Spire Inc.
2018 Form 10-K
2018 highlights
Fiscal years ended September 30
2018
2017
2016
Earnings and dividends (millions, except per share amounts)
Net income
Diluted earnings per share of common stock
Net economic earnings*
Net economic earnings per share of common stock*
Dividends declared per share of common stock
Operating revenues (millions)
Gas Utility
Gas Marketing and other
Total operating revenues
Utility sales and customers (thousands)
Therms sold and transported
Customers
Shareholders
$ 214.2
4.33
$
$
$
$
183.7
3.72
2.25
$ 1,888.0
77.0
$ 1,965.0
$ 161.6
3.43
$
$ 167.6
3.56
$
$
2.10
$ 1,660.0
80.7
$ 1,740.7
$ 144.2
3.24
$
$ 149.1
3.42
$
$
1.96
$ 1,457.2
80.1
$ 1,537.3
3,330.4
1,692.8
2,968.6
1,685.5
2,565.6
1,678.7
Common shareholders of record, end of period
3,096
3,240
3,428
Employees
Total employees, end of period
*For further discussion of these non-GAAP financial measures, see pages 29-30 of our Form 10-K.
3,366
3,279
3,296
Profile
At Spire Inc. (NYSE: SR), we believe energy exists to help people’s
We are transforming our business and pursuing growth through
lives. It’s a simple idea, but one that’s at the heart of our company.
1) growing organically, 2) investing in infrastructure, 3) acquiring
Every day we serve 1.7 million homes and businesses, making
and integrating, and 4) innovation and technology. Learn more
us the fifth largest publicly traded natural gas company in the
at SpireEnergy.com.
country. We help people fuel their daily lives through our gas
utilities serving Alabama, Mississippi and Missouri.
Our gas-related businesses include Spire Marketing, a Houston-
based provider of natural gas marketing and related services
to a diverse customer base primarily in the central U.S.;
Spire STL Pipeline, a 65-mile pipeline bringing lower-cost
natural gas supplies to the St. Louis region; and Spire Storage,
a Wyoming-based provider of natural gas storage services
to customers in the western U.S.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2018
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission
File Number
1-16681
1-1822
2-38960
Name of Registrant, Address of Principal
Executive Offices and Telephone Number
State of
Incorporation
I.R.S. Employer
Identification
Number
Spire Inc.
700 Market Street
St. Louis, MO 63101
314-342-0500
Spire Missouri Inc.
700 Market Street
St. Louis, MO 63101
314-342-0500
Spire Alabama Inc.
2101 6th Avenue North
Birmingham, AL 35203
205-326-8100
Missouri
74-2976504
Missouri
43-0368139
Alabama
63-0022000
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”):
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Title of each class
Common Stock $1.00 par value
None
None
Name of each exchange on which registered
New York Stock Exchange
Not applicable
Not Applicable
Securities registered pursuant to Section 12(g) of the Exchange Act:
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ ]
Yes [ ]
Yes [ ]
No [ X ]
No [ X ]
No [ X ]
Indicate by check mark whether each registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of
1933, as amended.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ X ]
Yes [ ]
Yes [ ]
No [ ]
No [ X ]
No [ X ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ ]
Yes [ ]
Yes [ ]
No [ X ]
No [ X ]
No [ X ]
Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has
been subject to such filing requirements for the past 90 days.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ X ]
Yes [ X ]
Yes [ X ]
No [ ]
No [ ]
No [ ]
Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files).
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ X ]
Yes [ X ]
Yes [ X ]
No [ ]
No [ ]
No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
[ X ]
[ X ]
[ X ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
Accelerated
filer
Non-
accelerated filer
Smaller
reporting
company
Emerging growth
company
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
X
X
X
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
[ ]
[ ]
[ ]
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ ]
Yes [ ]
Yes [ ]
No [ X ]
No [ X ]
No [ X ]
The aggregate market value of the voting stock held by non-affiliates of Spire Inc. amounted to $3,391,208,752 as of
March 31, 2018. All of Spire Missouri Inc.’s and Spire Alabama Inc.’s equity securities are owned by Spire Inc., their parent
company and a reporting company under the Exchange Act.
The number of shares outstanding of each registrant’s common stock as of November 12, 2018 was as follows:
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Common Stock, par value $1.00 per share
Common Stock, par value $1.00 per share (all owned by Spire Inc.)
Common Stock, par value $0.01 per share (all owned by Spire Inc.)
50,676,192
24,577
1,972,052
This combined Form 10-K represents separate filings by Spire Inc., Spire Missouri Inc., and Spire Alabama Inc. Information
contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes no
representation as to information relating to the other registrant, except that information relating to Spire Missouri Inc. and Spire
Alabama Inc. is also attributed to Spire Inc.
Spire Missouri Inc. and Spire Alabama Inc. meet the conditions set forth in General Instructions I(1)(a) and
(b) of Form 10-K and are therefore filing this Form 10-K with the reduced disclosure format specified in
General Instructions I(2) to Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of proxy statement for Spire Inc. to be filed on or about December 14, 2018 — Part III.
Certain exhibits as indicated in Part IV.
TABLE OF CONTENTS
GLOSSARY OF KEY TERMS AND ABBREVIATIONS
PART I
FORWARD-LOOKING STATEMENTS
Item 1
Item 1A
Item 1B
Item 2
Item 3
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Executive Officers of the Registrant (Item 401(b) of Regulation S-K)
PART II
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 6
Item 7
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9
Item 9A
Controls and Procedures
Item 9B Other Information
PART III
Item 10
Item 11
Item 12
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13
Item 14
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART IV
Item 15
Exhibits, Financial Statement Schedules
SIGNATURES
Page
2
3
4
10
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21
21
22
23
25
26
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132
132
133
133
133
134
140
1
GLOSSARY OF KEY TERMS AND ABBREVIATIONS
AOCI
APSC
ASC
ASU
CCM
Accumulated other comprehensive income
or loss
Alabama Public Service Commission
Accounting Standards Codification
Accounting Standards Update
Cost Control Measure
Degree days
The average of a day’s high and low
temperature below 65, subtracted from 65,
multiplied by the number of days impacted
EPS
ESR
Earnings per share
Enhanced Stability Reserve
NYMEX
New York Mercantile Exchange, Inc.
NYSE
O&M
OCI
OPC
PGA
RSE
SEC
New York Stock Exchange
Operation and maintenance expense
Other comprehensive income or loss
Missouri Office of the Public Counsel
Purchased Gas Adjustment
Rate Stabilization and Equalization
U.S. Securities and Exchange Commission
FASB
Financial Accounting Standards Board
Spire
Alabama
Spire Alabama Inc.
FERC
Federal Energy Regulatory Commission
Spire
EnergySouth
Spire EnergySouth Inc., 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
Marketing
Spire Marketing Inc.
Gas Utility
Segment including the regulated operations
of the Utilities
Spire
Mississippi
Spire Mississippi Inc.
GSA
Gas Supply Adjustment
ICE
Intercontinental Exchange
ISRS
Infrastructure System Replacement
Surcharge
Missouri
Utilities
Spire Missouri, including Spire Missouri
East and Spire Missouri West, the utilities
serving the Missouri region
MMBtu
Million British thermal units
MoPSC
Missouri Public Service Commission
Spire
Missouri
Spire
Missouri
East
Spire
Missouri
West
Spire
Storage
TCJA
U.S.
MSPSC
Mississippi Public Service Commission
Utilities
Spire Missouri Inc.
Spire Missouri’s eastern service territory
Spire Missouri’s western service territory
The physical natural gas storage operations of
Spire Storage West LLC and Clear Creek
Storage Company, L.L.C.
The Tax Cuts and Jobs Act of 2017
United States
Spire Missouri, Spire Alabama and the
subsidiaries of Spire EnergySouth
2
PART I
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report, excluding historical information, include forward-looking statements. Certain words,
such as “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “seek,” and similar words and expressions identify
forward-looking statements that involve uncertainties and risks. Future developments may not be in accordance with our current
expectations or beliefs and the effect of future developments may not be those anticipated. Among the factors that may cause
results to differ materially from those contemplated in any forward-looking statement are:
• Weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country;
• Volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on
margin deposits associated with the use of natural gas derivative instruments, and the impact 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;
• Acquisitions may not achieve their intended results;
• The Spire STL Pipeline project may be hindered or halted by regulatory, legal, operational 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,
• environmental or safety matters, including the potential impact of legislative and regulatory actions related to climate
change and pipeline safety,
• taxes,
• pension and other postretirement benefit liabilities and funding obligations, or
• accounting standards;
• The results of litigation;
• The availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund
our operations and necessary capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to
the capital markets;
• Retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
• Our ability to comply with all covenants in our indentures and credit facilities any violations of which, if not cured in a timely
manner, could trigger a default of our obligation;
• Capital and energy commodity market conditions, including the ability to obtain funds with reasonable terms for necessary
capital expenditures and general operations and the terms and conditions imposed for obtaining sufficient gas supply;
• Discovery of material weakness in internal controls;
• The disruption, failure or malfunction of our information technology systems including due to cyberattacks; and
• Employee workforce issues, including but not limited to labor disputes and future wage and employee benefit costs, including
changes in discount rates and returns on benefit plan assets.
Readers are urged to consider the risks, uncertainties, and other factors that could affect our business as described in this report.
All forward-looking statements made in this report rely upon the safe harbor protections provided under the Private Securities
Litigation Reform Act of 1995. We do not, by including this statement, assume any obligation to review or revise any particular
forward-looking statement in light of future events.
3
Item 1. Business
OVERVIEW
Spire Inc. (“Spire” or the “Company”), formerly the Laclede Group, Inc. (formed in 2000), is the holding company
for Spire Missouri Inc., Spire Alabama Inc., Spire EnergySouth Inc., and other utility and non-utility subsidiaries.
Spire Missouri Inc. (“Spire Missouri” or the “Missouri Utilities”) was founded in 1857 as The Laclede Gas Light
Company and was renamed Laclede Gas Company in 1950 and then Spire Missouri Inc. in 2017. Effective August 31,
2014, the Company purchased Alabama Gas Corporation, which was formed by the merger of two gas companies in
1948 and renamed Spire Alabama Inc. (“Spire Alabama”) in 2017. On September 12, 2016, the Company purchased
EnergySouth, Inc., along with its wholly owned subsidiaries, Mobile Gas Service Corporation and Willmut Gas & Oil
Company, and in 2017, those companies were renamed Spire EnergySouth Inc. (“Spire EnergySouth”), Spire Gulf
Inc. (“Spire Gulf”), and Spire Mississippi Inc. (“Spire Mississippi”), respectively.
Spire is committed to transforming its business and pursuing growth through 1) growing organically, 2) investing in
infrastructure, 3) acquiring and integrating, and 4) innovation and technology.
The Company has two key business segments: Gas Utility and Gas Marketing.
The Gas Utility segment includes the regulated operations of Spire Missouri, Spire Alabama, Spire Gulf and Spire
Mississippi (collectively, the “Utilities”). The business of the Utilities is subject to seasonal fluctuations with the
peak period occurring in the winter heating season, typically November through April of each fiscal year. Spire
Missouri is a public utility engaged in the purchase, retail distribution and sale of natural gas, with primary offices
located in St. Louis, Missouri. Spire Missouri is the largest natural gas distribution utility system in Missouri,
serving more than 1.1 million residential, commercial and industrial customers. For utility regulatory purposes
Spire Missouri has two regions, one serving St. Louis and eastern Missouri (“Spire Missouri East”) and the other
serving Kansas City and western Missouri (“Spire Missouri West”). Spire Alabama is a public utility engaged in the
purchase, retail distribution and sale of natural gas principally in central and northern Alabama, serving more than
0.4 million residential, commercial and industrial customers with primary offices located in Birmingham, Alabama.
Spire Gulf and Spire Mississippi are utilities engaged in the purchase, retail distribution and sale of natural gas to
0.1 million customers in southern Alabama and south-central Mississippi.
The Gas Marketing segment includes Spire Marketing Inc. (“Spire Marketing”), a wholly owned subsidiary engaged
in the marketing of natural gas and related activities on a non-regulated basis.
As of September 30, 2018, Spire had 3,366 employees, including 2,321 for Spire Missouri and 861 for Spire
Alabama.
Spire’s common stock is listed on the New York Stock Exchange (“NYSE”) and trades under the ticker symbol “SR.”
The following table reflects Spire shares issued during the two most recent fiscal years:
Common Stock Issuance
Dividend Reinvestment and Stock Purchase Plan (“DRIP”)
Equity Incentive Plan
Total Shares Issued
2018
2,300,000
23,023
85,637
2,408,660
2017
2,504,684
23,731
84,186
2,612,601
Shares were issued during 2018 to provide funds for repayment of short-term debt, to fund capital expenditures,
and other general corporate uses. Shares were issued during 2017 in conjunction with the conversion of equity units
that were issued in 2014 to help fund the Spire Alabama acquisition. During fiscal 2018 and 2017, shares were
issued at historically consistent levels for Spire’s DRIP and Equity Incentive Plan.
During fiscal 2018 and 2017, neither Spire Missouri nor Spire Alabama issued shares to Spire. For more detailed
common stock information of Spire, Spire Missouri and Spire Alabama, see Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Spire uses its website, SpireEnergy.com, as a routine channel for distribution of important information including
news releases, analyst presentations and financial information. The information Spire, Spire Missouri and Spire
Alabama file or furnish to the U.S. Securities and Exchange Commission (“SEC”), including annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and their amendments, and proxy statements
are available free of charge under “Filings and Annual Reports” in the Investors section of Spire’s website,
SpireEnergy.com, as soon as reasonably practical after the information is filed with or furnished to the SEC.
4
Information contained on Spire’s website is not incorporated by reference in this report. The SEC also maintains a
website that contains our SEC filings (sec.gov).
GAS UTILITY
Natural Gas Supply
The Utilities’ fundamental gas supply strategy is to meet the two-fold objective of 1) ensuring a dependable gas
supply is available for delivery when needed and 2) insofar as is compatible with that dependability, purchasing gas
that is economically priced. In structuring their natural gas supply portfolio, the Utilities focus on natural gas assets
that are strategically positioned to meet the Utilities’ primary objectives.
Spire Missouri focuses its gas supply portfolio around a number of large natural gas suppliers with equity ownership
or control of assets strategically situated to complement its regionally diverse firm transportation arrangements.
Spire Missouri East utilizes both Mid-Continent and Gulf Coast gas sources to provide a level of supply diversity
that facilitates the optimization of pricing differentials as well as protecting against the potential of regional supply
disruptions. Spire Missouri West utilizes both Mid-Continent and Rocky Mountain gas sources to provide a level of
supply diversity that accesses low cost supplies.
In fiscal year 2018, Spire Missouri purchased natural gas from 34 different suppliers to meet its total service area
current gas sales and storage injection requirements. Spire Missouri entered into firm agreements with suppliers
including major producers and marketers providing flexibility to meet the temperature sensitive needs of its
customers. Natural gas purchased by Spire Missouri for delivery to its service area through the Enable Mississippi
River Transmission LLC (“MRT”) system totaled 57.1 billion cubic feet (“Bcf”). Spire Missouri also holds firm
transportation arrangements on several other interstate pipeline systems that provide access to gas supplies
upstream of MRT. In addition to natural gas deliveries from MRT, 58.2 Bcf was purchased on the Southern Star
Central Gas Pipeline, Inc. (“Southern Star”), 4.4 Bcf was purchased on the Tallgrass Interstate Gas Transmission,
LLC (“TGIT”) system, 11.1 Bcf was purchased on the Panhandle Eastern Pipe Line Company, LP (“PEPL”) system,
and 0.7 Bcf was purchased on the Rockies Express Pipeline, LLC (“REX”) system. Some of Spire Missouri’s
commercial and industrial customers purchased their own gas with Spire Missouri transporting 41.5 Bcf to them
through its distribution system.
The fiscal year 2018 peak day send out of natural gas to Spire Missouri customers, including transportation
customers, occurred on January 16, 2018. The average temperature was 7 degrees Fahrenheit in St. Louis and 2
degrees Fahrenheit in Kansas City. On that day, the Missouri Utilities’ customers consumed 1.80 Bcf of natural gas.
For eastern Missouri, this peak day demand was met with natural gas transported to St. Louis through the MRT,
MoGas Pipeline LLC, and Southern Star transportation systems, and from Spire Missouri’s on-system storage and
peak shaving resources. For western Missouri, this peak day demand was met with natural gas transported to
Kansas City through the Southern Star, PEPL, TGIT, and REX transportation systems.
Spire Alabama’s distribution system is connected to two major interstate natural gas pipeline systems, Southern
Natural Gas Company, L.L.C. (“Southern Natural Gas”) and Transcontinental Gas Pipe Line Company, LLC
(“Transco”). It is also connected to two intrastate natural gas pipeline systems.
Spire Alabama purchases natural gas from various natural gas producers and marketers. Certain volumes are
purchased under firm contractual commitments with other volumes purchased on a spot market basis. The
purchased volumes are delivered to Spire Alabama’s system using a variety of firm transportation, interruptible
transportation and storage capacity arrangements designed to meet the system’s varying levels of demand.
In fiscal 2018, Spire Alabama purchased natural gas from 15 different suppliers to meet current gas sales, storage
injection, and liquefied natural gas (“LNG”) liquefaction requirements, of which six are under long-term supply
agreements. Approximately 67.0 Bcf was transported by Southern Natural Gas, 6.0 Bcf by Transco, and 6.0 Bcf
through intrastate pipelines to the Spire Alabama delivery points for its residential, commercial, and industrial
customers.
The fiscal 2018 peak day send out for Spire Alabama was 0.7 Bcf on January 17, 2018, when the average
temperature was 21 degrees Fahrenheit in Birmingham, of which 100% was met with supplies transported through
Southern Natural Gas, Transco, intrastate facilities, and one of the four LNG peak shaving facilities.
Spire Gulf’s distribution system is directly connected to interstate pipelines, natural gas processing plants and gas
storage facilities. Spire Gulf buys from a variety of producers and marketers, with BP Energy Company being the
primary supplier.
5
Natural Gas Storage
Spire Missouri believes that it has ample storage capacity to meet the demands of its distribution system,
particularly to augment its supply during peak demand periods. Spire Missouri has a contractual right to store 21.6
Bcf of gas in MRT’s storage facility located in Unionville, Louisiana, 16.3 Bcf of gas storage in Southern Star’s system
storage facilities located in Kansas and Oklahoma, and 1.4 Bcf of firm storage on PEPL’s system storage. MRT’s
tariffs allow injections into storage from May 16 through November 15 and require the withdrawal from storage of
all but 2.1 Bcf from November 16 through May 15. Southern Star tariffs allow both injections and withdrawals into
storage year round with ratchets that restrict the associated flows dependent upon the underlying inventory level
per the contracts.
In addition, Spire Missouri East supplements pipeline gas with natural gas withdrawn from its own underground
storage field located in St. Louis and St. Charles Counties in Missouri. The field is designed to provide
approximately 0.3 Bcf of natural gas withdrawals on a peak day and maximum annual net withdrawals of
approximately 4.0 Bcf of natural gas based on the inventory level that Spire Missouri plans to maintain.
Spire Alabama has a contractual right to store 12.5 Bcf of gas with Southern Natural Gas, 0.2 Bcf of gas with Transco
and 0.2 Bcf of gas with Tennessee Gas Pipeline. In addition, Spire Alabama has 1.8 Bcf of LNG storage that can
provide the system with up to an additional 0.2 Bcf of natural gas daily to meet peak day demand.
Spire Gulf obtains adequate storage capacity through Gulf South Pipeline Company, LP, and Sempra’s Bay Gas
Storage.
Regulatory Matters
For details on regulatory matters, see Note 14, Regulatory Matters, of the Notes to Financial Statements in Item 8.
Other Pertinent Matters
Spire Missouri is the only distributor of natural gas within its franchised service areas, while Spire Alabama is the
main distributor of natural gas in its service areas. The principal competition for the Utilities comes from the local
electric companies. Other competitors in the service areas include suppliers of fuel oil, coal, and propane, as well as
natural gas pipelines that can directly connect to large volume customers. For the Missouri Utilities, competition
also comes from district steam systems in the downtown areas of both St. Louis and Kansas City, and for Spire
Alabama, from municipally or publicly owned gas distributors located adjacent to its service territory. Coal is price
competitive as a fuel source for very large boiler plant loads, but environmental requirements for coal have shifted
the economic advantage to natural gas. Oil and propane can be used to fuel boiler loads and certain direct-fired
process applications, but these fuels require on-site storage, thus limiting their competitiveness. In certain cases,
district steam has been competitive with gas for downtown St. Louis and Kansas City area heating users.
Residential, commercial, and industrial markets represented approximately 93% and 84% of fiscal 2018 operating
revenues for Spire Missouri and Spire Alabama, respectively. Given the current level of natural gas supply and
market conditions, the Utilities believe that the relative comparison of natural gas equipment and operating costs
with those of competitive fuels will not change significantly in the foreseeable future, and that these markets will
continue to be supplied by natural gas. In new multi-family and commercial rental markets, the Utilities’
competitive exposures are presently limited to space and water heating applications.
Spire Missouri offers gas transportation service to its large-user industrial and commercial customers. The tariff
approved for that type of service produces a margin similar to that which the Missouri Utilities would have received
under their regular sales rates. Spire Alabama’s transportation tariff allows it to transport gas for large commercial
and industrial customers rather than buying and reselling it to them and is based on Spire Alabama’s sales profit
margin so that operating margins are unaffected. During fiscal 2018, substantially all of Spire Alabama’s large
commercial and industrial customer deliveries involved the transportation of customer-owned gas.
The Utilities are subject to various environmental laws and regulations that, to date, have not materially affected the
Utilities’ or the Company’s financial position and results of operations. For a detailed discussion of environmental
matters, see Note 15, Commitment and Contingencies, of the Notes to Financial Statements in Item 8.
6
Union Agreements
The Company believes labor relations with its employees are good. Should that condition change, the Company
could experience labor disputes, work stoppages or other disruptions in production that could negatively impact the
Company’s results of operations and cash flows.
The following table presents the Company’s various labor agreements as of September 30, 2018:
Spire Missouri
Union
United Steel, Paper and Forestry, Rubber Manufacturing,
Allied-Industrial and Service Workers International Union
(“USW”)
USW
USW
USW
USW
USW
Gas Workers Metal Trades locals of the United Association of
Journeyman and Apprentices of the Plumbing and Pipefitting
Industry of the United States and Canada
Gas Workers Metal Trades locals of the United Association of
Journeyman and Apprentices of the Plumbing and Pipefitting
Industry of the United States and Canada
Total Spire Missouri
Spire Alabama
USW
USW
United Association of Gas Fitters
Total Spire Alabama
Spire Gulf
USW
Total Spire
Local
Employees
Covered
Contract Start
Date
Contract End
Date
884
11-6
11-194
12561
14228
11-267
781-
Kansas
City
781-
Monett
12030
12030-A
548
63 August 1, 2018
July 31, 2021
944 August 1, 2018
July 31, 2021
75 August 1, 2018
July 31, 2021
131 August 16, 2016
July 31, 2019
41 August 16, 2016
July 31, 2019
28 August 16, 2016
July 31, 2019
192 August 16, 2016
July 31, 2019
56 August 16, 2016
July 31, 2019
1,530
223
57
127
407
May 1, 2017
April 30, 2020
May 1, 2017
April 30, 2020
July 1, 2016
April 30, 2019
3-541
65 October 1, 2017
July 31, 2020
2,002
7
Operating Revenues and Customer Information
The following information about revenues and therms sold and transported (before intersegment eliminations), and
annual average numbers of customers, includes data of acquired utilities for only the period of Spire’s ownership
(beginning September 12, 2016 for the utilities of Spire EnergySouth).
Gas Utility Operating Revenues
(In millions)
Residential
Commercial & Industrial
Interruptible
Transportation
Off-System and Other Incentive
Provisions for Refunds and Other
Total Gas Utility Operating Revenues
Gas Utility Therms Sold and Transported
(In millions)
Residential
Commercial & Industrial
Interruptible
Transportation
System Therms Sold and Transported
Off-System
Total Gas Utility Therms Sold and Transported
Gas Utility Customers
Residential
Commercial & Industrial
Interruptible
Transportation
Total Gas Utility Customers
2018
2017
2016
$
$
1,253.3
453.0
7.4
106.9
40.3
27.5
1,888.4
$
$
1,084.5
389.2
5.1
99.8
67.9
21.4
1,667.9
$
$
979.0
331.3
2.0
93.1
50.7
3.3
1,459.4
2018
2017
2016
1,095.8
536.4
14.5
1,615.1
3,261.8
68.6
3,330.4
866.2
446.7
12.6
1,467.5
2,793.0
175.6
2,968.6
867.5
420.4
4.6
1,089.8
2,382.3
183.3
2,565.6
2018
2017
2016
1,567,939
123,982
1,550,777
133,864
1,540,366
137,450
70
835
64
827
42
824
1,692,826
1,685,532
1,678,682
Total annual average number of customers for Spire Missouri and Spire Alabama for fiscal 2018 was 1,169,888 and
420,572, respectively.
Spire Missouri has franchises in nearly all the communities where it provides service with terms varying from five
years to an indefinite duration. Generally, a franchise is essentially a municipal permit to install pipes and construct
other facilities in the community. All of the franchises are free from unduly burdensome restrictions and are
adequate for the conduct of Spire Missouri’s current public utility businesses in the state of Missouri. In recent
years, although certain franchise agreements have expired, Spire Missouri has continued to provide service in those
communities without formal franchises.
Spire Alabama has franchises in nearly all the communities where it provides service with terms varying from five
years to an indefinite duration. Generally, a franchise is essentially a municipal permit to install pipes and construct
other facilities in the community. All of the franchises are free from unduly burdensome restrictions and are
adequate for the conduct of Spire Alabama’s public utility business in the state of Alabama.
8
GAS MARKETING
Spire Marketing is engaged in the marketing of natural gas and providing energy services to both on-system utility
transportation customers and customers outside of the Utilities’ traditional service areas. The majority of Spire
Marketing’s business is derived from the procurement and physical delivery of natural gas to a diverse customer
base. During fiscal 2018, Spire Marketing utilized over 43 interstate and intrastate pipelines and over 125 suppliers
to market natural gas to more than 250 retail customers and 120 wholesale customers, primarily in the central
United States (“U.S.”). Through its retail operations, Spire Marketing offers natural gas marketing services to large
commercial and industrial customers, while its wholesale business consists of producers, pipelines, power
generators, municipalities, storage operators, and utility companies. Wholesale activities currently represent a
majority of the total Gas Marketing business.
In the course of its business, Spire Marketing enters into agreements to purchase natural gas at a future date in
order to lock up supply to cover future sales commitments to its customers. To secure access to the markets it
serves, Spire Marketing contracts for transportation capacity on various pipelines from both pipeline companies
and through the secondary capacity market from third parties. Throughout fiscal 2018, Spire Marketing held
approximately 0.50 Bcf per day of firm transportation capacity. In addition, to ensure reliability of service and to
provide operational flexibility, Spire Marketing enters into firm storage contracts and interruptible park and loan
transactions with various companies, where it is able to buy and retain gas to be delivered at a future date, at which
time it sells the natural gas to third parties. As of September 30, 2018, Spire Marketing has contracted for
approximately 7.3 Bcf of such storage and park and loan capacity for the 2018-2019 winter season.
The Gas Marketing strategy is to leverage its market expertise and risk management skills to manage and optimize
the value of its portfolio of commodity, transportation, park and loan, and storage contracts while controlling costs
and acting on new marketplace opportunities. Overall, Gas Marketing saw significant growth in fiscal 2018
primarily as a result of increased business with producers and integrated utilities, retail and wholesale customer
growth, increased optimization opportunities resulting from its overall portfolio of assets, and more favorable
market conditions.
OTHER
Other includes unallocated corporate items, including certain debt and associated interest costs largely attributable
to acquisitions, Spire STL Pipeline LLC and Spire’s subsidiaries engaged in the operation of a physical natural gas
storage business, a propane pipeline, compression of natural gas, and risk management, among other activities.
Spire STL Pipeline LLC is a wholly owned subsidiary of Spire planning to construct and operate a 65-mile pipeline
to connect to the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri,
including Spire Missouri’s storage facility (the “STL Pipeline”) Federal Energy Regulatory Commission (“FERC”) in
August 2018 and received a Notice to Proceed from FERC in November 2018, allowing construction to begin. The
pipeline will operate under FERC jurisdiction and will be capable of delivering up to 4 million therms per day of
natural gas into eastern Missouri. Spire Missouri will be the foundational shipper with a contractual commitment of
3.5 million therms per day.
In fiscal 2018, the Company acquired and began integrating two neighboring natural gas storage facilities in
southwest Wyoming, referred to herein as “Spire Storage.” Both storage facilities fall under FERC jurisdiction.
9
Item 1A. Risk Factors
Spire’s and the Utilities’ business and financial results are subject to a number of risks and uncertainties, including
those set forth below. The risks described below are those the Company and the Utilities consider to be material.
When considering any investment in Spire or the Utilities’ securities, investors should carefully consider the
following information, as well as information contained in the caption “Forward-Looking Statements,” Item 7A, and
other documents Spire, Spire Missouri, and Spire Alabama file with the SEC. This list is not exhaustive, and Spire’s
and the Utilities’ respective management places no priority or likelihood based on the risk descriptions, order of
presentation or grouping by subsidiary. All references to dollar amounts are in millions.
RISKS AND UNCERTAINTIES THAT RELATE TO THE BUSINESS AND FINANCIAL RESULTS OF
SPIRE AND ITS SUBSIDIARIES
As a holding company, Spire depends on its operating subsidiaries to meet its financial obligations.
Spire is a holding company with no significant assets other than the stock of its operating subsidiaries and cash
investments. Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid dividends
continuously since 1946. Spire’s ability to pay dividends to its shareholders is dependent on the ability of its
subsidiaries to generate sufficient net income and cash flows to pay upstream dividends and make loans or loan
repayments. In addition, because it is a holding company and the substantial portion of its assets are represented by
its holdings in the Utilities, the risks faced by the Utilities as described below under RISKS THAT RELATE TO THE
GAS UTILITY SEGMENT may also adversely affect Spire’s cash flows, liquidity, financial condition and results of
operations.
A downgrade in Spire’s and/or its subsidiaries’ credit ratings may negatively affect its ability to
access capital.
Currently, Spire, Spire Missouri, and Spire Alabama have investment grade credit ratings. There is no assurance
that such credit ratings for any of the Spire companies will remain in effect for any given period of time or that such
ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in each rating agency’s
judgment, circumstances so warrant. Spire has a working capital line of credit to meet its short-term liquidity
needs. Spire’s line of credit may be used to meet the liquidity needs of any of its subsidiaries, subject to sublimits. If
the rating agencies lowered the credit rating at any of these entities, particularly below investment grade, it might
significantly limit that entity’s ability to secure new or additional credit facilities and would increase its costs of
borrowing. Spire’s or the Utilities’ ability to borrow under current or new credit facilities and costs of that borrowing
have a direct impact on their ability to execute their operating strategies.
Unexpected losses may adversely affect Spire’s or its subsidiaries’ financial condition and results of
operations.
As with most businesses, there are operations and business risks inherent in the activities of Spire’s subsidiaries. If,
in the normal course of business, Spire or any of its subsidiaries becomes a party to litigation, such litigation could
result in substantial monetary judgments, fines, or penalties or be resolved on unfavorable terms. In accordance
with customary practice, Spire and its subsidiaries maintain insurance against a significant portion of, but not all,
risks and losses. In addition, in the normal course of its operations, Spire and its subsidiaries may be exposed to loss
from other sources, such as bad debt expense or the failure of a counterparty to meet its financial obligations. Spire
and its operating companies employ many strategies to gain assurance that such risks are appropriately managed,
mitigated, or insured, as appropriate. To the extent a loss is not fully covered by insurance or other risk mitigation
strategies, that loss could adversely affect the Company’s and/or its subsidiaries’ financial condition and results of
operations.
10
Increased dependence on technology may hinder Spire’s and its subsidiaries’ business operations
and adversely affect their financial condition and results of operations if such technologies fail.
Over the last several years, Spire and its subsidiaries have implemented or acquired a variety of technological tools
including both Company-owned information technology and technological services provided by outside parties.
These tools and systems support critical functions including Spire and its subsidiaries’ integrated planning,
scheduling and dispatching of field resources, its automated meter reading system, customer care and billing,
procurement and accounts payable, operational plant logistics, management reporting, and external financial
reporting. The failure of these or other similarly important technologies, or the Company’s or its subsidiaries’
inability to have these technologies supported, updated, expanded, or integrated into other technologies, could
hinder their business operations and adversely impact their financial condition and results of operations.
Although the Company and its subsidiaries have, when possible, developed alternative sources of technology and
built redundancy into their computer networks and tools, there can be no assurance that these efforts to date would
protect against all potential issues related to the loss of any such technologies or the Utilities’ use of such
technologies.
A cyberattack may disrupt Spire’s operations or lead to a loss or misuse of confidential and
proprietary information or potential liability.
The Company and its subsidiaries are subject to cybersecurity risks primarily related to breaches of security
pertaining to sensitive customer, employee, and vendor information maintained by the Company, its subsidiaries,
or its third-party vendors in the normal course of business, as well as breaches in the technology that manages
natural gas distribution operations and other business processes. A loss of confidential or proprietary data or
security breaches of other technology business tools could adversely affect the Company’s and its subsidiaries’
reputation, diminish customer confidence, disrupt operations, and subject the Company and its subsidiaries to
possible financial liability, any of which could have a material effect on the Company’s and its subsidiaries’ financial
condition and results of operations. The Company and its subsidiaries closely monitor both preventive and detective
measures to manage these risks and maintain cyber risk insurance to mitigate a significant portion, but not all, of
these risks and losses. To the extent that the occurrence of any of these cyber events is not fully covered by
insurance, it could adversely affect the Company’s and its subsidiaries’ financial condition and results of operations.
Resources expended to pursue or integrate business acquisitions, investments or other business
arrangements may adversely affect Spire’s financial position and results of operations and return
on investments made may not meet expectations.
From time to time, Spire may seek to grow through strategic acquisitions, investments or other business
arrangements. Attractive acquisition and investment opportunities may be difficult to complete on economically
acceptable terms. It is possible for Spire to expend considerable resources pursuing acquisitions and investments
but, for a variety of reasons, decide not to move forward. Similarly, investment opportunities may be hindered or
halted by regulatory or legal actions. To the extent that acquisitions or investments are made, such transactions
involve a number of risks, including but not limited to, the assumption of material liabilities, the diversion of
management’s attention from daily operations, difficulties in assimilation and retention of employees, securing
adequate capital to support the transaction, and regulatory approval. Uncertainties exist in assessing the value,
risks, profitability, and liabilities associated with certain businesses or assets and there is a possibility that
anticipated operating and financial efficiencies expected to result from an acquisition or investment do not develop.
Additionally, there are no assurances that resources expended will achieve their intended result.
The failure to complete an acquisition successfully or to integrate acquisitions or investments it may undertake
could have an adverse effect on the Company’s financial condition and results of operations and the market’s
perception of the Company’s execution of its strategy. To the extent Spire engages in any of the above activities
together with or through one or more of its subsidiaries, including the Utilities, such subsidiaries may face the same
risks.
11
Failure to obtain required approvals and land rights or significant issues during the construction of
the STL Pipeline could adversely impact Spire’s investment in the project.
The design, construction and operation of natural gas pipelines and the transportation of natural gas are all highly
regulated activities. The STL Pipeline is subject to FERC jurisdiction under Section 7 of the Natural Gas Act, as well
as several other material governmental and regulatory approvals and permits, including several under the Clean Air
Act and the Clean Water Act from the U.S. Army Corps of Engineers and state environmental agencies. Even after
obtaining approval from the FERC, such projects are often subject to legal and political uncertainties which can be
difficult to predict or control. The Company has no control over the outcome of the review and approval process by
these regulatory authorities. The Company also does not know whether or when such approvals or permits can be
obtained, or whether any existing or potential interventions or other actions by third parties will interfere with the
STL Pipeline obtaining the necessary remaining authorizations or approvals.
The STL Pipeline project also requires the acquisition of land rights, mostly from private landowners. Although
FERC approval confers federal eminent domain authority, there is some risk and uncertainty associated with the
cost and timing of acquiring land rights, including potential condemnation costs. Spire may experience significant
delays in acquiring necessary land rights or may experience higher costs in doing so. If the Company were to fail to
obtain these rights on a timely basis or be required to relocate the STL Pipeline, its business could be materially and
adversely affected.
Construction of such assets are subject to various risks and uncertainties, including supply chain and labor
disruptions, weather conditions during construction, potential interconnection issues with other pipelines,
equipment failures and construction quality issues. Any of these adverse events regarding regulatory approvals,
land rights or construction risks could result in an impairment of Spire’s investment in the project, and such
impairment could have a material adverse effect on Spire’s financial condition and results of operations.
Pipeline safety integrity programs and repairs may impose significant costs and liabilities on the
Company.
The U.S. Pipeline and Hazardous Materials Safety Administration (“PHMSA”) requires pipeline operators to
develop integrity management programs to comprehensively evaluate certain areas along their pipelines and to take
additional measures to protect pipeline segments located in “high consequence areas” where a leak or rupture could
potentially do the most harm. As an operator of the STL Pipeline, the Company will be required to:
•
•
•
•
•
perform ongoing assessments of pipeline integrity;
identify and characterize applicable threats to pipeline segments that could impact a “high consequence
area”;
improve data collection, integration and analysis;
repair and remediate the pipeline as necessary; and
implement preventative and mitigating actions.
The Company is required to maintain pipeline integrity testing programs that are intended to assess pipeline
integrity. Any repair, remediation, preventative or mitigating actions may require significant capital and operating
expenditures. Should the Company fail to comply with applicable statutes and the PHMSA Office of Pipeline
Safety’s rules and related regulations and orders, it could be subject to significant penalties and fines.
Reductions in capacity of interconnecting, third-party pipelines could cause a reduction in volumes
transported on the STL Pipeline, which would adversely affect the Company’s revenues and cash
flows for the STL Pipeline business.
The STL Pipeline will be dependent upon third-party pipelines and other facilities to provide delivery options to and
from the STL Pipeline project. If any pipeline connection were to become unavailable for volumes of natural gas due
to repairs, damage to the facility, lack of capacity or any other reason, the STL Pipeline’s ability to continue shipping
natural gas to end markets could be restricted, thereby reducing the STL Pipeline’s revenues. Any permanent
interruption at any key pipeline interconnect that causes a material reduction in volumes transported on the STL
Pipeline could have a material adverse effect on the STL Pipeline’s business, financial condition, operating results,
cash flows, liquidity and prospects.
12
The Company’s natural gas storage business includes inherent geologic and operational risks, as
well as risks from competition and changes in market fundamentals.
In 2018, the Company acquired two neighboring storage facilities, one of which had been operating in bankruptcy
for an extended period. As the Company restructures and integrates these facilities into one, now known as Spire
Storage, to increase capacity and improve operating performance, it strives to improve the integrity of its storage
fields and associated above-ground facilities. Any damage to the storage facility or pipelines, or lack of integrity to
its storage fields, could have a material adverse effect on the Company’s financial condition, operating results and
cash flows.
The Company’s storage assets are connected to third-party-owned pipelines. The continuing operation of such
third-party pipelines is not within its control. If any of these pipelines become unable to transport, treat or process
natural gas or natural gas liquids, or if the volumes it gathers or transports do not meet the quality requirements of
such pipelines, the Company’s revenues and cash flows could be adversely affected.
The Company does not own all the land on which our storage facilities were constructed, and it is, therefore, subject
to the possibility of more onerous terms or increased costs to retain necessary land use, if and when applicable
property rights expire or are renewed. Changes in the terms of such land use could have an adverse impact on the
financial condition, results of operations and cash flows for the Company’s storage business.
Spire Storage is subject to competition from similar services provided by pipelines and from competing independent
storage providers capable of serving our customers. Natural gas storage is a competitive business, with competitors
having the ability to expand or build new storage capacity. Increased competition in the natural gas storage business
could reduce the demand for the Company’s natural gas storage services and drive rates down for its storage
business.
Storage businesses are affected by various gas market fundamentals which impact the level of demand for storage
services and the rates that can be charged for these services. These market fundamentals include: seasonal price
spread; monthly, daily and hourly price volatility; locational basis for pricing points on pipelines connected to a
storage facility; seasonal, daily and hourly weather; and operational impacts in supply and market areas served by a
storage facility and its connected pipelines. These fundamentals have varying and potentially material adverse
impacts on the various services offered by storage facilities and the rates that can be charged for these services in
the market. These services include: long-term firm storage; short-term park and loan; wheeling; and optimization.
Rates below the variable costs to operate a storage facility could result in a decision to not operate all of the capacity
in the facility or to operate the facility at a loss if required to fulfill firm customer contract obligations. A sustained
decline in these rates or a shut-in of all or a portion of one or more facilities’ capacity could have an adverse impact
on our financial condition, results of operations and cash flows.
Transporting, distributing, and storing natural gas and propane involves numerous risks that may
result in accidents and other operating risks and costs.
Natural gas transportation, distribution and storage activities inherently involve a variety of hazards and operations
risks, such as leaks, accidental explosions, damage caused by third parties, and mechanical problems, which could
cause substantial financial losses. In addition, these risks could result in serious injury to employees and non-
employees, loss of human life, significant damage to property, environmental pollution, impairment of operations,
and substantial losses to the Company and its subsidiaries. The location of pipelines and storage facilities near
populated areas, including residential areas, commercial business centers, and industrial sites, could increase the
level of damages resulting from these risks. Similar risks also exist for Spire Missouri’s propane storage,
transmission and minor distribution operations. These activities may subject the Company to litigation or
administrative proceedings. Such litigation or proceedings could result in substantial monetary judgments, fines, or
penalties against the Company and its subsidiaries or be resolved on unfavorable terms. The Utilities and other
Spire businesses are subject to federal and state laws and regulations requiring them to maintain certain safety and
system integrity measures by identifying and managing storage and pipeline risks. Compliance with these laws and
regulations, or future changes in these laws and regulations, may result in increased capital, operating and other
costs which may not be recoverable in a timely manner from customers in rates. In accordance with customary
industry practices, the Utilities and other Spire businesses maintain insurance against a significant portion, but not
all, of these risks and losses. To the extent that the occurrence of any of these events is not fully covered by
insurance, it could adversely affect the financial condition and results of operations of the Company and its
subsidiaries.
13
Workforce risks may affect the Company’s financial results.
The Company and its subsidiaries are subject to various workforce risks, including, but not limited to, the risk that it
will be unable to attract and retain qualified personnel; that it will be unable to effectively transfer the knowledge
and expertise of an aging workforce to new personnel as those workers retire; and that it will be unable to reach
collective bargaining arrangements with the unions that represent certain of its workers, which could result in work
stoppages.
In connection with acquisitions, Spire and Spire Missouri recorded goodwill and long-lived assets
that could become impaired and adversely affect its financial condition and results of operations.
Spire and Spire Missouri assess goodwill for impairment annually or more frequently if events or circumstances
occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The
Company and Spire Missouri assess their long-lived assets for impairment whenever events or circumstances
indicate that an asset’s carrying amount may not be recoverable. To the extent the value of goodwill or long-lived
assets becomes impaired, the Company and Spire Missouri may be required to incur impairment charges that could
have a material impact on their results of operations.
Since interest rates are a key component, among other assumptions, in the models used to estimate the fair values
of the Company’s reporting units, as interest rates rise, the calculated fair values decrease and future impairments
may occur. Due to the subjectivity of the assumptions and estimates underlying the impairment analysis, Spire and
Spire Missouri cannot provide assurance that future analyses will not result in impairment. These assumptions and
estimates include projected cash flows, current and future rates for contracted capacity, growth rates, weighted
average cost of capital and market multiples.
Changes in accounting standards may adversely impact the Company’s financial condition and
results of operations.
Spire and its subsidiaries are subject to changes in U.S. generally accepted accounting principles (“GAAP”), SEC
regulations and other interpretations of financial reporting requirements for public utilities. Neither the Company
nor any of its subsidiaries have any control over the impact these changes may have on their financial condition or
results of operations nor the timing of such changes. The potential issues associated with rate-regulated accounting,
along with other potential changes to GAAP that the U.S. Financial Accounting Standards Board (“FASB”) continues
to consider may be significant.
Climate change and regulatory and legislative developments in the energy industry related to
climate change may in the future adversely affect operations and financial results.
Climate change, and the extent regulatory or legislative changes occur to address the potential for climate change,
could adversely affect operations and financial results of the Company. Management believes it is likely that any
such resulting impacts would occur over a long period of time and thus would be difficult to quantify with any
degree of specificity. To the extent climate change results in warmer temperatures, financial results could be
adversely affected through lower gas volumes and revenues and lack of marketing opportunities. Another possible
impact of climate change may be more frequent and more severe weather events, such as hurricanes and tornadoes,
which could increase costs to repair damaged facilities and restore service to customers. If the Company were
unable to deliver natural gas to customers, financial results would be impacted by lost revenues, and the Utilities
generally would have to seek approval from regulators to recover restoration costs. To the extent the Utilities would
be unable to recover those costs, or if higher rates resulting from recovery of such costs would result in reduced
demand for the Company’s services, the Company’s and the Utilities’ future business, financial condition or
financial results could be adversely impacted.
In addition, there have been a number of federal and state legislative and regulatory initiatives proposed in recent
years in an attempt to control or limit the effects of global warming and overall climate change, including
greenhouse gas emissions, such as methane and carbon dioxide. The adoption of this type of legislation by Congress
or similar legislation by states or the adoption of related regulations by federal or state governments mandating a
substantial reduction in greenhouse gas emissions in the future could have far-reaching and significant impacts on
the energy industry. Such new legislation or regulations could result in increased compliance costs or additional
operating restrictions, affect the demand for natural gas or impact the prices charged to customers. At this time, we
cannot predict the potential impact of such laws or regulations that may be adopted on the Company’s and the
Utilities’ future business, financial condition or financial results.
14
Changes to income tax policy, certain tax elections, tax regulations and future taxable income could
adversely impact the Company’s financial condition and results of operations.
The Company has significantly reduced its federal and state income tax obligations over the past few years through
tax planning strategies and the extension of bonus depreciation deductions for certain expenditures for property. As
a result, the Company has generated large annual taxable losses that have resulted in significant federal and state
net operating losses. The Company plans to utilize these net operating losses in the future to reduce income tax
obligations. The value of these net operating losses could be reduced if the Company cannot generate enough
taxable income in the future to utilize all of the net operating losses before they expire due to lower than expected
financial performance or regulatory actions or if the Internal Revenue Service does not agree with certain filing
positions of the Company.
Changes to income tax policy, laws and regulations, including but not limited to changes in tax rates, the
deductibility of certain expenses including interest and state and local income taxes and/or changes in the
deductibility of certain expenditures for property, could adversely impact the Company. Those impacts could
include reducing the value of its net operating losses and could result in material charges to earnings. Further, the
Company’s financial condition and results of operations may be adversely impacted.
Spire’s pension and other postretirement benefits plans are subject to investment and interest rate
risk that could negatively impact its financial condition.
The Company and its subsidiaries have pension and other postretirement benefits plans that provide benefits to
many of their employees and retirees. Costs of providing benefits and related funding requirements of these plans
are subject to changes in the market value of the assets that fund the plans. The funded status of the plans and the
related costs reflected in our financial statements are affected by various factors, which are subject to an inherent
degree of uncertainty, including economic conditions, financial market performance, interest rates, life expectancies
and demographics. Recessions and volatility in the domestic and international financial markets have negatively
affected the asset values of Spire’s pension plans at various times in the past. Poor investment returns or lower
interest rates may necessitate accelerated funding of the plans to meet minimum federal government requirements,
which could have an adverse impact on the Company’s and its subsidiaries’ financial condition and results of
operations.
Catastrophic events may adversely affect the Company’s facilities and operations.
Catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, tropical storms, terrorist
acts, acts of civil unrest, pandemic illnesses or other similar occurrences could adversely affect the Utilities’ facilities
and operations, as well as those of Spire STL Pipeline and Spire Storage. The Utilities have emergency planning and
training programs in place to respond to events that could cause business interruptions. However, unanticipated
events or a combination of events, failure in resources needed to respond to events, or slow or inadequate response
to events may have an adverse impact on the operations, financial condition, and results of operations of the
Company and its subsidiaries. The availability of insurance covering catastrophic events may be limited or may
result in higher deductibles, higher premiums, and more restrictive policy terms.
RISKS THAT RELATE TO THE GAS UTILITY SEGMENT
Regulation of the Utilities’ businesses may impact rates they are able to charge, costs, and
profitability.
The Utilities are subject to regulation by federal, state and local authorities. At the state level, the Utilities are
regulated in Missouri by the Missouri Public Service Commission (“MoPSC”), in Alabama by the Alabama Public
Service Commission (“APSC”), and in Mississippi by the Mississippi Public Service Commission (“MSPSC”). These
state public service commissions regulate many aspects of the Utilities’ distribution operations, including
construction and maintenance of facilities, operations, safety, the rates the Utilities may charge customers, the
terms of service to their customers, transactions with their affiliates, the rate of return they are allowed to realize,
and the accounting treatment for certain aspects of their operations. For further discussion of these accounting
matters, see Regulatory Accounting under Critical Accounting Estimates in Item 7.
15
The Utilities’ ability to obtain and timely implement rate increases and rate supplements to maintain the current
rate of return is subject to regulatory review and approval. There can be no assurance that they will be able to obtain
rate increases or rate supplements or continue earning the current authorized rates of return. Spire Alabama’s and
Spire Gulf’s rate setting process, Rate Stabilization and Equalization (“RSE”), is subject to regulation by the APSC
and is implemented pursuant to APSC orders expiring September 30, 2022 and 2021, respectively. RSE
adjustments would continue after those dates unless the APSC enters an order to the contrary in a manner
consistent with the law. Spire Mississippi is subject to regulation by the MSPSC and utilizes the Rate Stabilization
Adjustment (“RSA”) Rider. For further details, see Note 14, Regulatory Matters, of the Notes to Financial
Statements in Item 8.
The Utilities could incur additional costs if required to adjust to new laws or regulations, revisions to existing laws
or regulations or changes in interpretations of existing laws or regulations such as the Dodd-Frank Act. In addition,
as the regulatory environment for the natural gas industry increases in complexity, the risk of inadvertent
noncompliance could also increase. If the Utilities fail to comply with applicable laws and regulations, whether
existing or new, they could be subject to fines, penalties or other enforcement action by the authorities that regulate
the Utilities’ operations.
The Utilities are involved in legal or administrative proceedings before various courts and
governmental bodies that could adversely affect their results of operations, cash flows and financial
condition.
The Utilities are involved in legal or administrative proceedings before various courts and governmental bodies with
respect to general claims, rates, environmental issues, gas cost prudence reviews and other matters. For further
details, see Contingencies in Note 15 to the financial statements in Item 8. Adverse decisions regarding these
matters, to the extent they require the Utilities to make payments in excess of amounts provided for in their
financial statements, or to the extent they are not covered by insurance, could adversely affect the Utilities’ results of
operations, cash flows and financial condition.
The Utilities’ liquidity may be adversely affected by delays in recovery of their costs, due to
regulation.
In the normal course of business, there is a lag between when the Utilities incur increases in certain of their costs
and the time in which those costs are considered for recovery in the ratemaking process. Cash requirements for
increased operating costs, increased funding levels of defined benefit pension and postretirement costs, capital
expenditures, and other increases in the costs of doing business can require outlays of cash prior to the
authorization of increases in rates charged to customers, as approved by the MoPSC, APSC, and MSPSC.
Accordingly, the Utilities’ liquidity can be adversely impacted to the extent higher costs are not timely recovered
from their customers.
The Utilities’ ability to meet their customers’ natural gas requirements may be impaired if
contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in
a timely manner.
In order to meet their customers’ annual and seasonal natural gas demands, the Utilities must obtain sufficient
supplies, interstate pipeline capacity, and storage capacity. If they are unable to obtain these, either from their
suppliers’ inability to deliver the contracted commodity or the inability to secure replacement quantities, the
Utilities’ financial condition and results of operations may be adversely impacted. If a substantial disruption in
interstate natural gas pipelines’ transmission and storage capacity were to occur during periods of heavy demand,
the Utilities’ financial results could be adversely impacted.
The Utilities’ liquidity and, in certain circumstances, the Utilities’ results of operations may be
adversely affected by the cost of purchasing natural gas during periods in which natural gas prices
are rising significantly.
The tariff rate schedules of the Missouri Utilities, Spire Gulf and Spire Mississippi contain Purchased Gas
Adjustment (“PGA”) clauses and Spire Alabama’s tariff rate schedule contains a Gas Supply Adjustment (“GSA”)
rider that permit the Utilities to file for rate adjustments to recover the cost of purchased gas. Changes in the cost of
purchased gas are flowed through to customers and may affect uncollectible amounts and cash flows and can
therefore impact the amount of capital resources.
16
Currently, the Missouri Utilities are allowed to adjust the gas cost component of rates up to four times each year
while Spire Alabama and Spire Gulf (collectively, the “Alabama Utilities”) and Spire Mississippi may adjust the gas
cost component of their rates on a monthly basis. The Missouri Utilities must make a mandatory gas cost
adjustment at the beginning of the winter, in November, and during the next twelve months may make up to three
additional discretionary gas cost adjustments, so long as each of these adjustments is separated by at least two
months.
The MoPSC typically approves the Missouri Utilities’ PGA changes on an interim basis, subject to refund and the
outcome of a subsequent audit and prudence review. Due to such review process, there is a risk of a disallowance of
full recovery of these costs. Any material disallowance of purchased gas costs would adversely affect revenues. The
Alabama Utilities’ gas supply charges are submitted for APSC review on a monthly basis, regardless of whether
there is a request for a change, so prudence review occurs on an ongoing basis. Spire Mississippi’s PGA is adjusted
on a monthly basis for the most recent charges and is filed at the MSPSC on a monthly basis.
Increases in the prices the Utilities charge for gas may also adversely affect revenues because they could lead
customers to reduce usage and cause some customers to have trouble paying the resulting higher bills. These higher
prices may increase bad debt expenses and ultimately reduce earnings. Rapid increases in the price of purchased
gas may result in an increase in short-term debt.
To lower financial exposure to commodity price fluctuations, Spire Missouri enters into contracts to hedge the
forward commodity price of its natural gas supplies. As part of this strategy, Spire Missouri may use fixed-price
forward physical purchase contracts, swaps, futures, and option contracts. However, Spire Missouri does not hedge
the entire exposure of energy assets or positions to market price volatility, and the coverage will vary over time. Any
costs, gains, or losses experienced through hedging procedures, including carrying costs, generally flow through the
PGA clause, thereby limiting the Missouri Utilities’ exposure to earnings volatility. However, variations in the
timing of collections of such gas costs under the PGA clause and the effect of cash payments for margin deposits
associated with the Missouri Utilities’ use of natural gas derivative instruments may cause short-term cash
requirements to vary. These procedures remain subject to prudence review by the MoPSC.
Other than fixed-price forward physical purchase contracts, Spire Alabama currently does not utilize risk mitigation
strategies that incorporate commodity hedge instruments but has the ability to do so through its GSA. Spire Gulf
hedges gas supply for up to 30 months in advance, and Spire Mississippi utilizes hedging for the upcoming heating
season.
The Utilities’ business activities are concentrated in three states.
The Utilities provide natural gas distribution services to customers in Alabama, Mississippi, and Missouri. Changes
in the regional economies, politics, regulations and weather patterns of these states could negatively impact the
Utilities’ growth opportunities and the usage patterns and financial condition of customers and could adversely
affect the Utilities’ earnings, cash flows, and financial position.
The Utilities may be adversely affected by economic conditions.
Periods of slowed economic activity generally result in decreased energy consumption, particularly by industrial and
large commercial companies, a loss of existing customers, fewer new customers especially in newly constructed
buildings. As a consequence, national or regional recessions or other downturns in economic activity could
adversely affect the Utilities’ revenues and cash flows or restrict their future growth. Economic conditions in the
Utilities’ service territories may also adversely impact the Utilities’ ability to collect accounts receivable, resulting in
an increase in bad debt expense.
17
Environmental laws and regulations may require significant expenditures or increase operating
costs.
The Utilities are subject to federal, state and local environmental laws and regulations affecting many aspects of
their present and future operations. These laws and regulations require the Utilities to obtain and comply with a
wide variety of environmental licenses, permits, inspections, and approvals. Failure to comply with these laws and
regulations and failure to obtain any required permits and licenses may result in costs to the Utilities in the form of
fines, penalties or business interruptions, which may be material. In addition, existing environmental laws and
regulations could be revised or reinterpreted and/or new laws and regulations could be adopted or become
applicable to the Utilities or their facilities, thereby impacting the Utilities’ cost of compliance. The discovery of
presently unknown environmental conditions, including former manufactured gas plant sites, and claims against
the Utilities under environmental laws and regulations may result in expenditures and liabilities, which could be
material. To the extent environmental compliance costs are not fully covered by insurance or recovered in rates
from customers, those costs may have an adverse effect on the Utilities’ financial condition and results of
operations.
Because of the highly competitive nature of its business, the Utilities may not be able to retain
existing customers or acquire new customers, which could have an adverse impact on their
business, operating results and financial condition.
The Utilities face the risk that customers may bypass gas distribution services by gaining distribution directly from
interstate pipelines or, in the case of Spire Alabama and Spire Gulf, also from municipally or publicly owned gas
distributors located adjacent to its service territory. The Utilities cannot provide any assurance that increased
competition or other changes in legislation, regulation or policies will not have a material adverse effect on their
business, financial condition or results of operations.
The Utilities compete with distributors offering a broad range of services and prices, from full-service distributors to
those offering delivery only. The Utilities also compete for retail customers with suppliers of alternative energy
products, principally propane and electricity. If they are unable to compete effectively, the Utilities may lose existing
customers and/or fail to acquire new customers, which in the aggregate could have a material adverse effect on their
business, operating results and financial condition.
Changes in the wholesale costs of purchased natural gas supplies may adversely impact the Utilities’
competitive position compared with alternative energy sources.
Changes in wholesale natural gas prices compared with prices for electricity, fuel oil, coal, propane, or other energy
sources may affect the Utilities’ retention of natural gas customers and may adversely impact their financial
condition and results of operations.
Significantly warmer-than-normal weather conditions, the effects of climate change, legislative and
regulatory initiatives in response to climate change or in support of increased energy efficiency,
and other factors that influence customer usage may affect the Utilities’ sale of heating energy and
adversely impact their financial position and results of operations.
The Utilities’ earnings are primarily generated by the sale of heating energy. The Missouri Utilities and Spire
Mississippi each have a Weather Normalization Adjustment rider, Spire Alabama has a Temperature Adjustment
Rider, and Spire Gulf has a Weather Impact Normalization Factor. These mechanisms, approved by the respective
state regulatory body, provide better assurance of the recovery of fixed costs and margins during winter months
despite variations in sales volumes due to the impacts of weather, while the annual rate designs of Alabama and
Mississippi help adjust for other factors that affect customer usage. However, significantly warmer-than-normal
weather conditions in the Utilities’ service areas and other factors, such as climate change, alternative energy
sources and increased efficiency of gas furnaces and other appliances, may result in reduced profitability and
decreased cash flows attributable to lower gas sales. Furthermore, continuation of these adjustment factors is
subject to regulatory discretion.
In addition, the promulgation of regulations by the U.S. Environmental Protection Agency, particularly those
regulating the emissions of greenhouse gases, and by the U.S. Department of Energy supporting higher efficiency
for residential gas furnaces and other gas appliances or the potential enactment of congressional legislation
addressing global warming and climate change may decrease customer usage, encourage fuel switching from gas to
other energy forms, and may result in future additional compliance costs that could impact the Utilities’ financial
conditions and results of operations.
18
Regional supply/demand fluctuations and changes in national infrastructure, as well as regulatory
discretion, may adversely affect the Missouri Utilities’ ability to profit from off-system sales and
capacity release.
The Missouri Utilities’ income from off-system sales and capacity release is subject to fluctuations in market
conditions and changing supply and demand conditions in areas the Missouri Utilities hold pipeline capacity rights.
Specific factors impacting the Missouri Utilities’ income from off-system sales and capacity release include the
availability of attractively-priced natural gas supply, availability of pipeline capacity, and market demand. Income
from off-system sales and capacity release is shared with customers. Effective April 19, 2018, the Missouri Utilities
are allowed to retain 25% of the net margins achieved as a result of such off-system sales and capacity releases. The
Missouri Utilities’ ability to retain such income in the future is subject to regulatory discretion in a base rate
proceeding.
RISKS THAT RELATE TO THE GAS MARKETING SEGMENT
Increased competition, fluctuations in natural gas commodity prices, expiration of supply and
transportation arrangements, and infrastructure projects may adversely impact the future
profitability of Gas Marketing.
Competition in the marketplace and fluctuations in natural gas commodity prices have a direct impact on the Gas
Marketing business. Changing market conditions and prices, the narrowing of regional and seasonal price
differentials and limited future price volatility may adversely impact its sales margins or affect its ability to procure
gas supplies and/or to serve certain customers, which may reduce sales profitability and/or increase certain credit
requirements caused by reductions in netting capability. Also, Gas Marketing profitability may be impacted by the
effects of the expiration, in the normal course of business, of certain of its natural gas supply contracts if those
contracts cannot be replaced and/or renewed with arrangements with similar terms and pricing. Although the
FERC regulates the interstate transportation of natural gas and establishes the general terms and conditions under
which Spire Marketing may use interstate gas pipeline capacity to purchase and transport natural gas, it must
occasionally renegotiate its transportation agreements with a concentrated group of pipeline companies.
Renegotiated terms of new agreements, or increases in FERC-authorized rates of existing agreements, may impact
Gas Marketing’s future profitability. Profitability may also be adversely impacted if pipeline capacity or future
storage capacity secured is not fully utilized.
Reduced access to credit and/or capital markets may prevent the Gas Marketing business from
executing operating strategies.
The Gas Marketing segment relies on its cash flows, ability to effect net settlements with counterparties, parental
guaranties, and access to Spire’s liquidity resources to satisfy its credit and working capital requirements. Spire
Marketing’s ability to rely on parental guaranties is dependent upon Spire’s financial condition and credit ratings. If
Spire’s credit ratings were lowered, particularly below investment grade, counterparty acceptance of parental
guaranties may diminish, resulting in decreased availability of credit. Additionally, under such circumstances,
certain counterparties may require Spire Marketing to provide prepayments or cash deposits, amounts of which
would be dependent upon natural gas market conditions. Reduced access to credit or increased credit requirements,
which may also be caused by factors such as higher overall natural gas prices, may limit Spire Marketing’s ability to
enter into certain transactions. In addition, Spire Marketing has concentrations of counterparty credit risk in that a
significant portion of its transactions are with (or are associated with) energy producers, utility companies, and
pipelines. These concentrations of counterparties have the potential to affect the Company’s overall exposure to
credit risk, either positively or negatively, in that each of these three groups may be affected similarly by changes in
economic, industry, or other conditions. Spire Marketing also has concentrations of credit risk in certain
individually significant counterparties. Spire Marketing closely monitors its credit exposure and, although
uncollectible amounts have not been significant, increased counterparty defaults are possible and may result in
financial losses and/or capital limitations.
Risk management policies, including the use of derivative instruments, may not fully protect Spire
Marketing’s sales and results of operations from volatility and may result in financial losses.
In the course of its business, Spire Marketing enters into contracts to purchase and sell natural gas at fixed prices
and index-based prices. Commodity price risk associated with these contracts has the potential to impact earnings
and cash flows. To minimize this risk, Spire Marketing has a risk management policy that provides for daily
monitoring of a number of business measures, including fixed price commitments.
19
Spire Marketing currently manages the commodity price risk associated with fixed-price commitments for the
purchase or sale of natural gas by either closely matching the offsetting physical purchase or sale of natural gas at
fixed prices or through the use of natural gas futures, options, and swap contracts traded on or cleared through the
New York Mercantile Exchange, Inc. and/or the Intercontinental Exchange to lock in margins. These exchange-
traded/cleared contracts may be designated as cash flow hedges of forecasted transactions. However, market
conditions and regional price changes may cause ineffective portions of matched positions to result in financial
losses. Additionally, to the extent that Spire Marketing’s natural gas contracts are classified as trading activities or
do not otherwise qualify for the normal purchases or normal sales designation (or the designation is not elected),
the contracts are recorded as derivatives at fair value each period. Accordingly, the associated gains and losses are
reported directly in earnings and may cause volatility in results of operations. Gains or losses (realized and
unrealized) on certain wholesale purchase and sale contracts, consisting of those classified as trading activities, are
required to be presented on a net basis (instead of a gross basis) in the statements of consolidated income. Such
presentation could result in volatility in the Company’s operating revenues.
As a natural gas market participant, Spire Marketing is subject to all applicable FERC- and Commodity Futures
Trading Commission- (“CFTC”) administered statutes, rules, regulations and orders, including those directed
generally to prevent manipulation of or fraud involving natural gas physical transactions and financial instruments,
such as futures, options and swaps. Spire Marketing could be subject to substantial penalties and fines by FERC or
CFTC, or both, for failure to comply with such rules.
The Dodd-Frank Act’s swaps regulatory provisions and the related rules may adversely affect our existing derivative
contracts and restrict our ability to monetize such contracts, cause us to restructure certain contracts, reduce the
availability of derivatives to protect against risks or to optimize assets, increase the costs of entering into and
maintaining swaps, adversely affect our ability to execute our hedging strategies and impact the liquidity of certain
swaps products, all of which could increase our business costs.
Spire Marketing’s ability to meet its customers’ natural gas requirements may be impaired if
contracted gas supplies and interstate pipeline services are not available or delivered in a timely
manner.
Spire Marketing’s ability to deliver natural gas to its customers is contingent upon the ability of natural gas
producers, other gas marketers, and interstate pipelines to fulfill delivery obligations to Spire Marketing under firm
contracts. To the extent that it is unable to obtain the necessary supplies, Spire Marketing’s financial position and
results of operations may be adversely impacted.
Regulatory and legislative developments pertaining to the energy industry may adversely impact
Gas Marketing’s results of operations, financial condition and cash flows.
The Gas Marketing business is non-regulated, in that the rates it charges its customers are not currently established
by or subject to approval by any regulatory body with jurisdiction over its business. However, it is subject to various
laws and regulations affecting the energy industry. New regulatory and legislative actions may adversely impact Gas
Marketing’s results of operations, financial condition, and cash flows by potentially reducing customer growth
opportunities and/or increasing the costs of doing business.
For example, Spire Marketing incurs additional costs to comply with new laws and regulations, such as the Dodd-
Frank Act amendments to the Commodity Exchange Act, which authorizes the CFTC to regulate futures contracts,
options and swaps. These derivative transactions include instruments and bilateral contracts that Spire Marketing
uses to hedge or mitigate ongoing commercial risks. The Dodd-Frank Act contemplates that most standardized
swaps will be required to be cleared through a registered clearing facility and traded on a designated exchange or
swap execution facility, subject to certain exceptions. In addition, the CFTC’s rules require companies, including
Spire Marketing, to maintain regulatory records of swap transactions, and to report swaps to centralized swap data
repositories, among other new compliance obligations. Although Spire Marketing may qualify for exceptions to
certain of the new CFTC rules, its derivatives counterparties are subject to new capital, margin, documentation and
business conduct requirements imposed as a result of the Dodd-Frank Act. Such new rules may increase transaction
costs and may make it more difficult for Spire Marketing to enter into hedging transactions on favorable terms or
affect the number and/or creditworthiness of available swap counterparties. Spire Marketing’s inability to enter into
derivatives instruments or other commercial risk hedging transactions on favorable terms, or at all, could increase
operating expenses and expose it to unhedged commercial risks, including potential adverse changes in commodity
prices.
20
The CFTC has re-proposed its position limits rules that would modify and expand the applicability of position limits
on the amounts of certain speculative futures contracts, as well as economically equivalent options, futures and
swaps for or linked to certain physical commodities that market participants may hold, subject to limited
exemptions for certain bona fide hedging positions and other types of transactions. To the extent the revised CFTC
position limits proposal becomes final, such positions will also be subject to the aggregation rules which the CFTC
has adopted and the Company’s ability to execute Spire Marketing’s hedging strategies described above could be
limited if Spire Marketing is unable to qualify for an exemption. It is uncertain at this time whether, when and in
what form the CFTC’s proposed new position limits rules may become final and effective.
The Federal Reserve Board also has proposed rules that would limit certain physical commodity activities of
financial holding companies. Such rules, if adopted, may adversely affect Spire Marketing’s ability to execute the
Company’s strategies by restricting the Company’s available counterparties for certain types of transactions,
limiting the Company’s ability to obtain certain services, and reducing liquidity in physical and financial markets. It
is uncertain at this time whether, when and in what form the Federal Reserve’s proposed rules regarding financial
holding companies may become final and effective.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Spire
Refer to the information below about the principal properties of Spire Missouri and Spire Alabama. The Spire
EnergySouth utilities own approximately 5,500 miles of pipelines. Other properties of Spire and its subsidiaries,
including Spire Marketing and Spire EnergySouth, do not constitute a significant portion of its properties. The
current leases for office space in downtown St. Louis commenced in early 2015, with terms ranging from 10 to 20
years, with multiple renewal options. For further information on leases see Note 15, Commitments and
Contingencies, of the Notes to Financial Statements in Item 8.
Spire Missouri
The principal properties of Spire Missouri consist of its gas distribution system, which includes more than 30,000
miles of main and related service lines, odorization and regulation facilities, and customer meters. The mains and
service lines are located in municipal streets or alleys, public streets or highways, or on lands of others for which we
have obtained the necessary legal rights to place and operate our facilities on such property. Spire Missouri has an
underground natural gas storage facility, several operating centers, and other related properties. Substantially all of
Spire Missouri’s utility plant is subject to the liens of its mortgage. All the properties of Spire Missouri are held in
fee, by easement, or under lease agreements. The principal lease agreements include underground storage rights
that are of indefinite duration.
Spire Alabama
The properties of Spire Alabama consist primarily of its gas distribution system, which includes approximately
23,000 miles of main and related service lines, odorization and regulation facilities, and customer meters. The
mains and service lines are located in municipal streets or alleys, public streets or highways, or on lands of others
for which we have obtained the necessary legal rights to place and operate our facilities on such property. Spire
Alabama also has four LNG facilities, several operating centers, and other related properties. All of the properties of
Spire Alabama are held in fee, by easement, or under lease agreements.
Item 3. Legal Proceedings
For a description of pending regulatory matters of Spire, see Note 14, Regulatory Matters, of the Notes to Financial
Statements in Item 8. For a description of environmental matters, see Contingencies in Note 15 of the Notes to
Financial Statements in Item 8.
Spire and its subsidiaries are involved in litigation, claims and investigations arising in the normal course of
business. Management, after discussion with counsel, believes the final outcome will not have a material effect on
the consolidated financial position or results of operations reflected in the consolidated financial statements
presented herein.
21
EXECUTIVE OFFICERS OF THE REGISTRANT – Listed below are executive officers as defined by the SEC
for Spire, Spire Missouri and Spire Alabama. Their ages, at September 30, 2018, and positions are listed below
along with their business experience during the past five years.
Name
Age Position with Company (1)
S. Sitherwood
58
Spire
President and Chief Executive Officer
Spire Missouri
Chairman of the Board
Chairman of the Board and Chief Executive Officer
Spire Alabama
Chairman of the Board
S. L. Lindsey
52
Spire
Executive Vice President, Chief Operating Officer of Distribution
Operations
Spire Missouri
President and Chief Executive Officer
President
Spire Alabama
Chief Executive Officer
S. P. Rasche
58
Spire
Executive Vice President and Chief Financial Officer
Spire Missouri
Chief Financial Officer
Spire Alabama
Chief Financial Officer
Appointed (2)
February 2012
January 2015
October 2012
September 2014
October 2012
January 2015
October 2012
September 2014
November 2013
May 2012
September 2014
M. C. Darrell
60
Spire
Senior Vice President, General Counsel and Chief Compliance Officer May 2012
M. C. Geiselhart
59
Spire
Senior Vice President, Strategic Planning and Corporate Development
January 2015
Vice President, Strategic Planning and Corporate Development
Vice President, Strategic Development and Planning
February 2014
August 2006
K. A. Smith
60
Spire Alabama
President
Vice President, System Integrity
April 2015
August 2011
(1) The information provided relates to the Company and its principal subsidiaries. Many of the executive officers
have served or currently serve as officers or directors for other subsidiaries of the Company.
(2) Officers of Spire are normally reappointed by the Board of Directors in November of each year. Officers of Spire
Missouri and Spire Alabama are normally reappointed by their boards of directors in January of each year.
22
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
Spire
Spire’s common stock trades on The New York Stock Exchange (“NYSE”) under the symbol “SR”. The number of
holders of record as of November 12, 2018 was 3,083.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Performance Graph
September 30
Spire Inc.
S&P Utilities Index
S&P 500 Index
2013
2014
2015
2016
2017
2018
$ 100.00
$ 107.08
$ 130.46
$ 157.24
$ 189.86
$ 192.98
100.00
100.00
117.13
119.73
124.82
119.00
146.50
137.36
164.12
162.92
168.93
192.10
* Cumulative total return is based on a $100 investment on September 30, 2013, assuming reinvestment of dividends.
For disclosures related to securities authorized for issuance under equity compensation plans, see Note 2, Stock-
Based Compensation, of the Notes to Financial Statements in Item 8.
23
During the three months ended September 30, 2018, the only repurchases of our common stock 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:
(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
—
114
64
178
—
$71.90
$74.58
$72.86
—
—
—
—
—
—
—
—
Period
July 1, 2018 - July 31, 2018
August 1, 2018 - August 31, 2018
September 1, 2018 - September 30, 2018
Total
Spire Missouri
Spire Missouri common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
Spire Missouri’s mortgage contains restrictions on its ability to pay cash dividends on its common stock, as
described in further detail in Note 4, Shareholders’ Equity, of the Notes to Financial Statements in Item 8. As of
September 30, 2018 and 2017, the amount under the mortgage’s formula that was available to pay dividends was
$1,097.6 million and $1,010.8 million, respectively.
Spire periodically purchases common stock of Spire Missouri with the price set at the book value of Spire Missouri
common stock as of the most recently completed fiscal quarter. There were no sales of Spire Missouri common stock
during the three most recent fiscal years.
Spire Alabama
Spire Alabama common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
24
Item 6. Selected Financial Data
Spire
(Dollars in millions, except per share amounts)
Fiscal Years Ended September 30
2018
2017
2016(1)
2015
2014(2)
Statements of Income data
Total Operating Revenues
Net Income
Common Stock data
Diluted Earnings Per Share of Common Stock
Dividends Declared Per Share of Common Stock
Balance Sheet data (3)
Total Assets
Long-Term Debt (less current portion)
Net Economic Earnings data (4)
Net Income [GAAP]
Missouri regulatory adjustments
Unrealized (gain) loss on energy-related derivatives
Lower of cost or market inventory adjustments
Realized (gain) loss on economic hedges prior to the sale of the
physical commodity
Acquisition, divestiture and restructuring activities
Gain on sale of property
Income tax effect of adjustments
Effect of the Tax Cuts and Jobs Act
Net Economic Earnings [Non-GAAP]
Diluted Earnings per Share of Common Stock:
Net Income [GAAP]
Missouri regulatory adjustments
Unrealized (gain) loss on energy-related derivatives
Lower of cost or market inventory adjustments
Realized (gain) loss on economic hedges prior to the sale of the
physical commodity
Acquisition, divestiture and restructuring activities
Gain on sale of property
Income tax effect of adjustments
Effect of the Tax Cuts and Jobs Act
Weighted average shares adjustment
Net Economic Earnings [Non-GAAP]
$ 1,965.0
214.2
$ 1,740.7
161.6
$ 1,537.3
144.2
$ 1,976.4
136.9
$ 1,627.2
84.6
$
$
4.33
2.25
$
3.43
2.10
$
3.24
1.96
$
3.16
1.84
2.35
1.76
$ 6,843.6
1,900.1
$ 6,546.7
1,995.0
$ 6,064.4
1,820.7
$ 5,277.6
1,758.9
$ 5,059.3
1,836.3
$
$
$
$
214.2
30.6
(4.0)
—
(0.3)
13.6
—
(10.3)
(60.1)
183.7
4.33
0.62
(0.08)
—
(0.01)
0.28
—
(0.21)
(1.21)
—
3.72
$
$
$
$
161.6
—
6.0
—
(0.3)
4.0
—
(3.7)
—
167.6
3.43
—
0.13
—
(0.01)
0.09
—
(0.08)
—
—
3.56
$
$
$
$
144.2
—
(0.1)
0.2
(1.6)
9.2
—
(2.8)
—
149.1
3.24
—
—
0.01
(0.04)
0.21
—
(0.06)
—
0.06
3.42
$
$
$
$
136.9
—
(2.8)
0.4
2.4
9.8
(7.6)
(0.8)
—
138.3
3.16
—
(0.07)
0.01
0.06
0.23
(0.18)
(0.02)
—
—
3.19
$
$
$
$
84.6
—
(1.6)
(1.1)
(0.4)
29.5
—
(10.9)
—
100.1
2.35
—
(0.04)
(0.03)
(0.01)
0.82
—
(0.31)
—
0.27
3.05
(1) Effective September 12, 2016, Spire completed the purchase of 100% of the outstanding common stock of Spire EnergySouth. Total cash
consideration paid, net of cash acquired, debt assumed and a working capital settlement payment received, was $313.9, funded with a
combination of the issuance of approximately 2.2 million shares of common stock on May 17, 2016, the issuance of $165.0 aggregate
principal amount of senior notes on September 9, 2016, and cash on hand.
(2) Effective August 31, 2014, Spire completed the purchase of 100% of the outstanding common stock of Spire Alabama for $1,590.3 (including
assumed debt of $264.8), funded with a combination of the issuance of 10.35 million shares of common stock and 2.875 million equity units
completed on June 11, 2014, the issuance of $625.0 aggregate principal amount of senior notes on August 19, 2014, and cash on hand.
(3) Balance Sheet data for fiscal years 2014-2016 has been restated to retrospectively reflect the impact of implementing Accounting Standards
Update (“ASU”) No. 2015-03, Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, during fiscal 2017.
(4) This section contains the non-GAAP financial measures of net economic earnings (“NEE”) and net economic earnings per share (“NEEPS”).
NEEPS are calculated by replacing consolidated net income with consolidated NEE in the GAAP diluted earnings per share calculation. Each
reconciling item between NEE and net income is shown pre-tax. The income 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 and then adding any estimated effects of
enacted state or local income tax laws for periods before the related effective date. NEEPS for 2016 excludes the impact of the May 2016
equity offering to fund the acquisition of Spire EnergySouth. NEEPS for 2014 excludes the impact of the June 2014 equity offerings to fund
the acquisition of Spire Alabama. The weighted-average diluted shares used in the NEEPS calculation for fiscal years 2016 and 2014 were
43.5 and 32.7, compared to 44.3 and 35.9, respectively, used in the GAAP earnings per share calculations for those years. For more
information on net economic earnings data, refer to the Non-GAAP Measures section of Management’s Discussion and Analysis of Financial
Condition and Results of Operations in Item 7.
25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
(Dollars in millions, except per share and per unit amounts)
INTRODUCTION
This section analyzes the financial condition and results of operations of Spire Inc. (“Spire” or 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 Inc. are collectively referred to
as the “Utilities”. The subsidiaries of Spire EnergySouth are Spire Gulf Inc. (“Spire Gulf”) and Spire Mississippi Inc.
(“Spire 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. Unless otherwise indicated, references to years herein are references to the
fiscal years ending September 30 for the Company and its subsidiaries.
Reference is made to “Item 1A. Risk Factors” and “Forward-Looking Statements,” which describe important factors
that could cause actual results to differ from expectations and non-historical information contained herein. In
addition, the following discussion should be read in conjunction with the audited financial statements and
accompanying notes thereto of Spire, Spire Missouri and Spire Alabama included in “Item 8. Financial Statements
and Supplementary Data.”
OVERVIEW
The Company has two key business segments: Gas Utility and Gas Marketing. Spire’s earnings are primarily derived
from its Gas Utility segment, which reflects the regulated activities of the Utilities. Due to the seasonal nature of the
Utilities’ business, earnings of Spire, Spire Missouri and Spire Alabama 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”). 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 delivers natural gas to
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. 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
0.1 million customers in southern Alabama and south-central Mississippi. Spire Gulf is regulated by the APSC and
Spire Mississippi is regulated by the Mississippi Public Service Commission (“MSPSC”).
26
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 and around the central United States (“U.S.”). It holds firm
transportation and storage contracts in order to effectively manage its customer base, which consists of producers,
pipelines, power generators, storage operators, municipalities, utility companies, and large commercial and
industrial customers.
Other
Other components of the Company’s consolidated information include:
•
•
•
•
unallocated corporate items, including certain debt and associated interest costs;
Spire STL Pipeline, a subsidiary of Spire planning the construction and operation of a 65-mile FERC-
regulated pipeline to deliver natural gas into eastern Missouri;
Spire Storage, providing physical natural gas storage services; and
Spire’s subsidiaries engaged in the operation of a propane pipeline, compression of natural gas, and risk
management, among other activities.
Business Evaluation Factors
Based on the nature of the business of the Company and its subsidiaries, as well as current economic conditions,
management focuses on the following key variables in evaluating the financial condition and results of operations
and managing the business.
Gas Utility segment:
•
•
•
•
•
•
the Utilities’ ability to recover the costs of purchasing and distributing natural gas from their customers;
the impact of weather and other factors, such as customer conservation, on revenues and expenses;
changes in the regulatory environment at the federal, state, and local levels, as well as decisions by
regulators, that impact the Utilities’ ability to earn its authorized rate of return in all service territories they
serve;
the Utilities’ ability to access credit markets and maintain working capital sufficient to meet operating
requirements;
the effect of natural gas price volatility on the business; and
the ability to manage costs, integrate and standardize operations, and upgrade infrastructure.
Gas Marketing segment:
the risks of competition;
fluctuations in natural gas prices;
the changing flow and availability of natural gas;
•
•
•
• new national infrastructure projects;
•
•
•
•
the ability to procure firm transportation and storage services at reasonable rates;
credit and/or capital market access;
counterparty risks; and
the effect of natural gas price volatility on the business.
Further information regarding how management seeks to manage these key variables is discussed below.
Gas Utility
The Utilities seek to provide reliable natural gas services at a reasonable cost, while maintaining and building secure
and dependable infrastructures. The Utilities’ strategies focus on improving both performance and the ability to
recover their authorized distribution costs and rates of return. The Utilities’ distribution costs are the essential,
primarily fixed, expenditures they must incur to operate and maintain more than 58,000 miles of mains and
services comprising their natural gas distribution systems and related storage facilities.
27
The Utilities’ distribution costs include wages and employee benefit costs, depreciation and maintenance expenses,
and other regulated utility operating expenses, excluding natural and propane gas expense. Distribution costs are
considered in the rate-making process, and recovery of these types of costs is included in revenues generated
through the Utilities’ tariff rates. Spire Missouri’s tariff rates are approved by the MoPSC, whereas Spire Alabama’s
tariff rates are approved by the APSC. Spire Gulf and Spire Mississippi have tariff rates that are approved by the
APSC and MSPSC, respectively. Spire Missouri also has an off-system sales and capacity release income stream that
is regulated by tariff but remains subject to fluctuations in market conditions. Effective April 19, 2018, customers
receive 75% and Spire Missouri receives 25% of the net margins achieved as a result of such off-system sales and
capacity releases. For information about the multiple sharing tiers and percentages in place prior to that date, see
Note 14, Regulatory Matters, in the Notes to Financial Statements in Item 8.
Some of the factors impacting the level of off-system sales include the availability and cost of Spire Missouri’s
natural gas supply, the weather in its service area and the weather in other markets. When Spire Missouri’s service
area experiences warmer-than-normal weather while other markets experience colder weather or supply
constraints, some of Spire Missouri’s natural gas supply is available for off-system sales.
The Utilities work actively to reduce the impact of wholesale natural gas price volatility on their costs by strategically
structuring their natural gas supply portfolios to increase their gas supply availability and pricing alternatives. They
may also use derivative instruments to hedge against significant changes in the commodity price of natural gas.
Nevertheless, the overall cost of purchased gas remains subject to fluctuations in market conditions. The Purchased
Gas Adjustment (“PGA”) clause of Spire Missouri, Spire Gulf and Spire Mississippi and Spire Alabama’s Gas Supply
Adjustment (“GSA”) rider allow the Utilities to flow through to customers, subject to prudence review by the public
service commissions, the cost of purchased gas supplies, including costs, cost reductions and related carrying costs
associated with the use of derivative instruments to mitigate volatility in the cost of natural gas. As of September 30,
2018, Spire Missouri had active derivative positions, but Spire Alabama has had no gas supply derivative instrument
activity since 2010. The Utilities believe they will continue to be able to obtain sufficient gas supply. The price of
natural gas supplies and other economic conditions may affect sales volumes, due to the conservation efforts of
customers, and cash flows associated with the timing of collection of gas costs and related accounts receivable from
customers.
The Utilities rely on short-term credit and long-term capital markets, as well as cash flows from operations, to
satisfy their seasonal cash requirements and fund their capital expenditures. The Utilities’ ability to issue
commercial paper, access their lines of credit, issue long-term bonds or obtain new lines of credit is dependent on
current conditions in the credit and capital markets. Management focuses on maintaining a strong balance sheet
and believes it currently has adequate access to credit and capital markets and will have sufficient capital resources
to meet their foreseeable obligations. See the Liquidity and Capital Resources section for additional information.
Gas Marketing
Spire Marketing is engaged in the marketing of natural gas and providing energy services to both on-system utility
transportation customers and customers outside of the Utilities’ traditional service areas. Spire Marketing utilizes
its natural gas supply agreements, transportation agreements, park and loan agreements, storage agreements and
other executory contracts to support a variety of services to its customers at competitive prices. It closely monitors
and manages the natural gas commodity price and volatility risks associated with providing such services to its
customers through the use of a variety of risk management activities, including the use of exchange-traded/cleared
derivative instruments and other contractual arrangements. Spire Marketing is committed to managing commodity
price risk while it seeks to expand the services that it now provides. Nevertheless, income from the Gas Marketing
operations is subject to more fluctuations in market conditions than the Utilities’ operations.
The Gas Marketing business is directly impacted by the effects of competition in the marketplace, the impacts of
new infrastructure, surplus natural gas supplies, and the addition of new demand from exports, power generation
and industrial load. Spire Marketing’s management expects a growing need for marketing services across the
country as customers manage seasonal variability and marketplace volatility.
In addition to its operating cash flows, Spire Marketing relies on Spire’s parental guaranties to secure its purchase
and sales obligations of natural gas, and it also has access to Spire’s liquidity resources. A large portion of Spire
Marketing’s receivables are from customers in the energy industry. It also enters into netting arrangements with
many of its energy counterparties to reduce overall credit and collateral exposure. Although Spire Marketing’s
uncollectible amounts are closely monitored and have not been significant, increases in uncollectible amounts from
customers are possible and could adversely affect Gas Marketing’s liquidity and results of operations.
28
Spire Marketing carefully monitors the creditworthiness of counterparties to its transactions. It performs in-house
credit reviews of potential customers and may require credit assurances such as prepayments, letters of credit or
parental guaranties when appropriate. Credit limits for customers are established and monitored.
As a result of infrastructure optimization activities and an abundance of natural gas supply, Spire Marketing cannot
be certain that all of its wholesale purchase and sale transactions will settle physically. As such, certain transactions
are designated as trading activities for financial reporting purposes, due to their settlement characteristics. Results
of operations from trading activities are reported on a net basis in Gas Marketing operating revenues (or expenses,
if negative), which may cause volatility in the Company’s operating revenues, but have no effect on operating
income or net income.
In the course of its business, Spire Marketing enters into commitments associated with the purchase or sale of
natural gas. In accordance with U.S. generally accepted accounting principles (“GAAP”), some of its purchase and
sale transactions are not recognized in earnings until the natural gas is physically delivered, while other energy-
related transactions, including those designated as trading activities, are required to be accounted for as derivatives,
with the changes in their fair value (representing unrealized gains or losses) recorded in earnings in periods prior to
settlement. Because related transactions of a purchase and sale strategy may be accounted for differently, there may
be timing differences in the recognition of earnings under GAAP and economic earnings realized upon settlement.
The Company reports both GAAP and net economic earnings (non-GAAP), as discussed below.
NON-GAAP MEASURES
Net income, earnings per share and operating income reported by Spire, Spire Missouri and Spire Alabama are
determined in accordance with GAAP. Spire, Spire Missouri and Spire Alabama also provide the non-GAAP
financial measures of net economic earnings, net economic earnings per share and contribution margin.
Management and the Board of Directors use non-GAAP financial measures, in addition to GAAP financial measures,
to understand and compare operating results 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. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP
measures are provided on the following pages.
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 impacts of fair value accounting and timing adjustments associated with energy-related transactions, the
impacts of acquisition, divestiture and restructuring activities, and the largely non-cash impacts of other non-
recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions. In fiscal 2018,
these items include the revaluation of deferred tax assets and liabilities due to the Tax Cuts and Jobs Act and the
write-off of certain long-standing assets as a result of disallowances in our Missouri rate proceedings. In addition,
net economic earnings per share excludes the impact, in the fiscal year of issuance, of shares issued to finance
acquisitions that have yet to be 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:
1) changes in the fair values of physical and/or financial derivatives prior to the period of settlement; and
ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due
2)
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.
29
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. 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. While management uses these non-GAAP measures to evaluate both the Utilities and non-utility
businesses, the net effect of these fair value and timing adjustments on the 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 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, have no direct effect on operating income. Therefore,
management believes that contribution margin is a useful supplemental measure, along with the remaining
operating expenses, for assessing the Company’s and the Utilities’ performance.
30
EARNINGS
Spire
Overview – Net Income (Loss)
Year Ended September 30, 2018
Net Income [GAAP]
Adjustments, pre-tax:
Missouri regulatory adjustments
Unrealized gain on energy-related derivatives
Realized gain on economic hedges prior
to the sale of the physical commodity
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments*
Effect of the Tax Cuts and Jobs Act
Gas
Utility
Gas
Marketing
Other
Consol-
idated
Per
Diluted
Share**
$
144.4
$
24.9
$
44.9
$
214.2
$
4.33
30.6
—
—
0.2
(9.1)
17.0
—
(4.0)
(0.3)
—
1.2
1.1
—
—
—
13.4
(2.4)
(78.2)
30.6
(4.0)
(0.3)
13.6
(10.3)
(60.1)
0.62
(0.08)
(0.01)
0.28
(0.21)
(1.21)
Net Economic Earnings (Loss) [Non-GAAP]
$
183.1
$
22.9
$
(22.3) $
183.7
$
3.72
Year Ended September 30, 2017
Net Income (Loss) [GAAP]
Adjustments, pre-tax:
$
180.5
$
3.4
$
(22.3) $
161.6
$
3.43
Unrealized loss on energy-related derivatives
Realized gain on economic hedges prior
to the sale of the physical commodity
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments*
0.1
—
1.5
(0.6)
5.9
(0.3)
—
(2.2)
—
—
2.5
(0.9)
6.0
(0.3)
4.0
(3.7)
0.13
(0.01)
0.09
(0.08)
Net Economic Earnings (Loss) [Non-GAAP]
$
181.5
$
6.8
$
(20.7) $
167.6
$
3.56
Year Ended September 30, 2016
Net Income (Loss) [GAAP]
Adjustments, pre-tax:
Unrealized (gain) loss on energy-related derivatives
Lower of cost or market inventory adjustments
Realized gain on economic hedges prior
to the sale of the physical commodity
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments*
Weighted average shares adjustment**
$
159.0
$
7.1
$
(21.9) $
144.2
$
3.24
(0.3)
—
—
2.3
(0.7)
—
0.2
0.2
(1.6)
—
0.5
—
6.4
—
—
—
6.9
(2.6)
—
(0.1)
0.2
(1.6)
9.2
(2.8)
—
$
(17.6) $
149.1
$
—
0.01
(0.04)
0.21
(0.06)
0.06
3.42
Net Economic Earnings (Loss) [Non-GAAP]
$
160.3
$
*
**
Income 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 and then adding any estimated effects of enacted state or local income tax laws
for periods before the related effective date.
Fiscal 2016 net economic earnings per share excludes the impact of the May 2016 equity issuance to fund a portion of the
acquisition of Spire EnergySouth. The weighted average diluted shares used in the net economic earnings per share
calculation for the fiscal year ended September 30, 2016 was 43.5 compared to 44.3 in the GAAP diluted earnings per
share (“EPS”) calculation. For fiscal years 2018 and 2017, net economic earnings per share is calculated by replacing
consolidated net income with consolidated net economic earnings in the GAAP diluted EPS calculation.
31
2018 vs. 2017
Consolidated
Spire’s net income was $214.2 in fiscal 2018, compared with $161.6 in fiscal 2017. Basic and diluted earnings per
share were $4.35 and $4.33, respectively, for fiscal 2018 compared with basic and diluted earnings per share of
$3.44 and $3.43, respectively, for fiscal 2017. Net economic earnings were $183.7 (or $3.72 per share) in fiscal
2018, compared with $167.6 (or $3.56 per share) in fiscal 2017, an increase of $16.1. Net income increased in fiscal
2018 compared to fiscal 2017 primarily due to a $67.2 expense decrease from other activities, a $21.5 net income
increase in the Gas Marketing segment, offset by a $36.1 net income decline in the Gas Utility segment. For the
current year, both net income per share and net economic earnings per share were impacted by 2.3 million shares
that were issued May 10, 2018. The key drivers of variances are discussed in detail below.
Gas Utility
Gas Utility net income decreased by $36.1, while net economic earnings increased $1.6 in fiscal 2018 compared to
fiscal 2017. Both measures benefited from weather patterns that were significantly favorable to the prior year, with
temperatures in the Utilities’ territories being near normal, versus 28% warmer than normal in the prior year,
combined with a lower federal tax rate resulting from the implementation of the Tax Cuts and Jobs Act (“TCJA”) net
of amounts reflected in lower customer rates. The TCJA is further described in Note 11, Income Taxes, of the Notes
to Financial Statements in Item 8. These favorable impacts were partly offset by the rates changes in the Missouri
Utilities effective during the third quarter as a result of two rate cases. Net income was further negatively impacted
by the $23.6 after-tax charge related to certain recoveries being disallowed by the MoPSC as a result of those rate
case proceedings.
Gas Marketing
Gas Marketing reported net income totaling $24.9, an increase of $21.5 compared with the same period last year.
Net economic earnings for fiscal 2018 increased $16.1 from fiscal 2017. The increase in both net income and net
economic earnings was attributable to improved market conditions resulting from colder weather and increased
temperature volatility in the current year that increased value from regional basis differentials (spreads) and storage
and transportation optimization. Net income also benefited from favorable mark-to-market fair value adjustments
and the implementation of the TCJA. Further details are discussed in the Gas Marketing section below.
Other
The Company’s other non-utility activities generated net income of $44.9 for fiscal 2018, compared to a $22.3 net
loss for the same period last year. This favorable variance was driven primarily by a $78.2 tax benefit resulting from
the implementation of the TCJA, partly offset by higher acquisition and restructuring activities. Net economic loss
was $22.3 for fiscal 2018, an increase of $1.6 compared to fiscal 2017. The increased loss reflects higher after-tax
interest and other corporate costs, partially offset by an increase in non-cash earnings related to STL Pipeline.
Operating Revenues and Operating Expenses
Reconciliations of contribution margin to the most directly comparable GAAP measure are shown below.
Gas
Utility
Gas
Marketing
Other
Eliminations
Consolidated
Year Ended September 30, 2018
Operating Income (Loss)
$
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural and propane gas costs
Gross receipts tax expense
Operating Revenues
262.2
464.1
167.0
152.5
(98.3)
947.5
842.6
98.3
$
33.8
$
(16.3)
$
7.4
—
0.2
(0.1)
41.3
30.2
0.1
71.6
30.3
1.4
0.8
—
16.2
0.3
—
— $
(10.1)
—
—
—
(10.1)
(1.4)
—
279.7
491.7
168.4
153.5
(98.4)
994.9
871.7
98.4
$
16.5
$
(11.5)
$
1,965.0
$
1,888.4
$
32
Gas
Utility
Gas
Marketing
Other
Eliminations
Consolidated
Year Ended September 30, 2017
Operating Income (Loss)
$
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural and propane gas costs
Gross receipts tax expense
Operating Revenues
$
321.6
409.1
153.5
137.8
(83.0)
939.0
645.9
83.0
$
(5.1)
$
5.2
5.9
0.1
0.5
(0.1)
11.6
67.6
0.1
79.3
11.8
0.5
0.2
—
7.4
0.3
—
7.7
$
Year Ended September 30, 2016
Operating Income (Loss)
$
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural and propane gas costs
Gross receipts tax expense
Operating Revenues
Consolidated
278.3
379.3
136.9
125.2
(75.3)
844.4
539.7
75.3
$
11.8
$
(7.8)
$
5.6
0.1
0.3
(0.1)
17.7
60.7
0.1
78.5
$
12.1
0.5
(0.2)
—
4.6
0.2
—
4.8
— $
(5.5)
—
—
—
(5.5)
(8.7)
—
321.7
421.3
154.1
138.5
(83.1)
952.5
705.1
83.1
— $
(2.4)
—
—
—
(2.4)
(3.0)
—
282.3
394.6
137.5
125.3
(75.4)
864.3
597.6
75.4
$
1,667.9
$
$
(14.2)
$
1,740.7
Gas
Utility
Gas
Marketing
Other
Eliminations
Consolidated
$
1,459.4
$
$
(5.4)
$
1,537.3
Spire reported operating revenues of $1,965.0 for the year ended September 30, 2018 compared with $1,740.7 for
the same period last year. The increase was driven primarily by the Utilities, the result of higher gas costs passed on
to customers in both Missouri and Alabama, higher volumetric demand driven principally by colder weather, higher
gross receipt taxes, and higher Infrastructure System Replacement Surcharge (“ISRS”) charges at Spire Missouri.
These positive drivers were partly offset by the negative impact of new rates implemented in the Spire Missouri
territory in April 2018, lower off-system sales at Spire Missouri, and the timing of return of tax savings to Spire
Alabama customers. Spire’s contribution margin increased $42.4 for the year ended September 30, 2018, compared
to the prior year. The increase was primarily due to higher contribution margin in the Gas Marketing and Gas
Utility segments of $29.7 and $8.5, respectively, combined with an $8.8 increase in contribution margin from the
Company’s other non-utility activities. Operation and maintenance (“O&M”) expenses increased $70.4 for the year
ended September 30, 2018 as compared to the prior year, as discussed below. Depreciation and amortization
expenses increased $14.3, driven principally by continued infrastructure investment at Spire Missouri and Spire
Alabama in fiscal 2018.
33
Gas Utility
Operating Revenues – Gas Utility operating revenues for fiscal 2018 increased $220.5 compared to fiscal 2017,
and was attributable to the following factors:
Missouri Utilities and Spire Alabama – Higher PGA/GSA gas cost recoveries
Missouri Utilities and Spire Alabama – Volumetric usage
Missouri Utilities and Spire Alabama – Higher gross receipts taxes
Spire EnergySouth revenue growth
Missouri Utilities – Higher ISRS
Missouri Utilities – Customer growth
Missouri Utilities – Off-system sales and capacity release
Missouri Utilities – New rate design implementation
Spire Alabama – Customer rate reductions resulting from TCJA
All other factors
Total Variation
$
$
149.2
99.3
14.9
6.6
5.2
2.6
(28.3)
(20.6)
(11.2)
2.8
220.5
As shown in the table above, Gas Utility revenue posted a year-over-year increase of $220.5. The growth was driven
by $149.2 higher gas cost recoveries at both Spire Missouri and Spire Alabama, $99.3 due to volumetric usage
primarily related to colder weather in fiscal 2018, higher gross receipt taxes resulting from the higher current year
revenues, growth at Spire EnergySouth and increases due to Spire Missouri customer growth. Partly offsetting these
gains were $28.3 in lower off-system sales at Spire Missouri as higher demand for system sales reduced gas
availability, the new rate design implementation at Spire Missouri, and customer rate reductions at Spire Alabama
due to tax savings from the TCJA.
Contribution Margin – Gas Utility contribution margin was $947.5 for fiscal 2018, a $8.5 increase over the same
period last year. The increase was attributable to the following factors:
Missouri Utilities and Spire Alabama – Volumetric usage
Missouri Utilities – Higher ISRS
Missouri Utilities – Customer growth
Missouri Utilities – New rate design implementation
Spire Alabama – Customer rate reductions resulting from TCJA
All other factors
Total Variation
$
$
29.2
5.2
2.6
(20.6)
(11.2)
3.3
8.5
The increase was primarily attributable to the $29.2 increase resulting from higher volumetric usage. Temperatures
in the Spire Missouri territory experienced degree days that were 29% colder than last year and 3% colder than
normal. Degree days in the Spire Alabama service areas in fiscal 2018 were 51% colder than the prior year, and were
close to normal. Contribution margin also benefited from higher ISRS charges and customer growth at Spire
Missouri. These positive impacts were partly offset by a $20.6 reduction at the Missouri Utilities due to the April
2018 implementation of new rates that lowered the fixed monthly charge and increased the volumetric component.
This results in the shifting of revenues from the April through October time period to November through March, the
period when the highest volume of gas is used by customers. At Spire Alabama, contribution margin was negatively
impacted by $11.2 resulting from the timing of rate reductions to customers due to tax savings from the TCJA.
34
Operating Expenses – O&M expenses increased $55.0 for the year ended September 30, 2018 compared to the
prior year. Excluding the impact of the $36.6 of disallowed recoveries at Spire Missouri resulting from the MoPSC
rulings in the rate cases completed in March 2018, O&M expenses were $18.4 above prior year levels due primarily
to $15.9 growth at Spire Missouri and $6.4 growth at Spire Alabama, partly offset by a $3.9 reduction experienced
by Spire EnergySouth. The O&M growth at the Missouri Utilities and Spire Alabama were attributable to the colder
weather, with higher employee-related costs and bad debt expense at both Spire Missouri and Spire Alabama in the
current year. Spire Missouri was also impacted by a $5.8 increase in pension and postretirement amortization
expenses resulting from the rate cases. For more information about the Missouri rate cases, see Note 14, Regulatory
Matters, of the Notes to Financial Statements in Item 8. Taxes other than income taxes were $14.7 higher in the
current year, driven by a $15.3 increase related to higher gross receipt taxes due to the higher revenues.
Depreciation and amortization expenses for the year ended September 30, 2018 increased $13.5 from the prior year,
$9.7 due to Spire Missouri and $3.3 relating to Spire Alabama, principally the result of continued infrastructure
capital spending in fiscal 2018.
Gas Marketing
Operating Revenues – Gas Marketing operating revenue for the year ended September 30, 2018 decreased $7.7
from the prior year. The variance in revenues reflects the impact of lower general pricing levels, partly offset by the
effect of favorable $10.5 mark-to-market adjustments on derivatives and slightly higher total volumes. Average
commodity pricing for the year ended September 30, 2018 was approximately $2.680/MMBtu versus
approximately $2.897/MMBtu for fiscal 2017, a decrease of $0.217/MMBtu.
Contribution Margin – Gas Marketing contribution margin was $41.3 for fiscal 2018, a $29.7 increase compared
to the same period last year, with that variance significantly impacted by favorable fair value adjustments on
derivative holdings in the current year, and unfavorable adjustments in the prior year. Removing these fair value
adjustments from both periods, contribution margin is $19.8 higher than last year, reflecting higher storage and
transportation optimization, and capturing large basis differentials (spreads) during the cold weather in the current
year.
Other
Other operating revenue increased $8.8 for the year ended September 30, 2018 compared to 2017, driven by higher
reinsurance premiums and gas storage revenues. Other operating expenses were $19.9 higher than the prior year,
with $15.7 of the increase driven by acquisitions of gas storage operations, and the remaining increase due to costs
related to the reinsurance premiums.
Interest Charges
Consolidated interest charges during the year ended September 30, 2018 increased $9.3 versus the prior year. The
increase was primarily driven by Spire Missouri’s issuance of $170.0 in long-term debt in September 2017, and
Spire Alabama’s issuance of $75.0 of long-term debt: $30.0 on December 1, 2017, and $45.0 on January 12, 2018.
Also, short-term rates averaged 2.0% in the current year versus 1.2% for the prior year, which was only partly offset
with lower average borrowings outstanding. For the years ended September 30, 2018 and 2017, average short-term
borrowings were $408.6 and $485.8, respectively.
Income Taxes
Consolidated income tax expense during the year ended September 30, 2018, decreased $104.1, primarily as a result
of the TCJA enacted in December 2017. Of the decrease, $60.1 is the result of the revaluation of deferred tax assets
and liabilities on the balance sheet that were not reflected in net economic earnings. The remaining reduction in
income tax is primarily the result of a decrease in current year federal income tax rate due to tax reform, combined
with the effects of lower pre-tax book income. The effective tax rate in fiscal 2018 was (14.1%) compared to 32.4% in
fiscal 2017. The TCJA is further described in Note 11, Income Taxes, of the Notes to Financial Statements in Item 8.
35
Spire Missouri
Summary Operating Results
Year ended September 30,
Operating Income
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin (non-GAAP)
Natural and propane gas costs
Gross receipts tax expense
Operating Revenues
Net Income
$
2018
2017
$
141.3
296.3
102.8
108.4
(68.9)
579.9
636.8
68.9
196.9
243.8
93.1
99.8
(60.0)
573.6
538.3
60.0
$
$
1,285.6
129.3
$
$
1,171.9
113.0
Operating revenues during the year ended September 30, 2018 increased $113.7 from the same period last year.
Revenues were impacted primarily by higher gas costs of $83.7 passed on to customers, a $61.1 increase due to
weather and volumetric impacts, higher gross receipts taxes of $8.9, higher ISRS charges of $5.2, and customer
growth of $2.6. These positive impacts on the revenue growth were partly offset by a $28.3 reduction in off-system
sales and a $20.6 reduction due to the implementation of the two Missouri rate cases that were resolved in March
2018.
Contribution margin for the year ended September 30, 2018 increased $6.3 from the prior year. Higher volumetric/
weather impacts and ISRS charges of $17.0 and $5.2, respectively, combined with customer growth impacts of $2.6,
were partly offset by a $20.6 reduction due to two Missouri rate cases (as noted above).
O&M for the year ended September 30, 2018 were $52.5 higher than the prior year. Of this increase, $36.6 was due
to disallowed recoveries resulting from the MoPSC rulings in the rate cases completed in March 2018, and $7.0 was
primarily related to an increase in the amount of amortization for pension and postretirement costs resulting from
those rate cases. Excluding these rate case impacts, O&M increased $8.9, attributable to the colder weather, with
higher employee-related costs and bad debt expense in the current year. Depreciation and amortization increased
$9.7, reflecting continued infrastructure investments throughout Missouri. Interest expense in the current year was
$7.3 greater than prior year, the result of the issuance of $170.0 in long-term debt in September 2017, and the
combination of higher short-term borrowings and higher average effective interest rates. Income taxes were $80.1
lower for the year ended September 30, 2018 versus the prior year, as described earlier.
Temperatures experienced in the Missouri Utilities’ service area during fiscal 2018 were 29% colder than they prior
year and 3% colder than normal. Total system therms sold and transported were 1,759.8 million for fiscal 2018
compared with 1,482.1 million for fiscal 2017, an increase of 19%. Total off-system therms sold and transported
outside of Spire Missouri’s service area decreased 61% to 68.6 million for fiscal 2018 compared with 175.6 million
for fiscal 2017. The decrease in off-system therms was the direct result of the increase in demand experienced for
system therms.
36
Spire Alabama
Summary Operating Results
Year ended September 30,
Operating Income
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin (Non-GAAP)
Natural and propane gas costs
Gross receipts tax expense
Operating Revenues
Net Income
2018
2017
98.6
136.8
53.2
36.1
(25.4)
299.3
176.0
25.4
500.7
1.3
$
$
$
105.8
130.4
49.9
29.9
(19.5)
296.5
84.5
19.5
400.5
58.1
$
$
$
Operating revenues for the year ended September 30, 2018 increased $100.2 versus the comparable period ended
September 30, 2017. Of the increase, $65.5 related to higher gas cost recoveries, $38.2 was the result of weather and
usage impacts, $6.0 was attributable to higher gross receipt taxes, along with approximately $1.7 associated with
lower Rate Stabilization and Equalization (“RSE”) return on equity revenue adjustments in the current year. Partly
offsetting these positive impacts was a $11.2 revenue reduction resulting from the timing of rate reductions to
customers due to tax savings from the TCJA.
Contribution margin increased $2.8 versus the prior year, as $12.2 in higher weather/volumetric impacts and a
favorable RSE adjustment of approximately $1.7 were offset by the $11.2 impact of the customer rate reduction
resulting from the TCJA.
O&M expenses for the year ended September 30, 2018 increased $6.4 versus the year ended September 30, 2017.
The increase in other operating expenses was driven primarily by higher employee-related costs and bad debt,
which were unfavorably impacted by the colder weather in the current year. Depreciation and amortization was
$3.3 higher versus the same period last year, the result of continued infrastructure investment throughout Spire
Alabama’s service territory.
Temperatures in Spire Alabama’s service area during the year ended September 30, 2018 were 51% colder than last
year, and approximately equal to historical norms. Spire Alabama’s total therms sold and transported were 1,020.8
million for the year ended September 30, 2018, compared with 900.6 million last year, a 13% increase.
For further information on the GSA, RSE and CCM mechanisms, see Note 14, Regulatory Matters, of the Notes to
Financial Statements in Item 8.
37
2017 vs. 2016
Spire
Consolidated
Spire’s net income was $161.6 in fiscal 2017, compared with $144.2 in fiscal 2016. Basic and diluted earnings per
share were $3.44 and $3.43, respectively, for fiscal 2017 compared with basic and diluted earnings per share of
$3.26 and $3.24, respectively, for fiscal 2016. Net economic earnings were $167.6 (or $3.56 per share) in fiscal
2017, compared with $149.1 (or $3.42 per share) in fiscal 2016, an increase of $18.5. Net income increased in fiscal
2017 compared to fiscal 2016 primarily due to $21.5 income growth in the Gas Utility segment, partly offset by a
$3.7 income decline in the Gas Marketing segment and a $0.4 larger loss from other activities.
Gas Utility
Gas Utility net income and net economic earnings increased by $21.5 and $21.2, respectively, in fiscal 2017,
compared to 2016. The increases to net income and net economic earnings were driven by the $9.6 income growth
generated by the Spire EnergySouth acquisition, margin growth and combined lower O&M expenses at Spire
Missouri and Spire Alabama. The margin growth was driven by higher ISRS charges at the Missouri Utilities and
net favorable regulatory adjustments at Spire Alabama, partly offset by weather impacts resulting from warmer
winter temperatures. These impacts were partly offset by increases in depreciation and amortization expenses.
Additionally, interest expense was higher due to the Spire EnergySouth acquisition and higher interest charges
experienced by Spire Missouri. Income taxes were also higher due to the Spire EnergySouth acquisition and higher
pre-tax income for both Spire Missouri and Spire Alabama. Further details are discussed in the Gas Utility section
below.
Gas Marketing
Gas Marketing reported net income totaling $3.4, a decrease of $3.7 compared with the same prior year period. Net
economic earnings for fiscal 2017 increased $0.4 from fiscal 2016. The decrease in net income was primarily
attributable to unfavorable mark-to-market (“MTM”) activity in fiscal 2017. Net economic earnings benefited from
increased value from spreads and asset optimization in fiscal 2017 versus 2016. Further details are discussed in the
Gas Marketing section below.
Other
The combined increase in net loss and net economic loss for the Company’s other non-utility activities were $0.4
and $3.1, respectively, for fiscal 2017 compared to the prior year. The increased loss was primarily the result of
higher interest charges associated with the September 2016 acquisition of Spire EnergySouth.
Operating Revenues and Operating Expenses
Reconciliations of the Company’s contribution margin to the most directly comparable GAAP measure are shown
above.
Consolidated
Spire reported operating revenues of $1,740.7 for the fiscal year ended September 30, 2017 compared with $1,537.3
for the fiscal year ended September 30, 2016. The increase was driven primarily by the Utilities, the result of the
Spire EnergySouth acquisition, higher ISRS charges at Spire Missouri, favorable regulatory adjustments at Spire
Alabama, and higher gas costs passed on to customers in both Missouri and Alabama. These positive drivers were
partly offset by lower demand as a result of warmer weather. Spire’s contribution margin increased $88.2 for the
twelve months ended September 30, 2017 compared to fiscal 2016. The increase was primarily due to higher
contribution margin of $94.6 for the Gas Utility segment, slightly offset by the lower contribution margin reported
in Gas Marketing. O&M expenses increased $26.7 for the twelve months ended September 30, 2017 as compared to
fiscal 2016, as discussed below. Depreciation and amortization expenses increased $16.6, driven principally by the
Spire EnergySouth acquisition and continued infrastructure investment at Spire Missouri and Spire Alabama in
fiscal 2017.
38
Gas Utility
Operating Revenues – Gas Utility Operating Revenues for fiscal 2017 increased $208.5 compared to fiscal 2016,
and was primarily attributable to the following factors:
New customer revenue from Spire EnergySouth acquisition
Higher wholesale gas costs passed on to customers
Spire Alabama - Lower RSE revenue reduction and higher CCM benefit
Spire Missouri - Higher off-system sales and capacity release
Spire Missouri - Higher ISRS charges
Higher gross receipts tax
Weather / temperature adjustment impact
All other
Total Variation
$
$
92.1
87.2
19.2
17.9
14.2
4.9
(27.3)
0.3
208.5
Contribution Margin – Gas Utility contribution margin was $939.0 for fiscal 2017, a $94.6 increase over the
fiscal 2016 period. The increase was attributable to the following factors:
Contribution margin from Spire EnergySouth acquisition
Spire Alabama - Lower RSE revenue reduction and higher CCM benefit
Spire Missouri - Higher ISRS charges
Spire Missouri - Higher off-system sales and capacity release
Weather / temperature adjustment impact
All other
Total Variation
$
$
66.6
19.2
14.2
1.4
(8.6)
1.8
94.6
The increase was primarily attributable to the $66.6 of operating margin resulting from the Spire EnergySouth
acquisition, lower RSE revenue adjustments, beneficial CCM and return on capital impacts totaling $19.2 for Spire
Alabama, and benefits of higher ISRS charges for the Missouri Utilities in 2017 of $14.2. These positive impacts
offset the negative impact of weather and temperature adjustments. Temperatures in the Spire Missouri territory
experienced degree days that were 1% warmer than last year and 20% warmer than normal. Degree days in the
Spire Alabama service areas in fiscal 2017 were 15% warmer than the prior year, and 35% warmer than normal.
Temperatures are a significant part of the Utilities’ rate cases, contributing to the constrained margins experienced
in fiscal 2017.
Operating Expenses – Depreciation and amortization expenses for the twelve months ended September 30, 2017
increased $16.6 from fiscal 2016, $10.0 the result of the Spire EnergySouth acquisition, $4.5 due to Spire Missouri
and $2.1 relating to Spire Alabama, principally the result of continued infrastructure capital spending in fiscal 2017.
O&M expenses increased $29.8 for the twelve months ended September 30, 2017 compared to the same period in
the prior year. Excluding the impact of the $33.5 increase relating to the Spire EnergySouth acquisition, O&M
expenses were $3.7 below fiscal 2016 levels due primarily to lower employee-related costs that were only partly
offset by higher professional services. The employee labor-costs were favorably impacted by the warmer weather
experienced in both the Spire Missouri and Spire Alabama service territories. Taxes other than income taxes were
$12.6 higher in fiscal 2017, with $7.6 of the increase attributable to the Spire EnergySouth acquisition. $4.2 of the
increase was related to the higher gross receipt taxes due to the higher revenues, with the remainder of the variance
related to property tax expense at Spire Missouri.
Gas Marketing
Operating Revenues – Gas Marketing operating revenue for the twelve months ended September 30, 2017
increased $0.8 from the same prior year period. The variance in revenues reflects the impact of higher total volumes
and higher commodity pricing levels partly offset by the effect of increased trading activities, and favorable MTM
adjustments on derivatives. Under GAAP, revenues associated with trading activities are presented net of related
costs. Average pricing for the twelve months ended September 30, 2017 was approximately $2.897/MMBtu versus
approximately $2.286/MMBtu for fiscal 2016, an increase $0.611/MMBtu.
39
Contribution Margin – Gas Marketing contribution margin was $11.6 for fiscal 2017, a $6.1 decrease compared
to the same prior year period, with that variance significantly impacted by unfavorable fair value adjustments on
derivative holdings in fiscal 2017, and favorable adjustments in the prior year. Removing these fair value
adjustments from both periods, contribution margin is $0.7 higher than fiscal 2016, reflecting favorable wholesale
trading volumes and storage optimization.
Other
Other operating revenue increased $2.9 for the twelve months ended September 30, 2017 compared to the same
period in fiscal 2016, driven by higher reinsurance premiums. Other operating expenses were essentially flat, as an
increase in costs related to the reinsurance premiums was offset by a decrease in corporate-level integration
expenses.
Interest Charges
Consolidated interest charges during the twelve months ended September 30, 2017 increased $11.9 from fiscal 2016.
The increase was primarily driven by the debt incurred and assumed as a result of the Spire EnergySouth
acquisition generating interest expense of $8.5, combined with marginally higher interest rates on floating rate debt
in the first six months of 2017 and higher interest rates on the senior notes issued in March of 2017 that were used
to retire the $250.0 of floating rate debt. Also, for the twelve months ended September 30, 2017 and 2016, average
short-term borrowings were $485.8 and $273.9, respectively, and the average interest rates on these borrowings
were 1.2% and 0.9%, respectively.
Income Taxes
Consolidated income tax expense increased $8.1 in fiscal 2017 from fiscal 2016 primarily due to higher pre-tax
income. The fiscal 2017 effective tax rate of 32.4% was essentially flat versus fiscal 2016’s effective rate of 32.5%.
REGULATORY MATTERS
For discussions of regulatory matters for Spire, Spire Missouri, and Spire Alabama, see Note 14, Regulatory Matters,
of the Notes to Financial Statements in Item 8. Those discussions include more information about the Utilities’
recent rate proceedings and updates on FERC proceedings related to Spire STL Pipeline and Spire Storage.
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 their financial position or results of operations upon adoption.
For disclosures related to the adoption of new accounting standards, see the New Accounting Pronouncements
section of Note 1 of the Notes to Financial Statements in Item 8.
INFLATION
The accompanying financial statements reflect the historical costs of events and transactions, regardless of the
purchasing power of the dollar at the time. Due to the capital-intensive nature of the businesses of the Company,
Spire Missouri and Spire Alabama, the most significant impact of inflation is on the depreciation of utility plant.
Rate regulation, to which the Utilities are subject, allows recovery through its rates of only the historical cost of
utility plant as depreciation. The Utilities expect to incur significant capital expenditures in future years, primarily
related to the planned increased replacements of distribution plant. The Utilities believe any higher costs
experienced upon replacement of existing facilities will be recovered through the normal regulatory process.
40
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, which 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. We
believe the following represent the more significant items requiring the use of judgment and estimates in preparing
our financial statements:
Regulatory Accounting – The Utilities account for their regulated operations in accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 980, Regulated
Operations. The provisions of this accounting guidance require, among other things, that financial statements of a
rate-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-rate-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. Also, 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. For Spire Missouri and Spire Alabama, management believes the
following represent the more significant items recorded through the application of this accounting guidance:
PGA Clause – Spire Missouri’s PGA clauses allows the Missouri Utilities to flow through to customers,
subject to a prudence review by the MoPSC, the cost of purchased gas supplies, including the costs, cost
reductions and related carrying costs associated with the Missouri Utilities’ use of natural gas derivative
instruments to hedge the purchase price of natural gas. The difference between actual costs incurred and
costs recovered through the application of the PGA clauses are recorded as regulatory assets and regulatory
liabilities that are recovered or refunded in a subsequent period. The PGA clauses also permit the
application of carrying costs to all over- or under-recoveries of gas costs, including costs and cost reductions
associated with the use of derivative instruments, and also provide for a portion of income from off-system
sales and capacity release revenues to be flowed through to customers.
GSA Rider – Spire Alabama’s rate schedules for natural gas distribution charges contain a GSA rider,
established in 1993, which permits the pass-through to customers of changes in the cost of gas supply. Spire
Alabama’s tariff provides a temperature adjustment mechanism, also included in the GSA, that is designed
to moderate the impact of departures from normal temperatures on Spire Alabama’s earnings. The
temperature adjustment applies primarily to residential, small commercial and small industrial customers.
Other non-temperature weather related conditions that may affect customer usage are not included in the
temperature adjustment. In prior years, Spire Alabama entered into cash flow derivative commodity
instruments to hedge its exposure to price fluctuations on its gas supply. Spire Alabama recognizes all
derivatives at fair value as either assets or liabilities on the balance sheet. Any realized gains or losses are
passed through to customers using the mechanisms of the GSA rider in accordance with Spire Alabama’s
APSC approved tariff and are recognized as a regulatory asset or regulatory liability. All derivative
commodity instruments in a gain position are valued on a discounted basis incorporating an estimate of
performance risk specific to each related counterparty. Derivative commodity instruments in a loss position
are valued on a discounted basis incorporating an estimate of performance risk specific to Spire Alabama.
Spire Alabama currently has no active gas supply derivative positions.
Employee Benefits and Postretirement Obligations – Pension and postretirement obligations are calculated
by actuarial consultants that utilize several statistical factors and other assumptions provided by management
related to future events, such as discount rates, returns on plan assets, compensation increases, and mortality rates.
For the Utilities, the amount of expense recognized and the amounts reflected in other comprehensive income are
dependent upon the regulatory treatment provided for such costs, as discussed further below. Certain liabilities
related to group medical benefits and workers’ compensation claims, portions of which are self-insured and/or
contain “stop-loss” coverage with third-party insurers to limit exposure, are established based on historical trends.
41
The amount of net periodic pension and other postretirement benefit costs recognized in the financial statements
related to the Utilities’ qualified pension plans and other postretirement benefit plans is based upon allowances, as
approved by the MoPSC (for Spire Missouri) and as approved by the APSC (for Spire Alabama). The allowances
have been established in the rate-making process for the recovery of these costs from customers. The differences
between these amounts and actual pension and other postretirement benefit costs incurred for financial reporting
purposes are deferred as regulatory assets or regulatory liabilities. GAAP also requires that changes that affect the
funded status of pension and other postretirement benefit plans, but that are not yet required to be recognized as
components of pension and other postretirement benefit costs, be reflected in other comprehensive income. For the
Utilities’ qualified pension plans and other postretirement benefit plans, amounts that would otherwise be reflected
in other comprehensive income are deferred with entries to regulatory assets or regulatory liabilities.
The tables below reflect the sensitivity of Spire’s plans to potential changes in key assumptions:
Pension Plan Benefits:
Actuarial Assumptions
Discount Rate
Expected Return on Plan Assets
Rate of Future Compensation Increase
Postretirement Benefits:
Actuarial Assumptions
Discount Rate
Expected Return on Plan Assets
Annual Medical Cost Trend
Increase/
(Decrease)
Estimated Increase/
(Decrease) to Projected
Benefit Obligation
Estimated Increase/
(Decrease) to Annual
Net Pension Cost*
0.25 %
(0.25)%
0.25 %
(0.25)%
0.25 %
(0.25)%
$ (14.4)
$
0.5
15.0
—
—
3.9
(3.8)
(0.5)
(1.2)
1.2
0.4
(0.4)
Increase/
(Decrease)
Estimated Increase/
(Decrease) to Projected
Postretirement Benefit
Obligation
Estimated Increase/
(Decrease) to Annual
Net Postretirement
Benefit Cost*
0.25 %
(0.25)%
0.25 %
(0.25)%
1.00 %
(1.00)%
$
(4.2)
$
0.1
4.4
—
—
8.4
(7.7)
(0.1)
(0.6)
0.6
1.4
(1.3)
* Excludes the impact of regulatory deferral mechanism. See Note 12, Pension Plans and Other Postretirement Benefits, of the
Notes to Financial Statements in Item 8 for information regarding the regulatory treatment of these costs.
Income Taxes – Income tax calculations require estimates due to book-tax differences, estimates with respect to
regulatory treatment of certain items, and uncertainty in the interpretation of tax laws and regulations. Critical
assumptions and judgments also include projections of future taxable income to determine the ability to utilize net
operating losses and credit carryforwards prior to their expiration. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Management regularly assesses financial statement tax provisions to identify
any change in regulatory treatment or tax related estimates and assumptions that could have a material impact on
cash flows, financial position and/or results of operations.
For further discussion of significant accounting policies, see Note 1, Summary of Significant Accounting Policies, of
the Notes to Financial Statements in Item 8.
CASH FLOWS
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.
42
Cash Flow Summary
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
2018
2017
2016
$
456.6
$
288.3
$
328.3
(531.7)
89.1
(433.5)
147.4
(612.7)
275.8
Net cash provided by operating activities increased $168.3 from 2017 to 2018, primarily driven by increased net
income and a decrease in working capital. Net cash provided by operating activities decreased $40.0 from fiscal
2016 to 2017 due to working capital fluctuations largely driven by the relative weather conditions and gas prices
during the periods.
In fiscal 2018, the Company used $98.2 more cash in investing activities than in 2017 but $81.0 less than in 2016.
Fiscal 2016 included $317.7 net cash used for the acquisition of Spire EnergySouth, while 2017 included only a small
related settlement, and 2018 net acquisition payments totaled $28.1 for Spire Storage. Capital expenditures
increased $144.8 from fiscal 2016 to 2017, primarily as a result of the higher level of infrastructure upgrades across
both Missouri and Alabama, as well as $16 from the addition of EnergySouth and $26 for the Spire STL Pipeline
project. Capital expenditures increased another $61.3 from fiscal 2017 to about $500 in 2018, reflecting spending of
$40 for the STL Pipeline, as well as investment to support customer growth, new business development, and the
continued commitment to infrastructure upgrades at the Utilities. Spire estimates its capital expenditures for fiscal
2019 will be approximately $650, including $475 for the Utilities and $175 for STL Pipeline and Spire Storage.
Net cash provided by financing activities decreased $58.2 from 2017 to 2018 after decreasing $128.5 from fiscal
2016 to 2017. This trend primarily reflects changes in the net issuance or repayment of long-term debt, with a a
$25.0 net repayment in 2018, a $26.2 net issuance in 2017, and a $165.0 net issuance in 2016. Short-term
borrowings and stock issuances and dividends paid trended higher over the three years.
LIQUIDITY AND 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. Our debt is rated by two rating agencies: Standard & Poor’s Corporation (“S&P”) and Moody’s
Investors Service (“Moody’s”). As of September 30, 2018, the debt ratings of the Company, Spire Missouri and Spire
Alabama, shown in the following table, remain at investment grade with a stable outlook.
Spire Inc. senior unsecured long-term debt
Spire Inc. short-term debt
Spire Missouri senior secured long-term debt
Spire Alabama senior unsecured long-term debt
S&P
BBB+
A-2
A
A-
Moody’s
Baa2
P-2
A1
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 September 30, 2018 or 2017. Due to lower yields available to Spire on short-term investments, the Company
elected to provide all of Spire Missouri’s and Spire Alabama’s short-term funding through intercompany lending
during the past fiscal year.
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
6, Notes Payable and Credit Agreements, of the Notes to Financial Statements in Item 8. Information about interest
rate risk is included under “MARKET RISK” below.
43
Long-term Debt and Equity
At September 30, 2018, including the current portion but excluding unamortized discounts and debt issuance costs,
Spire had long-term debt totaling $2,092.0, of which $880.0 was issued by Spire Missouri, $325.0 was issued by
Spire Alabama, and $72.0 was issued by other subsidiaries. For more information about long-term debt, see Note 5
of the Notes to Financial Statements in Item 8. For information about related interest rate risk, see “Interest Rate
Risk” under “MARKET RISK” below.
Spire Missouri is authorized by the MoPSC to issue registered securities (first mortgage bonds, unsecured debt and
preferred stock), issue common stock, and issue private placement debt in an aggregate amount of up to $500.0 for
financings placed any time before September 30, 2021.
Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission
(“SEC”) for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and
Direct Stock Purchase Plan. There were 221,107 and 216,678 shares at September 30, 2018 and November 12, 2018,
respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also have a shelf
registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which
expires on September 23, 2019.
Including the current portion of long-term debt, and treating the redeemable noncontrolling interest as equity, the
Company’s long-term consolidated capitalization at September 30, 2018 consisted of 52.2% equity, compared to
48.7% equity at September 30, 2017. For more information about equity, see Note 4 of the Notes to Financial
Statements in Item 8.
44
CONTRACTUAL OBLIGATIONS
As of September 30, 2018, Spire had contractual obligations with payments due as summarized below:
Contractual Obligations
Total
Payments due by period
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years
Principal Payments on Long-term Debt
$
2,092.0
$
175.5
$
100.2
$
384.3
$
1,432.0
Interest Payments on Long-term Debt (a)
Operating Leases (b)
Purchase Obligations – Natural Gas (c)
Purchase Obligations – Other (d)
Asset Retirement Obligations
1,256.3
78.5
1,240.9
45.9
321.1
86.6
9.7
547.7
39.3
9.8
158.3
14.5
469.1
5.0
18.4
141.6
13.0
100.4
0.9
18.1
869.8
41.3
123.7
0.7
274.8
Total (e)
$
5,034.7
$
868.6
$
765.5
$
658.3
$
2,742.3
(a) Includes interest payments over the terms of the debt. Interest is calculated using the applicable interest rate and
outstanding principal for each instrument with the terms ending at each instrument’s stated maturity. See Note 5, Long-
Term Debt, of the Notes to Financial Statements in Item 8.
(b) Lease obligations are primarily for office space and power operated equipment. Additional payments will be incurred if
renewal options are exercised under the provisions of certain agreements.
(c) These purchase obligations represent the minimum payments required under existing natural gas transportation and
storage contracts and natural gas supply agreements in the Gas Utility and Gas Marketing segments. These amounts reflect
fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using September 30, 2018
forward market prices. Each of the Utilities generally recovers costs related to its purchases, transportation and storage of
natural gas through the operation of its PGA clause or GSA rider, subject to prudence review by the appropriate regional
public service commission. Variations in the timing of collections of gas costs from customers may affect short-term cash
requirements. Additional contractual commitments are generally entered into prior to or during the heating season.
(d) These purchase obligations primarily reflect miscellaneous agreements for the purchase of materials and the procurement of
services necessary for normal operations.
(e) Long-term liabilities associated with unrecognized tax benefits, totaling $8.1, have been excluded from the table above
because the timing of future cash outflows, if any, cannot be reasonably estimated. Also, commitments related to pension
and postretirement benefit plans have been excluded from the table above. The Company expects to contribute $27.1 to its
qualified, trusteed pension plans and $0.5 to its non-qualified pension plans during fiscal 2019. With regard to the
postretirement benefits, the Company anticipates it will contribute $1.9 to the qualified trusts and $0.5 directly to
participants from Spire Missouri funds during fiscal 2019. For further discussion of the Company’s pension and
postretirement benefit plans, refer to Note 12, Pension Plans and Other Postretirement Benefits, of the Notes to Financial
Statements in Item 8.
ENVIRONMENTAL MATTERS
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, 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, Spire Missouri’s or Spire Alabama’s financial position and results of operations.
As environmental laws, regulations and their interpretations change, however, the Company and the Utilities may
be required to incur additional costs. For information relative to environmental matters, see Contingencies in Note
15 of the Notes to Financial Statements in Item 8.
OFF-BALANCE SHEET ARRANGEMENTS
At September 30, 2018, 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.
45
MARKET RISK
Commodity Price Risk
Gas Utility
The Utilities’ commodity price risk, which arises from market fluctuations in the price of natural gas, is primarily
managed through the operation of the Missouri Utilities’ PGA clauses and Spire Alabama’s GSA rider. The PGA
clauses and GSA rider allows the Utilities to flow through to customers, subject to prudence review by the MoPSC
and APSC, the cost of purchased gas supplies. Spire Missouri is allowed the flexibility to make up to three
discretionary PGA changes during each year, in addition to its mandatory November PGA change, so long as such
changes are separated by at least two months. Spire Missouri is able to mitigate, to some extent, changes in
commodity prices through the use of physical storage supplies and regional supply diversity. The Utilities also have
risk management policies that allow for the purchase of natural gas derivative instruments with the goal of
managing its price risk associated with purchasing natural gas on behalf of its customers. These policies prohibit
speculation. As of September 30, 2018, Spire Missouri had active natural gas derivative positions, but Spire
Alabama did not. Costs and cost reduction, including carrying costs, associated with the use of natural gas derivative
instruments are allowed to be passed on to customers through the operation of the PGA clauses or GSA rider.
Accordingly, the Utilities do not expect any adverse earnings impact as a result of the use of these derivative
instruments. However, the timing of recovery for cash payments related to margin requirements may cause short-
term cash requirements to vary. For more information about the Utilities’ natural gas derivative instruments, see
Note 9, Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8.
Gas Marketing
In the course of its business, Spire’s non-regulated gas marketing subsidiary, Spire Marketing, enters into contracts
to purchase and sell natural gas at fixed prices and natural gas index-based prices. Commodity price risk associated
with these contracts has the potential to impact earnings and cash flows. To minimize this risk, Spire Marketing has
a risk management policy that provides for daily monitoring of a number of business measures, including fixed
price commitments. In accordance with the risk management policy, Spire Marketing manages the price risk
associated with its fixed price commitments. This risk is currently managed either by closely matching the offsetting
physical purchase or sale of natural gas at fixed-prices or through the use of natural gas futures, options and swap
contracts traded on or cleared through the New York Mercantile Exchange (“NYMEX”) and Intercontinental
Exchange (“ICE”) to lock in margins. At September 30, 2018 and 2017, Spire Marketing’s unmatched fixed-price
positions were not material to Spire’s financial position or results of operations.
As mentioned above, Spire Marketing uses natural gas futures, options and swap contracts traded on or cleared
through the NYMEX and ICE to manage the commodity price risk associated with its fixed-price natural gas
purchase and sale commitments. These derivative instruments may be designated as cash flow hedges of forecasted
purchases or sales. Such accounting treatment, if elected, generally permits a substantial portion of the gain or loss
to be deferred from recognition in earnings until the period that the associated forecasted purchase or sale is
recognized in earnings. To the extent a hedge is effective, gains or losses on the derivatives will be offset by changes
in the value of the hedged forecasted transactions. Information about the fair values of Spire Marketing’s exchange-
traded/cleared natural gas derivative instruments is presented below:
Net balance of derivative assets at September 30, 2017
Changes in fair value
Settlements/purchases - net
Changes in cash margin
Net balance of derivative assets at September 30, 2018
Derivative
Fair
Values
Cash
Margin
Derivatives
and Cash
Margin
$
$
$
0.5
(9.7)
2.0
—
(7.2) $
2.0
—
—
9.2
11.2
$
$
2.5
(9.7)
2.0
9.2
4.0
46
As of September 30, 2018
Maturity by Fiscal Year
Total
2019
2020
2021
2022
2023
Fair values of exchange-traded/cleared natural gas
derivatives - net
$
(0.5) $
— $
(0.3) $
(0.1) $
(0.1) $
Fair values of basis swaps - net
(6.7)
(6.9)
0.2
Position volumes:
MMBtu - net (short) long futures/swap/option positions
MMBtu - net (short) long basis swap positions
(0.9)
(21.3)
(2.9)
(19.5)
0.1
(1.2)
—
1.2
—
—
0.7
(0.5)
—
—
—
(0.1)
Certain of Spire Marketing’s physical natural gas derivative contracts are designated as normal purchases or normal
sales, as permitted by GAAP. This election permits the Company to account for the contract in the period the
natural gas is delivered. Contracts not designated as normal purchases or normal sales, including those designated
as trading activities, are accounted for as derivatives with changes in fair value recognized in earnings in the periods
prior to settlement.
Below is a reconciliation of the beginning and ending balances for physical natural gas contracts accounted for as
derivatives, none of which will settle beyond fiscal 2020:
Net balance of derivative assets at September 30, 2017
Changes in fair value
Settlements
Net balance of derivative liabilities at September 30, 2018
$
$
(1.5)
24.7
(13.4)
9.8
For further details related to Spire Marketing’s derivatives and hedging activities, see Note 9, Derivative
Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8.
Counterparty Credit Risk
Spire Marketing has concentrations of counterparty credit risk in that a significant portion of its transactions are
with energy producers, utility companies and pipelines. These concentrations of counterparties have the potential to
affect the Company’s overall exposure to credit risk, either positively or negatively, in that each of these three
groups may be affected similarly by changes in economic, industry or other conditions. Spire Marketing also has
concentrations of credit risk with certain individually significant counterparties. To the extent possible, Spire
Marketing enters into netting arrangements with its counterparties to mitigate exposure to credit risk. It is also
exposed to credit risk associated with its derivative contracts designated as normal purchases and normal sales.
Spire Marketing closely monitors its credit exposure and, although uncollectible amounts have not been significant,
increased counterparty defaults are possible and may result in financial losses and/or capital limitations. For more
information on these concentrations of credit risk, including how Spire Marketing manages these risks, see Note 10,
Concentrations of Credit Risk, of the Notes to Financial Statements in Item 8.
Interest Rate Risk
The Company is subject to interest rate risk associated with its long-term and short-term debt issuances. Based on
average short-term borrowings during fiscal 2018, an increase of 100 basis points in the underlying average interest
rate for short-term debt would have caused an increase in interest expense (and a decrease in pre-tax earnings and
cash flows) of approximately $4.1 on an annual basis. Portions of such an increase may be offset through the
Utilities’ application of PGA and GSA carrying costs. At September 30, 2018, Spire had no variable rate long-term
debt outstanding but had fixed-rate long-term debt totaling $2,092.0. Spire Missouri had fixed-rate long-term debt
totaling $880.0 and Spire Alabama had fixed-rate long-term debt of $325.0, both included in Spire’s total long-
term debt. While these long-term debt issues are fixed-rate, they are subject to changes in fair value as market
interest rates change. However, increases or decreases in fair value would impact earnings and cash flows only if the
Company were to reacquire any of these issues in the open market prior to maturity. Under GAAP applicable to the
Utilities’ regulated operations, losses or gains on early redemptions of long-term debt would typically be deferred as
regulatory assets or regulatory liabilities and amortized over a future period.
47
During the second quarter of fiscal 2016, Spire entered into five-year interest rate swap transactions with a fixed
interest rate of 1.776% and a notional amount of $105.0 to protect itself against adverse movement in interest rates
in anticipation of the issuance of long-term debt in fiscal 2017. During the third quarter of fiscal 2016, the Company
entered into seven-year swap transactions with an average fixed interest rate of 1.501% and a notional amount of
$120.0 to hedge additional debt expected to be issued in fiscal 2017. All of these hedge positions were settled during
the second quarter of fiscal 2017, resulting in a gain of $14.1 which will be amortized over the hedged periods. Also
during the second quarter of fiscal 2017, Spire entered into a ten-year interest rate swap with a fixed interest rate of
2.658% and a notional amount of $60.0 to protect itself against adverse movements in interest rates on future
interest rate payments. The Company recorded a $2.5 mark-to-market gain on this swap as part of other
comprehensive income for the year ended September 30, 2018. In August 2018, Spire entered into a three-year
interest rate swap with a fixed interest rate of 2.7675% and a notional amount of $100.0 to protect itself against
adverse movements in interest rates on future variable interest rate payments. The Company recorded a $0.5 mark-
to-market gain on this swap as part of other comprehensive income for the year ended September 30, 2018.
Refer to Note 9, Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8 for
additional details on these interest rate swap transactions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
For this discussion, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Market Risk, of this report.
48
Item 8. Financial Statements and Supplementary Data
Management Reports on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Financial Statements (for years ended September 30, 2018, 2017, and 2016):
Spire Inc.
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Capitalization
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Spire Missouri Inc.
Statements of Comprehensive Income
Balance Sheets
Statements of Capitalization
Statements of Shareholder’s Equity
Statements of Cash Flows
Spire Alabama Inc.
Statements of Income
Balance Sheets
Statements of Capitalization
Statements of Shareholder’s Equity
Statements of Cash Flows
Notes to Financial Statements
Note 1. Summary of Significant Accounting Policies
Note 2. Stock-Based Compensation
Note 3. Earnings Per Common Share
Note 4. Shareholders’ Equity
Note 5. Long-Term Debt
Note 6. Notes Payable and Credit Agreements
Note 7. Fair Value of Financial Instruments
Note 8. Fair Value Measurements
Note 9. Derivative Instruments and Hedging Activities
Note 10. Concentrations of Credit Risk
Note 11. Income Taxes
Note 12. Pension Plans and Other Postretirement Benefits
Note 13. Information by Operating Segment
Note 14. Regulatory Matters
Note 15. Commitments and Contingencies
Note 16. Interim Financial Information (Unaudited)
49
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73
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Management Reports on Internal Control over Financial Reporting
Spire Inc.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.
Spire Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements and can provide only reasonable
assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Spire Inc.’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an
assessment of the effectiveness of Spire Inc.’s internal control over financial reporting as of September 30, 2018. In
making this assessment, management used the criteria in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment,
management concluded that Spire Inc.’s internal control over financial reporting was effective as of September 30,
2018. Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on
Spire Inc.’s internal control over financial reporting, which is included herein.
Spire Missouri Inc.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.
Spire Missouri Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements and can provide only
reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Spire Missouri Inc.’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an
assessment of the effectiveness of Spire Missouri Inc.’s internal control over financial reporting as of September 30,
2018. In making this assessment, management used the criteria in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment,
management concluded that Spire Missouri Inc.’s internal control over financial reporting was effective as of
September 30, 2018.
Spire Alabama Inc.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.
Spire Alabama Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements and can provide only
reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Spire Alabama Inc.’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an
assessment of the effectiveness of Spire Alabama Inc.’s internal control over financial reporting as of September 30,
2018. In making this assessment, management used the criteria in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment,
management concluded that Spire Alabama Inc.’s internal control over financial reporting was effective as of
September 30, 2018.
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Spire Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Spire Inc. and subsidiaries (the “Company”) as of
September 30, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of September 30, 2018,
based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2018, of the
Company and our report dated November 15, 2018, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management Reports on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 15, 2018
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Spire Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets and consolidated statements of capitalization of
Spire Inc. and subsidiaries (the “Company”) as of September 30, 2018 and 2017, the related consolidated
statements of income, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in
the period ended September 30, 2018, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of September 30, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in
the period ended September 30, 2018, in conformity with accounting principles generally accepted in the United
States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2018, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated November 15, 2018, expressed an unqualified
opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 15, 2018
We have served as the Company’s auditor since 1953.
52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Spire Missouri Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets and statements of capitalization of Spire Missouri Inc. (a wholly
owned subsidiary of Spire Inc.) (the "Company") as of September 30, 2018 and 2017, the related statements of
comprehensive income, shareholder’s equity, and cash flows, for each of the three years in the period ended
September 30, 2018, and the related notes (collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of September
30, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended
September 30, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 15, 2018
We have served as the Company’s auditor since 1953.
53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Spire Alabama Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets and statements of capitalization of Spire Alabama Inc.(a wholly
owned subsidiary of Spire Inc.) (the "Company") as of September 30, 2018 and 2017, the related statements of
income, shareholder’s equity, and cash flows, for each of the three years in the period ended September 30, 2018,
and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of September 30, 2018 and 2017,
and the results of its operations and its cash flows for each of the three years in the period ended September 30,
2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ Deloitte & Touche LLP
Birmingham, Alabama
November 15, 2018
We have served as the Company’s auditor since 2014.
54
SPIRE INC.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
Years Ended September 30
Operating Revenues:
Gas Utility
Gas Marketing and other
Total Operating Revenues
Operating Expenses:
Gas Utility
Natural and propane gas
Other operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Total Gas Utility Operating Expenses
Gas Marketing and other
Total Operating Expenses
Operating Income
Other Income, Net
Interest Charges:
Interest on long-term debt
Other interest charges
Total Interest Charges
Income Before Income Taxes
Income Tax (Benefit) Expense
Net Income
Weighted Average Number of Common Shares Outstanding:
Basic
Diluted
Basic Earnings Per Share of Common Stock
Diluted Earnings Per Share of Common Stock
See the accompanying Notes to Financial Statements.
2018
2017
2016
$
1,888.0
$
1,660.0
$
1,457.2
77.0
1,965.0
80.7
1,740.7
80.1
1,537.3
770.1
455.6
167.0
152.5
1,545.2
140.1
1,685.3
279.7
6.4
83.0
15.4
98.4
187.7
(26.5)
570.5
405.0
153.5
137.8
1,266.8
152.2
1,419.0
321.7
6.6
76.8
12.3
89.1
239.2
77.6
$
$
$
214.2
$
161.6
$
49.1
49.3
4.35
4.33
$
$
46.9
47.0
3.44
3.43
$
$
492.2
377.5
136.9
125.2
1,131.8
123.2
1,255.0
282.3
8.6
67.6
9.6
77.2
213.7
69.5
144.2
44.1
44.3
3.26
3.24
55
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SPIRE INC.
(In millions)
Years Ended September 30
Net Income
Other Comprehensive Income (Loss), Before Tax:
Cash flow hedging derivative instruments:
Net hedging gain (loss) arising during the period
Reclassification adjustment for (income) loss included in net income
Net unrealized gain (loss) on cash flow hedging derivative instruments
Defined benefit pension and other postretirement benefit plans:
Amortization of actuarial loss (gain) included in net periodic pension and
postretirement benefit cost
Net defined benefit pension and other postretirement benefit plans
Net unrealized gain (loss) on available-for-sale debt securities
Other Comprehensive Income (Loss), Before Tax
Income Tax Expense (Benefit) Related to Items of Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss), Net of Tax
Comprehensive Income
See the accompanying Notes to Financial Statements.
2018
2017
2016
$
214.2
$
161.6
$
144.2
3.9
(1.5)
2.4
0.4
0.4
0.3
3.1
0.6
2.5
11.5
—
11.5
0.4
0.4
(0.1)
11.8
4.4
7.4
(4.0)
1.1
(2.9)
(0.3)
(0.3)
—
(3.2)
(1.0)
(2.2)
$
216.7
$
169.0
$
142.0
56
SPIRE INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
September 30
ASSETS
Utility Plant
Less: Accumulated depreciation and amortization
Net Utility Plant
Non-utility property (net of accumulated depreciation and amortization, $10.4 and $8.6 at
September 30, 2018 and 2017, respectively)
Goodwill
Other investments
Other Property and Investments
Current Assets:
Cash and cash equivalents
Accounts receivable:
Utility
Other
Allowance for doubtful accounts
Delayed customer billings
Inventories:
Natural gas
Propane gas
Materials and supplies
Natural gas receivable
Derivative instrument assets
Unamortized purchased gas adjustments
Other regulatory assets
Prepayments
Other
Total Current Assets
Deferred Charges and Other Assets:
Regulatory assets
Other
Total Deferred Charges and Other Assets
Total Assets
2018
2017
$
5,653.3
$
1,682.8
3,970.5
174.5
1,171.6
68.7
1,414.8
5,278.4
1,613.2
3,665.2
52.0
1,171.6
64.2
1,287.8
4.4
7.4
151.9
167.3
(22.4)
6.9
175.2
12.0
23.1
1.8
13.3
8.2
64.6
31.0
22.3
659.6
669.8
128.9
798.7
140.5
149.2
(18.3)
3.4
194.9
12.0
18.9
1.9
5.9
102.6
72.9
28.0
6.2
725.5
791.1
77.1
868.2
$
6,843.6
$
6,546.7
57
CONSOLIDATED BALANCE SHEETS (Continued)
SPIRE INC.
September 30
CAPITALIZATION AND LIABILITIES
Capitalization:
Shareholders’ equity
Redeemable noncontrolling interest
Long-term debt
Total Capitalization
Current Liabilities:
Current portion of long-term debt
Notes payable
Accounts payable
Advance customer billings
Wages and compensation accrued
Dividends payable
Customer deposits
Interest accrued
Unamortized purchased gas adjustments
Taxes accrued
Other regulatory liabilities
Other
Total Current Liabilities
Deferred Credits and Other Liabilities:
Deferred income taxes
Pension and postretirement benefit costs
Asset retirement obligations
Regulatory liabilities
Other
2018
2017
$
2,255.4
$
1,991.3
7.9
1,900.1
4,163.4
—
1,995.0
3,986.3
175.5
553.6
290.1
22.7
39.7
30.0
35.5
15.2
2.9
65.4
32.8
58.3
100.0
477.3
257.1
32.0
38.7
26.6
34.9
14.6
1.0
61.0
21.6
33.1
1,321.7
1,097.9
435.8
180.2
321.1
354.6
66.8
707.5
237.4
296.6
157.2
63.8
Total Deferred Credits and Other Liabilities
1,358.5
1,462.5
Commitments and Contingencies (Note 15)
Total Capitalization and Liabilities
See the accompanying Notes to Financial Statements.
$
6,843.6
$
6,546.7
58
CONSOLIDATED STATEMENTS OF CAPITALIZATION
SPIRE INC.
(Dollars in millions, except per share amounts)
September 30
Shareholders’ Equity:
Common stock, par value $1 per share:
Authorized – 70,000,000 shares
Outstanding – 50,671,903 shares and 48,263,243 shares, respectively
Paid-in capital
Retained earnings
Accumulated other comprehensive income
Total Shareholders’ Equity
Redeemable Noncontrolling Interest
Long-term Debt - Spire:
2.55% Senior Notes, due August 15, 2019
2.52% Senior Notes, due September 1, 2021
3.31% Notes Payable, due December 15, 2022
3.54% Senior Notes, due February 27, 2024
3.13% Senior Notes, due September 1, 2026
3.93% Senior Notes, due March 15, 2027
4.70% Senior Notes, due August 15, 2044
Long-term Debt - Spire Missouri:
First Mortgage Bonds:
5.5% Series, due May 1, 2019
3.0% Series, due March 15, 2023
3.4% Series, due August 15, 2023
3.4% Series, due March 15, 2028
7.0% Series, due June 1, 2029
7.9% Series, due September 15, 2030
3.68% Series, due September 15, 2032
6.0% Series, due May 1, 2034
6.15% Series, due June 1, 2036
4.625% Series, due August 15, 2043
4.23% Series, due September 15, 2047
4.38% Series, due September 15, 2057
Long-term Debt - Spire Alabama:
5.2% Notes, due January 15, 2020
3.86% Notes, due December 22, 2021
3.21% Notes, due September 15, 2025
5.9% Notes, due January 15, 2037
4.31% Notes, due December 1, 2045
3.92% Notes, due January 15, 2048
4.02% Notes, due January 15, 2058
Long-term Debt - Other:
3.10% Note, due December 30, 2018
4.14% First Mortgage Bonds, due September 30, 2021
5.00% First Mortgage Bonds, due September 30, 2031
Non-interest-bearing Note, due December 27, 2022
Total Principal of Long-term Debt
Unamortized debt issuance costs
Unamortized discounts on long-term debt
Total Long-term Debt
Total Capitalization
Long-term debt dollar amounts are exclusive of current portion.
See the accompanying Notes to Financial Statements.
59
2018
2017
$
50.7
1,482.7
715.6
6.4
2,255.4
7.9
$
48.3
1,325.6
614.2
3.2
1,991.3
—
—
35.0
25.0
150.0
130.0
100.0
250.0
—
55.0
250.0
45.0
25.0
30.0
50.0
100.0
55.0
100.0
70.0
50.0
40.0
50.0
35.0
45.0
80.0
45.0
30.0
125.0
35.0
25.0
150.0
130.0
100.0
250.0
50.0
55.0
250.0
45.0
25.0
30.0
50.0
100.0
55.0
100.0
70.0
50.0
40.0
50.0
35.0
45.0
80.0
—
—
—
20.0
42.0
9.5
1,916.5
(14.0)
(2.4)
1,900.1
4,163.4
$
5.0
20.0
42.0
—
2,012.0
(15.2)
(1.8)
1,995.0
3,986.3
$
SPIRE INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Dollars in millions, except per share amounts)
Shares
Amount
Common Stock
Outstanding
Paid-in
Capital
Retained
Earnings
AOCI*
Total
Balance at September 30, 2015
43,335,012
$
43.3
$
1,038.1
$
494.2
$
(2.0) $
1,573.6
Net income
Common stock offering
Dividend reinvestment plan
Stock-based compensation costs
Stock issued under stock-based compensation
plans
Employees’ tax withholding for stock-based
compensation
Dividends declared:
Common stock ($1.96 per share)
Other comprehensive loss, net of tax
—
2,185,000
22,878
—
136,979
(29,227)
—
—
—
2.2
—
—
0.1
—
—
—
—
131.0
1.4
6.7
0.4
(1.7)
—
—
144.2
—
—
—
—
—
(87.5)
—
—
—
—
—
—
—
—
(2.2)
144.2
133.2
1.4
6.7
0.5
(1.7)
(87.5)
(2.2)
Balance at September 30, 2016
45,650,642
$
45.6
$
1,175.9
$
550.9
$
(4.2) $
1,768.2
Net income
Common stock offering
Dividend reinvestment plan
Stock-based compensation costs
Stock issued under stock-based compensation
plans
Employees’ tax withholding for stock-based
compensation
Dividends declared:
Common stock ($2.10 per share)
Other comprehensive income, net of tax
—
2,504,684
23,731
—
119,700
(35,514)
—
—
—
2.5
—
—
0.2
—
—
—
—
143.0
1.6
7.4
(0.1)
(2.2)
—
—
161.6
—
—
0.9
—
—
(99.2)
—
Balance at September 30, 2017
48,263,243
$
48.3
$
1,325.6
$
614.2
$
Net income
Common stock offering
Dividend reinvestment plan
Stock-based compensation costs
Stock issued under stock-based compensation
plans
Employees’ tax withholding for stock-based
compensation
Dividends declared:
Common stock ($2.25 per share)
Other comprehensive income, net of tax
Reclassification of certain income tax effects
—
2,300,000
23,023
—
119,592
(33,955)
—
—
—
—
2.3
—
—
0.1
—
—
—
—
—
150.7
1.6
7.7
(0.1)
(2.8)
—
—
—
214.2
—
—
—
—
—
(112.1)
—
(0.7)
Balance at September 30, 2018
50,671,903
$
50.7
$
1,482.7
$
715.6
$
—
—
—
—
—
—
—
7.4
3.2
—
—
—
—
—
—
—
2.5
0.7
6.4
161.6
145.5
1.6
8.3
0.1
(2.2)
(99.2)
7.4
$
1,991.3
214.2
153.0
1.6
7.7
—
(2.8)
(112.1)
2.5
—
$
2,255.4
*Accumulated other comprehensive income (loss)
See the accompanying Notes to Financial Statements.
60
CONSOLIDATED STATEMENTS OF CASH FLOWS
SPIRE INC.
(In millions)
Years Ended September 30
Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes and investment tax credits
Changes in assets and liabilities:
Accounts receivable
Inventories
Unamortized purchased gas adjustments
Accounts payable
Delayed/advance customer billings, net
Taxes accrued
Other assets and liabilities
Other
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Acquisition of Spire EnergySouth (net of $2.0 cash acquired) and final settlement
Other business acquisitions
Other
2018
2017
2016
$
214.2
$
161.6
$
144.2
168.4
(28.7)
(32.7)
15.5
109.0
12.6
(12.8)
6.4
(39.5)
44.2
456.6
154.1
77.0
(63.0)
(23.5)
(50.9)
51.1
(40.0)
5.8
11.9
4.2
288.3
(499.4)
(438.1)
—
(28.1)
(4.2)
3.8
—
0.8
137.5
68.8
(12.3)
16.5
(52.8)
30.0
26.9
(0.4)
(35.0)
4.9
328.3
(293.3)
(317.7)
—
(1.7)
Net cash used in investing activities
(531.7)
(433.5)
(612.7)
Financing Activities:
Issuance of long-term debt
Repayment of long-term debt
Issuance of short-term debt, net
Issuance of common stock
Dividends paid
Other
Net cash provided by financing activities
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year
Cash, Cash Equivalents, and Restricted Cash at End of Year
Supplemental disclosure of cash (paid) refunded for:
Interest, net of amounts capitalized
Income taxes
See the accompanying Notes to Financial Statements.
75.0
(105.0)
76.3
154.7
(108.7)
(3.2)
89.1
14.0
7.4
21.4
$
420.0
(393.8)
78.6
146.9
(96.2)
(8.1)
147.4
2.2
5.2
7.4
$
245.0
(80.0)
60.7
137.1
(85.2)
(1.8)
275.8
(8.6)
13.8
5.2
(95.1) $
(85.5) $
(1.5)
(1.3)
(72.5)
2.9
$
$
61
SPIRE MISSOURI INC.
STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Years Ended September 30
Operating Revenues:
Utility
Total Operating Revenues
Operating Expenses:
Utility
Natural and propane gas
Other operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Total Operating Expenses
Operating Income
Other Income, Net
Interest Charges:
Interest on long-term debt
Other interest charges
Total Interest Charges
Income Before Income Taxes
Income Tax (Benefit) Expense
Net Income
Other Comprehensive Income (Loss), Net of Tax
Comprehensive Income
See the accompanying Notes to Financial Statements.
2018
2017
2016
$
1,285.6
$
1,171.9
$
1,285.6
1,171.9
1,087.5
1,087.5
636.8
296.3
102.8
108.4
1,144.3
141.3
1.8
38.7
7.7
46.4
96.7
(32.6)
129.3
0.4
538.3
243.8
93.1
99.8
975.0
196.9
2.7
32.9
6.2
39.1
160.5
47.5
113.0
0.1
$
129.7
$
113.1
$
471.3
244.4
88.6
96.3
900.6
186.9
1.8
32.9
4.5
37.4
151.3
45.4
105.9
(0.1)
105.8
62
SPIRE MISSOURI INC.
BALANCE SHEETS
(In Millions)
September 30
ASSETS
Utility Plant
Less: Accumulated depreciation and amortization
Net Utility Plant
Goodwill
Other Property and Investments
Other Property and Investments
Current Assets:
Cash and cash equivalents
Accounts receivable:
Utility
Associated companies
Other
Allowance for doubtful accounts
Delayed customer billings
Inventories:
Natural gas
Propane gas
Materials and supplies
Derivative instrument assets
Unamortized purchased gas adjustments
Other regulatory assets
Prepayments
Total Current Assets
Deferred Charges and Other Assets:
Regulatory assets
Other
Total Deferred Charges and Other Assets
Total Assets
2018
2017
$
3,331.0
$
3,091.8
705.8
2,625.2
210.2
55.0
265.2
681.6
2,410.2
210.2
59.4
269.6
2.0
2.5
103.9
2.7
16.6
(16.0)
6.9
101.7
3.3
15.0
(14.1)
3.4
127.9
138.2
12.0
13.2
—
1.0
29.7
19.1
12.0
11.3
0.1
57.4
38.2
19.6
319.0
388.6
441.1
50.8
491.9
557.8
5.3
563.1
$
3,701.3
$
3,631.5
63
SPIRE MISSOURI INC.
BALANCE SHEETS (continued)
September 30
CAPITALIZATION AND LIABILITIES
Capitalization:
Shareholder’s equity
Long-term debt
Total Capitalization
Current Liabilities:
Current portion of long-term debt
Notes payable – associated companies
Accounts payable
Accounts payable – associated companies
Advance customer billings
Wages and compensation accrued
Dividends payable
Customer deposits
Interest accrued
Taxes accrued
Unamortized purchase gas adjustments
Other regulatory liabilities
Other
Total Current Liabilities
Deferred Credits and Other Liabilities:
Deferred income taxes
Pension and postretirement benefit costs
Asset retirement obligations
Regulatory liabilities
Other
Total Deferred Credits and Other Liabilities
Commitments and Contingencies (Note 15)
Total Capitalization and Liabilities
See the accompanying Notes to Financial Statements.
2018
2017
$
1,259.9
$
1,171.0
824.4
2,084.3
50.0
345.3
81.7
5.8
9.5
31.3
9.0
13.1
7.8
32.0
1.9
14.8
20.1
873.9
2,044.9
100.0
203.0
89.9
5.4
13.3
29.6
—
13.3
8.0
34.1
—
2.7
8.5
622.3
507.8
361.0
136.9
174.1
274.9
47.8
994.7
623.8
173.0
158.6
81.2
42.2
1,078.8
$
3,701.3
$
3,631.5
64
(Dollars in millions, except per share amounts)
SPIRE MISSOURI INC.
STATEMENTS OF CAPITALIZATION
September 30
Shareholder’s Equity:
Common stock, par value $1 per share:
Authorized – 50,000,000 shares
Outstanding – 24,577 shares
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Shareholder’s Equity
Long-term Debt:
First Mortgage Bonds:
5.5% Series, due May 1, 2019
3.0% Series, due March 15, 2023
3.4% Series, due August 15, 2023
3.4% Series, due March 15, 2028
7.0% Series, due June 1, 2029
7.9% Series, due September 15, 2030
3.68% Series, due September 15, 2032
6.0% Series, due May 1, 2034
6.15% Series, due June 1, 2036
4.625% Series, due August 15, 2043
4.23% Series, due September 15, 2047
4.38% Series, due September 15, 2057
Total Principal of Long-term Debt
Unamortized debt issuance costs
Unamortized discounts on long-term debt
Total Long-term Debt
Total Capitalization
Long-term debt dollar amounts are exclusive of current portion.
See the accompanying Notes to Financial Statements.
2018
2017
$
0.1
$
760.3
501.1
(1.6)
0.1
756.1
416.5
(1.7)
1,259.9
1,171.0
—
55.0
250.0
45.0
25.0
30.0
50.0
100.0
55.0
100.0
70.0
50.0
830.0
(4.3)
(1.3)
824.4
50.0
55.0
250.0
45.0
25.0
30.0
50.0
100.0
55.0
100.0
70.0
50.0
880.0
(4.6)
(1.5)
873.9
$
2,084.3
$
2,044.9
65
SPIRE MISSOURI INC.
STATEMENTS OF SHAREHOLDER’S EQUITY
(Dollars in millions)
Common Stock
Outstanding
Shares
Amount
Paid-in
Capital
Retained
Earnings
AOCI*
Total
Balance at September 30, 2015
24,577
$
0.1
$
748.2
$
291.2
$
(1.7) $
1,037.8
Net income
Stock-based compensation costs
Dividends declared
Other comprehensive loss, net of tax
—
—
—
—
—
—
—
—
—
3.7
—
—
105.9
—
(78.8)
—
—
—
—
(0.1)
105.9
3.7
(78.8)
(0.1)
Balance at September 30, 2016
24,577
$
0.1
$
751.9
$
318.3
$
(1.8) $
1,068.5
Net income
Stock-based compensation costs
Dividends declared
Other comprehensive income, net of tax
—
—
—
—
—
—
—
—
—
4.2
—
—
113.0
—
(14.8)
—
—
—
—
0.1
113.0
4.2
(14.8)
0.1
Balance at September 30, 2017
24,577
$
0.1
$
756.1
$
416.5
$
(1.7) $
1,171.0
Net income
Stock-based compensation costs
Dividends declared
Other comprehensive income, net of tax
Reclassification of certain income tax effects
—
—
—
—
—
—
—
—
—
—
—
4.2
—
—
—
129.3
—
(45.0)
—
0.3
—
—
—
0.4
(0.3)
129.3
4.2
(45.0)
0.4
—
Balance at September 30, 2018
24,577
$
0.1
$
760.3
$
501.1
$
(1.6) $
1,259.9
*Accumulated other comprehensive income (loss)
See the accompanying Notes to Financial Statements.
66
2018
2017
2016
$
129.3
$
113.0
$
105.9
102.8
(32.6)
(2.0)
8.4
71.0
(14.8)
(7.4)
(2.1)
(13.4)
45.0
284.2
(295.8)
4.8
(291.0)
—
(100.0)
142.3
(36.0)
—
6.3
(0.5)
2.5
2.0
$
93.1
47.5
(20.5)
(13.0)
(11.6)
16.8
(37.6)
5.0
(11.6)
1.6
182.7
(282.2)
1.1
(281.1)
170.0
(243.7)
203.0
(28.7)
(1.8)
98.8
0.4
2.1
2.5
$
88.6
45.3
35.7
11.0
(18.7)
0.9
24.9
4.9
(29.6)
2.3
271.2
(197.8)
1.1
(196.7)
—
10.7
—
(84.8)
—
(74.1)
0.4
1.7
2.1
(45.6) $
(38.6) $
—
—
(35.7)
2.1
$
$
SPIRE MISSOURI INC.
STATEMENTS OF CASH FLOWS
(In millions)
Years Ended September 30
Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes and investment tax credits
Changes in assets and liabilities:
Accounts receivable
Inventories
Unamortized purchased gas adjustments
Accounts payable
Delayed/advance customer billings, net
Taxes accrued
Other assets and liabilities
Other
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Other
Net cash used in investing activities
Financing Activities:
Issuance of first mortgage bonds
(Repayment) issuance of short-term debt, net
Borrowings from Spire
Dividends paid
Other
Net cash provided by (used in) financing activities
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
Supplemental disclosure of cash (paid) refunded for:
Interest, net of amounts capitalized
Income taxes
See the accompanying Notes to Financial Statements.
67
SPIRE ALABAMA INC.
STATEMENTS OF INCOME
(In millions)
Years Ended September 30
Operating Revenues:
Utility
Total Operating Revenues
Operating Expenses:
Utility
Natural and propane gas
Other operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Total Operating Expenses
Operating Income
Other Income, Net
Interest Charges:
Interest on long-term debt
Other interest charges
Total Interest Charges
Income Before Income Taxes
Income Tax Expense
Net Income
See the accompanying Notes to Financial Statements.
2018
2017
2016
$
500.7
$
400.5
$
500.7
400.5
176.0
136.8
53.2
36.1
402.1
98.6
1.6
13.5
3.8
17.3
82.9
81.6
$
1.3
$
84.5
130.4
49.9
29.9
294.7
105.8
2.5
11.2
3.2
14.4
93.9
35.8
58.1
$
368.5
368.5
67.3
133.5
47.8
28.4
277.0
91.5
7.9
11.4
2.4
13.8
85.6
32.4
53.2
68
SPIRE ALABAMA INC.
BALANCE SHEETS
(In millions)
September 30
ASSETS
Utility Plant
Less: Accumulated depreciation and amortization
Net Utility Plant
Current Assets:
Cash and cash equivalents
Accounts receivable:
Utility
Associated companies
Other
Allowance for doubtful accounts
Inventories:
Natural gas
Materials and supplies
Unamortized purchased gas adjustments
Other regulatory assets
Prepayments
Other
Total Current Assets
Deferred Charges and Other Assets:
Regulatory assets
Deferred income tax
Other
Total Deferred Charges and Other Assets
Total Assets
2018
2017
$
1,964.3
$
1,838.0
830.2
1,134.1
782.0
1,056.0
—
39.6
0.5
8.5
(3.9)
33.9
7.8
6.4
19.8
6.0
2.4
0.1
32.0
—
6.2
(2.6)
33.9
6.5
45.2
19.4
4.9
1.8
121.0
147.4
201.5
101.8
57.8
361.1
197.0
185.6
57.0
439.6
$
1,616.2
$
1,643.0
69
SPIRE ALABAMA INC.
BALANCE SHEETS (continued)
September 30
CAPITALIZATION AND LIABILITIES
Capitalization:
Shareholder’s equity
Long-term debt
Total Capitalization
Current Liabilities:
Notes payable – associated companies
Accounts payable
Accounts payable – associated companies
Advance customer billings
Wages and compensation accrued
Customer deposits
Interest accrued
Taxes accrued
Regulatory liabilities
Other
Total Current Liabilities
Deferred Credits and Other Liabilities:
Pension and postretirement benefit costs
Asset retirement obligations
Regulatory liabilities
Other
Total Deferred Credits and Other Liabilities
Commitments and Contingencies (Note 15)
Total Capitalization and Liabilities
See the accompanying Notes to Financial Statements.
2018
2017
$
808.7
$
322.6
1,131.3
867.4
247.8
1,115.2
142.5
169.9
48.4
2.1
13.1
6.7
18.6
3.9
28.3
7.6
3.2
44.4
1.6
18.6
7.4
17.9
3.3
23.4
12.0
2.9
274.4
301.4
35.0
135.7
31.3
8.5
210.5
50.2
128.4
39.6
8.2
226.4
$
1,616.2
$
1,643.0
70
SPIRE ALABAMA INC.
STATEMENTS OF CAPITALIZATION
(Dollars in millions, except per share amounts)
September 30
Shareholder’s Equity:
Common stock, par value $0.01 per share, and paid-in capital:
Authorized – 3,000,000 shares
Outstanding – 1,972,052 shares
Retained earnings
Total Shareholder’s Equity
Long-term Debt:
5.2% Notes, due January 15, 2020
3.86% Notes, due December 22, 2021
3.21% Notes, due September 15, 2025
5.9% Notes, due January 15, 2037
4.31% Notes, due December 1, 2045
3.92% Notes, due January 15, 2048
4.02% Notes, due January 15, 2058
Total Principal of Long-term Debt
Unamortized debt issuance costs
Total Long-term Debt
Total Capitalization
Long-term debt dollar amounts are exclusive of current portion.
See the accompanying Notes to Financial Statements.
2018
2017
$
390.9
$
417.8
808.7
40.0
50.0
35.0
45.0
80.0
45.0
30.0
325.0
(2.4)
322.6
420.9
446.5
867.4
40.0
50.0
35.0
45.0
80.0
—
—
250.0
(2.2)
247.8
$
1,131.3
$
1,115.2
71
SPIRE ALABAMA INC.
STATEMENTS OF SHAREHOLDER’S EQUITY
(Dollars in millions)
Common Stock
Outstanding
Shares
Amount
Paid-in
Capital
Retained
Earnings
Total
Balance at September 30, 2015
1,972,052
$
— $
480.9
$
393.7
$
Net income
Dividends declared
Return of capital to Spire
—
—
—
Balance at September 30, 2016
1,972,052
Net income
Dividends declared
Return of capital to Spire
—
—
—
Balance at September 30, 2017
1,972,052
Net income
Dividends declared
Return of capital to Spire
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(29.0)
451.9
—
—
(31.0)
420.9
—
—
(30.0)
53.2
(31.5)
—
415.4
58.1
(27.0)
—
446.5
1.3
(30.0)
—
874.6
53.2
(31.5)
(29.0)
867.3
58.1
(27.0)
(31.0)
867.4
1.3
(30.0)
(30.0)
Balance at September 30, 2018
1,972,052
$
— $
390.9
$
417.8
$
808.7
See the accompanying Notes to Financial Statements.
72
2018
2017
2016
$
1.3
$
58.1
$
53.2
53.2
81.6
(16.2)
(1.2)
38.8
4.7
(5.5)
4.9
(15.1)
(0.4)
146.1
(131.7)
(1.6)
(133.3)
75.0
—
—
(27.4)
(30.0)
(30.0)
(0.5)
(12.9)
(0.1)
0.1
— $
49.9
35.8
(10.0)
0.1
(39.6)
8.8
(2.5)
1.8
(16.6)
(1.3)
84.5
(113.9)
(0.4)
(114.3)
—
—
(82.0)
169.9
(31.0)
(27.0)
—
29.9
0.1
—
0.1
$
47.8
33.2
(11.1)
5.3
(33.8)
9.1
2.0
(5.2)
(3.2)
0.9
98.2
(93.4)
(2.5)
(95.9)
80.0
(80.0)
51.0
—
(29.0)
(31.5)
—
(9.5)
(7.2)
7.2
—
(15.1) $
(12.8) $
—
—
(12.4)
0.8
$
$
SPIRE ALABAMA INC.
STATEMENTS OF CASH FLOWS
(In millions)
Years Ended September 30
Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes
Changes in assets and liabilities:
Accounts receivable
Inventories
Unamortized purchased gas adjustments
Accounts payable
Advance customer billings
Taxes accrued
Other assets and liabilities
Other
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Other
Net cash used in investing activities
Financing Activities:
Issuance of long-term debt
Repayment of long-term debt
(Repayment) issuance of short-term debt, net
(Repayments of) borrowings from Spire
Return of capital to Spire
Dividends paid
Other
Net cash (used in) provided by financing activities
Net (Decrease) Increase 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) refunded for:
Interest, net of amounts capitalized
Income taxes
See the accompanying Notes to Financial Statements.
73
SPIRE INC., SPIRE MISSOURI INC., AND SPIRE ALABAMA INC.
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share, per unit and per gallon amounts)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION – These notes are an integral part of the accompanying audited financial statements
of Spire Inc. presented on a consolidated basis (“Spire” or the “Company”), Spire Missouri Inc. (“Spire Missouri” or
the “Missouri Utilities”) and Spire Alabama Inc. (“Spire Alabama”). Spire Missouri and Spire Alabama are wholly
owned subsidiaries of the Company. Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth Inc.
(“Spire EnergySouth”) are collectively referred to as “the Utilities.” The subsidiaries of Spire EnergySouth are Spire
Gulf Inc. and Spire Mississippi Inc. The accompanying audited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Unless otherwise indicated, references to years herein are references to the fiscal years ending September 30 for the
Company and its subsidiaries.
The consolidated financial position, results of operations and cash flows of Spire include the accounts of the
Company and all its subsidiaries. One subsidiary acquired an 80% voting interest in a natural gas storage facility in
December 2017, and the redeemable noncontrolling interest is shown as temporary equity on the balance sheet.
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.
NATURE OF OPERATIONS – Spire (NYSE: SR) has two 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. The Gas Utility segment is comprised of the
operations of: the Missouri Utilities, serving St. Louis and eastern Missouri (“Spire Missouri East”) and Kansas City
and western Missouri (“Spire Missouri 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 business, Spire Marketing Inc. (“Spire Marketing”), which provides
non-regulated natural gas services. The activities of other subsidiaries are reported as Other and are described in
Note 13, Information by Operating Segment. Spire Missouri and Spire Alabama each have a single reportable
segment.
USE OF ESTIMATES – The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those estimates.
SYSTEM OF ACCOUNTS – The accounts of the Utilities are maintained in accordance with the Uniform System
of Accounts prescribed by the applicable state public service commissions, which systems substantially conform to
that prescribed by the Federal Energy Regulatory Commission (“FERC”).
PROPERTY, PLANT, AND EQUIPMENT –
Utility Plant – Utility plant is stated at original cost. The cost of additions to utility plant includes contracted work,
direct labor and materials, allocable overheads and an allowance for funds used during construction. The costs of
units of property retired, replaced or renewed are removed from utility plant and are charged to accumulated
depreciation. Maintenance and repairs of property and replacement and renewal of items determined to be less
than units of property are charged to maintenance expenses.
For Spire Missouri, utility plant is depreciated on a straight-line basis at rates based on estimated service lives of the
various classes of property. In fiscal years 2018, 2017 and 2016, annual depreciation and amortization expense
averaged 3.0% of the original cost of depreciable and amortizable property.
For Spire Alabama, depreciation is provided using the composite method of depreciation on a straight-line basis
over the estimated useful lives of utility property at rates approved by the Alabama Public Service Commission
(“APSC”). The composite depreciation rate in fiscal years 2018, 2017 and 2016 was approximately 3.1%.
74
Non-utility Property – Non-utility property is recorded at the original cost of acquisition or construction, which
includes material, labor, contractor services and, for FERC-regulated projects, an allowance for funds used during
construction. Repairs, replacements and renewals of items of property determined to be less than a unit of property
or that do not increase the property’s life or functionality are charged to maintenance expense. Upon retirement or
sale of non-utility property, the original cost and related accumulated depreciation are removed from the accounts
and any gain or loss is included in the income statements. Costs related to software developed or obtained for
internal use are capitalized and amortized on a straight-line basis over the estimated useful life of the related
software. If software is retired prior to being fully amortized, the difference is recorded as a loss in the income
statements.
Accrued Capital Expenditures – Accrued capital expenditures, shown in the following table, are excluded from
capital expenditures in the statements of cash flows until paid.
September 30
Spire
Spire Missouri
Spire Alabama
2018
2017
2016
$
$
$
62.1
36.7
8.9
41.0
28.9
9.4
30.4
14.8
6.8
ASSET RETIREMENT OBLIGATIONS – Spire, Spire Missouri and Spire Alabama record legal obligations
associated with the retirement of long-lived assets in the period in which the obligations are incurred, if sufficient
information exists to reasonably estimate the fair value of the obligations. Obligations are recorded as both a cost of
the related long-lived asset and as a corresponding liability. Subsequently, the asset retirement costs are depreciated
over the life of the asset and the asset retirement obligations are accreted to the expected settlement amounts. The
Company, Spire Missouri and Spire Alabama record asset retirement obligations associated with certain safety
requirements to purge and seal gas distribution mains upon retirement, the plugging and abandonment of storage
wells and other storage facilities, specific service line obligations, and certain removal and disposal obligations
related to components of Spire Missouri’s, Spire Alabama’s and Spire Gulf’s distribution systems and general plant.
Asset retirement obligations recorded by Spire’s other subsidiaries are not material. As authorized by the Missouri
Public Service Commission (“MoPSC”) and APSC, Spire Missouri, Spire Alabama and Spire Gulf accrue future asset
removal costs associated with their property, plant and equipment even if a legal obligation does not exist. Such
accruals are provided for through depreciation expense and are recorded with corresponding credits to regulatory
liabilities or regulatory assets. When those utilities retire depreciable utility plant and equipment, they charge the
associated original costs to accumulated depreciation and amortization, and any related removal costs incurred are
charged to regulatory liabilities or regulatory assets. The difference between removal costs recognized in
depreciation rates and the accretion expense and depreciation expense recognized for financial reporting purposes
is a timing difference between recovery of these costs in rates and their recognition for financial reporting purposes.
Accordingly, these differences are deferred as regulatory liabilities or regulatory assets. In the rate setting process,
the regulatory liabilities or regulatory assets are excluded from the rate base upon which those utilities have the
opportunity to earn their allowed rates of return. The costs associated with asset retirement obligations of Spire
Missouri, Spire Alabama and Spire Gulf are either currently being recovered in rates or are probable of recovery in
future rates.
The following table presents a reconciliation of the beginning and ending balances of asset retirement obligations at
September 30, as reported in the balance sheets.
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
Asset retirement obligations, beginning of year
$
296.6
$
206.4
$
158.6
$
75.2
$
128.4
$
120.1
Liabilities incurred during the period
Liabilities settled during the period
Accretion
Revisions in estimated cash flows
Business combinations
5.5
(11.2)
12.7
16.9
0.6
5.5
(4.6)
9.1
80.2
—
0.6
(8.9)
6.6
17.2
—
0.3
(1.1)
3.6
80.6
—
3.5
(1.8)
5.6
—
—
5.2
(1.9)
5.0
—
—
Asset retirement obligations, end of year
$
321.1
$
296.6
$
174.1
$
158.6
$
135.7
$
128.4
75
REGULATED OPERATIONS – The Utilities account for their regulated operations in accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“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. See additional discussion on
regulated operations in Note 14, Regulatory Matters.
NATURAL GAS AND PROPANE GAS – For Spire Missouri East, inventory of natural gas in storage is priced on
a last in, first out (“LIFO”) basis and inventory of propane gas in storage is priced on a first in, first out (“FIFO”)
basis. For the rest of the Gas Utility segment, inventory of natural gas in storage is priced on the weighted average
cost basis. The replacement cost of Spire Missouri’s natural gas for current use in eastern Missouri at September 30,
2018 and September 30, 2017 was less than the LIFO cost by $14.5 and $20.8, respectively. The carrying value of
the Utilities’ inventory is not adjusted to the lower of net realizable value or market prices because, pursuant to
Purchased Gas Adjustment (“PGA”) clauses or a Gas Supply Adjustment (“GSA”) rider, actual gas costs are
recovered in customer rates. Natural gas and propane gas storage inventory in Spire’s other operating segments is
recorded at the lower of average cost or market.
BUSINESS COMBINATIONS – Spire’s acquisitions, including the recent transactions described below, were
accounted for using business combination accounting. Under this method, the purchase price paid by the acquirer is
allocated to the assets acquired and liabilities assumed as of the acquisition date based on their fair value.
Effective September 12, 2016, Spire completed the acquisition of 100% of the common stock of Spire EnergySouth.
Total cash consideration paid, net of cash acquired, debt assumed and a working capital settlement payment
received, was $313.9. Spire EnergySouth’s results of operations are included in the Spire statements of income from
the date of acquisition, as shown in the following table.
Total Operating Revenues
Net Income (Loss)
2018
2017
2016
$
102.1
$
13.8
$
95.5
9.4
3.3
(0.2)
The following unaudited pro forma financial information presents Spire’s combined results of operations as though
the Spire EnergySouth acquisition had occurred as of the beginning of fiscal 2016. The unaudited pro forma
financial information is not necessarily indicative of either future results of operations or results that would have
been achieved if the acquisition had occurred as of the earlier date. It includes estimates and assumptions which
management believes are reasonable. The timing of integration costs was not changed.
Total Operating Revenues
Net Income
Basic Earnings Per Share
Diluted Earnings Per Share
2018
2017
2016
$ 1,965.0
$ 1,740.7
$ 1,632.4
$
214.2
4.35
4.33
$
161.6
3.44
3.43
$
153.9
3.48
3.46
In December 2017, the Company acquired an 80% voting interest in a natural gas storage facility in Wyoming. The
transaction was valued at $24.8, consisting of $16.0 in cash and a $10.0 non-interest-bearing note valued at $8.8.
In October 2018, the Company completed the exercise of its right to call the remaining 20% voting interest in that
facility and settled the related note for a combined total of $17.0. In May 2018, the Company expanded its
operations by acquiring 100% of a neighboring natural gas storage facility for $12.2 in cash. Together, these storage
operations are referred to herein as “Spire Storage.”
76
GOODWILL – Goodwill is measured as the excess of the acquisition-date fair value of the consideration
transferred over the amount of acquisition-date identifiable assets acquired net of assumed liabilities. Spire and
Spire Missouri evaluate goodwill for impairment as of July 1 of each year, or more frequently if events and
circumstances indicate that goodwill might be impaired. At July 1, 2018, 2017 and 2016, Spire and Spire Missouri
each applied a quantitative goodwill evaluation model to their reporting units and concluded goodwill was not
impaired because the fair value exceeded the carrying amount. The changes in the carrying amount of goodwill by
reportable segment were as follows:
Balance as of September 30, 2015
Acquisition of Spire EnergySouth
Balance as of September 30, 2016
Adjustments to finalize the acquisition of Spire EnergySouth
Balance as of September 30, 2017
Balance as of September 30, 2018
Gas
Utility
Gas
Marketing
Other
Total
$
210.2
$
— $
735.8
$
—
210.2
—
210.2
210.2
$
$
$
$
—
—
—
— $
— $
218.9
954.7
6.7
961.4
961.4
$
$
946.0
218.9
1,164.9
6.7
1,171.6
1,171.6
IMPAIRMENT OF LONG-LIVED ASSETS – Long-lived assets classified as held and used are evaluated for
impairment when events or changes in circumstances indicate that the carrying value of such assets may not be
recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows
attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash
flows, the Company recognizes an impairment charge equal to the amount of the carrying value that exceeds the
estimated fair value of the assets. In the period in which the Company determines an asset meets held-for-sale
criteria, an impairment charge is recorded to the extent the book value exceeds its fair value less cost to sell.
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 September 30, 2018 and 2017 were $29.7 and
$30.1, respectively. Spire Alabama records natural gas distribution revenues in accordance with the tariff
established by the APSC. Unbilled revenue is accrued in an amount equal to the related gas cost, as profit margin is
not considered earned until billed. The amount of accrued unbilled revenues for Spire Alabama was $1.9 at both
September 30, 2018 and 2017. Spire’s other subsidiaries, including Spire Marketing, record revenues when earned,
either when the product is delivered or when services are performed.
In the course of their business, certain subsidiaries of the Company enter into commitments associated with the
purchase or sale of natural gas. Certain of its derivative natural gas contracts are designated as normal purchases or
normal sales and, as such, are excluded from the scope of ASC Topic 815, Derivatives and Hedging. Those contracts
are accounted for as executory contracts and recorded on an accrual basis. Revenues and expenses from such
contracts are recorded using a gross presentation. Contracts not designated as normal purchases or normal sales are
recorded as derivatives with changes in fair value recognized in earnings in the periods prior to physical delivery.
For additional information on derivative instruments, refer to Note 9, Derivative Instruments and Hedging
Activities. 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 (or expenses, if negative) in the Consolidated
Statements of Income. This net presentation has no effect on operating income or net income.
INCOME TAXES – Spire and its subsidiaries account for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amount of existing assets and liabilities and the respective tax basis and for tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be realized or settled. The effects
on deferred tax assets and liabilities of a change in enacted tax rates is recognized in income or loss for non-
regulated operations, and in a regulatory asset or regulatory liability for regulated operations. A valuation allowance
is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
77
The Company accounts for uncertain tax positions in accordance with authoritative guidance. The authoritative
guidance addresses the determination of whether tax benefits claimed, or expected to be claimed, on a tax return
should be recorded in the financial statements. Spire may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the position will be sustained upon examination by the taxing authority, based
on the technical merits of the position. Tax-related interest and penalties, if any, are classified as a liability on the
balance sheets. For additional information on the accounting for income taxes, refer to Note 11, Income Taxes.
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – All highly liquid debt instruments purchased
with original maturities of three months or less are considered to be cash equivalents. Such instruments are carried
at cost, which approximates market value. Outstanding checks on the Company’s and Utilities’ bank accounts in
excess of funds on deposit create book overdrafts (which are funded at the time checks are presented for payment)
and are classified as Other in the Current Liabilities section of the balance sheets. Changes in book overdrafts are
reflected as Operating Activities in the statements of cash flows. In Spire’s statements of cash flows, total cash, cash
equivalents, and restricted cash included $17.0 of restricted cash reported in “Other” current assets on Spire’s
balance sheet as of September 30, 2018 (in addition to amounts shown as “Cash and cash equivalents”). This
restricted cash was an escrow deposit for the purchase of the remaining 20% interest in a natural gas storage
business and the settlement of the related note payable, and the transaction was completed on October 25, 2018.
NATURAL GAS RECEIVABLE – Spire Marketing enters into natural gas transactions with natural gas pipeline
companies known as park and loan arrangements. Under the terms of the arrangements, Spire Marketing purchases
natural gas from a third party and delivers that natural gas to the pipeline company for the right to receive the same
quantity of natural gas from the pipeline company at the same location in a future period. These arrangements are
accounted for as non-monetary transactions under GAAP and are recorded at the carrying amount. As such, natural
gas receivables are reflected on the Consolidated Balance Sheets at cost, which includes related pipeline fees
associated with the transactions. In the period that the natural gas is returned to Spire Marketing, concurrent with
the sale of the natural gas to a third party, the related natural gas receivable is expensed in the Consolidated
Statements of Income. In conjunction with these transactions, Spire Marketing usually enters into New York
Mercantile Exchange (“NYMEX”) and Intercontinental Exchange (“ICE”) natural gas futures, options, and swap
contracts or fixed price sales agreements to protect against market changes in future sales prices.
EARNINGS PER COMMON SHARE – GAAP requires dual presentation of basic and diluted earnings per share
(“EPS”). EPS is computed using the two-class method, which is an earnings allocation method for computing EPS
that treats a participating security as having rights to earnings that would otherwise have been available to common
shareholders. Certain of the Company’s stock-based compensation awards pay non-forfeitable dividends to the
participants during the vesting period and, as such, are deemed participating securities. Basic EPS is computed by
dividing net income available to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted EPS is computed by dividing net income available to common shareholders
by the weighted average number of common shares outstanding that are increased for additional shares that would
be outstanding if potentially dilutive non-participating securities were converted to common shares, pursuant to the
treasury stock method. Shares attributable to equity units, non-participating stock options and time-vested
restricted stock/units are excluded from the calculation of diluted earnings per share if the effect would be
antidilutive. Shares attributable to non-participating performance-contingent restricted stock awards are only
included in the calculation of diluted earnings per share to the extent the underlying performance and/or market
conditions are satisfied (a) prior to the end of the reporting period or (b) would be satisfied if the end of the
reporting period were the end of the related contingency period and the result would be dilutive. The Company’s
EPS computations are presented in Note 3, Earnings Per Common Share.
GROSS RECEIPTS AND SALES TAXES – 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
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 taxes recorded as revenues:
Spire
Spire Missouri
Spire Alabama
2018
2017
2016
$
98.2
68.9
25.4
$
84.6
60.7
19.5
$
75.5
57.4
17.9
78
Sales taxes imposed on applicable Spire Alabama and Spire Missouri sales are billed to customers. These amounts
are not recorded in the statements of income but are recorded as tax collections payable and included in the “Other”
line of the Current Liabilities section of the balance sheets.
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:
Purchases of natural gas from Spire Marketing
Sales of natural gas to Spire Marketing
Transportation services received from Spire NGL Inc.
2018
2017
2016
$
71.5
$
74.4
$
46.3
0.3
1.0
7.8
1.0
1.9
1.0
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS – Trade accounts receivable
are recorded at the amounts due from customers, including unbilled amounts. Estimates of the collectability of
trade accounts receivable are based on historical trends, age of receivables, economic conditions, credit risk of
specific customers, and other factors. Accounts receivable are written off against the allowance for doubtful
accounts when they are deemed to be uncollectible.
Spire
2017
2018
Spire Missouri
Spire Alabama
2016
2018
2017
2016
2018
2017
2016
Allowance at beginning of year
$
18.3
$
20.5
$
14.2
$
14.1
$ 16.1
$
10.0
$
Additions charged to expense
Net deductions
14.6
(10.5)
10.6
(12.8)
6.5
(0.2)
11.9
10.1
(10.0)
(12.1)
6.2
(0.1)
$
2.6
2.1
3.3
0.2
$
(0.8)
(0.9)
4.2
0.6
(1.5)
Allowance at end of year
$
22.4
$
18.3
$
20.5
$
16.0
$ 14.1
$
16.1
$
3.9
$
2.6
$
3.3
FINANCE RECEIVABLES – Spire Alabama finances third party contractor sales of merchandise including gas
furnaces and appliances. At September 30, 2018 and September 30, 2017, the Company’s finance receivable totaled
approximately $13.1 and $12.5, respectively. Financing is available only to qualified customers who meet
creditworthiness thresholds for customer payment history and external agency credit reports. Spire Alabama relies
upon ongoing payments as the primary indicator of credit quality during the term of each contract. The allowance
for credit losses is recognized using an estimate of write-off percentages based on historical experience. Delinquent
accounts are evaluated on a case-by-case basis and, absent evidence of debt repayment, after 90 days are due in full
and assigned to a third-party collection agency. The remaining finance receivable is written off approximately 12
months after being assigned to the third-party collection agency. Spire Alabama had finance receivables past due 90
days or more of $0.4 at September 30, 2018 and September 30, 2017.
GROUP MEDICAL AND WORKERS’ COMPENSATION RESERVES – The Company self-insures its group
medical and workers’ compensation costs and carries stop-loss coverage in relation to medical claims and workers’
compensation claims. Reserves for amounts incurred but not reported are established based on historical cost levels
and lags between occurrences and reporting.
FAIR VALUE MEASUREMENTS – Certain assets and liabilities are recognized or disclosed at fair value, which
is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (exit price). GAAP establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value.
The levels of the hierarchy are described below:
• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 – Pricing inputs other than quoted prices included within Level 1, which are either directly or
indirectly observable for the asset or liability as of the reporting date. These inputs are derived principally
from, or corroborated by, observable market data.
• Level 3 – Pricing that is based upon inputs that are generally unobservable that are based on the best
information available and reflect management’s assumptions about how market participants would price
the asset or liability.
79
Assessment of the significance of a particular input to the fair value measurements may require judgment and may
affect the valuation of the asset or liability and its placement within the fair value hierarchy. Additional information
about fair value measurements is provided in Note 7, Fair Value of Financial Instruments, Note 8, Fair Value
Measurements, and Note 12, Pension Plans and Other Postretirement Benefits.
STOCK-BASED COMPENSATION – The Company accounts for share-based compensation arrangements in
accordance with ASC Topic 718, Compensation - Stock Compensation. The Company measures stock-based
compensation awards at fair value at the date of grant and recognizes the compensation cost of the awards over the
requisite service period. Effective with the adoption of Accounting Standards Update No. 2016-09 at the beginning
of fiscal 2017, forfeitures are recognized in the period they occur. Prior to fiscal 2017, forfeitures were estimated at
the time of grant and revised, when necessary, in subsequent periods when the actual forfeitures differed from those
estimates. Refer to Note 2, Stock-Based Compensation, for further discussion of the accounting for the Company’s
stock-based compensation plans.
NEW ACCOUNTING PRONOUNCEMENTS – In November 2016, the FASB issued Accounting Standards
Update (“ASU”) 2016-18, Statement of Cash Flows: Restricted Cash. This guidance requires the statement of cash
flows to present changes in the total of cash, cash equivalents and restricted cash. Prior to the adoption of this ASU,
the relevant accounting guidance did not require the statement of cash flows to include changes in restricted cash.
The Company, Spire Missouri and Spire Alabama adopted the standard retrospectively in 2018 with no impact to
2017 or 2016.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income. This guidance permits companies to make an election to reclassify stranded income tax
effects from the recently enacted Tax Cuts and Jobs Act included in accumulated other comprehensive income or
loss (“AOCI”) to retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years, with early adoption permitted. The Company, Spire Missouri
and Spire Alabama elected to early adopt this guidance in the quarter ended September 30, 2018. The
reclassifications from the adoption of this standard are shown on the statements of shareholders’ equity of the
Company and Spire Missouri. There was no effect for Spire Alabama.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts 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 previous 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 in 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, and 2017-14, which further modified the
standards for accounting for revenue. The Company, Spire Missouri and Spire Alabama have completed their
evaluation of their sources of revenue and related contracts and plan to adopt the new guidance in the first quarter
of fiscal 2019 using the modified retrospective approach with no material effect on their financial position, results of
operations, or cash flows.
In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires lessees to recognize a
right-of-use asset and lease liability for almost all lease contracts based on the present value of lease payments.
There is an exemption for short-term leases. The ASU provides new guidelines for identifying and classifying a
lease, and classification affects the pattern and income statement line item for the related expense. ASU Nos.
2018-01, 2018-10, and 2018-11, issued in January and July of 2018, amended several aspects of the new lease
guidance, including providing an additional practical expedient, an additional transition method, and clarification
of the related transition and accounting for land easements. The updates may be applied using a modified
retrospective transition approach for leases existing at, or entered into after, the beginning of (1) the earliest
comparative period presented in the financial statements or (2) the period of adoption. The ASUs are effective for
fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company,
Spire Missouri and Spire Alabama are currently assessing the impacts of adopting these standards in the first
quarter of fiscal 2020.
80
In June 2016, the FASB issued 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.
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 will adopt this
standard in the first quarter of fiscal 2019 using a practical expedient permitting the use of the amounts disclosed in
its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for
applying the retrospective presentation requirements. They will continue to capitalize the non-service cost
components as allowed for regulatory reporting, but those capitalized amounts will be reported as regulatory assets
rather than plant.
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to
Accounting for Hedging Activities. 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 effective for fiscal
years beginning after December 15, 2018, and interim periods within those fiscal years, and early application is
permitted. The Company, Spire Missouri and Spire Alabama are currently assessing the effects of this new guidance,
as well as the timing of adoption.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software:
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract. Previous GAAP did not specifically address the accounting for implementation costs of a hosting
arrangement that is a service contract. The amendments in this update clarify that accounting and align the
accounting for implementation costs for hosting arrangements, regardless of whether they convey a license to the
hosted software. The amendments are effective for fiscal years beginning after December 15, 2019, and interim
periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The
amendments in this ASU may be applied either retrospectively or prospectively to all implementation costs incurred
after the date of adoption. The Company, Spire Missouri and Spire Alabama are still assessing the effects of this new
guidance but currently expect early adoption.
2.
STOCK-BASED COMPENSATION
The Spire 2015 Equity Incentive Plan (“EIP”) was approved by shareholders of Spire on January 29, 2015 and
amended on November 9, 2017. The purpose of the EIP is to encourage directors, officers, and key employees of the
Company and its subsidiaries to contribute to the Company’s success and align their interests with that of
shareholders. To accomplish this purpose, the Compensation Committee (“Committee”) of the Board of Directors
may grant awards under the EIP that may be earned by achieving performance objectives and/or other criteria as
determined by the Committee. Under the terms of the EIP, officers and employees of the Company and its
subsidiaries, as determined by the Committee, are eligible to be selected for awards. The EIP provides for restricted
stock, restricted stock units, qualified and non-qualified stock options, stock appreciation rights, and performance
shares payable in stock, cash, or a combination of both. The EIP generally provides a minimum vesting period of at
least three years for each type of award, with pro rata vesting permitted during the minimum three-year vesting
period. The maximum number of shares reserved for issuance under the EIP is 1,000,000.
The Company issues new shares to satisfy employee restricted stock awards and stock option exercises.
81
Restricted Stock Awards
During fiscal 2018, the Company granted 87,960 performance-contingent restricted share units to executive officers
and key employees at a weighted average grant date fair value of $79.88 per share. This number represents the
target shares that can be earned pursuant to the terms of the awards. The share units have a performance period
ending September 30, 2021. While the participants have no interim voting rights on these share units, dividends
accrue during the performance period and are paid to the participants upon vesting, but are subject to forfeiture if
the underlying share units do not vest.
The number of share units that will ultimately vest is dependent upon the attainment of certain levels of earnings
and other strategic goals, as well as the Company’s level of total shareholder return (“TSR”) during the performance
period relative to a comparator group of companies. This TSR provision is considered a market condition under
GAAP and is discussed further below. The maximum amount of shares that can be earned pursuant to the terms of
the awards is 200% of the target units granted.
The weighted average grant date fair value of performance-contingent restricted share units granted during fiscal
years 2017 and 2016 was $58.45 and $62.38 per share, respectively.
Fiscal 2018 activity of restricted stock units subject to performance and/or market conditions is presented below:
Nonvested at September 30, 2017
Granted
Vested
Forfeited
Nonvested at September 30, 2018
Weighted
Average
Grant Date
Fair Value
Per Unit
$
$
$
$
$
56.32
79.88
47.80
56.73
66.69
Units
282,015
87,960
(81,933)
(21,960)
266,082
For the year ended September 30, 2018, the total number of shares that could be issued if all outstanding award
grants attain maximum performance payout is 532,164.
During fiscal 2018, the Company granted 37,980 shares of time-vested restricted stock to executive officers and key
employees at a weighted average grant date fair value of $76.60 per share. Unless forfeited based on terms of the
agreements, these shares will vest in fiscal 2021. In the interim, participants receive full voting rights and dividends,
which are not subject to forfeiture. The weighted average grant date fair value of time-vested restricted stock and
restricted stock units awarded to employees during fiscal years 2017 and 2016 was $63.05 and $59.40 per share,
respectively.
During fiscal 2018, the Company granted 9,800 shares of time-vested restricted stock to non-employee directors at
a weighted average grant date fair value of $63.20 per share. These shares vested in fiscal 2018, six months after the
grant date. The weighted average grant date fair value of restricted stock awarded to non-employee directors during
fiscal years 2017 and 2016 was $63.45 and $63.93 per share, respectively.
Time-vested restricted stock and stock unit activity for fiscal 2018 is presented below:
Weighted
Average
Grant Date
Fair Value
Per Share
Shares/
Units
110,940
47,780
(47,928)
(7,192)
103,600
$
$
$
$
$
55.85
73.85
53.48
65.25
64.60
Nonvested at September 30, 2017
Granted
Vested
Forfeited
Nonvested at September 30, 2018
82
For restricted stock and stock units (performance-contingent and time-vested) that vested during fiscal years 2018,
2017, and 2016, the Company withheld 34,922 shares, 35,514 shares and 30,712 shares, respectively, at weighted
average prices of $81.65, $63.83 and $57.29 per share, respectively, pursuant to elections by employees to satisfy
tax withholding obligations. The total fair value of restricted stock (performance-contingent and time-vested) that
vested during fiscal years 2018, 2017, and 2016 was $10.5, $8.9, and $6.3, respectively, and the related tax benefit
was $4.0, $3.3, and $2.4, respectively. None of the tax benefits have been realized.
Stock Option Awards
No stock options were granted during fiscal years 2018, 2017 and 2016. There was no stock option activity in fiscal
2018 or fiscal 2017, as all outstanding stock options either vested or forfeited in fiscal 2016. During fiscal 2016, cash
received from the exercise of stock options was $0.7 and the related intrinsic value was $0.7. Related tax benefits
were not material in any of those years.
Equity Compensation Costs
Compensation cost for performance-contingent restricted stock and stock unit awards is based upon the probable
outcome of the performance conditions. For shares or units that do not vest or that are not expected to vest due to
the outcome of the performance conditions (excluding market conditions), no compensation cost is recognized and
any previously recognized compensation cost is reversed.
The fair value of awards of performance-contingent and time-vested restricted stock and restricted stock units, not
subject to the TSR provision, are estimated using the closing price of the Company’s stock on the grant date. For
those awards that do not pay dividends during the vesting period, the estimate of fair value is reduced by the
present value of the dividends expected to be paid on the Company’s common stock during the performance period,
discounted using an appropriate United States (“U.S.”) Treasury yield. For shares subject to the TSR provision, the
estimated impact of this market condition is reflected in the grant date fair value per share of the awards.
Accordingly, compensation cost is not reversed to reflect any actual reductions in the awards that may result from
the TSR provision. However, if the Company’s TSR during the performance period ranks below the level specified in
the award agreements, relative to a comparator group of companies, and the Committee elects not to reduce the
award (or reduce by a lesser amount), this election would be accounted for as a modification of the original award
and additional compensation cost would be recognized at that time. The grant date fair value of the awards subject
to the TSR provision awarded during fiscal years 2018, 2017 and 2016 was valued by a Monte Carlo simulation
model that assessed the probabilities of various TSR outcomes. The significant assumptions used in the Monte
Carlo simulations are as follows:
Risk-free interest rate
Expected dividend yield of stock
Expected volatility of stock
Vesting period
2018
1.76%
—
16.0%
2.9 years
2017
1.39%
—
16.3%
2.8 years
2016
1.14%
—
15.0%
2.8 years
The risk-free interest rate was based on the yield on U.S. Treasury securities matching the vesting period. A zero
percent dividend yield was used, which is mathematically equivalent to the assumption that dividends are
reinvested as they are paid. The expected volatility is based on the historical volatility of the Company’s stock.
Volatility assumptions were also made for each of the companies included in the comparator group. The vesting
period is equal to the performance period set forth in the terms of the award.
The amounts of compensation cost recognized for share-based compensation arrangements are presented below:
Total compensation cost
Compensation cost capitalized
Prior period disallowed stock compensation capitalization
Compensation cost recognized in net income
Income tax benefit recognized in net income
Compensation cost recognized in net income, net of income tax
2018
2017
2016
$
$
$
6.9
(1.3)
6.9
12.5
(4.0)
8.5
$
$
$
$
7.4
(3.3)
— $
4.1
(1.5)
2.6
$
6.7
(2.2)
—
4.5
(1.7)
2.8
As of September 30, 2018, there was $9.4 of total unrecognized compensation cost related to non-vested share-
based compensation arrangements, which is expected to be recognized over a weighted average period of 1.8 years.
83
3.
EARNINGS PER COMMON SHARE
Basic Earnings Per Share:
Net Income
Less: Income allocated to participating securities
Net Income Available to Common Shareholders
Weighted Average Shares Outstanding (in millions)
Basic Earnings Per Share of Common Stock
Diluted Earnings per Share:
Net Income
Less: Income allocated to participating securities
Net Income Available to Common Shareholders
Weighted Average Shares Outstanding (in millions)
Dilutive Effect of Restricted Stock and Restricted Stock Units (in millions)*
Weighted Average Diluted Shares (in millions)
Diluted Earnings Per Share of Common Stock
2018
2017
2016
$
214.2
$
161.6
$
144.2
0.5
0.4
0.5
$
213.7
$
161.2
$
143.7
49.1
4.35
$
46.9
3.44
$
44.1
3.26
$
$
214.2
$
161.6
$
144.2
0.5
0.4
0.5
$
213.7
$
161.2
$
143.7
49.1
0.2
49.3
4.33
$
46.9
0.1
47.0
3.43
$
44.1
0.2
44.3
3.24
$
* 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
0.4
0.5
0.3
Spire’s 2.875 million equity units issued in June 2014 were anti-dilutive for the periods they were outstanding.
Accordingly, they were also excluded from the calculation of weighted average diluted shares for those periods. On
April 3, 2017, Spire settled the purchase contracts underlying those equity units by issuing approximately 2.5
million shares of its common stock.
4.
SHAREHOLDERS’ EQUITY
Spire
On May 17, 2016, Spire completed a public offering of 2,185,000 shares of its common stock, generating $133.2 of
proceeds net of issuance costs.
On April 3, 2017, Spire settled purchase contracts underlying equity units issued in 2014 by issuing 2,504,684
shares of its common stock, generating net cash proceeds of approximately $142.0.
Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission
(“SEC”) for the issuance of equity and debt securities, which expires September 23, 2019. Under that registration
statement, on May 10, 2018, Spire issued and sold 2,300,000 shares of its common stock at a public offering price
of $68.75 per share.
Spire filed a registration statement on Form S-3 with the SEC on June 15, 2017 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
221,107 and 216,678 shares at September 30, 2018 and November 12, 2018, respectively, remaining available for
issuance under this Form S-3.
At September 30, 2018 and 2017, Spire had authorized 5,000,000 shares of preferred stock, but none were issued
and outstanding.
84
Spire Missouri
Substantially all of Spire Missouri’s plant is subject to the liens of its first mortgage bonds. The mortgage contains
several restrictions on Spire Missouri’s ability to pay cash dividends on its common stock or to make loans to its
parent company. These mortgage restrictions are applicable regardless of whether the stock is publicly held or held
solely by Spire Missouri’s parent company. Under the most restrictive of these provisions, no cash dividend may be
declared or paid if, after the dividend, the aggregate net amount spent for all dividends after September 30, 1953
would exceed a maximum amount determined by a formula set out in the mortgage. Under that formula, the
maximum amount is the sum of $8.0 plus earnings applicable to common stock (adjusted for stock repurchases and
issuances) for the period from September 30, 1953 to the last day of the quarter before the declaration or payment
date for the dividends. As of September 30, 2018 and 2017, the amount under the mortgage’s formula that was
available to pay dividends was $1,097.6 and $1,010.8, respectively. Thus, all of Spire Missouri’s retained earnings
were free from such dividend restrictions as of those dates.
Spire Missouri is authorized by the MoPSC to issue registered securities (first mortgage bonds, unsecured debt and
preferred stock), issue common stock, and issue private placement debt in an aggregate amount of up to $500.0 for
financings placed any time before September 30, 2021.
At September 30, 2018 and 2017, Spire Missouri had authorized 1,480,000 shares of preferred stock, but none were
issued and outstanding.
Spire Alabama
At September 30, 2018 and 2017, Spire Alabama had authorized 120,000 shares of preferred stock, but none were
issued and outstanding.
Accumulated Other Comprehensive Income
The components of AOCI, net of income taxes, recognized in the balance sheets at September 30 were as follows:
Net
Unrealized
Gains (Losses)
on Cash Flow
Hedges
Defined Benefit
Pension and
Other
Postretirement
Benefit Plans
Net Unrealized
Losses on
Available-for-
Sale Debt
Securities
Total
Spire
Balance at September 30, 2016
Other comprehensive income (loss)
Balance at September 30, 2017
Other comprehensive income
Reclassification of certain income tax effects
Balance at September 30, 2018
Spire Missouri
Balance at September 30, 2016
Other comprehensive income (loss)
Balance at September 30, 2017
Other comprehensive (loss) income
Reclassification of certain income tax effects
Balance at September 30, 2018
$
$
$
$
(2.3) $
(1.8) $
(0.1) $
(4.2)
7.2
4.9
2.0
1.0
7.9
0.1
—
0.1
(0.1)
—
$
$
0.3
(1.5)
0.3
(0.3)
(0.1)
(0.2)
0.2
—
(1.5) $
— $
(1.8) $
(0.1) $
0.2
(1.6)
0.3
(0.3)
(0.1)
(0.2)
0.2
—
— $
(1.6) $
— $
7.4
3.2
2.5
0.7
6.4
(1.8)
0.1
(1.7)
0.4
(0.3)
(1.6)
Income tax expense (benefit) recorded for items of other comprehensive income (loss) reported in the statements of
comprehensive income is calculated by applying statutory federal, state, and local income tax rates applicable to
ordinary income. The tax rates applied to individual items of other comprehensive income (loss) are similar within
each reporting period. For the periods presented, Spire Alabama had no AOCI balances.
85
5.
LONG-TERM DEBT
The composition of long-term debt for Spire, Spire Missouri and Spire Alabama is shown in each registrant’s
statements of capitalization. Maturities of long-term debt for Spire on a consolidated basis, Spire Missouri and Spire
Alabama for the five fiscal years after September 30, 2018 are as follows:
Spire
Spire Missouri
Spire Alabama
2019
2020
2021
2022
2023
$ 175.5
$
43.2
$
57.0
$
52.0
$ 332.3
50.0
—
—
40.0
—
—
—
50.0
305.0
—
Spire’s, Spire Missouri’s and Spire Alabama’s long-term debt agreements contain customary covenants and default
provisions. As of September 30, 2018, there were no events of default under these covenants.
Spire
At September 30, 2018, including the current portion but excluding unamortized discounts and debt issuance costs,
Spire had long-term debt totaling $2,092.0, of which $880.0 was issued by Spire Missouri, $325.0 was issued by
Spire Alabama and $72.0 was issued by other subsidiaries. All long-term debt bears fixed rates and is subject 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 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 redemption of long-
term debt would typically be deferred as regulatory assets or regulatory liabilities and amortized over a future
period.
Interest expense shown on Spire’s consolidated statement of income is net of capitalized interest totaling $2.6, $0.8
and $0.2 for the years ended September 30, 2018, 2017 and 2016, respectively.
As indicated in Note 4, Shareholders’ Equity, Spire has a shelf registration statement on Form S-3 on file with the
SEC for the issuance of equity and debt securities.
Spire Missouri
At September 30, 2018, including the current portion but excluding unamortized discounts and debt issuance costs,
Spire Missouri had long-term debt totaling $880.0. While these long-term debt issues are fixed-rate, they are
subject to changes in fair value as market interest rates change.
Interest expense shown on Spire Missouri’s statement of income is net of capitalized interest totaling $0.9, $0.5 and
$0.2 for the years ended September 30, 2018, 2017 and 2016, respectively.
Spire Missouri is authorized by the MoPSC to issue registered securities (first mortgage bonds, unsecured debt and
preferred stock), issue common stock and issue private placement debt in an aggregate amount of up to $500.0 for
financings placed any time before September 30, 2021.
As indicated in Note 4, Shareholders’ Equity, Spire Missouri has a shelf registration on Form S-3 on file with the
SEC for issuance of first mortgage bonds, unsecured debt and preferred stock, which expires on September 22,
2019.
Substantially all of Spire Missouri’s plant is subject to the liens of its first mortgage bonds. The mortgage contains
several restrictions on Spire Missouri’s ability to pay cash dividends on its common stock, which are described in
Note 4, Shareholders’ Equity.
Spire Alabama
At September 30, 2018, excluding unamortized debt issuance costs, Spire Alabama had fixed-rate long-term debt
totaling $325.0. While these long-term debt issues are fixed-rate, they are subject to changes in fair value as market
interest rates change.
Because Spire Alabama has no standing authority to issue long-term debt, it must petition the APSC for each
planned issuance.
86
6.
NOTES PAYABLE AND CREDIT AGREEMENTS
Spire, Spire Missouri and Spire Alabama have a syndicated revolving credit facility pursuant to a loan agreement
with 11 banks, expiring 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
commitment 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 September 30, 2018, total debt was 54% of total capitalization for the consolidated Company, 49%
for Spire Missouri and 37% for Spire Alabama.
Spire has a commercial paper program (“Program”) pursuant to which it 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 about Spire’s consolidated short-term borrowings is presented in the following table.
Year Ended September 30, 2018
Weighted average borrowings outstanding
Weighted average interest rate
Range of borrowings outstanding
As of September 30, 2018
Borrowings outstanding
Weighted average interest rate
As of September 30, 2017
Borrowings outstanding
Weighted average interest rate
Commercial
Paper
Borrowings
Revolving Credit
Facility
Borrowings
Total
Short term
Borrowings
$408.5
2.0%
$0.1
2.8%
$408.6
2.0%
$146.0 - $632.9
$0.0 - $25.0
$146.0 - $632.9
$553.6
2.4%
$477.3
1.5%
$—
—%
$—
—%
$553.6
2.4%
$477.3
1.5%
From the total short-term borrowings as of September 30, 2018, Spire used $540.5 to provide funding to the
Utilities and Spire Storage. Information about Spire Missouri’s and Spire Alabama’s borrowings from Spire is
presented in the following table.
Year Ended September 30, 2018
Weighted average borrowings outstanding
Weighted average interest rate
Range of borrowings outstanding
As of September 30, 2018
Borrowings outstanding
Weighted average interest rate
As of September 30, 2017
Borrowings outstanding
Weighted average interest rate
Spire Missouri
Spire Alabama
$210.5
2.1%
$103.9
2.0%
$101.5 - $345.3
$33.6 - $188.6
$345.3
2.3%
$203.0
1.5%
$142.5
2.3%
$169.9
1.5%
87
7.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring
basis were as follows:
Carrying
Amount
Fair
Value
Classification of Estimated Fair Value
Quoted Prices in
Active Markets
(Level 1)
Significant
Observable Inputs
(Level 2)
Spire
As of September 30, 2018
Cash and cash equivalents
Short-term debt
Long-term debt, including current portion
As of September 30, 2017
Cash and cash equivalents
Short-term debt
Long-term debt, including current portion
Spire Missouri
As of September 30, 2018
Cash and cash equivalents
Short-term debt
Long-term debt, including current portion
As of September 30, 2017
Cash and cash equivalents
Short-term debt
Long-term debt, including current portion
Spire Alabama
As of September 30, 2018
Short-term debt
Long-term debt
As of September 30, 2017
Cash and cash equivalents
Short-term debt
Long-term debt
$
$
$
$
$
$
4.4
553.6
2,075.6
$
4.4
553.6
2,074.0
$
$
4.4
—
—
7.4
$
7.4
$
7.4
$
477.3
2,095.0
477.3
2,210.3
—
—
2.0
$
2.0
$
2.0
$
345.3
874.4
345.3
906.6
—
—
2.5
$
2.5
$
2.5
$
203.0
973.9
203.0
1,056.9
—
—
$
142.5
322.6
$
142.5
321.7
— $
—
0.1
$
0.1
$
0.1
$
169.9
247.8
169.9
269.4
—
—
—
553.6
2,074.0
—
477.3
2,210.3
—
345.3
906.6
—
203.0
1,056.9
142.5
321.7
—
169.9
269.4
88
8.
FAIR VALUE MEASUREMENTS
Spire
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 NYMEX. Derivative
instruments classified as Level 2 include physical commodity derivatives that are valued using Over-the-Counter
Bulletin Board, broker or dealer quotation services whose prices are derived principally from, or are corroborated
by, observable market inputs. Also included in Level 2 are certain derivative instruments that have values that are
similar to, and correlate with, quoted prices for exchange-traded instruments in active markets. Derivative
instruments included in Level 3 are valued using generally unobservable inputs that are based upon the best
information available and reflect management’s assumptions about how market participants would price the asset
or liability. There were no material Level 3 balances as of September 30, 2018 or 2017. 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 on the balance sheets when a legally enforceable
netting agreement exist between the Company or Spire Missouri and the counterparty to the derivative contract. For
additional information on derivative instruments, see Note 9, Derivative Instruments and Hedging Activities.
89
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
2.7
0.2
—
8.9
—
— $
—
4.0
17.5
—
3.0
— $
—
—
—
—
—
— $
(2.7)
(4.2)
(1.5)
—
—
$
$
$
32.1
$
24.5
$
— $
(8.4) $
1.9
$
— $
— $
(1.9) $
0.9
—
2.8
10.5
7.5
$
18.0
$
—
0.2
0.2
(11.4)
(1.5)
$
(14.8) $
As of September 30, 2018
ASSETS
Gas Utility:
U.S. stock/bond mutual funds
$
20.3
$
NYMEX/ICE natural gas contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Other:
U.S. stock/bond mutual funds
Interest rate swaps
Total
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Total
As of September 30, 2017
ASSETS
Gas Utility:
U.S. stock/bond mutual funds
$
18.3
$
4.1
$
— $
— $
NYMEX/ICE natural gas contracts
NYMEX gasoline and heating oil contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
3.4
0.1
1.3
—
—
—
1.3
6.8
23.1
$
12.2
$
—
—
—
0.1
0.1
(3.4)
—
(2.1)
(1.2)
$
(6.7) $
Total
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Other:
Interest rate swaps
Total
$
$
$
20.3
—
—
16.0
8.9
3.0
48.2
—
—
6.2
6.2
22.4
—
0.1
0.5
5.7
28.7
—
—
7.2
0.9
8.1
1.9
$
— $
— $
(1.9) $
1.8
—
—
3.7
$
0.3
8.4
0.9
9.6
—
—
—
$
— $
(2.1)
(1.2)
—
(5.2) $
90
Spire Missouri
As of September 30, 2018
ASSETS
U.S. stock/bond mutual funds
NYMEX/ICE natural gas contracts
Total
LIABILITIES
NYMEX/ICE natural gas contracts
As of September 30, 2017
ASSETS
U.S. stock/bond mutual funds
NYMEX/ICE natural gas contracts
NYMEX gasoline and heating oil contracts
Total
LIABILITIES
NYMEX/ICE natural gas contracts
Spire Alabama
$
$
$
$
$
$
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
20.3
$
2.7
23.0
$
— $
—
— $
— $
—
— $
— $
(2.7)
(2.7) $
20.3
—
20.3
1.9
$
— $
— $
(1.9) $
—
18.3
$
4.1
$
— $
— $
—
—
—
—
(3.4)
—
4.1
$
— $
(3.4) $
22.4
—
0.1
22.5
3.4
0.1
21.8
1.9
$
$
— $
— $
(1.9) $
—
Spire Alabama has a gasoline derivative program to stabilize the cost of fuel used in operations. As of September 30,
2017, the fair value of related gasoline contracts was not significant, and there were no gasoline derivatives
outstanding as of September 30, 2018.
91
9.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Spire
Spire Missouri has a risk management policy to utilize various derivatives, including futures contracts, exchange-
traded options and swaps for the explicit purpose of managing price risk associated with purchasing and delivering
natural gas on a regular basis to customers in accordance with its tariffs. The objective of this policy is to limit Spire
Missouri’s exposure to natural gas price volatility and to manage, hedge and mitigate substantial price risk. Further
discussion of this policy can be found in the Spire Missouri section.
From time to time Spire Missouri and Spire Alabama purchase NYMEX futures and options contracts to help
stabilize operating costs associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and
equipment. Further information on these derivatives can be found in the Spire Missouri and Spire Alabama
sections, respectively.
In the course of its business, Spire’s gas marketing subsidiary, Spire Marketing (including a wholly owned
subsidiary), enters into commitments associated with the purchase or sale of natural gas. Certain of Spire
Marketing’s derivative natural gas contracts are designated as normal purchases or normal sales and, as such, are
excluded from the scope of ASC Topic 815 and are accounted for as executory contracts on an accrual basis. Any of
Spire Marketing’s derivative natural gas contracts that are not designated as normal purchases or normal sales are
accounted for at fair value. At September 30, 2018, the fair values of 277.7 million MMBtu of non-exchange-traded
natural gas commodity contracts were reflected in the Consolidated Balance Sheet. Of these contracts, 196.7 million
MMBtu will settle during fiscal 2019, and 43.1 million MMBtu, 30.5 million MMBtu, 7.3 million MMBtu, and 0.1
million MMBtu will settle during fiscal years 2020, 2021, 2022, and 2023, respectively. These contracts have not
been designated as hedges; therefore, changes in the fair value of these contracts are reported in earnings each
period.
Furthermore, Spire Marketing manages the price risk associated with its fixed-priced commitments by either closely
matching the offsetting physical purchase or sale of natural gas at fixed prices or through the use of NYMEX or ICE
futures, swap, and option contracts to lock in margins.
At September 30, 2018, Spire Marketing’s unmatched fixed-price positions were not material to Spire’s financial
position or results of operations. Spire Marketing’s NYMEX and ICE natural gas futures, swap and option contracts
used to lock in margins may be designated as cash flow hedges of forecasted transactions for financial reporting
purposes.
During fiscal 2016, Spire entered into interest rate swap agreements, with a notional amount of $85.0, to effectively
lock in interest rates on a portion of the long-term debt it anticipated issuing to finance its acquisition of Spire
EnergySouth. These derivative instruments were designated as cash flow hedges of forecasted transactions.
Termination of the interest rate swap agreements later in fiscal 2016 resulted in a $0.4 loss recorded in
accumulated other comprehensive loss to be amortized to interest expense over the life of the related debt
issuances.
Also during fiscal 2016, Spire entered into interest rate swap transactions with a notional amount of $225.0 to
protect itself against adverse movement in interest rates in anticipation of the issuance of long-term debt in fiscal
2017. These hedge positions were settled during fiscal 2017, resulting in a gain of $14.1 which will be amortized to
reduce interest expense over the hedged periods. Also during fiscal 2017, Spire entered into a ten-year interest rate
swap with a fixed interest rate of 2.658% and a notional amount of $60.0 to protect itself against adverse
movements in interest rates on future interest rate payments. The Company recorded a $2.5 mark-to-market gain
on this swap as part of other comprehensive income for the year ended September 30, 2018. In August 2018, Spire
entered into a three-year interest rate swap with a fixed interest rate of 2.7675% and a notional amount of $100.0 to
protect itself against adverse movements in interest rates on future variable interest rate payments. The Company
recorded a $0.5 mark-to-market gain on this swap as part of other comprehensive income for the year ended
September 30, 2018.
92
The Company’s and Spire Missouri’s exchange-traded/cleared derivative instruments consist primarily of NYMEX
and ICE positions. The NYMEX is the primary national commodities exchange on which natural gas derivatives are
traded. Open NYMEX and ICE natural gas futures and swap positions at September 30, 2018 were as follows:
NYMEX/ICE open short futures positions/swap positions
Fiscal 2019
Fiscal 2020
Fiscal 2021
NYMEX/ICE open long futures/swap positions
Fiscal 2019
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
ICE open short daily swap positions
Fiscal 2019
ICE open long daily swap positions
Fiscal 2019
ICE open short basis swap positions
Fiscal 2019
Fiscal 2020
ICE open long basis swap positions
Fiscal 2019
Fiscal 2020
Fiscal 2022
Fiscal 2023
Gas Utility
Gas Marketing
MMBtu
(millions)
Avg. Price
Per
MMBtu
MMBtu
(millions)
Avg. Price
Per
MMBtu
— $
—
—
24.12
2.68
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2.80
2.69
—
—
—
—
—
—
—
—
—
—
—
$
7.87
2.00
0.14
9.27
2.11
0.55
0.25
0.01
2.54
0.57
52.48
3.80
49.99
3.18
0.92
0.16
3.04
2.93
2.94
2.89
2.85
2.87
2.98
2.86
2.95
2.92
0.23
0.25
0.64
0.68
0.52
0.52
At September 30, 2018, Spire Missouri also had 38.4 million MMBtu of other price mitigation in place through the
use of NYMEX natural gas option-based strategies while Spire Marketing had none.
Derivative instruments designated as cash flow hedges of forecasted transactions are recognized on the balance
sheets of the Company at fair value, and the change in fair value of the effective portion of these hedge instruments
is recorded, net of income tax, in other comprehensive income or loss (“OCI”). Accumulated other comprehensive
income or loss (“AOCI”) is a component of Total Common Stock Equity. Amounts are reclassified from AOCI into
earnings when the hedged items affect net income, using the same revenue or expense category that the hedged
item impacts. Based on market prices at September 30, 2018, it is expected that an immaterial amount of unrealized
gains will be reclassified into the Consolidated Statements of Income of the Company during the next twelve
months. Cash flows from hedging transactions are classified in the same category as the cash flows from the items
that are being hedged in the Consolidated Statements of Cash Flows.
93
Effect of Derivative Instruments on the Consolidated Statements of Income and Comprehensive Income
Location of Gain (Loss)
Recorded in Income
2018
2017
2016
Derivatives in Cash Flow Hedging Relationships
Effective portion of gain (loss) recognized in OCI on derivatives:
Gas Marketing natural gas contracts
Gas Utility gasoline and heating oil contracts
Interest rate swaps
Total
Effective portion of gain (loss) reclassified from AOCI to income:
Natural gas contracts
Subtotal
Gas Marketing Operating Revenues
Gas Marketing Operating Expenses
Gasoline and heating oil contracts
Gas Utility Other Operating Expenses
Interest rate swaps
Interest Expense
Total
Ineffective portion of gain (loss) on derivatives recognized in income:
Natural gas contracts
Subtotal
Gas Marketing Operating Revenues
Gas Marketing Operating Expenses
Gasoline and heating oil contracts
Gas Utility Other Operating Expenses
Interest rate swaps
Interest Expense
Total
— $
— $
(0.6)
—
3.9
3.9
$
0.1
11.4
11.5
$
— $
(0.4) $
0.1
(0.3)
0.2
0.1
—
—
0.1
1.4
1.5
$
— $
(1.1)
$
$
$
$
$
— $
— $
—
—
—
—
$
— $
—
—
—
0.5
0.5
$
—
(3.4)
(4.0)
4.3
(4.9)
(0.6)
(0.5)
—
0.1
0.1
0.2
0.1
—
0.3
Derivatives Not Designated as Hedging Instruments*
Gain (loss) recognized in income on derivatives:
Natural gas commodity contracts
Gas Marketing Operating Revenues
$
10.2
$
NYMEX / ICE natural gas contracts
Gas Marketing Operating Revenues
Gas Marketing Operating Expenses
Total
(8.1)
—
2.1
$
0.7
—
(4.4)
$
12.3
—
(1.7)
$
(3.7) $
10.6
* Gains and losses on Spire Missouri’s natural gas derivative instruments, which are not designated as hedging instruments
for financial reporting purposes, are deferred pursuant to the Missouri Utilities’ PGA clauses and initially recorded as
regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no
direct impact on the statements of income. Such amounts are recognized in the statements of income as a component of
Regulated Gas Distribution Natural and Propane Gas operating expenses when they are recovered through the PGA clause
and reflected in customer billings.
94
Fair Value of Derivative Instruments in the Consolidated Balance Sheets
Asset Derivatives*
Liability Derivatives*
September 30, 2018
Balance Sheet Location
Derivatives designated as hedging instruments
Other: Interest rate swaps
Derivative Instrument Assets
Subtotal
Fair
Value
Balance Sheet Location
Derivative Instrument Assets
3.0
3.0
Fair
Value
—
—
Derivatives not designated as hedging instruments
Gas Utility:
Natural gas contracts
Accounts Receivable – Other
2.7
Accounts Receivable – Other
1.9
Gas Marketing:
NYMEX / ICE natural gas contracts Derivative Instrument Assets
3.8 Derivative Instrument Assets
10.7
Natural gas commodity
Subtotal
Total derivatives
September 30, 2017
Deferred Charges – Other
0.4
Deferred Charges – Other
Derivative Instrument Assets
Deferred Charges – Other
Current Liabilities – Other
Deferred Credits – Other
Derivative Instrument Assets
10.9
Deferred Charges – Other
6.3
0.3 Current Liabilities – Other
Deferred Credits – Other
—
24.4
27.4
$
0.7
1.0
0.2
6.3
0.2
21.0
21.0
$
Derivatives designated as hedging instruments
Gas Utility:
Gasoline and heating oil contracts
Derivative Instrument Assets
$
0.1
Derivative Instrument Assets
$
—
Gas Marketing:
Natural gas contracts
Derivative Instrument Assets
0.3 Derivative Instrument Assets
Deferred Charges - Other
0.3
Deferred Charges - Other
Other: Interest rate swaps
Derivative Instrument Assets
Subtotal
Derivatives not designated as hedging instruments
Gas Utility:
Derivative Instrument Assets
—
0.7
Natural gas contracts
Accounts Receivable – Other
3.4 Accounts Receivable – Other
Gas Marketing:
NYMEX / ICE natural gas contracts Derivative Instrument Assets
Natural gas commodity
Derivative Instrument Assets
Deferred Charges – Other
Deferred Charges – Other
Current Liabilities – Other
Deferred Credits – Other
Subtotal
Total derivatives
Derivative Instrument Assets
1.7
0.3 Deferred Charges – Other
Derivative Instrument Assets
Deferred Charges – Other
Current Liabilities – Other
Deferred Credits – Other
5.3
0.4
0.8
0.4
12.3
13.0
$
0.2
—
0.9
1.1
1.9
1.4
0.5
0.1
—
5.0
3.3
12.2
13.3
$
* The fair values of Asset Derivatives and Liability Derivatives exclude the fair value of cash margin receivables or payables
with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value
amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the balance
sheets. As such, the gross balances presented in the table above are not indicative of the Company’s net economic exposure.
Refer to Note 8, Fair Value Measurements, for information on the valuation of derivative instruments.
95
Following is a reconciliation of the amounts in the tables above to the amounts presented in the Consolidated
Balance Sheets:
Fair value of asset derivatives presented above
Fair value of cash margin (payable) receivable offset with derivatives
Netting of assets and liabilities with the same counterparty
Total
Derivative Instrument Assets, per Consolidated Balance Sheets:
Derivative instrument assets
Deferred Charges – Other
Total
Fair value of liability derivatives presented above
Netting of assets and liabilities with the same counterparty
Total
Derivative Instrument Liabilities, per Consolidated Balance Sheets:
Current Liabilities – Other
Deferred Credits – Other
Total
2018
2017
27.4
$
6.4
(14.8)
19.0
13.3
5.7
19.0
21.0
(14.8)
6.2
6.0
0.2
6.2
$
$
$
$
$
$
$
13.0
(1.5)
(5.3)
6.2
5.9
0.3
6.2
13.3
(5.3)
8.0
4.9
3.1
8.0
$
$
$
$
$
$
$
$
Additionally, at September 30, 2018 and 2017, the Company had $4.1 and $4.0, respectively, in cash margin
receivables not offset with derivatives, which are presented in Accounts Receivable – Other.
Spire Missouri
Spire Missouri has a risk management policy to utilize various derivatives, including futures contracts, exchange-
traded options, swaps and over-the-counter instruments for the explicit purpose of managing price risk associated
with purchasing and delivering natural gas on a regular basis to customers in accordance with its tariffs. The
objective of this policy is to limit Spire Missouri’s exposure to natural gas price volatility and to manage, hedge and
mitigate substantial price risk. This policy strictly prohibits speculation and permits Spire Missouri to hedge current
physical natural gas purchase commitments or forecasted or anticipated future peak (maximum) physical need for
natural gas delivered. Costs and cost reductions, including carrying costs, associated with Spire Missouri’s use of
natural gas derivative instruments are allowed to be passed on to Spire Missouri customers through the operation of
its PGA clause, through which the MoPSC allows Spire Missouri to recover gas supply costs, subject to prudence
review by the MoPSC. Accordingly, Spire Missouri does not expect any adverse earnings impact as a result of the use
of these derivative instruments.
Spire Missouri does not designate these instruments as hedging instruments for financial reporting purposes
because gains or losses associated with the use of these derivative instruments are deferred and recorded as
regulatory assets or regulatory liabilities pursuant to ASC Topic 980, Regulated Operations, and, as a result, have
no direct impact on the statements of income.
The timing of the operation of the PGA clause may cause interim variations in short-term cash flows, because Spire
Missouri is subject to cash margin requirements associated with changes in the values of these instruments.
Nevertheless, carrying costs associated with such requirements are recovered through the PGA clause.
From time to time, Spire Missouri purchases NYMEX futures and options contracts to help stabilize operating costs
associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and equipment used in the
course of its business. These contracts are designated as cash flow hedges of forecasted transactions pursuant to
ASC Topic 815, Derivatives and Hedging. The gains or losses on these derivative instruments are not subject to
Spire Missouri’s PGA clause. At September 30, 2018, Spire Missouri had no gasoline futures contracts outstanding.
96
Derivative instruments designated as cash flow hedges of forecasted transactions are recognized on the balance
sheets at fair value and the change in the fair value of the effective portion of these hedge instruments is recorded,
net of income tax, in OCI. AOCI is a component of Total Common Stock Equity. Amounts are reclassified from AOCI
into earnings when the hedged items affect net income, using the same revenue or expense category that the hedged
item impacts. Based on market prices at September 30, 2018, it is expected that an immaterial amount of pre-tax
gains will be reclassified into the statements of income during fiscal 2019. Cash flows from hedging transactions are
classified in the same category as the cash flows from the items that are being hedged in the statements of cash
flows.
Spire Missouri’s derivative instruments consist primarily of NYMEX positions. The NYMEX is the primary national
commodities exchange on which natural gas derivatives are traded. Open NYMEX natural gas futures positions at
September 30, 2018 were as follows:
NYMEX/ICE open long futures/swap positions
Fiscal 2019
Fiscal 2020
MMBtu
(millions)
Avg. Price
Per MMBtu
24.12
$
2.68
2.80
2.69
At September 30, 2018, Spire Missouri also had 38.4 million MMBtu of other price mitigation in place through the
use of NYMEX natural gas option-based strategies.
Effect of Derivative Instruments on the Statements of Comprehensive Income
Location of Gain (Loss)
Recorded in Income
2018
2017
2016
Derivatives in Cash Flow Hedging Relationships
Effective portion of gain (loss) recognized in OCI on derivatives:
Gasoline and heating oil contracts
Effective portion of gain (loss) reclassified from AOCI to income:
Gasoline and heating oil contracts
Gas Utility Other Operating Expenses
Ineffective portion of gain (loss) on derivatives recognized in income:
Gasoline and heating oil contracts
Gas Utility Other Operating Expenses
$
$
$
— $
0.1
0.1
$
0.2
$
$
—
(0.5)
— $
— $
0.1
* Gains and losses on Spire Missouri’s natural gas derivative instruments, which are not designated as hedging instruments
for financial reporting purposes, are deferred pursuant to the Spire Missouri’s PGA clauses and initially recorded as
regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no
direct impact on the Statements of Income. Such amounts are recognized in the Statements of Income as a component of
Regulated Gas Distribution Natural and Propane Gas operating expenses when they are recovered through the PGA clause
and reflected in customer billings.
97
Fair Value of Derivative Instruments in the Balance Sheets
Asset Derivatives*
Liability Derivatives*
September 30, 2018
Balance Sheet Location
Derivatives not designated as hedging instruments
Natural gas contracts
Accounts Receivable – Other
Total derivatives
September 30, 2017
Derivatives designated as hedging instruments
Gasoline and heating oil contracts Derivative Instrument Assets
Subtotal
Derivatives not designated as hedging instruments
Natural gas contracts
Accounts Receivable – Other
Total derivatives
Fair
Value
Balance Sheet Location
Fair
Value
Accounts Receivable – Other
$
Derivative Instrument Assets
$
2.7
2.7
0.1
0.1
3.4 Accounts Receivable – Other
3.5
$
$
$
$
1.9
1.9
—
—
1.9
1.9
* The fair values of Asset Derivatives and Liability Derivatives exclude the fair value of cash margin receivables or payables
with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value
amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the Balance
Sheets. As such, the gross balances presented in the table above are not indicative of Spire Missouri’s net economic
exposure. Refer to Note 8, Fair Value Measurements, for information on the valuation of derivative instruments.
Following is a reconciliation of the amounts in the tables above to the amounts presented in Spire Missouri’s
Balance Sheets:
Fair value of asset derivatives presented above
Fair value of cash margin (payable) receivable offset with derivatives
Netting of assets and liabilities with the same counterparty
Total
Derivative Instrument Assets, per Balance Sheets:
Derivative instrument assets
Total
Fair value of liability derivatives presented above
Netting of assets and liabilities with the same counterparty
Total
2018
2017
$
$
$
$
$
$
$
2.7
(0.8)
(1.9)
— $
— $
— $
$
1.9
(1.9)
— $
3.5
(1.5)
(1.9)
0.1
0.1
0.1
1.9
(1.9)
—
Additionally, at September 30, 2017 and 2016, Spire Missouri had $3.8 and $4.0, respectively, in cash margin
receivables not offset with derivatives, which are presented in Accounts Receivable – Other.
Spire Alabama
During the fiscal second quarter of 2016, Spire Alabama commenced a gasoline derivative program to help stabilize
operating costs associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and
equipment used in the course of its business. Most of these contracts are designated as cash flow hedges of
forecasted transactions pursuant to ASC Topic 815, Derivatives and Hedging. The gains or losses on these
derivative instruments are not subject to Spire Alabama’s GSA rider. There were no contracts outstanding as of
September 30, 2018, and the fair value of gasoline contracts as of September 30, 2017 was not significant.
98
10.
CONCENTRATIONS OF CREDIT RISK
Other than in Spire Marketing, Spire has no significant concentration of credit risk.
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 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
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 accounts receivable attributable to energy producers and
their marketing affiliates amounted to $11.2 at September 30, 2018 ($3.7 reflecting netting arrangements). Spire
Marketing’s accounts receivable attributable to utility companies and their marketing affiliates comprised $96.1 of
total accounts receivable at September 30, 2018 ($89.7 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 amount. At September 30, 2018, the amounts included
in accounts receivable from Spire Marketing’s five largest counterparties (in terms of net accounts receivable
exposure) totaled $51.3 ($50.6 reflecting netting arrangements). Three of these five counterparties are investment-
grade rated integrated utilities. The fourth is an investment-grade rated wholesale power provider. The fifth is not
rated, but each of its owners is investment-grade.
99
11.
INCOME TAXES
Spire
The Company’s provision (benefit) for income taxes during the fiscal years ended September 30, 2018, 2017, and
2016 was as follows:
Federal
Current
Deferred
Investment tax credits
State and local
Current
Deferred
Total income tax (benefit) expense
2018
2017
2016
$
— $
(22.7)
(0.2)
2.2
(5.8)
(26.5)
$
$
0.1
67.7
(0.2)
0.5
9.5
77.6
$
$
0.1
62.0
(0.2)
0.6
7.0
69.5
The Company’s effective income tax rate varied from the federal statutory income tax rate for each year due to the
following:
Federal income tax statutory rate
State and local income taxes, net of federal income tax benefits
Certain expenses capitalized on books and deducted on tax return
Taxes related to prior years
Tax law changes
Amortization of excess deferred taxes
Other items – net *
Effective income tax rate
* Other consists primarily of property adjustments.
2018
2017
2016
24.5 %
35.0%
35.0%
3.4
(2.3)
(0.4)
(35.9)
(1.8)
(1.6)
(14.1)%
2.8
(2.3)
(0.9)
—
—
(2.2)
32.4%
2.8
(3.4)
(0.2)
—
—
(1.7)
32.5%
The Company’s significant items comprising the net deferred tax liability recorded in the Consolidated Balance
Sheets as of September 30 were as follows:
Deferred tax assets:
Reserves not currently deductible
Pension and other postretirement benefits
Operating losses
Regulatory amount due to customers, net
Other
Deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Relating to property
Regulatory pension and other postretirement benefits
Deferred gas costs
Other**
Total deferred tax liabilities
Net deferred tax liability
** Other consists primarily of Goodwill related liabilities.
100
2018
2017
$
$
25.9
75.6
162.7
41.8
8.2
314.2
1.4
312.8
518.3
117.1
2.3
110.9
748.6
435.8
$
$
31.5
58.6
169.6
—
26.0
285.7
0.5
285.2
728.3
108.0
30.6
125.8
992.7
707.5
The Tax Cuts and Jobs Act (“TCJA”) was signed into law on December 22, 2017, with an effective date of January 1,
2018, for substantially all of the provisions. This comprehensive act includes significant reform of the current
income tax code including changes in the calculation for business entities 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 in tax years beginning after January 1, 2018, and the continuation of certain rate normalization
requirements for accelerated depreciation benefits.
Missouri Senate Bill (“S.B.”) 884 was signed into law on June 1, 2018. S.B. 884 reduces the corporate income tax
rate from 6.25% to 4.0% for tax years beginning on or after January 1, 2020, among other legislative changes. The
impact of S.B. 884 is not material to the consolidated financial statements.
ASC Topic 740, Income Taxes, requires that the effects of changes in tax laws be recognized in the period in which
the new law is enacted. 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 non-regulated operations)
are recorded as adjustments to deferred tax expense or benefit.
The Company has recorded TCJA impacts and reflected those amounts in the September 30, 2018 financial
statements. The amounts recorded are based on information known and reasonable estimates used as of that date,
but are subject to change based on further actions of regulators. The items recorded include the impact of the
federal income tax rate reduction and the revaluation of the deferred tax assets and liabilities. In fiscal 2018, the
MoPSC Amended Report and Order took effect and the estimated excess accumulated deferred income tax began to
be returned to customers in rates. The amount being returned is estimated with a tracker established to defer the
difference from the estimated amounts to the actual amounts once the actual amounts have been calculated. During
fiscal 2018, excess accumulated deferred taxes of $3.5 were returned.
The total amounts recorded, before reduction for amounts returned to customers, for the year ended September 30,
2018, are presented in the table below.
Adjustment to deferred tax liabilities
Adjustment to deferred income tax expense
Adjustment to regulatory assets
Adjustment to regulatory liabilities
$
(318.3)
(75.0)
(75.9)
167.4
As indicated in Note 1, Summary of Significant Accounting Policies, the Company’s regulated operations accounting
for income taxes is impacted by ASC Topic 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.
In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Management considers all significant
available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax
liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to
assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not
the Company will realize the benefits of these deferred tax assets, except for the contribution carryforward valuation
allowance noted below.
The Company had federal and state loss carryforwards of approximately $711.9 at September 30, 2018. The
Company also had contribution carryforwards of approximately $12.9 at September 30, 2018. The loss
carryforwards begin to expire in fiscal 2030 for certain state purposes and fiscal 2035 for federal and other states
purposes. The contribution carryforwards begin to expire in fiscal 2019. The Company had a valuation allowance of
$1.4, as a portion of the contribution carryforward will not be realized prior to its expiration. The Company also has
various tax credit carryforwards of approximately $2.4 that begin to expire in 2020, as well as a capital loss
carryforward of $0.4 that expires in 2022.
101
The Company recognizes the tax benefit from a tax position only if it is at least more likely than not that the tax
position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The Company records potential interest and penalties related to its uncertain tax positions as interest expense and
other income deductions, respectively. Unrecognized tax benefits are reported as a reduction of a deferred tax asset
for an operating loss carryforward to the extent the recognition of the benefit would impact the operating loss
carryforward, pursuant to ASU 2013-11. In addition, pursuant to the TCJA, the deferred tax asset for a net operating
loss carryforward was revalued based on the federal tax law change.
The following table presents a reconciliation of the beginning and ending balances of the Company’s unrecognized
tax benefits:
Unrecognized tax benefits, beginning of year
Decrease related to tax law changes
Increases related to tax positions taken in current year
Reductions due to lapse of applicable statute of limitations
Unrecognized tax benefits, end of year
2018
2017
2016
$
11.0
$
10.0
$
(4.0)
1.2
(0.1)
8.1
$
—
2.4
(1.4)
11.0
$
$
7.1
—
3.4
(0.5)
10.0
The amount of unrecognized tax benefits which, if recognized, would affect the Company’s effective tax rate were
$3.9 and $5.1 as of September 30, 2018 and 2017, respectively. It is reasonably possible that events will occur in the
next 12 months that could increase or decrease the amount of the Company’s unrecognized tax benefits. The
Company does not expect that any such change will be significant to the Consolidated Balance Sheets.
As of September 30, 2018 and 2017, interest accrued associated with the Company’s uncertain tax positions was
de minimis, and no penalties were accrued.
The Company is subject to federal income tax as well as income tax in various state and local jurisdictions. The
Company is no longer subject to examination for fiscal years prior to 2014.
Regarding the Company’s Spire EnergySouth acquisition, tax returns for calendar years 2014 and 2015 remain open
and subject to examination by the Internal Revenue Service and state taxing jurisdictions. These returns cover
periods during which Spire EnergySouth was owned by Sempra Global. The impact of any adjustments made to
these returns by the relevant taxing authorities would be addressed by the indemnification provisions of the stock
purchase agreement with Sempra Global.
Spire Missouri
Spire Missouri’s provision (benefit) for income taxes during the fiscal years ended September 30, 2018, 2017, and
2016 was as follows:
Federal
Current
Deferred
Investment tax credits
State and local
Current
Deferred
Total income tax (benefit) expense
2018
2017
2016
$
$
—
(26.1)
(0.2)
—
(6.3)
(32.6)
$
$
—
42.0
(0.2)
—
5.7
47.5
$
$
—
37.5
(0.2)
0.1
8.0
45.4
102
Spire Missouri’s effective income tax rate varied from the federal statutory income tax rate for each year due to the
following:
Federal income tax statutory rate
State and local income taxes, net of federal income tax benefits
Certain expenses capitalized on books and deducted on tax return
Taxes related to prior years
Tax law changes
Amortization of excess deferred taxes
Other items – net *
Effective income tax rate
* Other consists primarily of property adjustments.
2018
2017
2016
24.5 %
3.4
(4.6)
(0.7)
(50.3)
(3.6)
(2.5)
(33.8)%
35.0%
2.8
(3.5)
(1.4)
—
—
(3.3)
29.6%
35.0%
2.8
(4.8)
(0.2)
—
—
(2.8)
30.0%
Spire Missouri’s significant items comprising the net deferred tax liability reported in the Balance Sheets as of
September 30 were as follows:
Deferred tax assets:
Reserves not currently deductible
Pension and other postretirement benefits
Deferred gas costs
Operating losses
Regulatory amount due to customers
Deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Relating to utility property
Regulatory pension and other postretirement benefits
Deferred gas costs
Other
Total deferred tax liabilities
Net deferred tax liability
2018
2017
$
$
20.0
71.9
0.5
65.2
38.0
195.6
1.4
194.2
372.6
113.4
—
69.2
555.2
361.0
$
$
25.3
52.7
—
52.0
—
130.0
0.5
129.5
563.2
108.0
25.0
57.1
753.3
623.8
Spire files a consolidated federal income tax return and various state income tax returns and allocates income taxes
to Spire Missouri and its other subsidiaries as if each entity were a separate taxpayer.
Spire Missouri has recorded TCJA impacts and reflected those amounts in the September 30, 2018 financial
statements. The amounts recorded are based on information known and reasonable estimates used as of that date,
but are subject to change based on further actions of regulators. The items recorded include the impact of the
federal income tax rate reduction and the revaluation of the deferred tax assets and liabilities. In fiscal 2018, the
MoPSC Amended Report and Order took effect and the estimated excess accumulated deferred income tax began to
be returned to customers in rates. The amount being returned is estimated with a tracker established to defer the
difference from the estimated amounts to the actual amounts once the actual amounts have been calculated. During
fiscal 2018, excess accumulated deferred taxes of $3.5 were returned.
S.B. 884, signed into law on June 1, 2018, reduces the corporate income tax rate from 6.25% to 4.0% for tax years
beginning on or after January 1, 2020, among other legislative changes. The impact of S.B. 884 is not material to
the financial statements.
The total amounts recorded, before reduction for amounts returned to customers, for the year ended September 30,
2018, are presented in the table below.
Adjustment to deferred tax liabilities
Adjustment to deferred income tax expense
Adjustment to regulatory assets
Adjustment to regulatory liabilities
103
$
(285.3)
(57.0)
(78.1)
150.2
As indicated in Note 1, Summary of Significant Accounting Policies, the Company’s regulated operations accounting
for income taxes is impacted by ASC Topic 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.
In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Management considers all significant
available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax
liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to
assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not
that Spire Missouri will realize the benefits of these deferred tax assets, except for the contribution carryforward
valuation allowance noted below.
Spire Missouri had federal and state loss carryforwards of approximately $309.2 at September 30, 2018 on a
separate company basis. For federal tax purposes, these loss carryforwards may be utilized against income from
another member of the consolidated group. Spire Missouri also had contribution carryforwards of approximately
$10.9 at September 30, 2018. The loss carryforwards begin to expire in fiscal 2035 for federal and state purposes.
The contribution carryforwards begin to expire in fiscal 2019. Spire Missouri had a valuation allowance of $1.4, as a
portion of the contribution carryforward will not be realized prior to its expiration. Spire Missouri also has
approximately $2.0 of various tax credit carryforwards with expiration dates which begin to expire in 2020.
Spire Missouri recognizes the tax benefit from a tax position only if it is at least more likely than not that the tax
position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Spire Missouri records potential interest and penalties related to its uncertain tax positions as interest expense and
other income deductions, respectively. Unrecognized tax benefits are reported as a reduction of a deferred tax asset
for an operating loss carryforward, pursuant to ASU 2013-11. In addition, pursuant to the TCJA, the deferred tax
asset for a net operating loss carryforward was revalued based on the federal tax law change.
The following table presents a reconciliation of the beginning and ending balances of Spire Missouri unrecognized
tax benefits:
Unrecognized tax benefits, beginning of year
Decrease related to tax law changes
Increases related to tax positions taken in current year
Reductions due to lapse of applicable statute of limitations
Unrecognized tax benefits, end of year
2018
2017
2016
$
$
10.7
(4.0)
1.1
—
7.8
$
$
9.7
—
2.4
(1.4)
10.7
$
$
6.9
—
3.3
(0.5)
9.7
The amount of unrecognized tax benefits, which, if recognized, would affect Spire Missouri’s effective tax rate were
$3.6 and $4.8 as of September 30, 2018 and 2017, respectively. It is reasonably possible that events will occur in the
next 12 months that could increase or decrease the amount of Spire Missouri’s unrecognized tax benefits. Spire
Missouri does not expect that any such change will be significant to Spire Missouri’s Balance Sheets.
As of September 30, 2018 and 2017, no interest or penalties were accrued associated with Spire Missouri’s uncertain
tax positions.
Spire Missouri is subject to federal income tax as well as income tax in various state and local jurisdictions, and is
no longer subject to examination for fiscal years prior to 2014.
104
Spire Alabama
Spire Alabama’s provision for income taxes charged during the fiscal years ended September 30, 2018, 2017, and
2016, was as follows:
Federal
Current
Deferred
State and local
Current
Deferred
Total income tax expense
2018
2017
2016
$
— $
— $
81.5
31.6
—
0.1
—
4.2
$
81.6
$
35.8
$
(0.8)
29.4
—
3.8
32.4
Spire Alabama’s effective income tax rate varied from the federal statutory income tax rate for each year due to the
following:
Federal income tax statutory rate
State and local income taxes, net of federal income tax benefits
Tax law change
Other items – net
Effective income tax rate
2018
2017
2016
24.5%
35.0%
35.0%
3.8
70.0
0.1
2.8
—
0.3
2.8
—
0.1
98.4%
38.1%
37.9%
Spire Alabama’s significant items comprising the net deferred tax asset reported in the Balance Sheets as of
September 30 were as follows:
Deferred tax assets:
Reserves not currently deductible
Pension and other postretirement benefits
Goodwill
Operating losses
Total deferred tax assets
Deferred tax liabilities:
Relating to utility property
Pension and other postretirement benefits
Other
Total deferred tax liabilities
Net deferred tax asset
2018
2017
$
$
5.3
—
129.6
86.0
220.9
111.9
1.8
5.4
119.1
101.8
$
$
6.0
4.4
214.4
88.3
313.1
119.3
—
8.2
127.5
185.6
Spire files a consolidated federal income tax return and various state income tax returns and allocates income taxes
to Spire Alabama and its other subsidiaries as if each entity were a separate taxpayer.
Spire Alabama has recorded TCJA impacts and reflected those amounts in the September 30, 2018 financial
statements. The amounts recorded are based on information known and reasonable estimates used as of that date,
but are subject to change based on further actions of regulators. The items recorded include the impact of the
federal income tax rate reduction and the revaluation of the deferred tax assets and liabilities.
The total amounts recorded, before reduction for amounts returned to customers, for the year ended September 30,
2018, are presented in the table below.
Adjustment to deferred tax assets
Adjustment to deferred income tax expense
Adjustment to regulatory assets
$
(61.0)
58.8
2.2
105
As indicated in Note 1, Summary of Significant Accounting Policies, the Company’s regulated operations accounting
for income taxes is impacted by ASC Topic 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.
In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Management considers all significant
available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax
liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to
assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not
that Spire Alabama will realize the benefits of these deferred tax assets.
On a separate company basis, Spire Alabama had federal and state loss carryforwards of approximately $342.6 at
September 30, 2018. The loss carryforwards begin to expire in fiscal 2030 for state purposes and fiscal 2035 for
federal purposes. For federal tax purposes, these loss carryforwards may be utilized against income from another
member of the consolidated group.
Spire Alabama recognizes the tax benefit from a tax position only if it is at least more likely than not that the tax
position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Spire Alabama records potential interest and penalties related to its uncertain tax positions as interest expense and
other income deductions, respectively. Spire Alabama has reported no unrecognized tax benefits for fiscal years
2018, 2017, and 2016.
Spire Alabama is subject to federal income tax as well as income tax in various state and local jurisdictions.
Energen’s tax return for 2014, which includes Spire Alabama, remains open to the statute of limitations for federal
purposes as a result of an IRS examination. No state tax returns for periods in which Spire Alabama was owned by
Energen are open to the statute of limitations. The impact of any adjustments made to this return by the IRS would
be addressed by the indemnification provisions of the 2014 stock purchase agreement with Energen.
12.
PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Spire information in this note reflects all plans of the Company, including information for plans covering
employees of Spire EnergySouth since September 12, 2016. The net pension and postretirement obligations were re-
measured at that acquisition date as well as at the fiscal year end.
Pension Plans
The pension plans of Spire consist of plans for employees at the Missouri Utilities, the employees of Spire Alabama
and employees of the subsidiaries of Spire EnergySouth.
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 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 U.S. equities with
varying strategies, global equities, alternative investments, and fixed income investments.
106
The net periodic pension costs include the following components:
Service cost – benefits earned during the period
$ 20.2
$ 20.5
$ 15.3
$ 12.7
$ 12.7
$ 10.0
$ 6.4
$ 6.2
$ 5.3
Spire
Spire Missouri
Spire Alabama
2018 2017
2016
2018 2017
2016
2018 2017
2016
Interest cost on projected benefit obligation
27.4
27.9
28.0
19.5
19.5
21.7
Expected return on plan assets
(37.0)
(38.5)
(34.9)
(27.2)
(28.1)
(26.7)
Amortization of prior service cost (credit)
Amortization of actuarial loss
Loss on lump-sum settlements and curtailments
Special termination benefits
Subtotal
Regulatory adjustment
Net pension cost
(0.9)
10.9
18.6
—
39.2
37.4
1.0
12.5
17.9
0.9
42.2
(2.4)
0.4
8.0
3.3
1.6
21.7
17.8
0.9
9.4
16.1
—
31.4
32.1
1.0
10.7
13.5
—
29.3
(4.1)
0.4
7.9
—
1.6
14.9
11.7
$ 76.6
$ 39.8
$ 39.5
$ 63.5
$ 25.2
$ 26.6
$ 12.0
$ 13.3
$ 12.9
5.5
(6.5)
(1.8)
1.5
2.4
—
7.5
4.5
6.1
(7.2)
—
1.8
4.6
—
11.5
1.8
6.3
(8.2)
—
0.1
3.3
—
6.8
6.1
Other changes in plan assets and pension benefit obligations recognized in other comprehensive income or loss
include the following:
Current year actuarial (gain) loss
Amortization of actuarial loss
Acceleration of loss recognized due to settlement
Current year service (credit) cost
Current year prior year service cost
Transfer due to merger
Amortization of prior service cost
Amortization of transition asset
Subtotal
Regulatory adjustment
Total recognized in OCI
Spire
Spire Missouri
Spire Alabama
2018 2017
2016
2018 2017
2016
2018 2017
2016
$ (1.4) $ 14.1
$ 46.8
$ 2.2
$ 14.8
$ 21.6
$ (0.6) $ 3.3
$ 25.2
(10.9)
(18.5)
(0.1)
(12.5)
(18.2)
—
— (20.7)
—
0.1
(2.9)
1.8
(8.0)
(3.3)
5.0
—
—
(9.4)
(16.1)
(10.7)
(13.5)
—
—
0.1
—
—
—
(7.9)
—
5.0
—
—
(1.0)
(0.4)
(0.9)
(1.0)
(0.4)
—
—
—
—
—
(1.5)
(2.4)
—
(1.8)
(4.5)
—
— (20.7)
—
—
1.8
—
—
—
(0.1)
(3.3)
—
—
—
—
—
(31.9)
(38.3)
40.1
(24.1)
(10.4)
18.3
(2.7)
(23.7)
21.8
31.6
38.0
(39.8)
23.8
10.1
(18.0)
2.7
23.7
(21.8)
$ (0.3) $ (0.3) $ 0.3
$ (0.3) $ (0.3) $ 0.3
$ — $ — $ —
Spire pension obligations are driven by separate plan and regulatory provisions governing Spire Missouri, Spire
Alabama and Spire EnergySouth pension plans.
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 in gains or losses. Two Spire Alabama plans and one Spire Missouri plan met the
criteria for settlement recognition in the fiscal year ended September 30, 2018, requiring re-measurement of the
obligation under those plans using updated census data and assumptions for discount rate and mortality. For the
remeasurements, the discount rates for the Missouri plans were updated to 4.20% and 4.15% at June 30, 2018
(from 3.70% and 3.75% at September 30, 2017), and the discount rate for the Alabama plan was updated to 4.20%
(from 3.65%). Lump-sum payments recognized as settlements during fiscal years 2018, 2017, and 2016 were $82.8
($65.5 attributable to Spire Missouri and $17.3 to Spire Alabama), $62.2 ($43.5 attributable to Spire Missouri and
$18.7 to Spire Alabama), and $16.6 (attributable to Spire Alabama), respectively.
Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets
implemented prospectively over a four-year period. Gains or losses not yet includible in pension cost are amortized
only to the extent that such gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-
related value of plan assets. Such excess is amortized over the average remaining service life of active participants.
107
Up to April 18, 2018, the recovery in rates for Spire Missouri East’s qualified pension plan was based on an annual
allowance of $15.5 effective January 1, 2011. The recovery in rates for Spire Missouri West’s qualified pension plan
was based on an annual allowance of approximately $9.9 effective February 20, 2010. Effective April 19, 2018, the
pension cost for Spire Missouri West included in customer rates was reduced from $9.9 to $5.5 per year, the
pension cost included in the Spire Missouri East customer rates was increased from $15.5 to $29.0 per year. Over an
amortization period of eight years, Spire Missouri East rates will also include the amortization of $173.0 of assets
for pension and other postretirement benefits, and Spire Missouri West rates will be reduced by the amortization of
a $26.2 net liability for pension and other postretirement benefits. These changes are discussed further in Note 14,
Regulatory Matters.
The difference between these amounts and pension expense as calculated pursuant to the above and that otherwise
would be included in the statements of income and statements of comprehensive income is deferred as a regulatory
asset or regulatory liability.
The following table shows the reconciliation of the beginning and ending balances of the pension benefit obligation
at September 30:
Benefit obligation, beginning of year
$
748.8
$
794.7
$
539.6
$
560.0
$
148.2
$
174.3
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
Service cost
Interest cost
Actuarial (gain) loss
Plan amendments
Plan mergers
Settlement loss
Special termination benefits
Settlement benefits paid
Regular benefits paid
Benefit obligation, end of year
Accumulated benefit obligation, end of year
20.2
27.4
(34.9)
(2.0)
—
7.6
—
(82.8)
(19.7)
20.5
27.9
(0.9)
(20.7)
—
14.6
0.9
(62.2)
(26.0)
12.7
19.5
(26.0)
—
(0.3)
7.6
—
(65.5)
(14.3)
12.7
19.5
(0.5)
—
—
12.2
—
(43.5)
(20.8)
6.4
5.5
(3.8)
—
—
—
—
(17.3)
(2.7)
$
$
664.6
636.0
$
$
748.8
701.4
$
$
473.3
446.5
$
$
539.6
500.4
$
$
136.3
134.5
$
$
6.2
6.1
1.6
(20.7)
—
2.4
—
(18.7)
(3.0)
148.2
142.8
The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets
at September 30:
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
Fair value of plan assets, beginning of year
$
531.6
$
540.5
$
385.9
$
395.7
$
97.9
$
100.0
Actual return on plan assets
Employer contributions
Divestitures
Settlement benefits paid
Regular benefits paid
Fair value of plan assets, end of year
Funded status of plans, end of year
11.2
58.9
—
(82.8)
(19.7)
38.0
41.3
—
(62.2)
(26.0)
6.4
36.9
(0.3)
(65.5)
(14.3)
25.1
29.4
—
(43.5)
(20.8)
3.3
20.1
—
(17.3)
(2.7)
499.2
$
531.6
$
349.1
$
385.9
$
101.3
$
7.7
11.9
—
(18.7)
(3.0)
97.9
(165.4) $
(217.2) $
(124.2) $
(153.7) $
(35.0) $
(50.3)
$
$
The following table sets forth the amounts recognized in the balance sheets at September 30:
Current liabilities
Noncurrent liabilities
Total
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
$
(0.6) $
(0.5) $
(0.6) $
(0.5) $
— $
—
(164.8)
(216.7)
(123.6)
(153.2)
(35.0)
$
(165.4) $
(217.2) $
(124.2) $
(153.7) $
(35.0) $
(50.3)
(50.3)
108
Pre-tax amounts recognized in accumulated other comprehensive loss not yet recognized as components of net
periodic pension cost consist of:
Net actuarial loss
Prior service (credit) cost
Subtotal
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
$
132.1
$
163.0
$
102.8
$
126.2
$
36.4
$
40.9
(14.4)
117.7
(13.4)
149.6
6.4
109.2
(107.0)
7.3
133.5
(131.0)
(18.8)
17.6
(17.6)
(20.7)
20.2
(20.2)
Adjustments for amounts included in regulatory assets
(115.5)
(147.1)
Total
$
2.2
$
2.5
$
2.2
$
2.5
$
— $
—
At September 30, 2018, the following pre-tax amounts are expected to be amortized from accumulated other
comprehensive loss into net periodic pension cost during fiscal 2019:
Amortization of net actuarial loss
Amortization of prior service (credit) cost
Subtotal
Regulatory adjustment
Total
Spire
Spire
Missouri
Spire
Alabama
$
$
9.2
$
(0.9)
8.3
(8.1)
$
8.6
0.9
9.5
(9.3)
0.2
$
0.2
$
0.8
(1.8)
(1.0)
1.0
—
The assumptions used to calculate net periodic pension costs for Spire Missouri are as follows:
Weighted average discount rate - Spire Missouri East plan
Weighted average discount rate - Spire Missouri West plan
Weighted average rate of future compensation increase
Expected long-term rate of return on plan assets
2018
3.75%
3.70%
3.00%
7.75%
2017
3.50%
3.50%
3.00%
7.75%
2016
4.40%
4.50%
3.00%
7.75%
The assumptions used to calculate net periodic pension costs for Spire Alabama are as follows:
Weighted average discount rate
Weighted average rate of future compensation increase
Expected long-term rate of return on plan assets
2018
2017
2016
3.65%/3.70%
3.45%/3.50%
4.25%/4.30%
3.00%
7.25%
3.00%
7.25%
3.00%
7.50%
The weighted average discount rate is based on long-term, high quality bond indices at the measurement date. The
expected long-term rate of return on plan assets is based on historical and projected rates of return for current and
planned asset classes in the investment portfolio. Assumed projected rates of return for each asset class were
selected after analyzing historical experience and future expectations of the returns. The overall expected rate of
return for the portfolio was developed based on the target allocation for each class.
The assumptions used to calculate the benefit obligations are as follows:
Weighted average discount rate - Spire Missouri East plan
Weighted average discount rate - Spire Missouri West plan
Weighted average discount rate - Spire Alabama plans
Weighted average rate of future compensation increase
2018
4.30%
4.35%
4.35%
3.00%
2017
3.75%
3.70%
3.65%/3.70%
3.00%
109
Following are the year-end projected benefit obligation, accumulated benefit obligation, and fair value of plan assets
for plans that have a projected benefit obligation and an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Spire
2018
2017
Spire Missouri
2017
2018
Spire Alabama
2017
2018
$
664.6
$
636.0
499.2
748.8
701.4
531.6
$
473.3
$
446.5
349.1
539.6
500.4
385.9
$
136.3
$
134.5
101.3
148.2
142.8
97.9
Following are the targeted and actual plan assets by category as of September 30 of each year for Spire Missouri and
Spire Alabama:
Spire Missouri
Equity markets
Debt securities
Cash equivalents
Total
Spire Alabama
Equity markets
Debt securities
Other*
Total
2018
Target
2018
Actual
2017
Target
2017
Actual
56.4%
43.6%
—%
55.3%
42.4%
2.3%
56.4%
43.6%
—%
56.8%
42.0%
1.2%
100.0%
100.0%
100.0%
100.0%
2018
Target
2018
Actual
2017
Target
2017
Actual
60.0%
29.0%
11.0%
100.0%
59.4%
28.6%
12.0%
100.0%
60.0%
29.0%
11.0%
100.0%
58.5%
28.7%
12.8%
100.0%
* Includes cash and funds invested in real estate, commodities, natural resources and inflation-protected securities.
Spire Missouri’s investment policies are designed to maximize, to the extent possible, the funded status of the plans
over time, and minimize volatility of funding and costs. The policy seeks to maximize investment returns consistent
with these objectives and Spire Missouri’s tolerance for risk. The duration of plan liabilities and the impact of
potential changes in asset values on the funded status are fundamental considerations in the selection of plan
assets. Outside investment management specialists are utilized in each asset class. Such specialists are provided
with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with
the policy. The policy seeks to avoid significant concentrations of risk by investing in a diversified portfolio of assets,
currently including a growth (equity) component and a liability-driven (debt) component. Investments in corporate,
U.S. government and agencies, and, to a lesser extent, international debt securities seek to provide duration
matching with plan liabilities, and typically have investment grade ratings and reflect allocations across various
entities and industries. There are also exposures to additional asset types in the target portfolio: commodities, real
estate and inflation-indexed securities. For the Missouri East plan, the investment policy permits the use of
derivative instruments, which may be used to achieve the desired market exposure of an index, adjust portfolio
duration, or rebalance the total portfolio to the target asset allocation. The growth strategy utilizes a combination of
derivative instruments and debt securities to achieve diversified exposure to equity and other markets while
generating returns from the fixed-income investments and providing further duration matching with the liabilities.
Performance and compliance with the guidelines is regularly monitored. The policy calls for increased allocations to
debt securities as the funded status improves.
Spire Alabama employs a total return investment approach whereby a mix of equities and fixed income investments
are used to maximize the long-term return of plan assets with a prudent level of risk. Risk tolerance is established
through consideration of plan liabilities, plan funded status, corporate financial condition and market conditions.
Spire Alabama has developed an investment strategy that focuses on asset allocation, diversification and quality
guidelines. The investment goals are to obtain an adequate level of return to meet future obligations of the plans by
providing above average risk-adjusted returns with a risk exposure in the mid-range of comparable funds.
Investment managers are retained by Spire Alabama to manage separate pools of assets. Funds are allocated to such
managers in order to achieve an appropriate, diversified, and balanced asset mix. Comparative market and peer
group benchmarks are utilized to ensure that investment managers are performing satisfactorily. Spire Alabama
seeks to maintain an appropriate level of diversification to minimize the risk of large losses in a single asset class.
Accordingly, plan assets for the pension plans do not have a concentration of assets in a single entity, industry,
country, commodity or class of investment fund.
110
Following are expected pension benefit payments for the succeeding five fiscal years, and in aggregate for the five
fiscal years thereafter, for Spire, Spire Missouri, and Spire Alabama:
Spire
Spire Missouri
Spire Alabama
2019
2020
2021
2022
2023
2024-
2028
$
63.0
$
63.6
$
60.0
$
58.4
$
57.1
$ 266.4
50.3
10.0
50.2
10.7
46.0
11.2
43.8
11.8
41.9
12.3
184.8
65.5
The funding policy of Spire Missouri and Spire Alabama 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. Spire Missouri contributions to the pension plans in fiscal 2019 are anticipated to be $27.1 into the
qualified trusts, and $0.5 into the non-qualified plans. Spire Alabama had no required contributions to the qualified
pension plans during 2018 or 2017, and it is not anticipated that the funded status of the qualified pension plans
will fall below statutory thresholds requiring accelerated funding or constraints on benefit levels or plan
administration. During fiscal 2018 and 2017, Spire Alabama made discretionary contributions to the qualified
pension plans totaling $20.1 and $11.9, respectively; none are expected in fiscal 2019.
Postretirement Benefits
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. For retirements after January 1, 2015, the Spire
Missouri West plans provide medical insurance after early retirement until age 65. Under the Spire Alabama plans,
medical insurance is currently available upon retirement until death for certain retirees depending on the type of
employee and the date the employee was originally hired.
Net periodic postretirement benefit costs consist of the following components:
Spire
Spire Missouri
Spire Alabama
2018 2017
2016
2018 2017
2016
2018 2017
2016
Service cost – benefits earned during the period
$ 9.4
$ 11.0
$ 10.9
$ 9.0
$ 10.4
$ 10.6
$ 0.2
$ 0.3
$ 0.3
Interest cost on accumulated postretirement
benefit obligation
Expected return on plan assets
Amortization of prior service cost (credit)
Amortization of actuarial loss (gain)
Special termination benefits
Subtotal
Regulatory adjustment
8.6
8.6
10.2
(13.9)
(13.6)
(13.5)
(0.1)
0.8
—
4.8
2.2
—
2.5
—
8.5
(3.2)
0.3
3.6
2.6
14.1
(6.6)
6.9
(9.6)
0.3
0.9
—
7.5
3.9
6.8
(9.0)
0.2
2.6
—
11.0
(1.5)
8.1
(8.5)
0.3
3.8
2.6
16.9
(4.8)
1.5
(4.1)
(0.4)
(0.1)
—
(2.9)
(1.8)
1.6
(4.4)
(0.2)
(0.1)
—
(2.8)
(1.8)
2.1
(5.0)
—
(0.2)
—
(2.8)
(1.8)
Net postretirement benefit cost
$ 7.0
$ 5.3
$ 7.5
$ 11.4
$ 9.5
$ 12.1
$ (4.7) $ (4.6) $ (4.6)
Other changes in plan assets and postretirement benefit obligations recognized in OCI include the following:
Spire
Spire Missouri
Spire Alabama
2018 2017
2016
2018 2017
2016
2018 2017
2016
Current year actuarial (gain) loss
$(45.1) $(34.1) $ 0.8
$ (47.1) $(28.5) $ 1.4
$ 1.6
$ (4.5) $ (0.6)
Amortization of actuarial (loss) gain
Current year prior service credit
Amortization of prior service (cost) credit
Subtotal
Regulatory adjustment
Total recognized in OCI
(0.8)
—
0.1
(2.5)
(1.4)
—
(45.8)
(38.0)
45.8
38.0
(3.6)
(1.8)
(0.3)
(4.9)
4.9
(0.9)
(2.6)
(3.8)
—
—
(0.3)
(0.2)
(48.3)
(31.3)
48.3
31.3
—
(0.3)
(2.7)
2.7
0.1
—
0.4
2.1
(2.1)
0.1
(1.4)
0.2
(5.6)
5.6
0.2
(1.8)
—
(2.2)
2.2
$ — $ — $ — $ — $ — $ — $ — $ — $ —
111
Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets
implemented prospectively over a four-year period. Gains and losses not yet includible in postretirement benefit
cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the accumulated
postretirement benefit obligation or the market-related value of plan assets. Such excess is amortized over the
average remaining service life of active participants. Up to April 18, 2018, the recovery in rates for Spire Missouri’s
postretirement benefit plans is based on an annual allowance of $9.5 effective January 1, 2011. Effective April 19,
2018, the allowance was reduced to $8.6. This change is discussed further in Note 14, Regulatory Matters. The
difference between these amounts and postretirement benefit cost based on the above and that otherwise would be
included in the statements of income and statements of comprehensive income is deferred as a regulatory asset or
regulatory liability.
The following table sets forth the reconciliation of the beginning and ending balances of the postretirement benefit
obligation at September 30:
Benefit obligation, beginning of year
$
238.5
$
259.2
$
192.5
$
207.9
$
40.6
$
45.4
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
Service cost
Interest cost
Actuarial (gain) loss
Plan amendments
Curtailments
Retiree drug subsidy program
Benefits paid
9.4
8.6
(37.5)
—
—
0.2
11.0
8.6
(22.1)
(1.4)
0.4
0.3
(11.1)
(17.5)
9.0
6.9
(41.1)
—
—
0.1
(8.6)
10.4
6.8
(20.9)
—
—
0.3
0.2
1.5
3.1
—
—
0.1
(12.0)
(2.4)
Benefit obligation, end of year
$
208.1
$
238.5
$
158.8
$
192.5
$
43.1
$
0.3
1.6
—
(1.4)
—
—
(5.3)
40.6
The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets
at September 30:
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
Fair value of plan assets at beginning of year
$
265.5
$
246.4
$
174.9
$
159.7
$
86.4
$
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets, end of year
Funded status of plans, end of year
$
$
21.5
7.6
(11.1)
283.5
75.4
$
$
26.2
10.4
(17.5)
265.5
27.0
15.6
7.6
(8.6)
16.8
10.4
(12.0)
$
$
189.5
30.7
$
$
174.9
$
(17.6) $
5.6
—
(2.4)
89.6
46.5
$
$
82.8
8.9
—
(5.3)
86.4
45.8
The following table sets forth the amounts recognized in the balance sheets at September 30:
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Total
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
$
— $
1.4
$
— $
92.0
(0.5)
(16.1)
47.0
(0.4)
(21.0)
45.5
(0.5)
(14.3)
1.4
1.2
(0.4)
(19.8)
$
— $
46.5
—
—
—
45.8
—
—
$
75.4
$
27.0
$
30.7
$
(17.6) $
46.5
$
45.8
112
Pre-tax amounts recognized in accumulated other comprehensive loss not yet recognized as components of net
periodic postretirement benefit cost consist of:
Spire
Spire Missouri
Spire Alabama
2018
2017
2018
2017
2018
2017
Net actuarial loss (gain)
Prior service credit
Subtotal
Adjustments for amounts included in regulatory assets
$
(44.4) $
1.5
$
(35.7) $
12.3
$
(8.0) $
(6.6)
(51.0)
51.0
(6.6)
(5.1)
5.1
(4.0)
(39.7)
39.7
(3.7)
8.6
(8.6)
(2.6)
(10.6)
10.6
Total
$
— $
— $
— $
— $
— $
(9.7)
(2.9)
(12.6)
12.6
—
At September 30, 2018, the following pre-tax amounts are expected to be amortized from accumulated other
comprehensive loss into net periodic postretirement benefit cost during fiscal 2019:
Amortization of net actuarial loss
Amortization of prior service (credit) cost
Subtotal
Regulatory adjustment
Total
Spire
Spire
Missouri
Spire
Alabama
$
$
(0.5) $
(0.5) $
(0.1)
(0.6)
0.6
0.3
(0.2)
0.2
— $
— $
—
(0.4)
(0.4)
0.4
—
The assumptions used to calculate net periodic postretirement benefit costs for Spire Missouri are as follows:
Weighted average discount rate - Spire Missouri East plans
Weighted average discount rate - Spire Missouri West plans
Weighted average rate of future compensation increase
2018
3.60%
3.60%
3.00%
2017
3.15%
3.45%
3.00%
2016
4.00%
4.30%
3.00%
Expected long-term rate of return on plan assets - Spire Missouri East plans
5.75%/7.75%
5.75%/7.75%
6.00%/7.75%
Expected long-term rate of return on plan assets - Spire Missouri West plans
5.75%
5.50%
4.75%
The assumptions used to calculate net periodic postretirement benefit costs for Spire Alabama are as follows:
Weighted average discount rate
2018
3.80%
2017
3.60%
2016
4.50%
Expected long-term rate of return on plan assets
3.75%/6.00%
4.00%/6.25%
4.50%/7.25%
The weighted average discount rate is based on long-term, high quality bond indices at the measurement date. The
expected long-term rate of return on plan assets is based on historical and projected rates of return for current and
planned asset classes in the investment portfolio. Assumed projected rates of return for each asset class were
selected after analyzing historical experience and future expectations of the returns. The overall expected rate of
return for the portfolio was developed based on the target allocation for each class.
The assumptions used to calculate the accumulated postretirement benefit obligations are as follows:
Weighted average discount rate - Spire Alabama plans
Weighted average discount rate - Spire Missouri East plans
Weighted average discount rate - Spire Missouri West plans
Weighted average rate of future compensation increase - Spire Missouri East plans
2018
4.30%
4.30%
4.30%
3.00%
2017
3.80%
3.60%
3.60%
3.00%
113
The assumed medical cost trend rates at September 30 are as follows:
Medical cost trend assumed for next year - Spire Missouri
Medical cost trend assumed for next year - Spire Alabama
Rate to which the medical cost trend rate is assumed to decline (the ultimate medical cost trend rate)
Year the rate reaches the ultimate trend
2018
7.00%
7.00%
5.00%
2025
2017
7.25%
7.25%
5.00%
2023
The following table presents the effects of an assumed 1% change in the assumed medical cost trend rate:
Spire
Spire Missouri
Spire Alabama
1%
Increase
1%
Decrease
1%
Increase
1%
Decrease
1%
Increase
1%
Decrease
Net periodic postretirement benefit cost
$
Accumulated postretirement benefit obligation
1.4
8.4
$
(1.3) $
(7.7)
1.2
6.0
$
(1.1) $
(5.6)
$
0.1
1.6
(0.1)
(1.5)
Following are the targeted and actual plan assets by category as of September 30 of each year for Spire Missouri and
Spire Alabama:
Spire Missouri
Equity securities
Debt securities
Other (cash and cash equivalents held to make benefit payments)
Total
Spire Alabama
Equity securities
Debt securities
Total
Target
2018
Actual
2017
Actual
60.0%
40.0%
—%
58.8%
39.1%
2.1%
59.0%
39.4%
1.6%
100.0%
100.0%
100.0%
Target
60.0%
40.0%
100.0%
2018
Actual
2017
Actual
60.0%
40.0%
100.0%
60.1%
39.9%
100.0%
Missouri and Alabama state 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 and Rabbi Trusts as external funding mechanisms. Their investment
policies seek to maximize investment returns consistent with their tolerance for risk. Outside investment
management specialists are utilized in each asset class. Such specialists are provided with guidelines, where
appropriate, designed to ensure that the investment portfolio is managed in accordance with policy. Performance
and compliance with the guidelines is regularly monitored. Spire Missouri and Spire Alabama currently invest in
mutual funds which are rebalanced periodically to the target allocation. The mutual funds are diversified across U.S.
stock and bond markets, and for Spire Alabama, international stock markets.
Following are expected postretirement benefit payments for the succeeding five fiscal years, and in aggregate for the
five fiscal years thereafter for Spire, Spire Missouri, and Spire Alabama:
Spire
Spire Missouri
Spire Alabama
2019
2020
2021
2022
2023
$
14.2
10.8
3.0
$
15.3
11.8
3.1
$
16.3
12.8
3.1
$
16.9
13.4
3.1
$
17.9
14.3
3.2
2024-
2028
$
93.9
76.4
15.1
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. For Spire Missouri, contributions to the postretirement plans in fiscal 2019
are anticipated to be $1.9 to the qualified trusts and $0.5 paid directly to participants from Spire Missouri funds. It
is not anticipated that contributions will be made to the Spire Alabama postretirement plans in fiscal 2019.
114
Other Plans
Spire Services Inc. sponsors a 401(k) plan that cover substantially all employees of Spire Inc. and its subsidiaries.
The plan allows employees to contribute a portion of their base pay in accordance with specific guidelines. The cost
of the defined contribution plan for Spire Inc. totaled $12.2, $11.5, and $10.5 for fiscal years 2018, 2017, and 2016,
respectively. Spire Missouri provides a match of such contributions within specific limits. The cost of the defined
contribution plan for Spire Missouri amounted to $9.0, $8.4, and $8.2 for fiscal years 2018, 2017, and 2016,
respectively. Spire Alabama also provides a match of employee contributions within specific limits. The cost of the
defined contribution plan for Spire Alabama amounted to $3.0, $2.7, and $2.3 for fiscal years 2018, 2017, and 2016,
respectively.
Fair Value Measurements of Pension and Other Postretirement Plan Assets
Spire
The table below categorizes the fair value measurements of the Spire pension plan assets:
As of September 30, 2018
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
U.S. corporate
U.S. municipal
International
Derivatives and margin (payable)
103-12 Direct Filing Entities
Total
As of September 30, 2017
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
U.S. corporate
U.S. municipal
International
Derivatives and margin (payable)
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
50.6
42.7
20.7
35.8
31.7
152.1
3.6
43.9
(0.8)
—
380.3
37.3
42.1
37.4
34.4
33.2
183.7
4.2
45.1
(2.6)
$
— $
— $
21.2
4.1
64.9
5.6
—
3.0
7.0
—
13.1
—
—
—
—
—
—
—
—
—
50.6
63.9
24.8
100.7
37.3
152.1
6.6
50.9
(0.8)
13.1
$
$
118.9
$
— $
499.2
— $
— $
25.4
11.2
68.5
4.5
—
—
7.2
—
—
—
—
—
—
—
—
—
37.3
67.5
48.6
102.9
37.7
183.7
4.2
52.3
(2.6)
$
414.8
$
116.8
$
— $
531.6
115
The table below categorizes the fair value measurements of Spire’s postretirement plan assets:
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
As of September 30, 2018
Cash and cash equivalents
U.S. stock/bond mutual funds
International fund
Total
As of September 30, 2017
Cash and cash equivalents
U.S. stock/bond mutual funds
International fund
Total
$
$
$
$
190.2
—
193.9
4.0
174.1
1.0
$
$
179.1
$
3.7
$
— $
— $
Total
3.7
264.7
15.1
4.0
245.8
15.7
—
—
—
—
$
— $
283.5
— $
— $
$
— $
265.5
74.5
15.1
89.6
71.7
14.7
86.4
Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values
of derivative instruments are calculated by investment managers who use valuation models that incorporate
observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable
market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.
Spire Missouri
The table below categorizes the fair value measurements of Spire Missouri’s pension plan assets:
As of September 30, 2018
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
U.S. corporate
U.S. municipal
International
Derivatives and margin (payable)
Total
As of September 30, 2017
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
U.S. corporate
U.S. municipal
International
Derivatives and margin (payable)
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
35.2
$
— $
— $
35.2
$
$
—
—
—
31.7
152.1
3.6
43.9
(0.8)
265.7
31.7
—
—
—
33.2
183.7
4.2
45.1
(2.6)
$
$
8.4
4.1
64.9
3.0
—
3.0
—
—
—
—
—
—
—
—
—
—
8.4
4.1
64.9
34.7
152.1
6.6
43.9
(0.8)
83.4
$
— $
349.1
— $
— $
11.9
5.7
68.5
4.5
—
—
—
—
—
—
—
—
—
—
—
—
31.7
11.9
5.7
68.5
37.7
183.7
4.2
45.1
(2.6)
$
295.3
$
90.6
$
— $
385.9
116
The table below categorizes the fair value measurements of Spire Missouri’s postretirement plan assets:
As of September 30, 2018
Cash and cash equivalents
U.S. stock/bond mutual funds
Total
As of September 30, 2017
Cash and cash equivalents
U.S. stock/bond mutual funds
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
$
3.5
186.0
189.5
3.9
171.0
174.9
$
$
$
$
— $
—
— $
— $
—
— $
— $
—
— $
3.5
186.0
189.5
— $
—
— $
3.9
171.0
174.9
Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values
of derivative instruments are calculated by investment managers who use valuation models that incorporate
observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable
market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.
Spire Alabama
The table below categorizes the fair value measurements of Spire Alabama’s pension plan assets:
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
10.4
28.8
14.0
24.2
—
—
—
77.4
3.4
28.4
25.2
23.2
—
— $
— $
8.6
—
—
1.8
4.7
8.8
—
—
—
—
—
—
10.4
37.4
14.0
24.2
1.8
4.7
8.8
23.9
$
— $
101.3
— $
— $
9.1
3.7
—
4.9
—
—
—
—
3.4
37.5
28.9
23.2
4.9
97.9
80.2
$
17.7
$
— $
As of September 30, 2018
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
International
103-12 Direct Filing Entities
Total
As of September 30, 2017
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
International
Total
$
$
$
$
117
The table below categorizes the fair value measurements of Spire Alabama’s postretirement plan assets:
As of September 30, 2018
U.S. stock/bond mutual funds
International fund
Total
As of September 30, 2017
U.S. stock/bond mutual funds
International fund
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
$
— $
—
— $
— $
—
— $
74.5
15.1
89.6
71.7
14.7
86.4
$
$
$
$
— $
—
— $
— $
—
— $
74.5
15.1
89.6
71.7
14.7
86.4
Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values
of derivative instruments are calculated by investment managers who use valuation models that incorporate
observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable
market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.
13.
INFORMATION BY OPERATING SEGMENT
The Company has two 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:
•
•
•
•
unallocated corporate items, including certain debt and associated interest costs;
Spire STL Pipeline, a subsidiary of Spire planning the construction and operation of a 65-mile FERC-
regulated pipeline to deliver natural gas into eastern Missouri;
Spire Storage, providing physical natural gas storage services; and
Spire’s subsidiaries engaged in the operation of a propane pipeline, compression 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, 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 fair value accounting
and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and
restructuring activities, and the largely non-cash impacts of other non-recurring or unusual items such as certain
regulatory, legislative or GAAP standard-setting actions. In fiscal 2018, these items include the revaluation of
deferred tax assets and liabilities due to the Tax Cuts and Jobs Act and the write-off of certain long-standing assets
as a result of disallowances in our Missouri rate proceedings.
118
2018
Gas
Utility
Gas
Marketing
Other
Eliminations
Consolidated
Revenues from external customers
$
1,888.0
$
71.6
$
5.4
$
—
$
1,965.0
Intersegment revenues
Total Operating Revenues
Operating Expenses
Gas Utility
Natural and propane gas
Other operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Gas Utility Operating Expenses
Gas Marketing and Other *
Total Operating Expenses
Operating Income (Loss)
Net Economic Earnings (Loss)
Capital Expenditures
0.4
1,888.4
842.6
464.1
167.0
152.5
1,626.2
—
1,626.2
262.2
183.1
457.7
$
$
$
$
$
$
—
71.6
11.1
16.5
—
—
—
—
—
37.8
37.8
33.8
—
—
—
—
—
32.8
32.8
$ (16.3)
22.9
$ (22.3)
—
$
41.7
$
$
$
(11.5)
(11.5)
(72.5)
(8.5)
—
—
(81.0)
69.5
(11.5)
—
—
—
$
$
$
—
1,965.0
770.1
455.6
167.0
152.5
1,545.2
140.1
1,685.3
279.7
183.7
499.4
2017
Gas
Utility
Gas
Marketing
Other
Eliminations
Consolidated
Revenues from external customers
$
1,660.0
$
79.3
$
$
—
$
1,740.7
1.4
6.3
7.7
—
—
—
—
—
12.8
12.8
$
(5.1)
$ (20.7)
25.5
$
$
$
$
(14.2)
(14.2)
(75.4)
(4.1)
—
—
(79.5)
65.3
(14.2)
—
—
—
$
$
$
—
1,740.7
570.5
405.0
153.5
137.8
1,266.8
152.2
1,419.0
321.7
167.6
438.1
Intersegment revenues
Total Operating Revenues
Operating Expenses
Gas Utility
Natural and propane gas
Other operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Gas Utility Operating Expenses
Gas Marketing and Other *
Total Operating Expenses
Operating Income (Loss)
Net Economic Earnings (Loss)
Capital Expenditures
7.9
1,667.9
645.9
409.1
153.5
137.8
1,346.3
—
1,346.3
321.6
181.5
412.6
$
$
$
—
79.3
—
—
—
—
—
74.1
74.1
5.2
6.8
—
$
$
$
119
2016
Gas
Utility
Gas
Marketing
Other
Eliminations
Consolidated
Revenues from external customers
$
1,457.2
$
78.5
$
$
—
$
1,537.3
Intersegment revenues
Total Operating Revenues
Operating Expenses
Gas Utility
Natural and propane gas
Other operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Gas Utility Operating Expenses
Gas Marketing and Other *
Total Operating Expenses
Operating Income (Loss)
Net Economic Earnings (Loss)
Capital Expenditures
2.2
1,459.4
539.7
379.3
136.9
125.2
1,181.1
—
1,181.1
278.3
160.3
291.7
$
$
$
$
$
$
—
78.5
—
—
—
—
—
66.7
66.7
11.8
6.4
—
1.6
3.2
4.8
—
—
—
—
—
12.6
12.6
$
(7.8)
$ (17.6)
$
1.6
$
$
$
(5.4)
(5.4)
(47.5)
(1.8)
—
—
(49.3)
43.9
(5.4)
—
—
—
$
$
$
—
1,537.3
492.2
377.5
136.9
125.2
1,131.8
123.2
1,255.0
282.3
149.1
293.3
* Operating Expenses for “Gas Marketing and Other” include depreciation and amortization for Gas Marketing ($0.0 for 2018,
$0.1 for 2017, and $0.1 for 2016) and for Other ($1.4 for 2018, $0.5 for 2017, and $0.5 for 2016).
Total Assets at End of Year
Gas Utility
Gas Marketing
Other
Eliminations
Total Assets
Reconciliation of Consolidated Net Income
to Consolidated Net Economic Earnings
Net Income
Adjustments, pre-tax:
Missouri regulatory adjustments
Unrealized (gain) loss on energy-related derivatives
Lower of cost or market inventory adjustments
Realized gain on economic hedges prior
to the sale of the physical commodity
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments
Effect of the Tax Cuts and Jobs Act
Net Economic Earnings
14.
REGULATORY MATTERS
2018
2017
2016
$
5,606.7
$
5,551.2
$
5,184.7
295.3
2,508.0
246.2
2,239.5
205.0
1,836.6
(1,566.4)
(1,490.2)
(1,161.9)
$
6,843.6
$
6,546.7
$
6,064.4
2018
2017
2016
$
214.2
$
161.6
$
144.2
30.6
(4.0)
—
(0.3)
13.6
(10.3)
(60.1)
—
6.0
—
(0.3)
4.0
(3.7)
—
—
(0.1)
0.2
(1.6)
9.2
(2.8)
—
$
183.7
$
167.6
$
149.1
As discussed below for Spire Missouri and Spire Alabama, 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 regulatory liabilities related to the PGA clauses and the GSA rider are both labeled
Unamortized Purchased Gas Adjustments herein.
120
The following regulatory assets and regulatory liabilities were reflected in the Balance Sheets as of September 30,
2018 and 2017. Unamortized Purchased Gas Adjustments are also included below, which are reported separately in
the current assets and liabilities sections of each balance sheet.
September 30
Regulatory Assets:
Current:
Pension and postretirement benefit costs
Unamortized purchased gas adjustments
Other
Total Current Regulatory Assets
Noncurrent:
Future income taxes due from customers
Pension and postretirement benefit costs
Cost of removal
Unamortized purchased gas adjustments
Energy efficiency
Other
Total Noncurrent Regulatory Assets
Total Regulatory Assets
Regulatory Liabilities:
Current:
Rate Stabilization and Equalization (“RSE”)
adjustment
Refundable negative salvage
Unamortized purchased gas adjustments
Other
Total Current Regulatory Liabilities
Noncurrent:
Deferred taxes due to customers
Pension and postretirement benefit costs
Refundable negative salvage
Accrued cost of removal
Unamortized purchased gas adjustments
Other
Total Noncurrent Regulatory Liabilities
Total Regulatory Liabilities
$
$
$
$
Spire
2018
2017
Spire Missouri
2017
2018
Spire Alabama
2017
2018
30.2
8.2
34.4
72.8
96.3
364.9
133.4
—
32.8
42.4
669.8
742.6
$
$
42.2
102.6
30.7
175.5
170.5
404.7
123.3
9.9
29.0
53.7
791.1
966.6
$
$
21.9
1.0
7.8
30.7
94.4
292.5
—
—
32.8
21.4
441.1
471.8
$
$
34.9
57.4
3.3
95.6
170.5
322.7
—
9.9
29.0
25.7
557.8
653.4
$
$
7.3
6.4
12.5
26.2
—
64.8
133.4
—
—
3.3
201.5
227.7
$
$
— $
1.4
$
— $
— $
— $
5.2
2.9
27.6
35.7
178.3
27.8
—
63.6
4.7
80.2
354.6
390.3
$
8.2
1.0
12.0
22.6
—
32.2
4.1
83.8
1.9
35.2
157.2
179.8
$
—
1.9
14.8
16.7
161.1
—
—
39.8
4.7
69.3
274.9
291.6
$
—
—
2.7
2.7
—
—
—
54.5
1.9
24.8
81.2
83.9
$
5.2
—
2.4
7.6
—
27.8
—
—
—
3.5
31.3
38.9
$
7.2
45.2
12.2
64.6
—
72.6
123.3
—
—
1.1
197.0
261.6
1.4
8.2
—
2.4
12.0
—
32.2
4.1
—
—
3.3
39.6
51.6
A portion of the Company’s regulatory assets are not earning a return and are shown in the schedule below:
September 30
Pension and postretirement benefit costs
Future income taxes due from customers
Other
Total Regulatory Assets Not Earning a Return
Spire
2018
2017
Spire Missouri
2017
2018
$
$
148.4
96.3
15.1
259.8
$
$
170.5
198.5
11.3
380.3
$
$
148.4
94.4
15.1
257.9
$
$
170.5
198.5
11.3
380.3
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.
121
Spire Missouri
As authorized by the MoPSC, the PGA clause allows Spire Missouri to flow through to customers, subject to
prudence review by the MoPSC, the cost of purchased gas supplies. To better match customer billings with market
natural gas prices, Spire Missouri is allowed to file to modify, on a periodic basis, the level of gas costs in its PGA.
Certain provisions of the PGA clause are included below:
• Spire Missouri has a risk management policy that allows for the purchase of natural gas derivative instruments
with the goal of managing price risk associated with purchasing natural gas on behalf of its customers. The
MoPSC clarified that costs, cost reductions, and carrying costs associated with the Utility’s use of natural gas
derivative instruments are gas costs recoverable through the PGA mechanism.
• The tariffs allow Spire Missouri flexibility to make up to three discretionary PGA changes during each year, in
addition to its mandatory November PGA change, so long as such changes are separated by at least two
months.
• Spire Missouri is authorized to apply carrying costs to all over- or under-recoveries of gas costs, including costs
and cost reductions associated with the use of derivative instruments, including cash payments for margin
deposits.
• The MoPSC approved a plan applicable to Spire Missouri’s gas supply commodity costs under which it retains
a portion of cost savings associated with the acquisition of natural gas below an established benchmark level.
This gas supply cost management program allows Spire Missouri to retain 10% of cost savings, up to a
maximum of $3.0 annually. Spire Missouri did not record any such incentive compensation under the plan
during the three fiscal years reported. Incentives recorded under the plan, if any, are included in Gas Utility
Operating Revenues on the Consolidated Statements of Income and under Operating Revenues on Spire
Missouri’s Statements of Comprehensive Income.
Pursuant to the provisions of the PGA clause, the difference between actual costs incurred and costs recovered
through the application of the PGA clause are reflected as a deferred charge or credit at the end of the fiscal year. At
that time, the balance is classified as a current asset or current liability and recovered from, or credited to,
customers over an annual period commencing in November. The balance in the current account is amortized as
amounts are reflected in customer billings.
The PGA clause also provides for the treatment of income from off-system sales and capacity release revenues. Pre-
tax income from off-system sales and capacity release revenues is shared with customers, with an estimated amount
assumed in PGA rates. The difference between the actual amount allocated to customers for each fiscal year and the
estimated amount assumed in PGA rates is recovered from, or credited to, customers over an annual period
commencing in the subsequent November. Before April 19, 2018, the customer share of such income was
determined in accordance with the following tables, shown for each service territory for which the PGA clauses were
approved by the MoPSC.
Customer Share
Company Share
Spire Missouri East
First $2.0 of pre-tax income*
Next $2.0 of pre-tax income
Next $2.0 of pre-tax income
Amounts of pre-tax income exceeding $6.0
* Customer share was set to 85% and company share set to 15% in fiscal 2017. For fiscal 2016, the customer share was 100%.
15%
20%
25%
30%
85%
80%
75%
70%
Spire Missouri West
First $1.2 of pre-tax income
Next $1.2 of pre-tax income
Next $1.2 of pre-tax income
Amounts of pre-tax income exceeding $3.6
85%
80%
75%
70%
15%
20%
25%
30%
In the latest rate cases (discussed in the following paragraphs), the multiple sharing tiers and percentages were
eliminated in favor of a single sharing percentage under which customers receive 75% (and Spire Missouri East and
Spire Missouri West receive 25%) of the net margins achieved as a result of such off-system sales and capacity
releases.
122
On March 7, 2018, the MoPSC issued an Amended Report and Order (the “Order”) in two general rate cases
(docketed as GR-2017-0215 and GR-2017-0216) approving a base rate revenue requirement increase of $18.0 for
Spire Missouri East and $15.2 for Spire Missouri West. The annualized Infrastructure System Replacement
Surcharge (“ISRS”) amounts of $32.6 for Spire Missouri East and $16.4 for Spire Missouri West were reset to zero,
resulting in a net decrease in revenues of $14.6 and $1.2, respectively. These net amounts reflect decreases totaling
approximately $33.0 resulting from the TCJA’s federal income tax rate reduction and a related allowance to return
excess accumulated deferred income taxes to customers in accordance with Internal Revenue Service normalization
requirements. Tariffs reflecting the Order went into effect on April 19, 2018.
Included in the Order were updates to the treatment of pension and other postretirement benefits. Effective April
19, 2018, the pension cost for Spire Missouri West included in customer rates was reduced from $9.9 to $5.5 per
year, the pension cost included in the Spire Missouri East customer rates was increased from $15.5 to $29.0 per
year, and the annual allowance for health care postretirement plans for Spire Missouri East was reduced from $9.5
to $8.6. Over a period of eight years, Spire Missouri East rates will also include the amortization of $173.0 of assets
for pension and other postretirement benefits, and Spire Missouri West rates were reduced by the amortization of a
$26.2 net liability for pension and other postretirement benefits.
Certain provisions of the Order allow less future recovery of certain deferred or capitalized costs than estimated
based upon previous rate proceedings. The Order denied recovery of $28.8 regulatory asset related to certain
pension costs incurred prior to 1997. The Order also excluded from rate base certain incentive compensation costs
totaling $6.9, along with $1.8 of assets related to real estate sold in 2014. Rate case expenses totaling $0.9 were also
disallowed. On April 25, 2018, Spire Missouri filed an appeal of the MoPSC’s decisions on the pension asset, the real
estate sale, and rate case expense to Missouri’s Southern District Court of Appeals. Spire Missouri filed its initial
brief in that court on October 17, 2018. Though the appeal is pending on these issues, management determined that
the related assets, along with the incentive compensation exclusion, should be written down or off in connection
with the preparation of the financial statements for the second quarter of 2018. For both Spire and Spire Missouri,
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. The charges related to the long-standing pension and real estate assets, totaling $30.6, are excluded in
the determination of net economic earnings, as shown in Note 13, Information by Operating Segment.
On September 30, 2016, Spire Missouri filed ISRS cases for both Spire Missouri East and Spire Missouri West (the
“2016 ISRS Cases”) and rates of $4.5 and $3.2, respectively, became effective January 28, 2017. The Missouri Office
of the Public Counsel (“OPC”) appealed the MoPSC’s decisions on the 2016 ISRS Cases to Missouri’s Western
District Court of Appeals, arguing that a portion of these costs were ineligible because some plastic pipe was
replaced along with the cast iron and bare steel. On February 3, 2017, Spire Missouri filed to increase its ISRS
revenues in both its East and West service territories (the “2017 ISRS Cases”). The parties agreed to apply the
outcome of the appeal in the 2016 ISRS Cases to the 2017 ISRS Cases, and $3.0 in rates for each of the two service
territories became effective June 1, 2017. On November 21, 2017, the court reversed the MoPSC’s decision in the
2016 ISRS Cases to the extent costs were incurred to replace ISRS-ineligible plastic pipe and remanded the case to
the MoPSC for further proceedings.
On June 7, 2018, Spire Missouri filed to establish new ISRS rates in both its East and West divisions (the “2018
ISRS Cases”), requesting a $4.8 and $7.1 increase, respectively. On August 27, 2018, the MoPSC held a hearing on
the plastics issue related to all of the above noted ISRS cases. On September 20, 2018, the MoPSC issued orders
finding that Spire Missouri’s ISRS petitions in all three ISRS cases included ineligible costs related to the
replacement of plastic pipe components. However, the MoPSC found that it lacked statutory authority to refund
ineligible costs in the 2016 and 2017 ISRS Cases. On September 28, 2018 the MoPSC approved rates in the 2018
ISRS Cases of $2.6 for Spire Missouri East and $5.4 for Spire Missouri West, which became effective October 8,
2018. Spire Missouri and the OPC have both filed applications for rehearing in all of these ISRS cases. The MoPSC
denied the rehearing for the 2016 and 2017 ISRS Cases on October 17, 2018, which OPC has appealed to the
Western District Court. The MoPSC has not yet made a determination in the 2018 ISRS Cases.
On September 20, 2018, the MoPSC approved financing authority for Spire Missouri in the amount of $500.0,
effective October 1, 2018, through September 30, 2021.
123
Spire Alabama
Spire Alabama’s rate schedules for natural gas distribution charges contain a GSA rider, established by the APSC in
1993, which permits the pass-through to customers of changes in the cost of gas supply. Spire Alabama’s tariff
provides a temperature adjustment mechanism, also included in the GSA rider, which is designed to moderate the
impact of departures from normal temperatures on Spire Alabama’s earnings. The temperature adjustment applies
primarily to residential, small commercial and small industrial customers. Other non-temperature weather-related
conditions that may affect customer usage are not included in the temperature adjustment.
The APSC established the RSE rate-setting process in 1983. Effective January 1, 2014, Spire Alabama’s allowed
range of return on average common equity was 10.5% to 10.95% with an adjusting point of 10.8%. Spire Alabama
was 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. In October 2018, the APSC approved the renewal of RSE through September 30, 2022, with
several modifications. Effective October 1, 2018, Spire Alabama’s allowed range of return on average common
equity is 10.15% to 10.65% with an adjusting point of 10.4%. Spire Alabama is eligible to receive a performance-
based adjustment of +/- 10 basis point to the return on equity adjusting point, based upon the terms of the newly
approved Accelerated Infrastructure Modernization Program tariff. The 5-basis point adjustment for certain
customer satisfaction criteria has been removed. Other modifications include an equity limitation as a percent of
total capitalization from 56.5% to 55.5% and adjustments to the Cost Control Measure (“CCM”) as noted below.
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. There was no RSE reduction in 2018 for the January 31, April
30, July 31 or September 30 quarterly points of test. Effective February 1, 2018, Spire Alabama rates were reduced
by $12.8 to reflect the impact of tax reform under the TCJA on current income taxes.
The inflation-based CCM, established by the APSC, allows for annual increases to operation and maintenance
(“O&M”) expense. For the three years ended September 30, 2018, the CCM range was Spire Alabama’s 2007 actual
rate year O&M expense inflation-adjusted using an index range based on the June Consumer Price Index For All
Urban Consumers (“CPI-U”) each rate year plus or minus 1.75%. If rate year O&M expense falls within the index
range, no adjustment is required. If rate year O&M expense exceeds the index range, three-quarters of the
difference is returned to customers through future rate adjustments. To the extent rate year O&M is less than the
index range, Spire Alabama benefits by one-half of the difference through future rate adjustments. Certain items
that fluctuate based on situations demonstrated to be beyond Spire Alabama’s control may be excluded from the
CCM calculation. As of September 30, 2018, Spire Alabama recorded a CCM benefit of $9.7 for rate year 2018,
which will be reflected in rates effective December 1, 2018. The CCM benefit was $10.7 for rate year 2017 and $7.8
for rate year 2016. Effective October 1, 2018, the CCM will be calculated based upon O&M expense per customer
and the O&M base year will be Spire Alabama’s actual 2018 O&M expense with an adjustment to that base in 2019
of 2/3 of the 2018 CCM differential (amount below the CCM range in 2018) and an adjustment in 2020 of 1/3 of the
2018 CCM differential, with no adjustment to the base in 2021 and 2022. Spire Alabama’s 2018 actual rate year
O&M expense will be inflation adjusted using a new index range based on the June CPI-U each rate year plus or
minus 1.50%.
On June 28, 2010, the APSC approved a reduction in depreciation rates, effective June 1, 2010, and a regulatory
liability to be 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 (“ESR”) and other APSC-approved
charges. The refunds are due to a re-estimation of future removal costs provided for through the prior depreciation
rates. For fiscal 2018, 2017, and 2016, NSR amounts returned to customers were approximately $7.2, $6.3, and
$8.3, respectively. As of September 30, 2018, $5.2 remains to be refunded through rate reductions effective
December 1, 2018, through March 31, 2019.
124
The APSC approved an ESR in 1998, which was subsequently modified and expanded in 2010. As currently
approved, the ESR provides deferred treatment and recovery for the following: (1) extraordinary O&M expenses
related to environmental response costs; (2) extraordinary O&M expenses related to self-insurance costs that exceed
$1.0 per occurrence; (3) extraordinary O&M expenses, other than environmental response costs and self-insurance
costs, resulting from a single force majeure event or multiple force majeure events greater than $0.3 and $0.4,
respectively, during a rate year; and (4) negative individual large commercial and industrial customer budget
revenue variances that exceed $0.4 during a rate year. Charges to the ESR are subject to certain limitations which
may disallow deferred treatment and which prescribe the timing of recovery. Funding to the ESR is provided as a
reduction to the refundable negative salvage balance over its nine-year term beginning December 1, 2010.
Subsequent to the nine-year period and subject to APSC authorization, Spire Alabama expects to be able to recover
underfunded ESR balances over a five-year amortization period with an annual limitation of $0.7. Amounts in
excess of this limitation are deferred for recovery in future years.
Spire Alabama has APSC approval for an intercompany revolving credit agreement allowing Spire Alabama to
borrow from Spire in a principal amount not to exceed $200.0 at any time outstanding in combination with its bank
line of credit, and to loan to Spire in a principal amount not to exceed $25.0 at any time outstanding. Borrowings
may be used for the following purposes: (a) meeting increased working capital requirements; (b) financing
construction requirements related to additions, extensions, and replacements of the distribution systems; and (c)
financing other expenditures that may arise from time to time in the normal course of business. On October 2, 2018,
the APSC approved an application for up to $90.0 of long-term debt financing.
Spire
In addition to those discussed above for Spire Missouri and Spire Alabama, Spire is affected by the following
regulatory matters.
Spire Gulf has similar rate regulation to Spire Alabama. The RSE allowed range of return on average common equity
is 10.45% to 10.95% with an adjusting point of 10.7%. The CCM has the same return and similar recovery provisions
when expenses exceed or are under a band of +/- 1.50% around the CPI-U inflated O&M per customer expense level
from September 30, 2017, excluding expenses for pensions and gas bad debt. Additionally, it has a Cast Iron Main
Replacement factor that provides an enhanced return on the pro-rata costs associated with cast iron main
replacement for miles over 10 miles per year based on a 75% weighting for the equity content. Spire Gulf also has an
ESR for negative revenue variances over $0.1 or a force majeure event expense of $0.1 (or two events that exceed
$0.15), a Self Insurance Reserve for general liability coverage, and an Environmental Cost Recovery Factor that
recovers 90% of prudently incurred costs for compliance with environmental laws, rules and regulations. It also has
an APSC-approved intercompany revolving credit agreement with Spire to borrow in a principal amount not to
exceed $50.0, and to loan up to $25.0.
Spire Gulf’s rates were reduced $1.9 effective February 1, 2018, to reflect lower income taxes resulting from the
TCJA.
Spire Mississippi utilizes a formula rate-making process under the Rate Stabilization Adjustment (“RSA”) Rider. It
is based on a formulaically derived return on equity (currently 9.34%), and is updated on an annual basis if the
equity return on an end of period rate base is beyond the allowed return on equity by 1.0%, with 75% of any shortfall
back to the midpoint being put into a rate increase and 50% of any excess back to the midpoint resulting in a rate
decrease. Updates may include known and measurable adjustments to historic costs from the 12 months ended
June 30, submitted September 15 for an effective date of November 1, unless disputed by the Mississippi Public
Utilities Staff, with any disputes to be resolved by the MSPSC by January 15 of the following year. In December
2015, a Supplemental Growth Rider (“SGR”) was approved for a 3-year period to provide recovery of certain system
expansion projects. On September 4, 2018, the SGR was extended to October 15, 2021.
On April 10, 2018, the MSPSC approved an agreement between Spire Mississippi and the Mississippi Public Utility
Staff settling its Rates Stabilization and Adjustments filing that was made on September 15, 2017, and included
adjusting the federal income tax rate for the TCJA resulting in a $0.2 reduction in the annualized revenue
requirement. New rates were effective May 1, 2018.
In August 2018, FERC approved an order issuing a Certificate of Public Convenience and Necessity for the Spire
STL Pipeline, and in November 2018, FERC issued a Notice to Proceed, allowing construction to begin.
In fiscal 2018, the Company acquired and began integrating two neighboring natural gas storage facilities in
Wyoming. Both storage facilities fall under FERC jurisdiction, and on July 9, 2018, the Company submitted an
application with the FERC to abandon the cost-based tariff of the second facility and combine the operations under
one FERC certificate with the market-based tariff of the first facility.
125
15.
COMMITMENTS AND CONTINGENCIES
Commitments
The Company and the Utilities have entered into contracts with various counterparties, expiring on dates through
2032, for the storage, transportation, and supply of natural gas. Minimum payments required under the contracts in
place at September 30, 2018 are estimated at $1,240.9, $572.4 and $286.5 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.
Spire NGL Inc. is providing liquid propane transportation service to Spire Missouri pursuant to an approved FERC
tariff and a contractual arrangement with Spire Missouri. In accordance with the terms of that agreement, Spire
Missouri is obligated to pay Spire NGL Inc. approximately $1.0 annually, at current rates. The agreement renews at
the end of each contract year, unless terminated by either party upon provision of at least six months’ notice.
A consolidated subsidiary is a general partner in an unconsolidated partnership that invests in real estate
partnerships. The subsidiary and third parties are jointly and severally liable for the payment of mortgage loans in
the aggregate outstanding amount of approximately $1.3 incurred in connection with various real estate ventures.
Spire has no reason to believe that the other principal liable parties will not be able to meet their proportionate
share of these obligations. Spire further believes that the asset values of the real estate properties are sufficient to
support these mortgage loans.
Leases
The lease agreement covering the Company’s primary office space in Missouri extends through January 2035. The
lease agreement covering the primary office space of Spire Alabama extends through February 2020. Spire Alabama
has an operating lease for additional office space that extends to January 31, 2024. Spire Alabama has subleased all
of this additional office space to Energen pursuant to a sublease that expires on December 31, 2019 with an option
to extend through January 31, 2024. Spire Missouri, Spire Alabama, Spire Marketing, and other Spire subsidiaries
have other relatively minor rental arrangements that require minimum rental payments. Aggregate rental expense
and annual minimum rental commitments under all leases having an initial or remaining non-cancelable term of
more than one year are shown below.
Aggregate Rental Expense
Minimum Rental Commitments
2018
2017
2016
2019
2020
2021
2022
2023
Later
Total
Spire
$
10.0
$
Spire Missouri
Spire Alabama
3.6
4.7
9.7
4.8
4.6
$
11.9
$
4.3
3.7
$
$
9.7
1.3
4.1
7.8
0.6
2.9
6.7
0.3
2.1
$
$
6.5
0.1
2.1
6.5
—
2.1
$ 41.3
$ 78.5
—
0.7
2.3
14.0
Amounts in the table above have not been reduced for sublease rentals. For Spire Alabama and Spire, annual
sublease rentals were $2.1 for fiscal years 2018, 2017, and 2016, and minimum future rentals to be received in fiscal
years 2019 and 2020 are $2.1 and $0.5, respectively.
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 the
final outcome will not have a material effect on the 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.
126
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 Missouri
Spire Missouri has identified three former MGP sites in the city of St. Louis, Missouri (the “City”) where costs have
been incurred and claims have been asserted. Spire Missouri has enrolled two 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 (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. To date, MDNR has not approved the agreement, so remedial investigation 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 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 requested
more information from the EPA, some of which 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 MGP sites. While some of the insurers have denied coverage and reserved
their rights, Spire Missouri retains the right to seek potential reimbursements 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.
127
In its western service area, Spire Missouri has seven owned MGP sites enrolled in the BVCP, including Joplin MGP
#1, St. Joseph MGP #1, Kansas City Coal Gas Station B, Kansas City Station A Railroad area, Kansas City Coal Gas
Station A North, Kansas City Coal Gas Station A South, and Independence MGP #2. Source removal has been
conducted at all of the owned sites since 2003 with the exception of Joplin. 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,
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.
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
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.
Spire Alabama is in the chain of title of nine former MGP sites, four of which it still owns, and five former
manufactured gas distribution sites, one of which it still owns. 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 matters.
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 13 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.
128
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.
16.
INTERIM FINANCIAL INFORMATION (UNAUDITED)
Spire
In the opinion of Spire, the quarterly information presented below for fiscal years 2018 and 2017 includes all
adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results of operations
for such periods. Variations in consolidated operations reported on a quarterly basis primarily reflect the seasonal
nature of the business of the Utilities.
Three Months Ended
Fiscal Year 2018
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Basic Earnings (Loss) Per Share of Common Stock
Diluted Earnings (Loss) Per Share of Common Stock
Fiscal Year 2017
Total Operating Revenues
Operating Income
Net Income (Loss)
Basic Earnings (Loss) Per Share of Common Stock
Diluted Earnings (Loss) Per Share of Common Stock
Spire Missouri
Dec. 31 March 31
June 30
Sept. 30
$
$
$
$
$
$
561.8
$
813.4
$
350.6
$
239.2
105.1
116.0
2.40
2.39
495.1
89.1
45.2
0.99
0.99
$
$
$
$
$
141.8
98.2
2.03
2.03
663.4
180.4
108.0
2.36
2.36
$
$
$
$
$
52.4
25.9
0.52
0.52
323.5
50.3
21.7
0.45
0.45
$
$
$
$
$
(19.6)
(25.9)
(0.51)
(0.51)
258.7
1.9
(13.3)
(0.28)
(0.28)
In the opinion of Spire Missouri, the quarterly information presented below for fiscal years 2018 and 2017 includes
all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results of
operations for such periods. Variations in operations reported on a quarterly basis primarily reflect their seasonal
nature.
Three Months Ended
Fiscal Year 2018
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Fiscal Year 2017
Total Operating Revenues
Operating Income
Net Income
Dec. 31 March 31
June 30
Sept. 30
$
$
$
$
392.3
74.8
89.4
363.6
64.5
38.0
$
$
533.2
52.1
38.4
447.2
90.2
57.0
$
$
215.5
21.0
11.5
198.5
30.5
15.5
144.6
(6.6)
(10.0)
162.6
11.7
2.5
129
Spire Alabama
In the opinion of Spire Alabama, the quarterly information presented below for fiscal years 2018 and 2017 includes
all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results of
operations for such periods. Variations in operations reported on a quarterly basis primarily reflect their seasonal
nature.
Three Months Ended
Fiscal Year 2018
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Fiscal Year 2017
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Dec. 31 March 31
June 30
Sept. 30
$
$
$
$
120.8
19.0
(49.6)
86.7
19.8
10.3
$
$
218.3
78.2
55.6
158.8
78.9
47.6
$
$
100.3
12.3
6.3
90.5
15.5
7.4
61.3
(10.9)
(11.0)
64.5
(8.4)
(7.2)
130
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
There have been no changes in or disagreements on accounting and financial disclosure with Spire’s, Spire
Missouri’s, or Spire Alabama’s outside auditors that are required to be disclosed.
Item 9A. 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 our fourth fiscal quarter
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
There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our 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
There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
The Management Reports on Internal Control Over Financial Reporting and the Reports of Independent Registered
Public Accounting Firm are included in Item 8, Financial Statements and Supplementary Data.
131
Item 9B. Other Information
On August 31, 2018, Spire Alabama entered into extensions to the following firm transportation and/or storage
agreements with Southern Natural Gas Company, LLC effective September 1, 2018:
• Firm Transportation Service Agreement Under Rate Schedule FT-NN, Contract #450291-MFTSNG,
• Firm Transportation Service Agreement Under Rate Schedule FT, Contract #450292-MFTSNG, and
•
Service Agreement Under Rate Schedule CSS, Contract #450293-MFTSNG.
In each case, the primary term of the agreement was extended to September 1, 2021. The agreements continue to be
subject to automatic annual extensions unless otherwise terminated by either party.
On June 26 and 28, 2018, respectively, Spire Missouri entered into the following replacement firm transportation
service agreements with Enable Mississippi River Transmission, LLC effective August 1, 2018:
• Transportation Service Agreement For Rate Schedule FTS, Contract #6081, and
• Transportation Service Agreement For Rate Schedule FTS, Contract #6082.
In each case, the primary term of the agreement extends to August 1, 2019. The agreements are not subject to
automatic annual extensions.
Item 10. Directors, Executive Officers and Corporate Governance
Information about:
PART III
• our directors is incorporated by reference from the discussion under Proposal 1 of our proxy statement to be
filed on or about December 14, 2018 (“2018 proxy statement”);
• our executive officers is reported in Part I of this Form 10-K;
• compliance with Section 16(a) of the Exchange Act is incorporated by reference from the discussion in our
2018 proxy statement under the heading “Section 16(a) beneficial ownership reporting compliance”;
• our Financial Code of Ethics is posted on our website, www.SpireEnergy.com, under Investors/Governance/
Governance documents (http://investors.spireenergy.com/governance/governance-documents); and
• our Audit Committee, our Audit Committee financial experts, and submitting nominations to the Corporate
Governance Committee is incorporated by reference from the discussion in our 2018 proxy statement under
the heading “Corporate governance.”
In addition, our Code of Business Conduct, Corporate Governance Guidelines, and charters for our Audit,
Compensation and Corporate Governance Committees are available under “Governance documents” on our website,
as indicated above, and a copy will be sent to any shareholder upon written request.
Item 11. Executive Compensation
Information about director and executive compensation is incorporated by reference from the discussion in our
2018 proxy statement under the headings: “Directors’ compensation,” “Compensation Discussion and Analysis,”
and “Executive compensation.” The 2018 proxy statement also includes the “Compensation committee report,”
which is deemed furnished and not filed.
132
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Information about security ownership of certain beneficial owners and management is incorporated by reference
from the discussion in our 2018 proxy statement under “Beneficial ownership of Spire common stock.”
The following table sets forth aggregate information regarding the Company’s equity compensation plans as of
September 30, 2018:
Plan category
Equity compensation plans
approved by security holders (1)
Equity compensation plans not
approved by security holders
Total
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted average
exercise price of
outstanding options,
warrants and rights
(a)
635,764
—
635,764
(b)
$—
—
$—
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
315,209
—
315,209
(1) Reflects the Company’s 2015 Equity Incentive Plan.
Information regarding the above referenced plan is set forth in Note 2, Stock-Based Compensation, of the Notes to
Financial Statements in Item 8 of this report.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information about:
• our policy and procedures for related party transactions and
•
the independence of our directors
is included in our 2018 proxy statement under “Corporate governance” and is incorporated by reference. There were
no related party transactions in fiscal 2018.
Item 14. Principal Accounting Fees and Services
Information about fees paid to our independent registered public accountant and our policy for pre-approval of
services provided by our independent registered public accountant is incorporated by reference from our 2018
proxy statement under “Fees of independent registered public accountant” and “Corporate governance,”
respectively.
133
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)
(1) Financial Statements
See Item 8, Financial Statements and Supplementary Data, filed herewith, for a list of financial
statements.
(2) Financial Statement Schedules
Schedules have been omitted because they are not applicable, related significance tests were not met,
or the required data has been included in the financial statements or notes to financial statements.
(3) Exhibits
Exhibit
Number
2.01*
3.01*
3.02*
3.03*
3.04*
3.05*
3.06*
4.01*
4.02*
4.03*3
4.04*3
4.05*3
4.06*3
4.07*3
4.08*3
Description
Agreement and Plan of Merger and Reorganization; filed as Appendix A to proxy statement/
prospectus contained in the Company’s Registration Statement on Form S-4 filed October 27, 2000,
No. 333-48794.
Articles of Incorporation of Spire Inc., as amended, effective as of April 28, 2016; filed as Exhibit 3.1
to the Company’s Current Report on Form 8-K filed May 3, 2016.
Bylaws of Spire Inc., as amended, effective as of April 28, 2016; filed as Exhibit 3.2 to the Company’s
Current Report on Form 8-K filed May 3, 2016.
Spire Missouri Inc.’s Amended Articles of Incorporation, as amended, effective August 30, 2017; filed
as Exhibit 3.1 to Spire Missouri’s Current Report on Form 8-K filed September 1, 2017.
Amended Bylaws of Spire Missouri Inc. effective as of August 30, 2017; filed as Exhibit 3.2 to Spire
Missouri’s Current Report on Form 8-K filed September 1, 2017.
Articles of Amendment of the Articles of Incorporation of Spire Alabama Inc., dated September 1,
2017; which was filed as Exhibit 3.3 to Spire Alabama’s Current Report on Form 8-K filed September
1, 2017.
Amended Bylaws of Spire Alabama Inc. effective September 1, 2017; filed as Exhibit 3.4 to Spire
Alabama’s Current Report on Form 8-K filed September 1, 2017.
Mortgage and Deed of Trust, dated as of February 1, 1945; filed as Exhibit 7-A to registration
statement No. 2-5586.
Fourteenth Supplemental Indenture, dated as of October 26, 1976; filed as Exhibit b-4 to registration
statement No. 2-64857 filed June 26, 1979.
Twenty-Fourth Supplemental Indenture dated as of June 1, 1999, between Laclede Gas and State
Street Bank and Trust Company of Missouri, N.A., as trustee; filed as Exhibit 4.01 to Laclede Gas’
Current Report on Form 8-K filed June 4, 1999.
Twenty-Fifth Supplemental Indenture dated as of September 15, 2000, between Laclede Gas and
State Street Bank and Trust Company of Missouri, as trustee; filed as Exhibit 4.01 to Laclede Gas’
Current Report on Form 8-K filed September 29, 2000.
Twenty-Seventh Supplemental Indenture dated as of April 15, 2004, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.01 to Laclede Gas’ Current Report on Form 8-K filed
April 28, 2004.
Twenty-Eighth Supplemental Indenture dated as of April 15, 2004, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.02 to Laclede Gas’ Current Report on Form 8-K filed
April 28, 2004.
Twenty-Ninth Supplemental Indenture dated as of June 1, 2006, between Laclede Gas and UMB
Bank and Trust, N.A., as trustee; filed as Exhibit 4.1 to Laclede Gas’ Current Report on Form 8-K
filed June 9, 2006.
Thirty-First Supplemental Indenture, dated as of March 15, 2013, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.1 to the Company’s Form 10-Q for the fiscal quarter
ended March 31, 2013.
134
Exhibit
Number
4.09*3
4.10*3
4.11*3
4.12*
4.13*
4.14*
4.15*2
4.16*2
4.17*2
4.18*2
4.19*
4.20*
4.21*
4.22*3
4.23*
10.01*†3
10.02*3
10.03*3
Description
Thirty-Second Supplemental Indenture, dated as of August 13, 2013, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.1 to Laclede Gas’ Current Report on Form 8-K filed
August 13, 2013.
Laclede Gas Board of Directors’ Resolution dated August 28, 1986 which generally provides that the
Board may delegate its authority in the adoption of certain employee benefit plan amendments to
certain designated Executive Officers; filed as Exhibit 4.12 to Laclede Gas’ Annual Report on Form
10-K for the fiscal year ended September 30, 1991.
Laclede Gas’ Board of Directors’ Resolutions dated March 27, 2003, updating authority delegated
pursuant to August 28, 1986 Laclede Gas resolutions; filed as Exhibit 4.19(a) to the Company’s
Annual Report on Form 10-K for the fiscal year ended September 30, 2003.
Junior Subordinated Indenture, dated as of June 11, 2014, between the Company and U.S. Bank
National Association, as trustee; filed as Exhibit 4.1 to Spire’s Current Report on Form 8-K filed June
11, 2014.
Indenture, dated as of August 19, 2014, between the Company and UMB Bank & Trust, N.A., as
trustee; filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed August 19, 2014.
First Supplemental Indenture, dated as of August 19, 2014, between the Company and UMB Bank &
Trust, N.A., as trustee (including Form of Floating Rate Senior Notes due 2017, Form of 2.55% Senior
Notes due 2019 and Form of 4.70% Senior Notes due 2044); filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed August 19, 2014.
Indenture dated as of November 1, 1993, between Alagasco and NationsBank of Georgia, National
Association, Trustee, (“Alagasco 1993 Indenture”); filed as Exhibit 4(k) to Alagasco’s Registration
Statement on Form S-3 (Registration No. 33-70466).
Officers’ Certificate, dated January 14, 2005, pursuant to Section 301 of the Alagasco 1993 Indenture
setting forth the terms of the 5.20 percent Notes due January 15, 2020; filed as Exhibit 4.4 to
Alagasco’s Current Report on Form 8-K filed January 14, 2005.
Officers’ Certificate, dated November 17, 2005, pursuant to Section 301 of the Alagasco 1993
Indenture setting forth the terms of the 5.368 percent Notes due December 1, 2015; filed as Exhibit
4.2 to Alagasco’s Current Report on Form 8-K filed November 17, 2005.
Officers’ Certificate, dated January 16, 2007, pursuant to Section 301 of the Alagasco 1993 Indenture
setting forth the terms of the 5.90 percent Notes due January 15, 2037; filed as Exhibit 4.2 to
Alagasco’s Current Report on Form 8-K filed January 16, 2007.
Second Supplemental Indenture, dated as of February 27, 2017, between Spire Inc. and UMB Bank &
Trust, N.A., as Trustee (including Form of 3.543% Senior Notes due 2024); filed as Exhibit 4.2 to the
Company’s Current Report on Form 8-K filed February 27, 2017.
Master Note Purchase Agreement dated June 20, 2016, among Spire Inc. and certain institutional
purchasers party thereto; filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2017.
First Supplement to Master Note Purchase Agreement dated as of March 15, 2017, among Spire Inc.
and certain institutional purchasers party thereto; filed as Exhibit 4.3 to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2017.
Bond Purchase Agreement dated March 20, 2017, among Laclede Gas Company and certain
institutional purchasers party thereto (including Form of Thirty-Third Supplemental Indenture);
filed as Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2017.
First Supplement to Master Note Purchase Agreement, dated as of December 1, 2017, between Spire
Alabama Inc. and certain institutional investors; filed as Exhibit 4.01 to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 2017.
Automated Meter Reading Services Agreement, dated as of March 11, 2005, between Cellnet
Technology, Inc. and Laclede Gas; filed as Exhibit 10.1 to Laclede Gas’ Quarterly Report on Form 10-
Q for the fiscal quarter ended March 31, 2005. Confidential portions of this exhibit have been omitted
and filed separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Restated Laclede Gas Supplemental Retirement Benefit Plan, as amended and restated
as of January 1, 2005; filed as Exhibit 10.06 to Laclede Gas’ Quarterly Report on Form
10-Q for the fiscal quarter ended December 31, 2008.
Laclede Gas Supplemental Retirement Benefit Plan II, effective as of January 1, 2005;
filed as Exhibit 10.7 to Laclede Gas’ Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 2008.
135
Exhibit
Number
10.04*3
10.05*3
10.06*3
10.07*3
10.08*3
10.09*
10.10*
10.11*3
10.12*3
10.13*
10.14*3
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*1
10.21*1
Description
Amendment and Restatement of Retirement Plan for Non-Employee Directors of
Laclede Gas as of November 1, 2002; filed as Exhibit 10.08c to Laclede Gas’ Annual
Report on Form 10-K for the fiscal year ended September 30, 2002.
Amendment to Terms of Retirement Plan for Non-Employee Directors of Laclede Gas
as of October 1, 2004; filed as Exhibit 10.2 to Laclede Gas’ Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2004.
Salient Features of Laclede Gas’ Deferred Income Plan for Directors and Selected
Executives, including amendments adopted by the Board of Directors on July 26, 1990;
filed as Exhibit 10.12 to Laclede Gas’ Annual Report on Form 10-K for the fiscal year
ended September 30, 1991.
Amendment to Laclede Gas’ Deferred Income Plan for Directors and Selected
Executives, adopted by the Board of Directors on August 27, 1992; filed as Exhibit
10.12a to Laclede Gas’ Annual Report on Form 10-K for the fiscal year ended
September 30, 1992.
Salient Features of Laclede Gas’ Deferred Income Plan II for Directors and Selected
Executives (as amended and restated effective as of January 1, 2005); filed as Exhibit
10.1 to Laclede Gas’ Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 2008.
Salient Features of the Company’s Deferred Income Plan for Directors and Selected
Executives (effective as of January 1, 2005); filed as Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2008.
The Company’s Deferred Income Plan for Directors and Selected Executives, as
Amended and Restated as of January 1, 2015; filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed November 4, 2014.
Form of Indemnification Agreement between Laclede Gas and its Directors and
Officers; filed as Exhibit 10.13 to Laclede Gas’ Annual Report on Form 10-K for the
fiscal year ended September 30, 1990.
The Laclede Group Management Continuity Protection Plan, effective as of January 1,
2005; filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 2008.
Form of Management Continuity Protection Agreement; filed as Exhibit 10.5a to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,
2008.
The Laclede Group 2011 Management Continuity Protection Plan; filed as Exhibit 10.25
to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2010.
Form of Agreement under the Company’s 2011 Management Continuity Protection
Plan; filed as Exhibit 10.25a to the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2010.
Restricted Stock Plan for Non-Employee Directors as amended and effective January
29, 2009; filed as Appendix A to the Company’s Definitive Proxy Statement on
Schedule 14A filed December 22, 2008.
Amendment to Restricted Stock Plan for Non-Employee Directors; filed as Exhibit 10.6
to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2011.
Form of Non-Qualified Stock Option Award Agreement with Mandatory Retirement
Provisions; filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
November 5, 2004.
Form of Non-Qualified Stock Option Award Agreement without Mandatory Retirement
Provisions; filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed
November 5, 2004.
The Laclede Group 2006 Equity Incentive Plan, as amended effective February 1, 2012;
filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2012.
The Laclede Group 2015 Equity Incentive Plan; filed as the Appendix to the Company’s
Definitive Proxy Statement on Form DEF 14A filed December 19, 2014.
136
Exhibit
Number
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*3
10.28*3
10.29*3
10.30*3
10.31*
10.32*2
10.33*2
10.34*2
10.35*2
10.36*2
10.37*2
10.38*2
10.39*2
10.40*2
Description
The Company’s Form of Restricted Stock Award Agreement; filed as Exhibit 10.8 to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,
2008.
The Company’s Form of Performance Contingent Restricted Stock Award Agreement;
filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 2009.
The Company’s Form of Performance Contingent Restricted Stock Unit Award
Agreement; filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 2011.
The Company’s Form of Performance Contingent Restricted Stock Unit Award
Agreement; filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 2012.
Note Purchase Agreement, dated August 3, 2012, by and among the Company and the Purchasers
listed in Schedule A thereto; filed as Exhibit 10.28 to the Company’s Annual Report on Form 10-K for
the fiscal year ended September 30, 2012.
Laclede Gas Cash Balance Supplemental Retirement Benefit Plan, effective as of
January 1, 2009; filed as Exhibit 10.19 to Laclede Gas’ Annual Report on Form 10-K for
the fiscal year ended September 30, 2012.
Amended and Restated Storage Service Agreement For Rate Schedule FSS, Contract #3147, dated
July 30, 2013, between CenterPoint Energy-Mississippi River Transmission Corporation and Laclede
Gas; filed as Exhibit 10.1 to Laclede Gas’ Current Report on Form 8-K filed August 2, 2013.
Amended and Restated Transportation Service Agreement for Rate Schedule FTS, Contract #3310,
dated July 30, 2013, between CenterPoint Energy-Mississippi River Transmission Corporation and
Laclede Gas; filed as Exhibit 10.2 to Laclede Gas’ Current Report on Form 8-K filed August 2, 2013.
Amended and Restated Transportation Service Agreement for Rate Schedule FTS, Contract #3311,
dated July 30, 2013, between CenterPoint Energy-Mississippi River Transmission Corporation and
Laclede Gas; filed as Exhibit 10.3 to Laclede Gas’ Current Report on Form 8-K filed August 2, 2013.
Lease Agreement, dated January 21, 2014, between the Company, as Tenant, and Market 700, LLC,
as Landlord; filed as Exhibit 10.1 to Spire Inc.’s Current Report on Form 8-K filed January 27, 2014.
Master Note Purchase Agreement, dated as of June 5, 2015, among Alagasco and certain institutional
purchasers; filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2015.
Note Purchase Agreement, dated December 22, 2011, among Alagasco and the Purchasers thereto
(the AIG purchasers) with respect to $25 million 3.86 percent Senior Notes due December 22, 2021;
filed as Exhibit 10.1 to Alagasco’s Current Report on Form 8-K filed December 22, 2011.
Note Purchase Agreement, dated December 22, 2011, among Alagasco and the Purchasers thereto
(the Prudential purchasers) with respect to $25 million 3.86 percent Senior Notes due December 22,
2021; filed as Exhibit 10.2 to Alagasco’s Current Report on Form 8-K filed December 22, 2011.
Service Agreement Under Rate Schedule CSS (No. SSNG1), between Southern Natural Gas Company
and Alagasco, dated as of September 1, 2005; filed as Exhibit 10(a) to Alagasco’s Annual Report on
Form 10-K for the year ended December 31, 2005.
Amended Exhibit A, effective January 15, 2014, to Service Agreement Under Rate Schedule CSS (No.
SSNG1) between Southern Natural Gas Company and Alagasco dated September 1, 2005; filed as
Exhibit 10(g) to Alagasco’s Annual Report on Form 10-K for the year ended December 31, 2013.
Firm Transportation Service Agreement Under Rate Schedule FT and/or FT-NN (No. FSNG1),
between Southern Natural Gas Company and Alagasco dated as of September 1, 2005; filed as
Exhibit 10(b) to Alagasco’s Annual Report on Form 10-K for the year ended December 31, 2005.
Amended Exhibit A, effective October 1, 2013, to Firm Transportation Service Agreement (No.
FSNG1) between Southern Natural Gas Company and Alagasco; filed as Exhibit 10(i) to Alagasco’s
Annual Report on Form 10-K for the year ended December 31, 2013.
Amended Exhibit B, effective November 1, 2013, to Firm Transportation Service Agreement (No.
FSNG1) between Southern Natural Gas Company and Alagasco; filed as Exhibit 10(j) to Alagasco’s
Annual Report on Form 10-K for the year ended December 31, 2013.
Amendment to Service Agreement between Transcontinental Gas Pipeline Corporation and Alagasco,
dated December 2, 2005; filed as Exhibit 10(e) to Alagasco’s Annual Report on Form 10-K for the
year ended December 31, 2005.
137
Exhibit
Number
10.41*1
10.42*1
10.43*2 3
10.44*
10.45*
10.46*†3
10.47*3
10.48*
10.49*1
10.50*1
10.51*
10.52*1
10.53*
10.54*
10.55
10.56*
10.57*
10.58
Description
The Laclede Group, Inc. Annual Incentive Plan, as Amended; filed as Appendix to the
Company’s Definitive Proxy Statement on Schedule 14A filed December 18, 2015.
The Laclede Group, Inc. Deferred Income Plan, as Amended and Restated as of
January 1, 2016; filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed November 24, 2015.
Loan Agreement, dated December 14, 2016, by and among Spire Inc., Alabama Gas Corporation,
Laclede Gas Company, and the several banks party thereto, including Wells Fargo Bank, National
Association, as Administrative Agent; JPMorgan Chase Bank, N.A. and U.S. Bank National
Association, as Co-Syndication Agents; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A.,
and U.S. Bank National Association, as Joint Lead Arrangers and Joint Bookrunners; and Bank of
America, N.A., Credit Suisse AG, Cayman Islands Branch, Morgan Stanley Bank, N.A., Regions Bank,
Royal Bank of Canada, and TD Bank, N.A., as Documentation Agents; filed as Exhibit 99.1 to the
Company’s Current Report on Form 8-K filed December 16, 2016.
Commercial Paper Dealer Agreement, dated December 21, 2016, between Spire Inc. and Wells Fargo
Securities, LLC; filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 2016.
Commercial Paper Dealer Agreement, dated December 21, 2016, between Spire Inc. and Credit
Suisse Securities (USA) LLC; filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q
for the fiscal quarter ended December 31, 2016.
Precedent Agreement dated as of January 25, 2017, between Laclede Gas Company and Spire STL
Pipeline LLC; filed as Exhibit 10.1 to Laclede Gas’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2017.
Amendment to Precedent Agreement dated as of April 17, 2017, between Laclede Gas Company and
Spire STL Pipeline LLC; filed as Exhibit 10.2 to Laclede Gas’s Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2017.
Spire Inc. Executive Severance Plan; filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed May 2, 2017.
Amendment 1 to The Laclede Group Annual Incentive Plan effective January 1, 2018;
filed as Exhibit 10.53 to the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2017.
Amendment 1 to The Laclede Group 2015 Equity Incentive Plan effective January 1,
2018; filed as Exhibit 10.54 to the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2017.
Amendment 1 to Spire Inc. Executive Severance Plan effective January 1, 2018; filed as
Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2017.
Amendment 1 to The Laclede Group 2011 Management Continuity Protection Plan
effective January 18, 2018; filed as Exhibit 10.56 to the Company’s Annual Report on
Form 10-K for the fiscal year ended September 30, 2017.
Amendment 2 to Spire Inc. Deferred Income Plan effective January 1, 2018; filed as
Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2017.
Contract between Spire STL Pipeline LLC and Michels Corporation for Procurement and Installation
of Gas Pipeline for the Spire STL Pipeline, dated as of April 26, 2018; filed as Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2018.
First Amendment to Contract between Spire STL Pipeline LLC and Michels Corporation for
Procurement and Installation of Gas Pipeline, dated as of October 9, 2018.
First Amendment to Loan Agreement, dated as of October 31, 2018, by and among Spire Inc., a
Missouri corporation, Spire Alabama Inc. (formerly Alabama Gas Corporation), an Alabama
corporation, and Spire Missouri Inc. (formerly Laclede Gas Company), a Missouri corporation, the
Banks from time to time party thereto, and Wells Fargo Bank, National Association, as
Administrative Agent for the Banks; filed as Exhibit 10.1 to the Company’s Current Report on Form
8-K filed November 6, 2018.
Amendment 3 to Spire Deferred Income Plan effective January 1, 2019; filed as Exhibit
10.1 to the Company’s Current Report on Form 8-K filed November 14, 2018.
Transportation Service Agreement for Rate Schedule FTS, Contract #6081, dated June 28, 2018,
between Enable Mississippi River Transmission, LLC and Spire Missouri.
138
Exhibit
Number
10.59
10.60
10.61
10.62
21
23.1
23.2
23.3
31.1
31.2
31.3
32.1
32.2
32.3
101.INS(×)
101.SCH(×)
101.CAL(×)
101.DEF(×)
101.LAB(×)
101.PRE(×)
Description
Transportation Service Agreement for Rate Schedule FTS, Contract #6082, dated June 28, 2018,
between Enable Mississippi River Transmission, LLC and Spire Missouri.
Firm Transportation Service Agreement Under Rate Schedule FT-NN, Contract #450291-MFTSNG
dated August 31, 2018, between Southern Natural Gas Company, L.L.C. and Spire Alabama.
Firm Transportation Service Agreement Under Rate Schedule FT, Contract #450292-MFTSNG dated
August 31, 2018, between Southern Natural Gas Company, L.L.C. and Spire Alabama.
Service Agreement Under Rate Schedule CSS, Contract #450293-MFTSNG dated August 31, 2018,
between Southern Natural Gas Company, L.L.C. and Spire Alabama.
Subsidiaries of the Company.
Consent of Independent Registered Public Accounting Firm of the Company.
Consent of Independent Registered Public Accounting Firm of Spire Missouri Inc.
Consent of Independent Registered Public Accounting Firm of Spire Alabama Inc.
Certifications under Rule 13a-14(a) of the CEO and CFO of the Company.
Certifications under Rule 13a-14(a) of the CEO and CFO of Spire Missouri Inc.
Certifications under Rule 13a-14(a) of the CEO and CFO of Spire Alabama Inc.
Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of the Company.
Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of Spire Missouri Inc.
Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of Spire Alabama Inc.
XBRL Instance Document.
XBRL Taxonomy Extension Schema.
XBRL Taxonomy Extension Calculation Linkbase.
XBRL Taxonomy Definition Linkbase.
XBRL Taxonomy Extension Labels Linkbase.
XBRL Taxonomy Extension Presentation Linkbase.
(×) Attached as Exhibit 101 to this Annual Report are the following documents formatted in extensible business reporting
language (“XBRL”): (i) Document and Entity Information; (ii) Consolidated Statements of Income and Statements of Income
for the years ended September 30, 2018, 2017, and 2016; (iii) Consolidated Statements of Comprehensive Income and
Statements of Comprehensive Income for the years ended September 30, 2018, 2017, and 2016; (iv) Consolidated Statements
of Shareholders’ Equity and Statements of Shareholder’s Equity for the years ended September 30, 2018, 2017, and 2016; (v)
Consolidated Statements of Cash Flows and Statements of Cash Flows for the years ended September 30, 2018, 2017, and
2016; (vi) Consolidated Balance Sheets and Balance Sheets at September 30, 2018 and 2017; (vii) Consolidated Statements of
Capitalization and Statements of Capitalization at September 30, 2018 and 2017; and (viii) Notes to Financial Statements. We
also make available on our website the Interactive Data Files submitted as Exhibit 101 to this Annual Report.
*
Incorporated herein by reference and made a part hereof. Spire Inc. File No. 1-16681. Spire Missouri Inc. File No. 1-1822.
Spire Alabama Inc. File No. 2-38960.
† Portions of this exhibit were omitted pursuant to a confidential treatment request submitted pursuant to Rule 24b-2 of the
Exchange Act.
1 The Laclede Group, Inc. changed its name to Spire Inc. effective April 28, 2016.
2 Alabama Gas Corporation (“Alagasco”) changed its name to Spire Alabama Inc. effective September 1, 2017.
3 Laclede Gas Company changed its name to Spire Missouri Inc. effective August 30, 2017.
Bold items reflect management contracts or compensatory plans or arrangements.
139
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date November 15, 2018
Spire Inc.
By /s/ Steven P. Rasche
Steven P. Rasche
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Signature
Title
November 15, 2018
/s/ Suzanne Sitherwood
Suzanne Sitherwood
Director, President and Chief Executive Officer
(Principal Executive Officer)
November 15, 2018
/s/ Steven P. Rasche
Steven P. Rasche
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
November 15, 2018
/s/ Edward L. Glotzbach
Chairman of the Board
Edward L. Glotzbach
November 15, 2018
/s/ Mark A. Borer
Director
Mark A. Borer
November 15, 2018
/s/ Maria V. Fogarty
Director
Maria V. Fogarty
November 15, 2018
/s/ Rob L. Jones
Director
Rob L. Jones
November 15, 2018
/s/ Brenda D. Newberry
Director
Brenda D. Newberry
November 15, 2018
/s/ John P. Stupp Jr.
Director
John P. Stupp Jr.
November 15, 2018
/s/ Mary Ann Van Lokeren
Mary Ann Van Lokeren
Director
140
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date November 15, 2018
Spire Missouri Inc.
By /s/ Steven P. Rasche
Steven P. Rasche
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Signature
Title
November 15, 2018
/s/ Suzanne Sitherwood
Chairman of the Board
Suzanne Sitherwood
November 15, 2018
/s/ Steven P. Rasche
Steven P. Rasche
Director and Chief Financial Officer
(Principal Financial and Accounting Officer)
November 15, 2018
/s/ Steven L. Lindsey
Director, President and Chief Executive Officer
Steven L. Lindsey
(Principal Executive Officer)
November 15, 2018
November 15, 2018
/s/ Mark C. Darrell
Mark C. Darrell
/s/ Scott B. Carter
Scott B. Carter
Director
Director
141
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date November 15, 2018
Spire Alabama Inc.
By /s/ Steven P. Rasche
Steven P. Rasche
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Signature
Title
November 15, 2018
/s/ Suzanne Sitherwood
Chairman of the Board
Suzanne Sitherwood
November 15, 2018
/s/ Steven P. Rasche
Steven P. Rasche
Director and Chief Financial Officer
(Principal Financial and Accounting Officer)
November 15, 2018
/s/ Steven L. Lindsey
November 15, 2018
November 15, 2018
Steven L. Lindsey
/s/ Mark C. Darrell
Mark C. Darrell
/s/ Scott B. Carter
Scott B. Carter
Director and Chief Executive Officer
(Principal Executive Officer)
Director
Director
142
Information for
our shareholders
Annual meeting
The annual meeting of shareholders of Spire Inc. will be held
at 10 a.m. Central Standard Time on Thursday, January 31, 2019,
at Spire’s primary business office, 700 Market Street, St. Louis,
MO 63101. The formal notice of the meeting, proxy statement,
form of proxy and this annual report were made available
to shareholders on December 14, 2018. The proxy statement
and annual report may be found on our website by visiting
SpireEnergy.com.
Transfer agent and registrar
Spire’s shareholder records are maintained by its transfer
agent, Computershare Trust Company, N.A. Inquiries relating
to stockholder records, stock transfers, address changes,
dividend payments, lost certificates and other administrative
matters should be addressed to:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, KY 40233-5000
800-884-4225
Primary business office
Spire Inc.
700 Market Street
St. Louis, MO 63101
314-342-0500
SpireEnergy.com
Dividend reinvestment and stock purchase plan
Spire’s dividend reinvestment and stock purchase plan
provides common shareholders the opportunity to purchase
additional common stock by automatically reinvesting dividends
or by making additional cash payments. Shareholders who are
interested in obtaining more information, including an
enrollment card, may contact:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, KY 40233-5000
800-884-4225
Stock and dividends
Spire Inc. common stock is listed on the New York Stock Exchange
(NYSE) under the symbol SR. There were 50,671,903 shares
outstanding as of September 30, 2018. Spire has paid a cash
dividend continuously since 1946. Dividends are typically paid
on the second business day of January, April, July and October.
The current annualized dividend is $2.37 per share, effective with
the quarterly payment on January 3, 2019.
The high and low trading prices and dividends declared on
common stock for the past two years were:
Fiscal 2018
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Fiscal 2017
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
$ 82.85
75.25
74.25
77.30
High
$ 66.65
68.30
72.83
78.00
Low
$ 73.65
60.09
64.95
70.25
Low
$ 59.54
62.33
63.84
68.30
Dividends
declared
$ 0.5625
0.5625
0.5625
0.5625
Dividends
declared
$ 0.525
0.525
0.525
0.525
Inquiries
Copies of Spire’s Forms 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission, quarterly updates, news releases and
other investor information are available at no charge by visiting
SpireEnergy.com or by contacting Investor Relations:
Scott W. Dudley Jr.
Managing Director, Investor Relations
Scott.Dudley@SpireEnergy.com
314-342-0878
For media inquiries, contact Corporate Communications:
Jessica B. Willingham
Vice President, Communications and Marketing
Jessica.Willingham@SpireEnergy.com
314-342-3300
Spire Inc.
700 Market Street
St. Louis, MO 63101
SpireEnergy.com