’s Annual Report on Form 10-K as of September 30, ~~2017. During the second quarter of fiscal 2017,~~2018. In August 2018, Spire entered into a ~~ten-year~~three-year interest rate swap with a fixed interest rate of ~~2.658%~~2.7675% and a notional amount of ~~$60.0~~$100.0 to protect itself against adverse movements in interest rates on future interest rate payments. In the fourth quarter of 2019, this hedge was settled, resulting in a loss of $2.5 which is being amortized over the remaining hedged periods. During the first quarter of fiscal 2019, the Company entered into a three-year interest rate swap with a fixed interest rate of 3.250% and a notional amount of $100.0 to protect itself against adverse movements in interest rates on future interest rate payments. The Company recorded a ~~$0.8~~$24.5 mark-to-market loss on ~~these swaps~~this swap for the three months ended December 31, 2017. During October 2017, Spire entered into a three-month interest rate swap with a fixed interest rate of 2.591% and a notional amount of $56.0 to protect itself against adverse movements in interest rates on Spire Alabama debt that was issued in December 2017 and January 2018. During the first quarter of fiscal 2018, the Company settled the swap for a gain of $0.4 which will be amortized over the hedged periods. The fair values of related derivative instruments are shown in ~~Note 6, Fair Value Measurements. Information about the Company’s short-term and long-term debt is included under the heading “Liquidity and Capital Resources” in this Item 2.~~

2019.

ENVIRONMENTAL MATTERS

~~Spire’s~~

The Utilities and other Spire subsidiaries own and operate natural gas distribution, transmission and storage facilities, the operations of which are subject to various environmental laws and regulations, along with their interpretations. While environmental issues resulting from such operations arise in the ordinary course of business, such issues have not materially affected the Company’s, Spire Missouri’s, or Spire Alabama’s financial position and results of operations. As environmental laws, regulations, and interpretations change, however, the ~~subsidiaries~~Company and the Utilities may be required to incur additional costs. For information relative to environmental matters, see Contingencies in Note 1011~~, Commitments and Contingencies,~~ of the Notes to Financial Statements ~~included~~ in Item 1.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, ~~2017,~~2019, the Company had no off-balance-sheet financing arrangements other than operating leases, surety bonds, 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.

~~Table of Contents~~

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

Evaluation of Disclosure Controls and Procedures

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 such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Change in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, ~~2017,~~2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Spire Missouri

Evaluation of Disclosure Controls and Procedures

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.

Changes in Internal Control over Financial Reporting

Spire Alabama

Evaluation of Disclosure Controls and Procedures

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.

Changes in Internal Control over Financial Reporting

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of legal proceedings, environmental matters and ~~legal proceedings,~~regulatory matters, see Note 1011, Commitments and Contingencies, and Note 4, Regulatory Matters, of the Notes to Financial Statements in Item 1 of Part I. ~~For a description of pending regulatory matters, see Regulatory and Other Matters under~~ ~~Part I, Item 2.~~

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’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 repurchases of Spire’s common stock in the quarter were 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. 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, 2019 – October 31, 2019		—	$—			—		—
November 1, 2019 – November 31, 2019		—		—		—		—
December 1, 2019 – December 31, 2019		37,945		77.355		—		—
Total		37,945	$77.355			—		—

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, 2017 -
October 31, 2017
— $— — —
November 1, 2017 -
November 30, 2017
— $— — —
December 1, 2017 -
December 31, 2017
33,581 $81.75 — —
Total 33,581 $81.75 — —

Spire Missouri’s outstanding first mortgage bonds contain restrictions on its ability to pay cash dividends on its common stock. As of December 31, ~~2017,~~2019, all of Spire Missouri’s retained earnings were free from such restrictions.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

~~Table of Contents~~

Item 6. Exhibits

Exhibit No.		Description
4.1		Thirty-Fourth Supplemental Indenture, dated as of November 12, 2019, between Spire Missouri Inc. and UMB Bank & Trust, N.A., as trustee.
~~Exhibit No.~~ 4.2*		~~Description~~
~~4.01~~		~~First~~Third Supplement to Master Note Purchase Agreement, dated as of December ~~1, 2017,~~2, 2019, between Spire Alabama Inc. and certain institutional ~~investors.~~investors; filed as Exhibit 4.1 to Spire Alabama’s Current Report on Form 8-K filed December 4, 2019.
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 Spire Missouri Inc.
31.3		CEO and CFO Certifications under Exchange Act Rule 13a-14(a) of Spire Alabama Inc.
32.1		CEO and CFO Section 1350 Certifications of Spire Inc.
32.2		CEO and CFO Section 1350 Certifications of Spire Missouri Inc.
32.3		CEO and CFO Section 1350 Certifications of Spire Alabama Inc.
~~101.INS~~^(x) 101		~~XBRL Instance Document.~~
~~101.SCH~~^(x)		~~XBRL Taxonomy Extension Schema.~~
~~101.CAL~~^(x)		~~XBRL Taxonomy Extension Calculation Linkbase.~~
~~101.DEF~~^(x)		~~XBRL Taxonomy Extension Definition Linkbase.~~
~~101.LAB~~^(x)		~~XBRL Taxonomy Extension Label Linkbase.~~
~~101.PRE~~^(x)		~~XBRL Taxonomy Extension Presentation Linkbase.~~


^(x)	~~Attached as Exhibit 101 to this~~ Interactive Data Files including the following information from the Quarterly Report ~~are~~on Form 10-Q for the ~~following documents for each registrant~~period ended December 31, 2019, formatted in inline extensible business reporting language ~~(XBRL)~~(“Inline XBRL”): (i) ~~Document~~Cover Page Interactive Data and ~~Entity Information;~~ (ii) ~~unaudited Condensed Consolidated~~the Financial Statements ~~of Income~~included in Item 1.
104		Cover Page Interactive Data File (formatted in Inline XBRL and ~~Condensed Statements of Income for the~~ ~~three months ended December 31, 2017~~ ~~and 2016; (iii) unaudited Condensed Consolidated Statements of Comprehensive Income and Condensed Statements of Comprehensive Income for the~~ ~~three months ended December 31, 2017~~ ~~and 2016; (iv) unaudited Condensed Consolidated Balance Sheets and Condensed Balance Sheets at~~ ~~December 31, 2017~~, ~~September 30, 2017, and~~ ~~December 31, 2016; (v) unaudited Condensed Consolidated Statements of Shareholders’ Equity and Condensed Statements of Shareholder’s Equity for the~~ ~~three months ended December 31, 2017~~ ~~and 2016; (vi) unaudited Condensed Consolidated Statements of Cash Flows and Condensed Statements of Cash Flows for the~~ ~~three months ended December 31, 2017~~ ~~and 2016, and (vii) combined Notes to Financial Statements. We also make available on our website~~included in the Interactive Data Files submitted asunder Exhibit ~~101 to this Quarterly Report.~~101).

*	Incorporated herein by reference and made a part hereof. Spire Alabama Inc. file No. 2-38960.

~~Table of Contents~~

SIGNATURES

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

		Spire Inc.

Date:	February 5, 2020	~~Spire Inc.~~
By:
~~Date:~~	~~February 1, 2018~~	~~By:~~	/s/ Steven P. Rasche
			Steven P. Rasche
			Executive Vice President, ~~and~~ Chief Financial Officer
			(Authorized Signatory and Principal Financial Officer)



		Spire Missouri Inc.

Date:	February ~~1, 2018~~5, 2020	By:	/s/ ~~Steven P. Rasche~~Timothy W. Krick
			~~Steven P. Rasche~~ Timothy W. Krick
			Controller and Chief ~~Financial~~Accounting Officer
			(Authorized Signatory and ~~Principal Financial~~ Chief Accounting Officer)



		Spire Alabama Inc.

Date:	February ~~1, 2018~~5, 2020	By:	/s/ ~~Steven P. Rasche~~Timothy W. Krick
			~~Steven P. Rasche~~ Timothy W. Krick
			Chief ~~Financial~~Accounting Officer
			(Authorized Signatory and ~~Principal Financial~~ Chief Accounting Officer)


☒
~~[ X ]~~	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31,~~, 2017~~ 2019
	OR 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 314-342-0500	Missouri	74-2976504

1-1822	Spire Missouri Inc. 700 Market Street St. Louis, MO 63101 314-342-0500	Missouri	43-0368139

2-38960	Spire Alabama Inc. 2101 6th Avenue North Birmingham, AL 35203 205-326-8100	Alabama	63-0022000

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock $1.00 par value	SR	New York Stock Exchange LLC

Depositary Shares, each representing a 1/1,000^th interest in a share of 5.90% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $25.00 per share	SR.PRA	New York Stock Exchange LLC

Spire Inc.	Yes ☒	No ☐

~~Spire Inc.~~	~~Yes [ X ]~~	~~No [ ]~~
Spire Missouri Inc.	Yes ~~[ X ]~~☒	No ~~[ ]~~☐
Spire Alabama Inc.	Yes ~~[ X ]~~☒	No ~~[ ]~~☐

Spire Inc.	Yes ☒	No ☐

~~Spire Inc.~~	~~Yes [ X ]~~	~~No [ ]~~
Spire Missouri Inc.	Yes ~~[ X ]~~☒	No ~~[ ]~~☐
Spire Alabama Inc.	Yes ~~[ X ]~~☒	No ~~[ ]~~☐



	Large accelerated filer		Accelerated filer	Non- accelerated filer		Smaller reporting company	Emerging growth company
Spire Inc.	X	X
Spire Missouri Inc.				X	X
Spire Alabama Inc.				X	X

Spire Inc.		☐

~~Spire Inc.~~		~~[ ]~~
Spire Missouri Inc.		~~[ ]~~ ☐
Spire Alabama Inc.		~~[ ]~~ ☐

Spire Inc.	Yes ☐	No ☒

~~Spire Inc.~~	~~Yes [ ]~~	~~No [ X ]~~
Spire Missouri Inc.	Yes ~~[ ]~~☐	No ~~[ X ]~~☒
Spire Alabama Inc.	Yes ~~[ ]~~☐	No ~~[ X ]~~☒



Spire Inc.	Common Stock, par value $1.00 per share	~~48,344,121~~ 51,068,070
Spire Missouri Inc.	Common Stock, par value $1.00 per share (all owned by Spire Inc.)	24,577
Spire Alabama Inc.	Common Stock, par value $0.01 per share (all owned by Spire Inc.)	1,972,052



TABLE OF CONTENTS					~~Page No.~~

~~GLOSSARY~~			2 Page 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 Shareholders’ Equity		8
		Condensed Consolidated Statements of Cash Flows		9
	Spire Missouri Inc.
		~~Condensed Statements of Income~~		10
		Condensed Statements of Comprehensive Income			11 10
		Condensed Balance Sheets		12 11
		Condensed Statements of Shareholder’s Equity		14 13
		Condensed Statements of Cash Flows		15 14
	Spire Alabama Inc.
		Condensed Statements of Income		16 15
		Condensed Balance Sheets		17 16
		Condensed Statements of Shareholder’s Equity		19 18
		Condensed Statements of Cash Flows		20 19
	Notes to Financial Statements
		Note 1. Summary of Significant Accounting Policies		21 20
		Note 2. Revenue	23
		Note 3. Earnings Per Common Share		24
		Note 3.4. Regulatory Matters		25 24
		Note 4.5. Financing Arrangements and Long-term Debt		28
		Note 5.6. Fair Value of Financial Instruments		28 30
		Note 6.7. Fair Value Measurements		30 31
		Note 7.8. Concentrations of Credit Risk		33 34
		Note 8.9. Pension Plans and Other Postretirement Benefits		33 34
		Note 9.10. Information by Operating Segment		36 37
		Note ~~10.~~11. Commitments and Contingencies		38
		Note ~~11. Income Taxes~~12. Leases		41

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		42 43

Item 3	Quantitative and Qualitative Disclosures About Market Risk		55 56

Item 4	Controls and Procedures		55 56

PART II. OTHER INFORMATION

Item 1	Legal Proceedings		56 57

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		56 57
Item 3	Defaults upon Senior Securities		57
Item 4	Mine Safety Disclosures		57
Item 5	Other Information		57
Item 6	Exhibits		57 58

SIGNATURES			58 59


APSC
~~APSC~~	Alabama Public Service Commission	~~O&M~~ PGA	~~Operation and maintenance expense~~ Purchased Gas Adjustment
ASC	Accounting Standards Codification	~~PGA~~ RSE	~~Purchased Gas Adjustment~~ Rate Stabilization and Equalization
~~ASU~~ Company	~~Accounting Standards Update~~ Spire Inc.	~~PRP~~ SEC	~~Potentially responsible party~~ U.S. Securities and Exchange Commission
Degree days	The average of a day’s high and low temperature below 65, subtracted from 65, multiplied by the number of days impacted	~~RSE~~ Spire	~~Rate Stabilization and Equalization~~ Spire Inc.
~~EPS~~ FASB	~~Earnings per share~~	~~SEC~~	~~US Securities and Exchange Commission~~
~~FASB~~	Financial Accounting Standards Board	Spire Alabama	Spire Alabama Inc.
FERC	Federal Energy Regulatory Commission	~~Spire Alabama~~	~~Spire Alabama Inc.~~
~~GAAP~~	~~Accounting principles generally accepted in the United States of America~~	Spire EnergySouth	Spire EnergySouth Inc., the parent of Spire Gulf and Spire Mississippi
GAAP	Accounting principles generally accepted in the United States of America	Spire Gulf	Spire Gulf Inc.
Gas Marketing	Segment including Spire Marketing, which is engaged in the non-regulated marketing of natural gas and related activities	Spire ~~Gulf~~Marketing	Spire ~~Gulf~~Marketing Inc.
Gas Utility	Segment including the regulated operations of the Utilities	Spire ~~Marketing~~Mississippi	Spire ~~Marketing~~Mississippi Inc.
GSA	Gas Supply Adjustment	Spire ~~Mississippi~~Missouri	Spire ~~Mississippi~~Missouri Inc.
ISRS	Infrastructure System Replacement Surcharge	~~Spire Missouri~~	Spire Missouri ~~Inc.~~East	Spire Missouri’s eastern service territory
Missouri Utilities	Spire Missouri, including Spire Missouri East and Spire Missouri West, the utilities serving ~~the~~ Missouri ~~region~~	~~Spire Missouri East~~	~~Spire Missouri’s eastern service territory~~
~~MMBtu~~	~~Million British thermal units~~	Spire Missouri West	Spire Missouri’s western service territory
~~MoPSC~~ MMBtu	Million British thermal units	Spire STL Pipeline	Spire STL Pipeline LLC
MoPSC	Missouri Public Service Commission	~~TCJA~~ Spire Storage	~~The Tax Cuts and Jobs Act of 2017~~ Spire’s physical natural gas storage operations at two facilities in Wyoming
MSPSC	Mississippi Public Service Commission	US U.S.	United States
~~NYSE~~ O&M	~~New York Stock Exchange~~ Operation and maintenance expense	Utilities	Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth



	Common Stock Outstanding					Paid-in Capital			Retained Earnings			AOCI*			Total Equity Attributable to Spire Shareholders			Noncon- trolling Interest		Total
(Dollars in millions)	Shares		Par			Paid-in Capital			Retained Earnings			AOCI*			Total Equity Attributable to Spire Shareholders			Noncon- trolling Interest		Total
Balance at September 30, 2016	45,650,642		$	45.6		$	1,175.9		$	550.9		$	(4.2	)	$	1,768.2		$	—	$	1,768.2
Net income	—		—			—			45.2			—			45.2			—		45.2
Dividend reinvestment plan	5,610		—			0.3			—			—			0.3			—		0.3
Stock-based compensation costs	—		—			1.7			—			—			1.7			—		1.7
Stock issued under stock-based compensation plans	110,136		0.1			(0.1		)	—			—			—			—		—
Employee’s tax withholding for stock-based compensation	(33,615	)	—			(2.1		)	—			—			(2.1		)	—		(2.1		)
Dividends declared	—		—			—			(24.0		)	—			(24.0		)	—		(24.0		)
Other comprehensive income, net of tax	—		—			—			—			7.4			7.4			—		7.4
Balance at December 31, 2016	45,732,773		$	45.7		$	1,175.7		$	572.1		$	3.2		$	1,796.7		$	—	$	1,796.7

Balance at September 30, 2017	48,263,243		$	48.3		$	1,325.6		$	614.2		$	3.2		$	1,991.3		$	—	$	1,991.3
Net income	—		—			—			116.0			—			116.0			—		116.0
Business combination	—		—			—			—			—			—			6.5		6.5
Dividend reinvestment plan	4,618		—			0.3			—			—			0.3			—		0.3
Stock-based compensation costs	—		—			1.9			—			—			1.9			—		1.9
Stock issued under stock-based compensation plans	105,434		0.1			(0.1		)	—			—			—			—		—
Employee’s tax withholding for stock-based compensation	(33,581	)	(0.1		)	(2.8		)	—			—			(2.9		)	—		(2.9		)
Dividends declared	—		—			—			(27.2		)	—			(27.2		)	—		(27.2		)
Other comprehensive loss, net of tax	—		—			—			—			(0.2		)	(0.2		)	—		(0.2		)
Balance at December 31, 2017	48,339,714		$	48.3		$	1,324.9		$	703.0		$	3.0		$	2,079.2		$	6.5	$	2,085.7

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.



As of September 30, 2017
ASSETS
US stock/bond mutual funds	$	18.3	$	4.1	$	—	$	—		$	22.4
NYMEX/ICE natural gas contracts	3.4		—		—		(3.4		)	—
NYMEX gasoline and heating oil contracts	0.1		—		—		—			0.1
Total	$	21.8	$	4.1	$	—	$	(3.4	)	$	22.5
LIABILITIES
NYMEX/ICE natural gas contracts	$	1.9	$	—	$	—	$	(1.9	)	$	—
Total	$	1.9	$	—	$	—	$	(1.9	)	$	—



As of December 31, 2016
ASSETS
US stock/bond mutual funds	$	17.2	$	4.0	$	—	$	—		$	21.2
NYMEX/ICE natural gas contracts	8.8		—		—		(6.6		)	2.2
NYMEX gasoline and heating oil contracts	0.5		—		—		—			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	)	$	—



Missouri Utilities and Spire Alabama – Weather/volumetric usage	$	38.4
Missouri Utilities and Spire Alabama – Higher PGA/GSA gas cost recoveries	33.2
Missouri Utilities and Spire Alabama – Higher gross receipts taxes	3.5
Missouri Utilities – Higher ISRS	3.4
All other factors	3.6
Missouri Utilities – Off-system sales and capacity release	(16.8		)
Total Variation	$	65.3



Utilities – Weather/volumetric usage	$	7.9
Missouri Utilities – Higher ISRS	3.4
Missouri Utilities – Customer growth	0.3
All other factors	0.7
Total Variation	$	12.3



	Commercial Paper Borrowings	Revolving Credit Facility Borrowings	Total Short-term Borrowings
Three Months Ended December 31, 2017
Weighted average borrowings outstanding	$545.5	$0.3	$545.8
Weighted average interest rate	1.6%	2.8%	1.6%
Range of borrowings outstanding	$477.3 - $632.9	$0.0 - $25.0	$477.3 - $632.9
As of December 31, 2017
Borrowings outstanding	$583.6	$—	$583.6
Weighted average interest rate	2.0%	—%	2.0%



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, 2017 - October 31, 2017	—	$—	—	—
November 1, 2017 - November 30, 2017	—	$—	—	—
December 1, 2017 - December 31, 2017	33,581	$81.75	—	—
Total	33,581	$81.75	—	—