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SR Spire

Filed: 7 May 21, 10:11am

 

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021

 

or

TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to

 

Commission

File Number

 

Name of Registrant, Address of Principal

Executive Offices and Telephone Number

 

State of Incorporation

 

I.R.S. Employer Identification Number

 

 

 

 

 

 

 

1-16681

 

Spire Inc.

700 Market Street

St. Louis, MO 63101

314-342-0500

 

Missouri

 

74-2976504

 

 

 

 

 

 

 

1-1822

 

Spire Missouri Inc.

700 Market Street

St. Louis, MO 63101

314-342-0500

 

Missouri

 

43-0368139

 

 

 

 

 

 

 

2-38960

 

Spire Alabama Inc.

605 Richard Arrington Blvd N

Birmingham, AL 35203

205-326-8100

 

Alabama

 

63-0022000

 

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

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

Common Stock $1.00 par value

 

SR

 

New York Stock Exchange LLC

 

 

 

 

 

Depositary Shares, each representing a 1/1,000th interest in a share of 5.90% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $25.00 per share

 

SR.PRA

 

New York Stock Exchange LLC

 

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.

 

Yes

 

No

Spire Missouri Inc.

 

Yes

 

No

Spire Alabama Inc.

 

Yes

 

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.

 

Yes

 

No

Spire Missouri Inc.

 

Yes

 

No

Spire Alabama Inc.

 

Yes

 

No

 

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.

 

X

 

 

 

 

 

 

 

 

Spire Missouri Inc.

 

 

 

 

 

X

 

 

 

 

Spire Alabama Inc.

 

 

 

 

 

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.

 

Yes

 

No

Spire Missouri Inc.

 

Yes

 

No

Spire Alabama Inc.

 

Yes

 

No

 

The number of shares outstanding of each registrant’s common stock as of April 30, 2021, was as follows:

Spire Inc.

 

Common Stock, par value $1.00 per share

 

51,679,561

 

Spire Missouri Inc.

 

Common Stock, par value $1.00 per share (all owned by Spire Inc.)

 

24,577

 

Spire Alabama Inc.

 

Common Stock, par value $0.01 per share (all owned by Spire Inc.)

 

1,972,052

 

 

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

 

This combined Form 10-Q represents separate filings by Spire Inc., 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 registrants, except that information relating to Spire Missouri Inc. and Spire Alabama Inc. are also attributed to Spire Inc.

 

 

 

 

 

 

 

 

 


 

 

TABLE OF CONTENTS

 

 

 

 

 

Page No.

 

 

 

GLOSSARY

2

 

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1

Financial Statements (Unaudited)

 

 

Spire Inc.

 

 

 

Condensed Consolidated Statements of Income

4

 

 

Condensed Consolidated Statements of Comprehensive Income

5

 

 

Condensed Consolidated Balance Sheets

6

 

 

Condensed Consolidated Statements of Shareholders’ Equity

8

 

 

Condensed Consolidated Statements of Cash Flows

10

 

Spire Missouri Inc.

 

 

 

Condensed Statements of Comprehensive Income

11

 

 

Condensed Balance Sheets

12

 

 

Condensed Statements of Shareholder’s Equity

14

 

 

Condensed Statements of Cash Flows

15

 

Spire Alabama Inc.

 

 

 

Condensed Statements of Income

16

 

 

Condensed Balance Sheets

17

 

 

Condensed Statements of Shareholder’s Equity

19

 

 

Condensed Statements of Cash Flows

20

 

Notes to Financial Statements

 

 

 

Note 1. Summary of Significant Accounting Policies

21

 

 

Note 2. Revenue

24

 

 

Note 3. Earnings Per Common Share

25

 

 

Note 4. Regulatory Matters

26

 

 

Note 5. Financing

31

 

 

Note 6. Fair Value of Financial Instruments

33

 

 

Note 7. Fair Value Measurements

34

 

 

Note 8. Pension Plans and Other Postretirement Benefits

36

 

 

Note 9. Information by Operating Segment

40

 

 

Note 10. Commitments and Contingencies

 

42

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

45

Item 3

Quantitative and Qualitative Disclosures About Market Risk

65

Item 4

Controls and Procedures

65

 

 

 

 

PART II. OTHER INFORMATION

 

Item 1

Legal Proceedings

66

Item 1A

Risk Factors

66

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

66

Item 3

Defaults upon Senior Securities

66

Item 4

Mine Safety Disclosures

66

Item 5

Other Information

66

Item 6

Exhibits

67

 

 

 

 

SIGNATURES

68

 

1


 

 

GLOSSARY OF KEY TERMS AND ABBREVIATIONS

 

APSC

Alabama Public Service Commission

 

PGA

Purchased Gas Adjustment

ASC

Accounting Standards Codification

 

RSE

Rate Stabilization and Equalization

Company

Spire Inc.

 

SEC

U.S. Securities and Exchange Commission

Degree days

The average of a day’s high and low temperature below 65, subtracted from 65, multiplied by the number of days impacted

 

Spire

Spire Inc.

FASB

Financial Accounting Standards Board

 

Spire Alabama

Spire Alabama Inc.

FERC

Federal Energy Regulatory Commission

 

Spire EnergySouth

Spire EnergySouth Inc., the parent of Spire Gulf and Spire Mississippi

GAAP

Accounting principles generally accepted in the United States of America

 

Spire Gulf

Spire Gulf Inc.

Gas Marketing

Segment including Spire Marketing, which is engaged in the non-regulated marketing of natural gas and related activities

 

Spire Marketing

Spire Marketing Inc.

Gas Utility

Segment including the regulated operations of the Utilities

 

Spire Mississippi

Spire Mississippi Inc.

GSA

Gas Supply Adjustment

 

Spire Missouri

Spire Missouri Inc.

ISRS

Infrastructure System Replacement Surcharge

 

Spire STL Pipeline

Spire STL Pipeline LLC

MoPSC

Missouri Public Service Commission

 

Spire Storage

Spire’s physical natural gas storage operations at two facilities in Wyoming

MSPSC

Mississippi Public Service Commission

 

U.S.

United States

O&M

Operation and maintenance expense

 

Utilities

Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


 

 

PART I. FINANCIAL INFORMATION

The interim financial statements included herein have been prepared by three separate registrants — Spire Inc. (“Spire” or the “Company”), Spire Missouri Inc. (“Spire Missouri”) and Spire Alabama Inc. (“Spire Alabama”) — without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the registrants’ combined Form 10-K for the fiscal year ended September 30, 2020.

The Financial Information in this Part I includes separate financial statements (i.e., statements of income and comprehensive income, balance sheets, statements of shareholders’ equity and statements of cash flows) for Spire, Spire Missouri and Spire Alabama. The Notes to Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations are also included and presented herein on a combined basis for Spire, Spire Missouri and Spire Alabama.

3


 

Item 1. Financial Statements

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

(In millions, except per share amounts)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating Revenues

 

$

1,104.9

 

 

$

715.5

 

 

$

1,617.5

 

 

$

1,282.4

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

619.1

 

 

 

297.1

 

 

 

800.3

 

 

 

559.0

 

Operation and maintenance

 

 

119.0

 

 

 

105.7

 

 

 

230.6

 

 

 

222.3

 

Depreciation and amortization

 

 

51.5

 

 

 

49.2

 

 

 

102.3

 

 

 

96.7

 

Taxes, other than income taxes

 

 

57.9

 

 

 

53.0

 

 

 

94.0

 

 

 

91.6

 

Total Operating Expenses

 

 

847.5

 

 

 

505.0

 

 

 

1,227.2

 

 

 

969.6

 

Operating Income

 

 

257.4

 

 

 

210.5

 

 

 

390.3

 

 

 

312.8

 

Interest Expense, Net

 

 

25.8

 

 

 

27.2

 

 

 

51.5

 

 

 

53.9

 

Other Income (Expense), Net

 

 

1.8

 

 

 

(19.5

)

 

 

6.1

 

 

 

(13.8

)

Income Before Income Taxes

 

 

233.4

 

 

 

163.8

 

 

 

344.9

 

 

 

245.1

 

Income Tax Expense

 

 

46.0

 

 

 

30.2

 

 

 

68.6

 

 

 

44.5

 

Net Income

 

 

187.4

 

 

 

133.6

 

 

 

276.3

 

 

 

200.6

 

Provision for preferred dividends

 

 

3.7

 

 

 

3.7

 

 

 

7.4

 

 

 

7.4

 

Income allocated to participating securities

 

 

0.3

 

 

 

0.2

 

 

 

0.4

 

 

 

0.3

 

Net Income Available to Common Shareholders

 

$

183.4

 

 

$

129.7

 

 

$

268.5

 

 

$

192.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51.6

 

 

 

51.0

 

 

 

51.6

 

 

 

51.0

 

Diluted

 

 

51.7

 

 

 

51.1

 

 

 

51.7

 

 

 

51.1

 

Basic Earnings Per Common Share

 

$

3.56

 

 

$

2.55

 

 

$

5.21

 

 

$

3.78

 

Diluted Earnings Per Common Share

 

$

3.55

 

 

$

2.54

 

 

$

5.20

 

 

$

3.77

 

 

See the accompanying Notes to Financial Statements.

4


 

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net Income

 

$

187.4

 

 

$

133.6

 

 

$

276.3

 

 

$

200.6

 

Other Comprehensive Income, Before Tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedging derivative instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net hedging gain (loss) arising during the period

 

 

43.5

 

 

 

(41.1

)

 

 

60.7

 

 

 

(22.2

)

Amounts reclassified into net income

 

 

(0.4

)

 

 

(2.2

)

 

 

(0.7

)

 

 

(2.5

)

Net gain (loss) on cash flow hedging derivative instruments

 

 

43.1

 

 

 

(43.3

)

 

 

60.0

 

 

 

(24.7

)

Net gain (loss) on defined benefit pension and other postretirement plans

 

 

0.2

 

 

 

(0.1

)

 

 

0.2

 

 

 

(0.1

)

Net unrealized loss on available for sale securities

 

 

(0.1

)

 

 

 

 

 

(0.1

)

 

 

 

Other Comprehensive Income (Loss), Before Tax

 

 

43.2

 

 

 

(43.4

)

 

 

60.1

 

 

 

(24.8

)

Income Tax Expense (Benefit) Related to Items of Other Comprehensive Income

 

 

9.8

 

 

 

(9.7

)

 

 

13.6

 

 

 

(5.5

)

Other Comprehensive Income (Loss), Net of Tax

 

 

33.4

 

 

 

(33.7

)

 

 

46.5

 

 

 

(19.3

)

Comprehensive Income

 

$

220.8

 

 

$

99.9

 

 

$

322.8

 

 

$

181.3

 

 

See the accompanying Notes to Financial Statements.

5


 

SPIRE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

(Dollars in millions, except per share amounts)

 

2021

 

 

2020

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Utility Plant

 

$

6,974.3

 

 

$

6,766.3

 

 

$

6,369.4

 

Less: Accumulated depreciation and amortization

 

 

2,145.1

 

 

 

2,086.2

 

 

 

1,848.4

 

Net Utility Plant

 

 

4,829.2

 

 

 

4,680.1

 

 

 

4,521.0

 

Non-utility Property (net of accumulated depreciation and

   amortization of $25.4, $19.0 and $17.5 at March 31, 2021,

   September 30, 2020, and March 31, 2020, respectively)

 

 

457.0

 

 

 

432.3

 

 

 

547.4

 

Other Investments

 

 

76.4

 

 

 

71.7

 

 

 

68.1

 

Total Other Property and Investments

 

 

533.4

 

 

 

504.0

 

 

 

615.5

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

104.0

 

 

 

4.1

 

 

 

108.4

 

Accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

Utility

 

 

447.7

 

 

 

131.8

 

 

 

248.2

 

Other

 

 

182.3

 

 

 

146.4

 

 

 

132.8

 

Allowance for credit losses

 

 

(34.4

)

 

 

(24.9

)

 

 

(28.0

)

Delayed customer billings

 

 

20.7

 

 

 

10.0

 

 

 

16.9

 

Inventories:

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

143.0

 

 

 

154.3

 

 

 

90.3

 

Propane gas

 

 

8.7

 

 

 

10.7

 

 

 

10.7

 

Materials and supplies

 

 

28.3

 

 

 

26.5

 

 

 

26.1

 

Regulatory assets

 

 

60.4

 

 

 

69.5

 

 

 

68.0

 

Prepayments

 

 

29.4

 

 

 

29.2

 

 

 

27.9

 

Other

 

 

49.9

 

 

 

33.0

 

 

 

17.5

 

Total Current Assets

 

 

1,040.0

 

 

 

590.6

 

 

 

718.8

 

Deferred Charges and Other Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,171.6

 

 

 

1,171.6

 

 

 

1,171.6

 

Regulatory assets

 

 

1,133.6

 

 

 

1,069.4

 

 

 

770.7

 

Other

 

 

229.0

 

 

 

225.5

 

 

 

220.4

 

Total Deferred Charges and Other Assets

 

 

2,534.2

 

 

 

2,466.5

 

 

 

2,162.7

 

Total Assets

 

$

8,936.8

 

 

$

8,241.2

 

 

$

8,018.0

 

 

 

6


 

 

SPIRE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(UNAUDITED)

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

2020

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock ($25.00 par value per share; 10.0 million depositary shares authorized, issued and outstanding at March 31, 2021, September 30, 2020, and March 31, 2020)

 

$

242.0

 

 

$

242.0

 

 

$

242.0

 

Common stock (par value $1.00 per share; 70.0 million shares authorized; 51.7 million, 51.6 million, and 51.2 million shares issued and outstanding at March 31, 2021, September 30, 2020, and March 31, 2020, respectively)

 

 

51.7

 

 

 

51.6

 

 

 

51.2

 

Paid-in capital

 

 

1,512.2

 

 

 

1,549.2

 

 

 

1,520.7

 

Retained earnings

 

 

920.1

 

 

 

720.7

 

 

 

902.3

 

Accumulated other comprehensive gain (loss)

 

 

5.3

 

 

 

(41.2

)

 

 

(50.6

)

Total Shareholders' Equity

 

 

2,731.3

 

 

 

2,522.3

 

 

 

2,665.6

 

Temporary equity

 

 

8.2

 

 

 

3.4

 

 

 

3.9

 

Long-term debt (less current portion)

 

 

2,692.5

 

 

 

2,423.7

 

 

 

2,484.8

 

Total Capitalization

 

 

5,432.0

 

 

 

4,949.4

 

 

 

5,154.3

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

110.8

 

 

 

60.4

 

 

 

5.4

 

Notes payable

 

 

653.5

 

 

 

648.0

 

 

 

560.6

 

Accounts payable

 

 

352.1

 

 

 

243.3

 

 

 

221.4

 

Advance customer billings

 

 

11.4

 

 

 

45.3

 

 

 

11.6

 

Wages and compensation accrued

 

 

43.5

 

 

 

46.3

 

 

 

34.0

 

Customer deposits

 

 

29.9

 

 

 

30.6

 

 

 

35.9

 

Taxes accrued

 

 

60.0

 

 

 

71.4

 

 

 

55.1

 

Regulatory liabilities

 

 

56.3

 

 

 

113.0

 

 

 

31.8

 

Other

 

 

190.0

 

 

 

190.9

 

 

 

196.7

 

Total Current Liabilities

 

 

1,507.5

 

 

 

1,449.2

 

 

 

1,152.5

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

602.8

 

 

 

511.4

 

 

 

498.1

 

Pension and postretirement benefit costs

 

 

274.4

 

 

 

309.0

 

 

 

272.1

 

Asset retirement obligations

 

 

551.0

 

 

 

540.1

 

 

 

344.7

 

Regulatory liabilities

 

 

423.5

 

 

 

343.7

 

 

 

472.3

 

Other

 

 

145.6

 

 

 

138.4

 

 

 

124.0

 

Total Deferred Credits and Other Liabilities

 

 

1,997.3

 

 

 

1,842.6

 

 

 

1,711.2

 

Commitments and Contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

Total Capitalization and Liabilities

 

$

8,936.8

 

 

$

8,241.2

 

 

$

8,018.0

 

 

See the accompanying Notes to Financial Statements.

7


 

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

 

 

 

Common Stock

 

 

Preferred

 

 

Paid-in

 

 

Retained

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

Shares

 

 

Par

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

AOCI*

 

 

Total

 

Three Months Ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

51,659,473

 

 

$

51.7

 

 

$

242.0

 

 

$

1,550.0

 

 

$

771.2

 

 

$

(28.1

)

 

$

2,586.8

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

187.4

 

 

 

 

 

 

187.4

 

Dividend reinvestment plan

 

 

5,847

 

 

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

0.3

 

Stock-based compensation costs

 

 

 

 

 

 

 

 

 

 

 

2.0

 

 

 

 

 

 

 

 

 

2.0

 

Stock issued under stock-based

   compensation plans

 

 

9,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees’ tax withholding for

   stock-based compensation

 

 

(313

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity units issued

 

 

 

 

 

 

 

 

 

 

 

(40.1

)

 

 

 

 

 

 

 

 

(40.1

)

Temporary equity adjustment

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

 

 

 

(1.2

)

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($0.65 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33.6

)

 

 

 

 

 

(33.6

)

Preferred stock ($0.36875 per

   depositary share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3.7

)

 

 

 

 

 

(3.7

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33.4

 

 

 

33.4

 

Balance at March 31, 2021

 

 

51,674,256

 

 

$

51.7

 

 

$

242.0

 

 

$

1,512.2

 

 

$

920.1

 

 

$

5.3

 

 

$

2,731.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

51,611,789

 

 

$

51.6

 

 

$

242.0

 

 

$

1,549.2

 

 

$

720.7

 

 

$

(41.2

)

 

$

2,522.3

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

276.3

 

 

 

 

 

 

276.3

 

Dividend reinvestment plan

 

 

12,545

 

 

 

 

 

 

 

 

 

0.7

 

 

 

 

 

 

 

 

 

0.7

 

Stock-based compensation costs

 

 

 

 

 

 

 

 

 

 

 

3.4

 

 

 

 

 

 

 

 

 

3.4

 

Stock issued under stock-based

   compensation plans

 

 

64,410

 

 

 

0.1

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

 

Employees’ tax withholding for

   stock-based compensation

 

 

(14,488

)

 

 

 

 

 

 

 

 

(0.9

)

 

 

 

 

 

 

 

 

(0.9

)

Equity units issued

 

 

 

 

 

 

 

 

 

 

 

(40.1

)

 

 

 

 

 

 

 

 

(40.1

)

Temporary equity adjustment

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.1

)

 

 

 

 

 

(2.1

)

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($1.30 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(67.4

)

 

 

 

 

 

(67.4

)

Preferred stock ($0.7375 per

   depositary share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7.4

)

 

 

 

 

 

(7.4

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46.5

 

 

 

46.5

 

Balance at March 31, 2021

 

 

51,674,256

 

 

$

51.7

 

 

$

242.0

 

 

$

1,512.2

 

 

$

920.1

 

 

$

5.3

 

 

$

2,731.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

 

 

 

 

 

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Continued)

(UNAUDITED)

 

 

 

 

Common Stock

 

 

Preferred

 

 

Paid-in

 

 

Retained

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

AOCI*

 

 

Total

 

Three Months Ended March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

51,063,460

 

 

$

51.1

 

 

$

242.0

 

 

$

1,506.7

 

 

$

803.1

 

 

$

(16.9

)

 

$

2,586.0

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

133.6

 

 

 

 

 

 

133.6

 

Common stock issued

 

 

112,758

 

 

 

0.1

 

 

 

 

 

 

9.4

 

 

 

 

 

 

 

 

 

9.5

 

Dividend reinvestment plan

 

 

45,119

 

 

 

 

 

 

 

 

 

3.3

 

 

 

 

 

 

 

 

 

3.3

 

Stock-based compensation costs

 

 

 

 

 

 

 

 

 

 

 

1.5

 

 

 

 

 

 

 

 

 

1.5

 

Stock issued under stock-based

   compensation plans

 

 

9,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees’ tax withholding for

   stock-based compensation

 

 

(1,902

)

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

 

(0.2

)

Temporary equity adjustment

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.2

 

 

 

 

 

 

1.2

 

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($0.6225 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31.9

)

 

 

 

 

 

(31.9

)

Preferred stock ($0.36875 per

   depositary share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3.7

)

 

 

 

 

 

(3.7

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33.7

)

 

 

(33.7

)

Balance at March 31, 2020

 

 

51,229,061

 

 

$

51.2

 

 

$

242.0

 

 

$

1,520.7

 

 

$

902.3

 

 

$

(50.6

)

 

$

2,665.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

 

50,973,515

 

 

$

51.0

 

 

$

242.0

 

 

$

1,505.8

 

 

$

775.5

 

 

$

(31.3

)

 

$

2,543.0

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200.6

 

 

 

 

 

 

200.6

 

Common stock issued

 

 

112,758

 

 

 

0.1

 

 

 

 

 

 

9.4

 

 

 

 

 

 

 

 

 

9.5

 

Dividend reinvestment plan

 

 

73,883

 

 

 

 

 

 

 

 

 

5.6

 

 

 

 

 

 

 

 

 

5.6

 

Stock-based compensation costs

 

 

 

 

 

 

 

 

 

 

 

3.1

 

 

 

 

 

 

 

 

 

3.1

 

Stock issued under stock-based

   compensation plans

 

 

108,752

 

 

 

0.1

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

 

Employees’ tax withholding for

   stock-based compensation

 

 

(39,847

)

 

 

 

 

 

 

 

 

(3.1

)

 

 

 

 

 

 

 

 

(3.1

)

Temporary equity adjustment

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.1

 

 

 

 

 

 

1.1

 

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($1.245 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(63.8

)

 

 

 

 

 

(63.8

)

Preferred stock ($1.10625 per

   depository share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11.1

)

 

 

 

 

 

(11.1

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19.3

)

 

 

(19.3

)

Balance at March 31, 2020

 

 

51,229,061

 

 

$

51.2

 

 

$

242.0

 

 

$

1,520.7

 

 

$

902.3

 

 

$

(50.6

)

 

$

2,665.6

 

 

 

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.

9


 

SPIRE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six Months Ended

March 31,

 

(In millions)

 

2021

 

 

2020

 

Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

276.3

 

 

$

200.6

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

102.3

 

 

 

96.7

 

Deferred income taxes and investment tax credits

 

 

68.5

 

 

 

42.8

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(342.3

)

 

 

(64.4

)

Inventories

 

 

14.0

 

 

 

69.5

 

Regulatory assets and liabilities

 

 

(6.7

)

 

 

74.7

 

Accounts payable

 

 

141.3

 

 

 

(50.5

)

Delayed/advance customer billings, net

 

 

(44.6

)

 

 

(33.6

)

Taxes accrued

 

 

(11.1

)

 

 

(14.1

)

Other assets and liabilities

 

 

(44.3

)

 

 

0.1

 

Other

 

 

5.8

 

 

 

(0.1

)

Net cash provided by operating activities

 

 

159.2

 

 

 

321.7

 

Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(303.5

)

 

 

(346.1

)

Other

 

 

(0.8

)

 

 

1.5

 

Net cash used in investing activities

 

 

(304.3

)

 

 

(344.6

)

Financing Activities:

 

 

 

 

 

 

 

 

Issuance of long-term debt

 

 

325.0

 

 

 

510.0

 

Repayment of long-term debt

 

 

(5.4

)

 

 

(140.0

)

Issuance (repayment) of short-term debt, net

 

 

5.5

 

 

 

(182.6

)

Issuance of common stock

 

 

0.7

 

 

 

15.2

 

Dividends paid on common stock

 

 

(65.9

)

 

 

(63.8

)

Dividends paid on preferred stock

 

 

(7.4

)

 

 

(7.4

)

Other

 

 

(7.5

)

 

 

(5.9

)

Net cash provided by financing activities

 

 

245.0

 

 

 

125.5

 

Net Increase in Cash, Cash Equivalents, and Restricted Cash

 

 

99.9

 

 

 

102.6

 

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

 

 

4.1

 

 

 

5.8

 

Cash and Cash Equivalents at End of Period

 

$

104.0

 

 

$

108.4

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash (paid) received for:

 

 

 

 

 

 

 

 

Interest, net of amounts capitalized

 

$

(48.5

)

 

$

(46.7

)

Income taxes

 

 

(1.1

)

 

 

(1.7

)

 

See the accompanying Notes to Financial Statements.

10


 

SPIRE MISSOURI INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating Revenues

 

$

790.9

 

 

$

457.5

 

 

$

1,146.4

 

 

$

831.5

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

537.4

 

 

 

223.6

 

 

 

699.0

 

 

 

409.4

 

Operation and maintenance

 

 

62.8

 

 

 

50.8

 

 

 

125.7

 

 

 

116.3

 

Depreciation and amortization

 

 

31.0

 

 

 

29.3

 

 

 

61.4

 

 

 

58.3

 

Taxes, other than income taxes

 

 

38.9

 

 

 

36.1

 

 

 

64.0

 

 

 

62.8

 

Total Operating Expenses

 

 

670.1

 

 

 

339.8

 

 

 

950.1

 

 

 

646.8

 

Operating Income

 

 

120.8

 

 

 

117.7

 

 

 

196.3

 

 

 

184.7

 

Interest Expense, Net

 

 

11.7

 

 

 

12.7

 

 

 

23.4

 

 

 

25.9

 

Other Income (Expense), Net

 

 

0.8

 

 

 

(20.9

)

 

 

3.5

 

 

 

(19.9

)

Income Before Income Taxes

 

 

109.9

 

 

 

84.1

 

 

 

176.4

 

 

 

138.9

 

Income Tax Expense

 

 

16.8

 

 

 

9.6

 

 

 

26.7

 

 

 

16.4

 

Net Income

 

 

93.1

 

 

 

74.5

 

 

 

149.7

 

 

 

122.5

 

Other Comprehensive Income (Loss), Net of Tax

 

 

0.1

 

 

 

(0.2

)

 

 

0.2

 

 

 

(0.1

)

Comprehensive Income

 

$

93.2

 

 

$

74.3

 

 

$

149.9

 

 

$

122.4

 

 

 

See the accompanying Notes to Financial Statements.

11


 

SPIRE MISSOURI INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

(Dollars in millions, except per share amounts)

 

2021

 

 

2020

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Utility Plant

 

$

4,089.1

 

 

$

3,931.2

 

 

$

3,790.8

 

Less: Accumulated depreciation and amortization

 

 

869.9

 

 

 

825.7

 

 

 

795.2

 

Net Utility Plant

 

 

3,219.2

 

 

 

3,105.5

 

 

 

2,995.6

 

Other Property and Investments

 

 

59.4

 

 

 

56.7

 

 

 

53.5

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

0

 

 

 

0

 

 

 

5.1

 

Accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

Utility

 

 

363.9

 

 

 

92.5

 

 

 

169.2

 

Associated companies

 

 

2.8

 

 

 

2.7

 

 

 

3.7

 

Other

 

 

22.2

 

 

 

34.1

 

 

 

22.4

 

Allowance for credit losses

 

 

(26.6

)

 

 

(18.1

)

 

 

(20.2

)

Delayed customer billings

 

 

18.4

 

 

 

2.4

 

 

 

16.9

 

Inventories:

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

115.6

 

 

 

95.1

 

 

 

58.5

 

Propane gas

 

 

8.7

 

 

 

10.7

 

 

 

10.7

 

Materials and supplies

 

 

15.8

 

 

 

15.6

 

 

 

15.6

 

Regulatory assets

 

 

37.5

 

 

 

32.1

 

 

 

29.4

 

Prepayments

 

 

18.9

 

 

 

20.7

 

 

 

15.9

 

Total Current Assets

 

 

577.2

 

 

 

287.8

 

 

 

327.2

 

Deferred Charges and Other Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

210.2

 

 

 

210.2

 

 

 

210.2

 

Regulatory assets

 

 

604.3

 

 

 

548.7

 

 

 

512.1

 

Other

 

 

99.0

 

 

 

96.0

 

 

 

83.4

 

Total Deferred Charges and Other Assets

 

 

913.5

 

 

 

854.9

 

 

 

805.7

 

Total Assets

 

$

4,769.3

 

 

$

4,304.9

 

 

$

4,182.0

 

 

12


 

 

SPIRE MISSOURI INC.

CONDENSED BALANCE SHEETS (Continued)

(UNAUDITED)

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

2020

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in capital and common stock (par value $1.00 per share;

   50.0 million shares authorized; 24,577 shares issued and

   outstanding)

 

$

765.1

 

 

$

765.1

 

 

$

765.1

 

Retained earnings

 

 

822.6

 

 

 

672.9

 

 

 

676.5

 

Accumulated other comprehensive loss

 

 

(2.7

)

 

 

(2.9

)

 

 

(2.5

)

Total Shareholder's Equity

 

 

1,585.0

 

 

 

1,435.1

 

 

 

1,439.1

 

Long-term debt

 

 

1,092.4

 

 

 

1,092.0

 

 

 

1,098.7

 

Total Capitalization

 

 

2,677.4

 

 

 

2,527.1

 

 

 

2,537.8

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable

 

 

250.0

 

 

 

0

 

 

 

185.1

 

Notes payable – associated companies

 

 

369.4

 

 

 

301.2

 

 

 

39.6

 

Accounts payable

 

 

87.5

 

 

 

66.7

 

 

 

63.8

 

Accounts payable – associated companies

 

 

7.7

 

 

 

9.3

 

 

 

5.2

 

Advance customer billings

 

 

2.1

 

 

 

32.7

 

 

 

5.4

 

Wages and compensation accrued

 

 

28.0

 

 

 

33.3

 

 

 

24.1

 

Customer deposits

 

 

8.2

 

 

 

9.3

 

 

 

13.2

 

Taxes accrued

 

 

29.4

 

 

 

39.1

 

 

 

26.6

 

Regulatory liabilities

 

 

37.6

 

 

 

103.2

 

 

 

24.3

 

Other

 

 

43.4

 

 

 

39.9

 

 

 

32.7

 

Total Current Liabilities

 

 

863.3

 

 

 

634.7

 

 

 

420.0

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

470.9

 

 

 

434.7

 

 

 

390.6

 

Pension and postretirement benefit costs

 

 

193.7

 

 

 

217.2

 

 

 

205.0

 

Asset retirement obligations

 

 

156.5

 

 

 

153.4

 

 

 

177.1

 

Regulatory liabilities

 

 

353.5

 

 

 

274.8

 

 

 

400.4

 

Other

 

 

54.0

 

 

 

63.0

 

 

 

51.1

 

Total Deferred Credits and Other Liabilities

 

 

1,228.6

 

 

 

1,143.1

 

 

 

1,224.2

 

Commitments and Contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

Total Capitalization and Liabilities

 

$

4,769.3

 

 

$

4,304.9

 

 

$

4,182.0

 

 

See the accompanying Notes to Financial Statements.

13


 

SPIRE MISSOURI INC.

CONDENSED STATEMENTS OF SHAREHOLDER’S EQUITY

(UNAUDITED)

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

Shares

 

 

Par

 

 

Capital

 

 

Earnings

 

 

AOCI*

 

 

Total

 

Three Months Ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

729.5

 

 

$

(2.8

)

 

$

1,491.8

 

Net income

 

 

 

 

 

 

 

 

 

 

 

93.1

 

 

 

 

 

 

93.1

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

Balance at March 31, 2021

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

822.6

 

 

$

(2.7

)

 

$

1,585.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

672.9

 

 

$

(2.9

)

 

$

1,435.1

 

Net income

 

 

 

 

 

 

 

 

 

 

 

149.7

 

 

 

 

 

 

149.7

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.2

 

 

 

0.2

 

Balance at March 31, 2021

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

822.6

 

 

$

(2.7

)

 

$

1,585.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

613.3

 

 

$

(2.3

)

 

$

1,376.1

 

Net income

 

 

 

 

 

 

 

 

 

 

 

74.5

 

 

 

 

 

 

74.5

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(11.3

)

 

 

 

 

 

(11.3

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.2

)

 

 

(0.2

)

Balance at March 31, 2020

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

676.5

 

 

$

(2.5

)

 

$

1,439.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

576.6

 

 

$

(2.4

)

 

$

1,339.3

 

Net income

 

 

 

 

 

 

 

 

 

 

 

122.5

 

 

 

 

 

 

122.5

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(22.6

)

 

 

 

 

 

(22.6

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

(0.1

)

Balance at March 31, 2020

 

 

24,577

 

 

$

0.1

 

 

$

765.0

 

 

$

676.5

 

 

$

(2.5

)

 

$

1,439.1

 

 

* Accumulated other comprehensive income (loss)

See the accompanying Notes to Financial Statements.

14


 

SPIRE MISSOURI INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six Months Ended

March 31,

 

(In millions)

 

2021

 

 

2020

 

Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

149.7

 

 

$

122.5

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

61.4

 

 

 

58.3

 

Deferred income taxes and investment tax credits

 

 

26.7

 

 

 

16.4

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(251.1

)

 

 

(67.6

)

Inventories

 

 

(18.7

)

 

 

39.3

 

Regulatory assets and liabilities

 

 

(28.7

)

 

 

59.8

 

Accounts payable

 

 

32.3

 

 

 

6.8

 

Delayed/advance customer billings, net

 

 

(46.5

)

 

 

(27.9

)

Taxes accrued

 

 

(9.7

)

 

 

(9.8

)

Other assets and liabilities

 

 

(50.3

)

 

 

(1.9

)

Other

 

 

0.3

 

 

 

0.3

 

Net cash (used in) provided by operating activities

 

 

(134.6

)

 

 

196.2

 

Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(184.1

)

 

 

(183.2

)

Other

 

 

0.5

 

 

 

0.3

 

Net cash used in investing activities

 

 

(183.6

)

 

 

(182.9

)

Financing Activities:

 

 

 

 

 

 

 

 

Issuance of long-term debt

 

 

0

 

 

 

275.0

 

Repayment of long-term debt

 

 

0

 

 

 

(100.0

)

Issuance of short-term debt, net

 

 

250.0

 

 

 

185.1

 

Borrowings from (repayments to) Spire, net

 

 

68.2

 

 

 

(346.8

)

Dividends paid

 

 

0

 

 

 

(22.6

)

Other

 

 

0

 

 

 

(1.5

)

Net cash provided by (used in) financing activities

 

 

318.2

 

 

 

(10.8

)

Net Increase in Cash and Cash Equivalents

 

 

0

 

 

 

2.5

 

Cash and Cash Equivalents at Beginning of Period

 

 

0

 

 

 

2.6

 

Cash and Cash Equivalents at End of Period

 

$

0

 

 

$

5.1

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash paid for:

 

 

 

 

 

 

 

 

Interest, net of amounts capitalized

 

$

(22.9

)

 

$

(21.6

)

Income taxes

 

 

0

 

 

 

0

 

 

See the accompanying Notes to Financial Statements.

15


 

SPIRE ALABAMA INC.

CONDENSED STATEMENTS OF INCOME

(UNAUDITED)

 

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating Revenues

 

$

222.6

 

 

$

185.5

 

 

$

336.2

 

 

$

311.7

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

69.8

 

 

 

39.4

 

 

 

104.9

 

 

 

86.4

 

Operation and maintenance

 

 

33.7

 

 

 

37.1

 

 

 

66.5

 

 

 

72.3

 

Depreciation and amortization

 

 

15.2

 

 

 

14.6

 

 

 

30.2

 

 

 

28.9

 

Taxes, other than income taxes

 

 

14.7

 

 

 

13.2

 

 

 

22.9

 

 

 

22.0

 

Total Operating Expenses

 

 

133.4

 

 

 

104.3

 

 

 

224.5

 

 

 

209.6

 

Operating Income

 

 

89.2

 

 

 

81.2

 

 

 

111.7

 

 

 

102.1

 

Interest Expense, Net

 

 

5.3

 

 

 

5.3

 

 

 

10.0

 

 

 

10.7

 

Other Income, Net

 

 

0.7

 

 

 

1.2

 

 

 

1.4

 

 

 

3.4

 

Income Before Income Taxes

 

 

84.6

 

 

 

77.1

 

 

 

103.1

 

 

 

94.8

 

Income Tax Expense

 

 

21.3

 

 

 

19.3

 

 

 

26.1

 

 

 

23.8

 

Net Income

 

$

63.3

 

 

$

57.8

 

 

$

77.0

 

 

$

71.0

 

 

See the accompanying Notes to Financial Statements.

 

16


 

 

SPIRE ALABAMA INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

(Dollars in millions, except per share amounts)

 

2021

 

 

2020

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Utility Plant

 

$

2,523.4

 

 

$

2,469.9

 

 

$

2,217.0

 

Less: Accumulated depreciation and amortization

 

 

1,136.5

 

 

 

1,117.0

 

 

 

904.7

 

Net Utility Plant

 

 

1,386.9

 

 

 

1,352.9

 

 

 

1,312.3

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

18.2

 

 

 

0

 

 

 

0.1

 

Accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

Utility

 

 

66.4

 

 

 

31.4

 

 

 

65.6

 

Associated companies

 

 

0.5

 

 

 

0.6

 

 

 

0.1

 

Other

 

 

5.7

 

 

 

5.8

 

 

 

7.8

 

Allowance for credit losses

 

 

(6.5

)

 

 

(5.5

)

 

 

(6.8

)

Delayed customer billings

 

 

2.3

 

 

 

7.5

 

 

 

0

 

Notes receivable – associated companies

 

 

20.0

 

 

 

0

 

 

 

0

 

Inventories:

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

14.8

 

 

 

22.5

 

 

 

16.3

 

Materials and supplies

 

 

10.0

 

 

 

8.4

 

 

 

8.3

 

Regulatory assets

 

 

11.8

 

 

 

20.4

 

 

 

23.3

 

Prepayments

 

 

4.7

 

 

 

4.3

 

 

 

5.7

 

Other

 

 

0.1

 

 

 

0.2

 

 

 

0.3

 

Total Current Assets

 

 

148.0

 

 

 

95.6

 

 

 

120.7

 

Deferred Charges and Other Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory assets

 

 

501.2

 

 

 

489.9

 

 

 

230.1

 

Deferred income taxes

 

 

33.2

 

 

 

59.3

 

 

 

57.4

 

Other

 

 

53.5

 

 

 

53.7

 

 

 

61.0

 

Total Deferred Charges and Other Assets

 

 

587.9

 

 

 

602.9

 

 

 

348.5

 

Total Assets

 

$

2,122.8

 

 

$

2,051.4

 

 

$

1,781.5

 

 

17


 

 

SPIRE ALABAMA INC.

CONDENSED BALANCE SHEETS (Continued)

(UNAUDITED)

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

2020

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in capital and common stock (par value $0.01 per share;

   3.0 million shares authorized; 2.0 million shares issued and

   outstanding)

 

$

328.9

 

 

$

350.9

 

 

$

350.9

 

Retained earnings

 

 

566.8

 

 

 

500.8

 

 

 

518.1

 

Total Shareholder's Equity

 

 

895.7

 

 

 

851.7

 

 

 

869.0

 

Long-term debt (less current portion)

 

 

571.1

 

 

 

471.8

 

 

 

471.7

 

Total Capitalization

 

 

1,466.8

 

 

 

1,323.5

 

 

 

1,340.7

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

50.0

 

 

 

0

 

 

 

0

 

Notes payable

 

 

0

 

 

 

0

 

 

 

50.0

 

Notes payable – associated companies

 

 

0

 

 

 

121.3

 

 

 

33.0

 

Accounts payable

 

 

37.4

 

 

 

43.7

 

 

 

48.0

 

Accounts payable – associated companies

 

 

8.0

 

 

 

4.2

 

 

 

4.8

 

Advance customer billings

 

 

5.4

 

 

 

11.5

 

 

 

5.3

 

Wages and compensation accrued

 

 

6.4

 

 

 

8.0

 

 

 

5.9

 

Customer deposits

 

 

19.0

 

 

 

18.7

 

 

 

19.9

 

Taxes accrued

 

 

25.1

 

 

 

28.0

 

 

 

23.0

 

Regulatory liabilities

 

 

14.2

 

 

 

3.9

 

 

 

2.4

 

Other

 

 

14.8

 

 

 

11.8

 

 

 

9.7

 

Total Current Liabilities

 

 

180.3

 

 

 

251.1

 

 

 

202.0

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

 

68.2

 

 

 

74.9

 

 

 

54.6

 

Asset retirement obligations

 

 

381.7

 

 

 

374.3

 

 

 

151.7

 

Regulatory liabilities

 

 

18.0

 

 

 

18.5

 

 

 

21.6

 

Other

 

 

7.8

 

 

 

9.1

 

 

 

10.9

 

Total Deferred Credits and Other Liabilities

 

 

475.7

 

 

 

476.8

 

 

 

238.8

 

Commitments and Contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

Total Capitalization and Liabilities

 

$

2,122.8

 

 

$

2,051.4

 

 

$

1,781.5

 

 

See the accompanying Notes to Financial Statements.

18


 

SPIRE ALABAMA INC.

CONDENSED STATEMENTS OF SHAREHOLDER’S EQUITY

(UNAUDITED)

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

 

 

 

(Dollars in millions)

 

Shares

 

 

Par

 

 

Capital

 

 

Earnings

 

 

Total

 

Three Months Ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

1,972,052

 

 

$

 

 

$

339.9

 

 

$

509.0

 

 

$

848.9

 

Net income

 

 

 

 

 

 

 

 

 

 

 

63.3

 

 

 

63.3

 

Return of capital to Spire

 

 

 

 

 

 

 

 

(11.0

)

 

 

 

 

 

(11.0

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(5.5

)

 

 

(5.5

)

Balance at March 31, 2021

 

 

1,972,052

 

 

$

 

 

$

328.9

 

 

$

566.8

 

 

$

895.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

1,972,052

 

 

$

 

 

$

350.9

 

 

$

500.8

 

 

$

851.7

 

Net income

 

 

 

 

 

 

 

 

 

 

 

77.0

 

 

 

77.0

 

Return of capital to Spire

 

 

 

 

 

 

 

 

(22.0

)

 

 

 

 

 

(22.0

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(11.0

)

 

 

(11.0

)

Balance at March 31, 2021

 

 

1,972,052

 

 

$

 

 

$

328.9

 

 

$

566.8

 

 

$

895.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

1,972,052

 

 

$

 

 

$

370.9

 

 

$

466.3

 

 

$

837.2

 

Net income

 

 

 

 

 

 

 

 

 

 

 

57.8

 

 

 

57.8

 

Return of capital to Spire

 

 

 

 

 

 

 

 

(20.0

)

 

 

 

 

 

(20.0

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(6.0

)

 

 

(6.0

)

Balance at March 31, 2020

 

 

1,972,052

 

 

$

 

 

$

350.9

 

 

$

518.1

 

 

$

869.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

 

1,972,052

 

 

$

 

 

$

370.9

 

 

$

459.1

 

 

$

830.0

 

Net income

 

 

 

 

 

 

 

 

 

 

 

71.0

 

 

 

71.0

 

Return of capital to Spire

 

 

 

 

 

 

 

 

(20.0

)

 

 

 

 

 

(20.0

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(12.0

)

 

 

(12.0

)

Balance at March 31, 2020

 

 

1,972,052

 

 

$

 

 

$

350.9

 

 

$

518.1

 

 

$

869.0

 

 

See the accompanying Notes to Financial Statements.

19


 

SPIRE ALABAMA INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six Months Ended

March 31,

 

(In millions)

 

2021

 

 

2020

 

Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

77.0

 

 

$

71.0

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

30.2

 

 

 

28.9

 

Deferred income taxes and investment tax credits

 

 

26.1

 

 

 

23.9

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(33.7

)

 

 

(27.9

)

Inventories

 

 

6.2

 

 

 

18.3

 

Regulatory assets and liabilities

 

 

14.6

 

 

 

13.7

 

Accounts payable

 

 

9.9

 

 

 

(10.8

)

Delayed/advance customer billings

 

 

(0.9

)

 

 

(5.3

)

Taxes accrued

 

 

(2.9

)

 

 

(4.4

)

Other assets and liabilities

 

 

(4.6

)

 

 

(7.8

)

Other

 

 

0.1

 

 

 

(2.5

)

Net cash provided by operating activities

 

 

122.0

 

 

 

97.1

 

Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(78.9

)

 

 

(75.8

)

Lending to Spire, net of repayments

 

 

(20.0

)

 

 

0

 

Other

 

 

0.3

 

 

 

(3.0

)

Net cash used in investing activities

 

 

(98.6

)

 

 

(78.8

)

Financing Activities:

 

 

 

 

 

 

 

 

Issuance of long-term debt

 

 

150.0

 

 

 

100.0

 

Repayment of long-term debt

 

 

0

 

 

 

(40.0

)

Issuance of short-term debt – net

 

 

0

 

 

 

50.0

 

Repayments of borrowings from Spire, net

 

 

(121.3

)

 

 

(95.7

)

Return of capital to Spire

 

 

(22.0

)

 

 

(20.0

)

Dividends paid

 

 

(11.0

)

 

 

(12.0

)

Other

 

 

(0.9

)

 

 

(0.5

)

Net cash used in financing activities

 

 

(5.2

)

 

 

(18.2

)

Net Increase in Cash and Cash Equivalents

 

 

18.2

 

 

 

0.1

 

Cash and Cash Equivalents at Beginning of Period

 

 

0

 

 

 

0

 

Cash and Cash Equivalents at End of Period

 

$

18.2

 

 

$

0.1

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash paid for:

 

 

 

 

 

 

 

 

Interest, net of amounts capitalized

 

$

(8.4

)

 

$

(9.5

)

Income taxes

 

 

0

 

 

 

0

 

 

See the accompanying Notes to Financial Statements.

 

20


 

 

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

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

(Dollars in millions, except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION – These notes are an integral part of the accompanying unaudited financial statements of Spire Inc. (“Spire” or the “Company”) presented on a consolidated basis, Spire Missouri Inc. (“Spire Missouri”) and Spire Alabama Inc. (“Spire Alabama”). Spire Missouri and Spire Alabama are wholly owned subsidiaries of Spire. 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 unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions to Form 10-Q and Rule 10-01 of Regulation S‑X. Accordingly, they do not include all the disclosures required for complete financial statements. In the opinion of management, the accompanying unaudited financial statements include all adjustments necessary for the fair presentation of the results of operations for the periods presented. This Form 10-Q should be read in conjunction with the Notes to Financial Statements contained in Spire’s, Spire Missouri’s and Spire Alabama’s combined Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

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

NATURE OF OPERATIONS – Spire has 2 reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment consists of the regulated natural gas distribution operations of the Company and is the core business segment of Spire in terms of revenue and earnings. The Gas Utility segment is comprised of the operations of: Spire Missouri, serving St. Louis, Kansas City, and other areas in Missouri; 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 largest gas-related business, Spire Marketing Inc. (“Spire Marketing”), which provides non-regulated natural gas services, primarily in the central and southern United States (U.S.). The activities of other subsidiaries are reported as Other and are described in Note 9, Information by Operating Segment. Spire Missouri and Spire Alabama each have a single reportable segment.

Nearly all the Company’s earnings are derived from its Gas Utility segment. Due to the seasonal nature of the Utilities’ business and the Spire Missouri rate design, earnings are typically concentrated during the heating season of November through April each fiscal year. As a result, the interim statements of income for Spire, Spire Missouri and Spire Alabama are not necessarily indicative of annual results or representative of succeeding quarters of the fiscal year.

21


 

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.

As authorized by the Missouri Public Service Commission (MoPSC), the Mississippi Public Service Commission (MSPSC) and the Alabama Public Service Commission (APSC), the Purchased Gas Adjustment (PGA) clauses and Gas Supply Adjustment (GSA) riders allow the Utilities to pass through to customers the cost of purchased gas supplies. Regulatory assets and liabilities related to the PGA clauses and the GSA riders are both labeled Unamortized Purchased Gas Adjustments herein. See additional information about regulatory assets and liabilities in Note 4, Regulatory Matters.

DERIVATIVES – In the course of their business, certain subsidiaries of Spire enter into commitments associated with the purchase or sale of natural gas. Certain of their derivative natural gas contracts are designated as normal purchases or normal sales and, as such, are excluded from the scope of FASB 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 gross. Contracts not designated as normal purchases or normal sales are recorded as derivatives with changes in fair value recognized in earnings in the periods prior to physical delivery. Certain of Spire Marketing’s wholesale purchase and sale transactions are classified as trading activities for financial reporting purposes, with income and expenses presented on a net basis in natural gas expenses in the Condensed Consolidated Statements of Income.

TRANSACTIONS WITH AFFILIATES – Transactions between affiliates of the Company have been eliminated from the consolidated financial statements of Spire. As reflected in their separate financial statements, Spire Missouri and Spire Alabama borrowed funds from the Company and incurred related interest, and in 2021, Spire Alabama lent excess funds to the Company and earned related interest. Spire Missouri and Spire Alabama also participated in normal intercompany shared services transactions. Spire Missouri’s and Spire Alabama’s other transactions with affiliates are presented below:

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Spire Missouri

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of natural gas from Spire Marketing Inc.

 

$

57.6

 

 

$

13.3

 

 

$

68.3

 

 

$

32.8

 

Transportation services received from Spire STL Pipeline LLC

 

 

7.9

 

 

 

7.9

 

 

 

16.0

 

 

 

11.8

 

Sales of natural gas to Spire Marketing Inc.

 

 

 

 

 

 

 

 

1.1

 

 

 

 

Transportation services received from Spire NGL Inc.

 

 

0.2

 

 

 

0.2

 

 

 

0.5

 

 

 

0.5

 

Spire Alabama

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of natural gas from Spire Marketing Inc.

 

$

5.8

 

 

$

1.0

 

 

$

10.6

 

 

$

4.3

 

Sales of natural gas to Spire Marketing Inc.

 

 

0.1

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

22


 

 

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

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

2020

 

Spire

 

$

36.1

 

 

$

67.6

 

 

$

51.4

 

Spire Missouri

 

 

21.8

 

 

 

34.3

 

 

 

21.5

 

Spire Alabama

 

 

4.7

 

 

 

17.0

 

 

 

17.6

 

 

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES – Trade accounts receivable are recorded at the amounts due from customers, including unbilled amounts. Accounts receivable are written off when they are deemed to be uncollectible. An allowance for expected credit losses is estimated and updated based on relevant data and trends such as accounts receivable aging, historical write-off experience, current write-off trends, economic conditions, and the impact of weather and availability of customer payment assistance on collection trends. For the Utilities, net write-offs as a percentage of revenue has historically been the best predictor of base net write-off experience over time. Management judgment is applied in the development of the allowance due to the complexity of variables and subjective nature of certain relevant factors. For March 31, 2021, and September 30, 2020, the estimates for expected credit losses were increased as a result of considerations related to the outbreak of the novel coronavirus (COVID-19), including trends from previous economic downturns, the effects of moratoriums on gas service cutoffs, and the effects of slower-than-normal disconnection activity in general, offset by the amount subject to specific recovery under Missouri’s deferral order (see Note 4, Regulatory Matters). The accounts receivable of Spire’s non-utility businesses are evaluated separately from those of the Utilities. The allowance for credit losses for those other businesses is based on a continuous evaluation of the individual counterparty risk and is not significant for the periods presented. Activity in the allowance for credit losses for the three and six months ended March 31, 2021, is shown in the following table.

 

Three Months Ended March 31, 2021

 

 

Six Months Ended March 31, 2021

 

 

 

 

 

 

Spire

 

 

Spire

 

 

 

 

 

 

Spire

 

 

Spire

 

 

Spire

 

 

Missouri

 

 

Alabama

 

 

Spire

 

 

Missouri

 

 

Alabama

 

Allowance at beginning of period

$

28.9

 

 

$

21.4

 

 

$

6.2

 

 

$

24.9

 

 

$

18.1

 

 

$

5.5

 

Provision for expected credit losses

 

6.6

 

 

 

5.7

 

 

 

0.6

 

 

 

10.7

 

 

 

9.0

 

 

 

1.3

 

Write-offs, net of recoveries

 

(1.1

)

 

 

(0.5

)

 

 

(0.3

)

 

 

(1.2

)

 

 

(0.5

)

 

 

(0.3

)

Allowance at end of period

$

34.4

 

 

$

26.6

 

 

$

6.5

 

 

$

34.4

 

 

$

26.6

 

 

$

6.5

 

NEW ACCOUNTING PRONOUNCEMENTS – In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which was later supplemented by ASU Nos. 2018-19, 2019-04, 2019-05 and 2019-11. The new standard replaces the current “incurred loss” model with an “expected loss” model for certain instruments, including trade receivables, requiring measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. It also required entities to record credit loss allowances for available-for-sale securities rather than impair the carrying amount of the securities. Spire, Spire Missouri and Spire Alabama adopted the new standard for the quarter ended December 31, 2020. Based on the credit quality of the existing available-for-sale securities portfolio, 0 allowance for credit losses was recognized for those investments. Application of the new guidance did not result in any significant modifications to the Company’s policies related to recognizing an allowance on trade receivables, and the adoption of the new standard did not have a material impact on Spire’s, Spire Missouri’s and Spire Alabama’s financial statements.

RECLASSIFICATIONS – Spire’s consolidated statements of income historically showed Gas Utility operating revenues and expense line items separately from Gas Marketing and other operations. The current presentation shows operating revenues and expense line items on a consolidated basis. Disaggregated data is presented in Note 9, Information by Operating Segment. Prior period amounts have been reclassified to conform with the current period presentation.

23


 

2. REVENUE

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

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Spire

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

537.6

 

 

$

471.9

 

 

$

887.5

 

 

$

840.3

 

Commercial & industrial

 

 

369.2

 

 

 

156.8

 

 

 

472.2

 

 

 

279.3

 

Transportation

 

 

34.2

 

 

 

32.5

 

 

 

66.4

 

 

 

63.5

 

Off-system & other incentive

 

 

130.6

 

 

 

9.3

 

 

 

139.9

 

 

 

18.7

 

Other customer revenue

 

 

(11.9

)

 

 

3.2

 

 

 

(9.7

)

 

 

5.6

 

Total revenue from contracts with customers

 

 

1,059.7

 

 

 

673.7

 

 

 

1,556.3

 

 

 

1,207.4

 

Changes in accrued revenue under alternative revenue programs

 

 

(6.6

)

 

 

5.3

 

 

 

(5.0

)

 

 

2.3

 

Total Gas Utility operating revenues

 

 

1,053.1

 

 

 

679.0

 

 

 

1,551.3

 

 

 

1,209.7

 

Gas Marketing

 

 

33.4

 

 

 

33.3

 

 

 

58.2

 

 

 

65.6

 

Other

 

 

15.6

 

 

 

14.7

 

 

 

32.3

 

 

 

25.8

 

Total before eliminations

 

 

1,102.1

 

 

 

727.0

 

 

 

1,641.8

 

 

 

1,301.1

 

Intersegment eliminations (see Note 9, Information by Operating Segment)

 

 

2.8

 

 

 

(11.5

)

 

 

(24.3

)

 

 

(18.7

)

Total Operating Revenues

 

$

1,104.9

 

 

$

715.5

 

 

$

1,617.5

 

 

$

1,282.4

 

 

Spire Missouri

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

365.4

 

 

$

331.1

 

 

$

628.4

 

 

$

607.0

 

Commercial & industrial

 

 

304.0

 

 

 

99.2

 

 

 

373.9

 

 

 

180.0

 

Transportation

 

 

9.9

 

 

 

9.7

 

 

 

18.9

 

 

 

18.7

 

Off-system & other incentive

 

 

128.5

 

 

 

9.3

 

 

 

135.9

 

 

 

18.7

 

Other customer revenue

 

 

(17.5

)

 

 

0.9

 

 

 

(14.6

)

 

 

1.4

 

Total revenue from contracts with customers

 

 

790.3

 

 

 

450.2

 

 

 

1,142.5

 

 

 

825.8

 

Changes in accrued revenue under alternative revenue programs

 

 

0.6

 

 

 

7.3

 

 

 

3.9

 

 

 

5.7

 

Total Operating Revenues

 

$

790.9

 

 

$

457.5

 

 

$

1,146.4

 

 

$

831.5

 

 

Spire Alabama

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

144.8

 

 

$

120.5

 

 

$

214.0

 

 

$

194.8

 

Commercial & industrial

 

 

53.2

 

 

 

46.2

 

 

 

77.5

 

 

 

77.5

 

Transportation

 

 

21.7

 

 

 

19.9

 

 

 

42.2

 

 

 

39.5

 

Off-system & other incentive

 

 

1.9

 

 

 

 

 

 

3.9

 

 

 

 

Other customer revenue

 

 

3.9

 

 

 

1.7

 

 

 

2.0

 

 

 

3.3

 

Total revenue from contracts with customers

 

 

225.5

 

 

 

188.3

 

 

 

339.6

 

 

 

315.1

 

Changes in accrued revenue under alternative revenue programs

 

 

(2.9

)

 

 

(2.8

)

 

 

(3.4

)

 

 

(3.4

)

Total Operating Revenues

 

$

222.6

 

 

$

185.5

 

 

$

336.2

 

 

$

311.7

 

As discussed in Note 4, Regulatory Matters, Spire Missouri recorded a $25.0 revenue adjustment related to “Off-system and other incentive” sales during February 2021, resulting in negative “Other customer revenue” for the three and six months ended March 31, 2021.

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

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Spire

 

$

42.2

 

 

$

37.9

 

 

$

63.9

 

 

$

62.5

 

Spire Missouri

 

 

28.6

 

 

 

26.2

 

 

 

43.8

 

 

 

43.4

 

Spire Alabama

 

 

11.8

 

 

 

9.9

 

 

 

17.1

 

 

 

16.1

 

 

24


 

 

3. EARNINGS PER COMMON SHARE

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Basic Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

187.4

 

 

$

133.6

 

 

$

276.3

 

 

$

200.6

 

Less: Provision for preferred dividends

 

 

3.7

 

 

 

3.7

 

 

 

7.4

 

 

 

7.4

 

Income allocated to participating securities

 

 

0.3

 

 

 

0.2

 

 

 

0.4

 

 

 

0.3

 

Income Available to Common Shareholders

 

$

183.4

 

 

$

129.7

 

 

$

268.5

 

 

$

192.9

 

Weighted Average Common Shares Outstanding (in millions)

 

 

51.6

 

 

 

51.0

 

 

 

51.6

 

 

 

51.0

 

Basic Earnings Per Common Share

 

$

3.56

 

 

$

2.55

 

 

$

5.21

 

 

$

3.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

187.4

 

 

$

133.6

 

 

$

276.3

 

 

$

200.6

 

Less: Provision for preferred dividends

 

 

3.7

 

 

 

3.7

 

 

 

7.4

 

 

 

7.4

 

Income allocated to participating securities

 

 

0.3

 

 

 

0.2

 

 

 

0.4

 

 

 

0.3

 

Income Available to Common Shareholders

 

$

183.4

 

 

$

129.7

 

 

$

268.5

 

 

$

192.9

 

Weighted Average Common Shares Outstanding (in millions)

 

 

51.6

 

 

 

51.0

 

 

 

51.6

 

 

 

51.0

 

Dilutive Effect of Restricted Stock and Restricted Stock Units (in millions)*

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

Weighted Average Diluted Common Shares (in millions)

 

 

51.7

 

 

 

51.1

 

 

 

51.7

 

 

 

51.1

 

Diluted Earnings Per Common Share

 

$

3.55

 

 

$

2.54

 

 

$

5.20

 

 

$

3.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Calculation excludes certain outstanding common shares (shown in millions by

   period at the right) attributable to stock units subject to performance or market

   conditions and restricted stock, which could have a dilutive effect in the future

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

25


 

 

4. REGULATORY MATTERS

As explained in Note 1, Summary of Significant Accounting Policies, the Utilities account for regulated operations in accordance with FASB ASC Topic 980, Regulated Operations. The following regulatory assets and regulatory liabilities were reflected in the balance sheets of the Company, Spire Missouri and Spire Alabama as of March 31, 2021, September 30, 2020, and March 31, 2020.

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

Spire

 

2021

 

 

2020

 

 

2020

 

Regulatory Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

30.9

 

 

$

30.6

 

 

$

30.1

 

Unamortized purchased gas adjustments

 

 

0.1

 

 

 

5.5

 

 

 

10.4

 

Other

 

 

29.4

 

 

 

33.4

 

 

 

27.5

 

Total Current Regulatory Assets

 

 

60.4

 

 

 

69.5

 

 

 

68.0

 

Noncurrent:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

 

418.3

 

 

 

439.3

 

 

 

415.6

 

Cost of removal

 

 

430.7

 

 

 

395.6

 

 

 

154.3

 

Future income taxes due from customers

 

 

127.4

 

 

 

123.5

 

 

 

113.5

 

Energy efficiency

 

 

43.2

 

 

 

39.6

 

 

 

37.7

 

Unamortized purchased gas adjustments

 

 

51.5

 

 

 

12.1

 

 

 

0

 

Other

 

 

62.5

 

 

 

59.3

 

 

 

49.6

 

Total Noncurrent Regulatory Assets

 

 

1,133.6

 

 

 

1,069.4

 

 

 

770.7

 

Total Regulatory Assets

 

$

1,194.0

 

 

$

1,138.9

 

 

$

838.7

 

Regulatory Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

5.8

 

 

$

5.8

 

 

$

5.8

 

Unamortized purchased gas adjustments

 

 

28.9

 

 

 

73.1

 

 

 

8.0

 

Other

 

 

21.6

 

 

 

34.1

 

 

 

18.0

 

Total Current Regulatory Liabilities

 

 

56.3

 

 

 

113.0

 

 

 

31.8

 

Noncurrent:

 

 

 

 

 

 

 

 

 

 

 

 

Deferred taxes due to customers

 

 

133.2

 

 

 

138.8

 

 

 

174.2

 

Pension and postretirement benefit costs

 

 

170.2

 

 

 

157.6

 

 

 

152.5

 

Accrued cost of removal

 

 

28.7

 

 

 

28.6

 

 

 

31.7

 

Unamortized purchased gas adjustments

 

 

49.7

 

 

 

4.4

 

 

 

82.6

 

Other

 

 

41.7

 

 

 

14.3

 

 

 

31.3

 

Total Noncurrent Regulatory Liabilities

 

 

423.5

 

 

 

343.7

 

 

 

472.3

 

Total Regulatory Liabilities

 

$

479.8

 

 

$

456.7

 

 

$

504.1

 

26


 

 

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

Spire Missouri

 

2021

 

 

2020

 

 

2020

 

Regulatory Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

21.9

 

 

$

21.9

 

 

$

21.9

 

Other

 

 

15.6

 

 

 

10.2

 

 

 

7.5

 

Total Current Regulatory Assets

 

 

37.5

 

 

 

32.1

 

 

 

29.4

 

Noncurrent:

 

 

 

 

 

 

 

 

 

 

 

 

Future income taxes due from customers

 

 

118.6

 

 

 

114.6

 

 

 

106.8

 

Pension and postretirement benefit costs

 

 

324.6

 

 

 

332.6

 

 

 

337.5

 

Energy efficiency

 

 

43.2

 

 

 

39.6

 

 

 

37.7

 

Unamortized purchased gas adjustments

 

 

51.5

 

 

 

12.1

 

 

 

0

 

Cost of removal

 

 

21.3

 

 

 

7.1

 

 

 

0

 

Other

 

 

45.1

 

 

 

42.7

 

 

 

30.1

 

Total Noncurrent Regulatory Assets

 

 

604.3

 

 

 

548.7

 

 

 

512.1

 

Total Regulatory Assets

 

$

641.8

 

 

$

580.8

 

 

$

541.5

 

Regulatory Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

3.6

 

 

$

3.6

 

 

$

3.6

 

Unamortized purchased gas adjustments

 

 

17.0

 

 

 

72.3

 

 

 

7.1

 

Other

 

 

17.0

 

 

 

27.3

 

 

 

13.6

 

Total Current Regulatory Liabilities

 

 

37.6

 

 

 

103.2

 

 

 

24.3

 

Noncurrent:

 

 

 

 

 

 

 

 

 

 

 

 

Deferred taxes due to customers

 

 

115.8

 

 

 

121.4

 

 

 

156.8

 

Pension and postretirement benefit costs

 

 

151.9

 

 

 

140.4

 

 

 

130.7

 

Accrued cost of removal

 

 

0

 

 

 

0

 

 

 

4.8

 

Unamortized purchased gas adjustments

 

 

49.7

 

 

 

4.4

 

 

 

82.6

 

Other

 

 

36.1

 

 

 

8.6

 

 

 

25.5

 

Total Noncurrent Regulatory Liabilities

 

 

353.5

 

 

 

274.8

 

 

 

400.4

 

Total Regulatory Liabilities

 

$

391.1

 

 

$

378.0

 

 

$

424.7

 

27


 

 

 

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

Spire Alabama

 

2021

 

 

2020

 

 

2020

 

Regulatory Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

8.0

 

 

$

7.7

 

 

$

7.2

 

Unamortized purchased gas adjustments

 

 

 

 

 

5.5

 

 

 

10.4

 

Other

 

 

3.8

 

 

 

7.2

 

 

 

5.7

 

Total Current Regulatory Assets

 

 

11.8

 

 

 

20.4

 

 

 

23.3

 

Noncurrent:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

 

88.5

 

 

 

98.2

 

 

 

72.6

 

Cost of removal

 

 

409.4

 

 

 

388.6

 

 

 

154.3

 

Future income taxes due from customers

 

 

2.2

 

 

 

2.2

 

 

 

0

 

Other

 

 

1.1

 

 

 

0.9

 

 

 

3.2

 

Total Noncurrent Regulatory Assets

 

 

501.2

 

 

 

489.9

 

 

 

230.1

 

Total Regulatory Assets

 

$

513.0

 

 

$

510.3

 

 

$

253.4

 

Regulatory Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

2.2

 

 

$

2.2

 

 

$

2.2

 

Unamortized purchased gas adjustments

 

 

10.6

 

 

 

0

 

 

 

0

 

Other

 

 

1.4

 

 

 

1.7

 

 

 

0.2

 

Total Current Regulatory Liabilities

 

 

14.2

 

 

 

3.9

 

 

 

2.4

 

Noncurrent:

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

 

14.3

 

 

 

14.8

 

 

 

17.8

 

Other

 

 

3.7

 

 

 

3.7

 

 

 

3.8

 

Total Noncurrent Regulatory Liabilities

 

 

18.0

 

 

 

18.5

 

 

 

21.6

 

Total Regulatory Liabilities

 

$

32.2

 

 

$

22.4

 

 

$

24.0

 

 

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

 

 

March 31,

 

 

September 30,

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

2020

 

Spire

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

226.3

 

 

$

232.3

 

 

$

226.2

 

Future income taxes due from customers

 

 

125.1

 

 

 

121.3

 

 

 

113.5

 

Other

 

 

122.9

 

 

 

12.9

 

 

 

13.7

 

Total Regulatory Assets Not Earning a Return

 

$

474.3

 

 

$

366.5

 

 

$

353.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Missouri

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefit costs

 

$

226.3

 

 

$

232.3

 

 

$

226.2

 

Future income taxes due from customers

 

 

118.6

 

 

 

114.6

 

 

 

106.8

 

Other

 

 

122.9

 

 

 

12.9

 

 

 

13.7

 

Total Regulatory Assets Not Earning a Return

 

$

467.8

 

 

$

359.8

 

 

$

346.7

 

 

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 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.

28


 

On March 7, 2018, the MoPSC issued its order in two general rate cases (docketed as GR-2017-0215 and GR-2017-0216), approving new tariffs that became effective on April 19, 2018. Certain provisions of the order allow less future recovery of certain deferred or capitalized costs than estimated based upon previous rate proceedings, and management determined that the related regulatory assets should be written down or off in connection with the preparation of the financial statements for the second quarter of 2018. Spire Missouri filed an appeal of portions of the MoPSC’s order, including the disallowance of certain pension costs ($28.8). On February 9, 2021, the Missouri Supreme Court issued its decision, reversing the MoPSC’s order with respect to certain pension costs and affirming the MoPSC’s order in all other respects. The case will now be remanded back to the MoPSC with directions that $9.0 in pension assets that accrued between 1994 and 1996 be added to the Company’s prepaid pension asset. The MoPSC has not yet opened a remand docket in the case, but based on the court’s decision, the Company increased its noncurrent regulatory asset for “Pension and postretirement benefit costs” and reduced operation and maintenance expense for the three and six months ended March 31, 2021. Like the original write-down in 2018, this adjustment is excluded for the net economic earnings financial measure.  

In the first half of fiscal 2020, provisions totaling $4.2 were recorded to Spire Missouri’s regulatory liability for Infrastructure System Replacement Surcharge (ISRS) revenues related to customer billings recorded during the period under a disputed ISRS filing, along with a $0.6 provision for interest due on all ISRS revenues in dispute. The after-tax impact of these provisions reduced net income for the six months ended March 31, 2020, by $3.7, which was excluded for the net economic earnings financial measure. As previously disclosed, these matters were settled by the end of fiscal 2020.

In September 2020, Spire Missouri, the MoPSC staff and the OPC reached a Unanimous Stipulation and Agreement regarding Spire Missouri’s request for an Accounting Authority Order (AAO) pertaining to certain costs and lost customer fee revenue related to the COVID-19 pandemic. In October 2020, the MoPSC issued an order approving that agreement and granting an AAO effective through March 31, 2021. Accordingly, Spire Missouri recorded a net regulatory asset of $3.4 and $3.8 as of March 31, 2021, and September 30, 2020, respectively, related to the deferral of applicable costs and has tracked lost customer fee revenue. All ratemaking treatment of the deferrals and any revenue recoveries is reserved for consideration in Spire Missouri’s ongoing general rate case.

On December 11, 2020, Spire Missouri filed a general rate case with the MoPSC that includes new proposed rates for its service areas. The case proposes an increase in base rates, reflecting recovery of system investments and operating costs necessary to maintain the safety and reliability of its natural gas distribution systems as well as to support enhancements to customer service. The request, if approved, represents a net base rate increase of $64.2. Spire Missouri is already recovering $47.3 from customers through the ISRS, resulting in a total base rate increase request of $111.5. The ISRS cap would then be reset in order to continue the timely recovery of the investment in pipeline upgrades. The proposed rates are calculated on a filed rate base of $2,780 based on the end of fiscal year 2020, reflecting the significant investment made in infrastructure upgrades and other systems. Among other things, the filing changes rate design, proposes new customer programs, and aligns the tariffs of the company’s service areas. The filing assumes a common equity ratio of 54.25% and a 9.95% return on equity. Management anticipates that certain measures, such as rate base, capital structure and operating costs will be updated through May 31, 2021. In accordance with Missouri law, the MoPSC has up to 11 months to consider this filing. Direct testimony of other parties is due to be filed in May 2021, local public hearings will take place June 21–25, 2021, and evidentiary hearings are scheduled for late July and early August 2021.

29


 

In mid-February 2021, the central U.S. experienced a period of unusually severe cold weather, and Spire Missouri implemented an Operational Flow Order (OFO) to preserve the integrity of its distribution system. During this time, Spire Missouri was required to purchase additional natural gas supply, both to ensure adequate supply for its firm utility customers, and to cover the shortfall created when third-party marketers failed to deliver natural gas supply to its city gates on behalf of their customers. In accordance with its tariffs, Spire Missouri invoiced the cost of gas and associated penalties totaling $195.8 to non-compliant marketers pursuant to the MoPSC-approved OFO tariff. Recoveries collected will be an offset to cost of natural gas for firm utility customers through the Purchased Gas Adjustment (PGA) and Actual Cost Adjustment. The three largest counterparties did not remit payment when due, so Spire Missouri filed suit against them in federal court to recover the invoiced amounts. The marketers have filed complaints with the MoPSC requesting review of the transactions between them and Spire; at this time, the Company has no reason to believe the MoPSC will not follow the tariff and has determined collection is probable. The MoPSC has also opened a working case to investigate the effects of the February cold weather event on all Missouri utilities. Spire Missouri is not subject to any upstream OFO penalties on any interstate pipelines.

Spire Missouri is able to sell excess natural gas supply and capacity to third parties off system, resulting in significant savings to its firm utility customers through the gas incentive mechanisms of its PGA. Spire Missouri normally retains 25% and passes 75% through to its customers. During the February cold weather event, Spire Missouri had an unusually large off-system sale resulting in $100.0 of incremental gross revenue. Due to the nature and magnitude of this particular transaction, Spire Missouri anticipates distributing all or a portion of its usual 25% share to customers and plans to work with the MoPSC and community partners over the rest of the fiscal year to determine the method and timing. Accordingly, a $25.0 regulatory liability has been recorded, with a corresponding reduction in revenue.

Spire Missouri’s net deferred gas costs and average inventory cost in the quarter increased by approximately $110 primarily due to the February weather event, including projected offsets of off-system sales and tariff-based OFO penalties.

In August 2018, the Federal Energy Regulatory Commission (FERC) approved an order issuing a Certificate of Public Convenience and Necessity for the Spire STL Pipeline (“August 2018 Order”), and in November 2018, the FERC issued a Notice to Proceed, allowing construction to begin. In November 2019, Spire STL Pipeline received FERC authorization to place the pipeline into service. Also, in November 2019, the FERC issued an Order on Rehearing of the August 2018 Order dismissing or denying the outstanding requests for rehearing filed by several parties, dismissing the request for stay filed by one party, and noting the withdrawal of the request for rehearing by another party. On January 21, 2020, two of the rehearing parties filed petitions for review of the FERC’s orders with the U.S. Court of Appeals for the District of Columbia Circuit. Spire STL Pipeline and Spire Missouri have intervened and filed responsive briefs in this proceeding, which remains pending.

On October 9, 2020, Spire Storage filed with the FERC an Abbreviated Application for an Amendment of Certificate of Public Convenience and Necessity, Reaffirmation of Market-Based Rate Authority, and Related Authorizations pursuant to Section 7(c) of the Natural Gas Act. The application, which requests authorization to expand capacity and increase pipeline connectivity at certain of Spire Storage’s natural gas storage facilities in Wyoming, remains pending.

30


 

5. FINANCING

Short-term

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 commitments fees applied for each borrower relative to its credit rating. Spire may use its line to provide for the funding needs of various subsidiaries. The agreement also contains financial covenants limiting each borrower’s consolidated total debt, including short-term debt, to no more than 70% of its total capitalization. As defined in the line of credit, on March 31, 2021, total debt was less than 60% of total capitalization for each borrower.

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

On March 26, 2020, Spire entered into a loan agreement with 2 banks providing for a term loan of $150.0, which was immediately fully funded. It was repaid on December 16, 2020. The term loan bore interest at the LIBOR Rate (as defined in the loan agreement) plus 0.85% per annum.

On March 23, 2021, Spire Missouri entered into a loan agreement with several banks for a $250.0, 364-day unsecured term loan with an interest rate based on LIBOR plus 65 basis points. The loan carries 0 prepayment penalty and has the same covenants as the revolving credit facility.

Information about Spire’s consolidated short-term borrowings and about Spire Missouri’s and Spire Alabama’s borrowings from Spire is presented in the following table. As of March 31, 2021, $398.1 of Spire’s short-term borrowings were used to support lending to the Utilities.

 

 

Spire (Parent Only)

 

 

Spire Missouri

 

 

Spire Alabama

 

 

Spire

 

 

 

Credit

 

 

Term

 

 

CP

 

 

Credit

 

 

Term

 

 

Spire

 

 

Credit

 

 

Spire

 

 

Consol-

 

 

 

Facility

 

 

Loan

 

 

Program

 

 

Facility

 

 

Loan

 

 

Note

 

 

Facility

 

 

Note

 

 

idated

 

Six Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average borrowings

 

$

 

 

$

63.5

 

 

$

606.9

 

 

$

 

 

$

11.0

 

 

$

360.8

 

 

$

 

 

$

59.6

 

 

$

681.4

 

Lowest borrowings outstanding

 

 

 

 

 

 

 

 

403.5

 

 

 

 

 

 

 

 

 

277.2

 

 

 

 

 

 

 

 

 

455.5

 

Highest borrowings outstanding

 

 

 

 

 

150.0

 

 

 

775.0

 

 

 

 

 

 

250.0

 

 

 

441.9

 

 

 

 

 

 

152.2

 

 

 

850.5

 

Weighted average interest rate

 

n/a

 

 

 

1.1

%

 

 

0.3

%

 

n/a

 

 

 

0.8

%

 

 

0.3

%

 

n/a

 

 

 

0.2

%

 

 

0.4

%

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings outstanding

 

$

 

 

$

 

 

$

403.5

 

 

$

 

 

$

250.0

 

 

$

369.4

 

 

$

 

 

$

 

 

$

653.5

 

Weighted average interest rate

 

n/a

 

 

n/a

 

 

 

0.2

%

 

n/a

 

 

 

0.8

%

 

 

0.2

%

 

n/a

 

 

n/a

 

 

 

0.4

%

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings outstanding

 

$

 

 

$

150.0

 

 

$

498.0

 

 

$

 

 

$

 

 

$

301.2

 

 

$

 

 

$

121.3

 

 

$

648.0

 

Weighted average interest rate

 

n/a

 

 

 

1.1

%

 

 

0.2

%

 

n/a

 

 

n/a

 

 

 

0.2

%

 

n/a

 

 

 

0.2

%

 

 

0.6

%

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings outstanding

 

$

 

 

$

150.0

 

 

$

175.5

 

 

$

185.1

 

 

$

 

 

$

39.6

 

 

$

50.0

 

 

$

33.0

 

 

$

560.6

 

Weighted average interest rate

 

n/a

 

 

 

2.1

%

 

 

1.8

%

 

 

1.8

%

 

n/a

 

 

 

1.9

%

 

 

1.9

%

 

 

1.9

%

 

 

1.9

%

Long-term Debt

The long-term debt agreements of Spire, Spire Missouri and Spire Alabama contain customary financial covenants and default provisions. As of March 31, 2021, there were no events of default under these financial covenants.

31


 

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

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Spire

 

$

1.1

 

 

$

1.4

 

 

$

2.0

 

 

$

3.6

 

Spire Missouri

 

 

0.1

 

 

 

0.3

 

 

 

0.1

 

 

 

0.6

 

Spire Alabama

 

 

0.7

 

 

 

0.4

 

 

 

1.3

 

 

 

1.0

 

On December 15, 2020, Spire Alabama issued and sold to certain institutional investors in a private placement $150.0 of 2.04% Series 2020 Senior Notes due December 15, 2030. Interest is payable semi-annually. The notes are senior unsecured obligations of Spire Alabama and rank equal in right to payment with all its other senior unsecured indebtedness. Spire Alabama used the proceeds to repay short-term debt.

In February 2021, Spire issued $175.0 of 2021 Series A 0.75% Remarketable Senior Notes as part of the equity units described in the next section.

Equity Units

In February 2021, Spire issued 3.5 million equity units, initially in the form of Corporate Units, for an aggregate stated amount of $175.0, resulting in net proceeds (after underwriting fees and other issuance costs) of $169.3. Each “Corporate Unit” has a stated amount of fifty dollars and consists of (i) a stock purchase contract and (ii) a 1/20, or 5%, undivided beneficial ownership interest in 1 thousand dollars principal amount of Spire’s 2021 Series A 0.75% Remarketable Senior Notes due March 1, 2026 (RSNs). The RSNs are pledged as collateral to secure the holder’s obligation under the related stock purchase contracts. Each stock purchase contract obligates the holder to purchase, and Spire to issue and deliver, on March 1, 2024, for a price of fifty dollars in cash, a variable number of shares of its common stock as follows (subject to anti-dilution adjustments).

If the applicable market value* per share

of Spire common stock is:

 

Number of shares to be purchased per stock purchase contract is:

Equal to or greater than $78.6906 (“threshold appreciation price”)

 

0.6354 (“minimum settlement rate”)

Less than $78.6906, but greater than $64.24

 

$50.00 ÷ applicable market value*

Less than or equal to $64.24 (“reference price”)

 

0.7783 (“maximum settlement rate”)

*Based on the volume-weighted average price of Spire common stock during the 20 trading days before settlement.

If a holder elects to settle purchase contracts early, the holder would pay fifty dollars per unit and receive 0.6354 shares per unit.

The Company will make quarterly interest payments on the RSNs at the rate of 0.75% per year and quarterly contract adjustment payments on the stock purchase contracts at the rate of 6.75%. The RSNs and the contract adjustment payments are structurally subordinated to all liabilities of Spire’s subsidiaries.

The Company has recorded the $35.0 present value of the stock purchase contract payments as a liability (reflected in “Other” current and noncurrent liabilities on the balance sheet) offset by a charge to additional paid-in capital in equity. This noncash financing activity has been excluded from the statement of cash flows. Interest payments on the RSNs are recorded as interest expense and stock purchase contract payments are charged against the liability. Accretion of the stock purchase contract liability is recorded as imputed interest expense. In calculating diluted EPS, the Company applies the treasury stock method to the Corporate Units. These securities have not had an effect on diluted EPS.

In order to secure funds necessary for the holders to pay the purchase price of the common stock on the purchase contract settlement date, the remarketing agent will remarket the RSNs on behalf of the current holders to new third-party investors. Following any successful remarketing of the RSNs, the interest rate on the RSNs will be reset, interest will be payable on a semi-annual basis, and Spire will cease to have the option to redeem the RSNs, other than in connection with the occurrence or continuance of certain special events.

32


 

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, notes receivable, and short-term debt approximate fair value due to the short maturity of these instruments. The fair values of long-term debt are estimated based on market prices for similar issues. Refer to Note 7, Fair Value Measurements, for information on financial instruments measured at fair value on a recurring basis.

The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis are shown in the following tables, classified according to the fair value hierarchy. There were no such instruments classified as Level 3 (significant unobservable inputs) as of March 31, 2021, September 30, 2020, and March 31, 2020.

 

 

 

 

 

 

 

 

 

 

 

Classification of Estimated

Fair Value

 

 

 

Carrying

Amount

 

 

Fair

Value

 

 

Quoted

Prices in

Active Markets

(Level 1)

 

 

Significant Observable Inputs

(Level 2)

 

Spire

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

104.0

 

 

$

104.0

 

 

$

104.0

 

 

$

 

Notes payable

 

 

653.5

 

 

 

653.5

 

 

 

 

 

 

653.5

 

Long-term debt, including current portion

 

 

2,803.3

 

 

 

3,090.9

 

 

 

 

 

 

3,090.9

 

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4.1

 

 

$

4.1

 

 

$

4.1

 

 

$

 

Notes payable

 

 

648.0

 

 

 

648.0

 

 

 

 

 

 

648.0

 

Long-term debt, including current portion

 

 

2,484.1

 

 

 

2,908.6

 

 

 

 

 

 

2,908.6

 

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

108.4

 

 

$

108.4

 

 

$

108.4

 

 

$

 

Notes payable

 

 

560.6

 

 

 

560.6

 

 

 

 

 

 

560.6

 

Long-term debt, including current portion

 

 

2,490.2

 

 

 

2,671.0

 

 

 

 

 

 

2,671.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Missouri

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable

 

$

250.0

 

 

$

250.0

 

 

$

 

 

$

250.0

 

Notes payable – associated companies

 

 

369.4

 

 

 

369.4

 

 

 

 

 

 

369.4

 

Long-term debt

 

 

1,092.4

 

 

 

1,254.2

 

 

 

 

 

 

1,254.2

 

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable associated companies

 

$

301.2

 

 

$

301.2

 

 

$

 

 

$

301.2

 

Long-term debt

 

 

1,092.0

 

 

 

1,313.5

 

 

 

 

 

 

1,313.5

 

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5.1

 

 

$

5.1

 

 

$

5.1

 

 

$

 

Notes payable

 

 

185.1

 

 

 

185.1

 

 

 

 

 

 

185.1

 

Notes payable associated companies

 

 

39.6

 

 

 

39.6

 

 

 

 

 

 

39.6

 

Long-term debt

 

 

1,098.7

 

 

 

1,231.2

 

 

 

 

 

 

1,231.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Alabama

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18.2

 

 

$

18.2

 

 

$

18.2

 

 

$

 

Notes receivable – associated companies

 

 

20.0

 

 

 

20.0

 

 

 

 

 

 

20.0

 

Long-term debt, including current portion

 

 

621.1

 

 

 

682.3

 

 

 

 

 

 

682.3

 

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable associated companies

 

$

121.3

 

 

$

121.3

 

 

$

 

 

$

121.3

 

Long-term debt, including current portion

 

 

471.8

 

 

 

576.9

 

 

 

 

 

 

576.9

 

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

0.1

 

 

$

0.1

 

 

$

0.1

 

 

$

 

Notes payable

 

 

50.0

 

 

 

50.0

 

 

 

 

 

 

50.0

 

Notes payable associated companies

 

 

33.0

 

 

 

33.0

 

 

 

 

 

 

33.0

 

Long-term debt

 

 

471.7

 

 

 

535.1

 

 

 

 

 

 

535.1

 

 

33


 

 

7. FAIR VALUE MEASUREMENTS

The information presented below categorizes the assets and liabilities in the balance sheets that are accounted for at fair value on a recurring basis in periods subsequent to initial recognition.

The mutual funds included in Level 1 are valued based on exchange-quoted market prices of individual securities.

Derivative instruments included in Level 1 are valued using quoted market prices on the New York Mercantile Exchange (NYMEX) or the Intercontinental Exchange (ICE). Derivative instruments classified in Level 2 include physical commodity derivatives that are valued using broker or dealer quotation services whose prices are derived principally from, or are corroborated by, observable market inputs. Also included in Level 2 are certain derivative instruments that have values that are similar to, and correlate with, quoted prices for exchange-traded instruments in active markets. 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 Level 3 balances as of March 31, 2021, and those Level 3 balances at September 30, 2020, and March 31, 2020, consisted of gas commodity contracts. The Company’s and the Utilities’ policy is to recognize transfers between the levels of the fair value hierarchy, if any, as of the beginning of the interim reporting period in which circumstances change or events occur to cause the transfer.

The mutual funds are included in “Other Investments” on the Company’s balance sheets and in “Other Property and Investments” on Spire Missouri’s balance sheets. Derivative assets and liabilities, including receivables and payables associated with cash margin requirements, are presented net in the balance sheets when a legally enforceable netting agreement exists between the Company, Spire Missouri, or Spire Alabama and the counterparty to a derivative contract.

Spire

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

 

Effects of

Netting and

Cash Margin

Receivables

/Payables

 

 

Total

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

$

23.5

 

 

$

0

 

 

$

0

 

 

$

0

 

 

$

23.5

 

NYMEX/ICE natural gas contracts

 

 

0.4

 

 

 

0

 

 

 

0

 

 

 

(0.4

)

 

 

0

 

Gasoline and heating oil contracts

 

 

0.3

 

 

 

0

 

 

 

0

 

 

 

(0.3

)

 

 

0

 

Gas Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

 

0

 

 

 

15.1

 

 

 

0

 

 

 

(12.3

)

 

 

2.8

 

Natural gas commodity contracts

 

 

0

 

 

 

9.3

 

 

 

0

 

 

 

0

 

 

 

9.3

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

 

22.9

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

22.9

 

Interest rate swaps

 

 

0

 

 

 

27.9

 

 

 

0

 

 

 

0

 

 

 

27.9

 

Total

 

$

47.1

 

 

$

52.3

 

 

$

0

 

 

$

(13.0

)

 

$

86.4

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

$

1.8

 

 

$

0

 

 

$

0

 

 

$

(1.8

)

 

$

0

 

Gas Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

 

0

 

 

 

4.7

 

 

 

0

 

 

 

(4.7

)

 

 

0

 

Natural gas commodity contracts

 

 

0

 

 

 

24.5

 

 

 

0

 

 

 

0

 

 

 

24.5

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

 

0

 

 

 

21.4

 

 

 

0

 

 

 

0

 

 

 

21.4

 

Total

 

$

1.8

 

 

$

50.6

 

 

$

0

 

 

$

(6.5

)

 

$

45.9

 

34


 

 

 

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

 

Effects of

Netting and

Cash Margin

Receivables

/Payables

 

 

Total

 

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

$

21.9

 

 

$

0

 

 

$

0

 

 

$

0

 

 

$

21.9

 

NYMEX/ICE natural gas contracts

 

 

6.3

 

 

 

0

 

 

 

0

 

 

 

(6.3

)

 

 

0

 

Gasoline and heating oil contracts

 

 

0.3

 

 

 

0

 

 

 

0

 

 

 

(0.3

)

 

 

0

 

Gas Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

 

0

 

 

 

27.7

 

 

 

0

 

 

 

(25.4

)

 

 

2.3

 

Natural gas commodity contracts

 

 

0

 

 

 

14.5

 

 

 

0.4

 

 

 

0

 

 

 

14.9

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

 

18.6

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

18.6

 

Total

 

$

47.1

 

 

$

42.2

 

 

$

0.4

 

 

$

(32.0

)

 

$

57.7

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

$

0.9

 

 

$

0

 

 

$

0

 

 

$

(0.9

)

 

$

0

 

Gas Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

 

0.7

 

 

 

21.4

 

 

 

0

 

 

 

(22.1

)

 

 

0

 

Natural gas commodity contracts

 

 

0

 

 

 

22.3

 

 

 

0

 

 

 

0

 

 

 

22.3

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

 

0

 

 

 

54.2

 

 

 

0

 

 

 

0

 

 

 

54.2

 

Total

 

$

1.6

 

 

$

97.9

 

 

$

0

 

 

$

(23.0

)

 

$

76.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

$

18.1

 

 

$

0

 

 

$

0

 

 

$

0

 

 

$

18.1

 

NYMEX/ICE natural gas contracts

 

 

0.1

 

 

 

0

 

 

 

0

 

 

 

(0.1

)

 

 

0

 

Gas Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

 

0.2

 

 

 

6.8

 

 

 

0

 

 

 

(7.0

)

 

 

0

 

Natural gas commodity contracts

 

 

0

 

 

 

17.5

 

 

 

0

 

 

 

(4.8

)

 

 

12.7

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

 

17.6

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

17.6

 

Total

 

$

36.0

 

 

$

24.3

 

 

$

0

 

 

$

(11.9

)

 

$

48.4

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Utility:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

$

12.2

 

 

$

0

 

 

$

0

 

 

$

(12.2

)

 

$

0

 

Gasoline and heating oil contracts

 

 

0.4

 

 

 

0

 

 

 

0

 

 

 

(0.4

)

 

 

0

 

Gas Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

 

0.5

 

 

 

8.4

 

 

 

0

 

 

 

(8.9

)

 

 

0

 

Natural gas commodity contracts

 

 

0

 

 

 

27.7

 

 

 

1.1

 

 

 

(4.8

)

 

 

24.0

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

 

0

 

 

 

66.9

 

 

 

0

 

 

 

0

 

 

 

66.9

 

Total

 

$

13.1

 

 

$

103.0

 

 

$

1.1

 

 

$

(26.3

)

 

$

90.9

 

 

35


 

 

Spire Missouri

 

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

 

Effects of

Netting and

Cash Margin

Receivables

/Payables

 

 

Total

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

$

23.5

 

 

$

0

 

 

$

0

 

 

$

0

 

 

$

23.5

 

NYMEX/ICE natural gas contracts

 

 

0.4

 

 

 

0

 

 

 

0

 

 

 

(0.4

)

 

 

0

 

Gasoline and heating oil contracts

 

 

0.3

 

 

 

0

 

 

 

0

 

 

 

(0.3

)

 

 

0

 

Total

 

$

24.2

 

 

$

0

 

 

$

0

 

 

$

(0.7

)

 

$

23.5

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

$

1.8

 

 

$

0

 

 

$

0

 

 

$

(1.8

)

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

$

21.9

 

 

$

0

 

 

$

0

 

 

$

0

 

 

$

21.9

 

NYMEX/ICE natural gas contracts

 

 

6.3

 

 

 

0

 

 

 

0

 

 

 

(6.3

)

 

 

0

 

Gasoline and heating oil contracts

 

 

0.3

 

 

 

0

 

 

 

0

 

 

 

(0.3

)

 

 

0

 

Total

 

$

28.5

 

 

$

0

 

 

$

0

 

 

$

(6.6

)

 

$

21.9

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

$

0.9

 

 

$

0

 

 

$

0

 

 

$

(0.9

)

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. stock/bond mutual funds

 

$

18.1

 

 

$

0

 

 

$

0

 

 

$

0

 

 

$

18.1

 

NYMEX/ICE natural gas contracts

 

 

0.1

 

 

 

0

 

 

 

0

 

 

 

(0.1

)

 

 

0

 

Total

 

$

18.2

 

 

$

0

 

 

$

0

 

 

$

(0.1

)

 

$

18.1

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYMEX/ICE natural gas contracts

 

$

12.2

 

 

$

0

 

 

$

0

 

 

$

(12.2

)

 

$

0

 

Gasoline and heating oil contracts

 

 

0.4

 

 

 

0

 

 

 

0

 

 

 

(0.4

)

 

 

0

 

Total

 

$

12.6

 

 

$

0

 

 

$

0

 

 

$

(12.6

)

 

$

0

 

 

8. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Pension Plans

Spire and the Utilities maintain pension plans for their employees.

Spire Missouri has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its 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.

36


 

The net periodic pension cost includes components shown in the following tables.  The components other than the service costs and regulatory adjustment are presented in “Other Income (Expense), Net” in the income statement, except for Spire Alabama’s losses on lump-sum settlements. Such losses are capitalized in regulatory balances and amortized over the remaining actuarial life of individuals in the plan, and that amortization is presented in “Other Income (Expense), Net.”

 

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Spire

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost – benefits earned during the period

 

$

5.3

 

 

$

5.6

 

 

$

10.9

 

 

$

11.1

 

Interest cost on projected benefit obligation

 

 

4.6

 

 

 

5.8

 

 

 

9.8

 

 

 

11.7

 

Expected return on plan assets

 

 

(7.1

)

 

 

(9.0

)

 

 

(15.1

)

 

 

(18.2

)

Amortization of prior service credit

 

 

(0.7

)

 

 

(0.6

)

 

 

(1.5

)

 

 

(1.2

)

Amortization of actuarial loss

 

 

3.8

 

 

 

3.9

 

 

 

7.8

 

 

 

7.6

 

Loss on lump-sum settlements

 

 

3.8

 

 

 

21.0

 

 

 

3.8

 

 

 

21.0

 

Subtotal

 

 

9.7

 

 

 

26.7

 

 

 

15.7

 

 

 

32.0

 

Regulatory adjustment

 

 

5.2

 

 

 

(11.3

)

 

 

14.8

 

 

 

(1.7

)

Net pension cost

 

$

14.9

 

 

$

15.4

 

 

$

30.5

 

 

$

30.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Missouri

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost – benefits earned during the period

 

$

3.9

 

 

$

3.9

 

 

$

7.8

 

 

$

7.7

 

Interest cost on projected benefit obligation

 

 

3.5

 

 

 

4.0

 

 

 

7.0

 

 

 

8.2

 

Expected return on plan assets

 

 

(5.6

)

 

 

(6.3

)

 

 

(11.2

)

 

 

(12.9

)

Amortization of prior service (credit) cost

 

 

(0.1

)

 

 

0.1

 

 

 

(0.3

)

 

 

0.1

 

Amortization of actuarial loss

 

 

2.8

 

 

 

3.1

 

 

 

5.7

 

 

 

6.0

 

Loss on lump-sum settlements

 

 

 

 

 

21.0

 

 

 

 

 

 

21.0

 

Subtotal

 

 

4.5

 

 

 

25.8

 

 

 

9.0

 

 

 

30.1

 

Regulatory adjustment

 

 

7.5

 

 

 

(13.2

)

 

 

15.1

 

 

 

(5.5

)

Net pension cost

 

$

12.0

 

 

$

12.6

 

 

$

24.1

 

 

$

24.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Alabama

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost – benefits earned during the period

 

$

1.4

 

 

$

1.5

 

 

$

2.9

 

 

$

3.0

 

Interest cost on projected benefit obligation

 

 

1.2

 

 

 

1.3

 

 

 

2.4

 

 

 

2.5

 

Expected return on plan assets

 

 

(1.5

)

 

 

(1.8

)

 

 

(3.1

)

 

 

(3.5

)

Amortization of prior service credit

 

 

(0.6

)

 

 

(0.6

)

 

 

(1.2

)

 

 

(1.2

)

Amortization of actuarial loss

 

 

1.0

 

 

 

0.8

 

 

 

2.1

 

 

 

1.6

 

Loss on lump-sum settlements

 

 

3.8

 

 

 

 

 

 

3.8

 

 

 

 

Subtotal

 

 

5.3

 

 

 

1.2

 

 

 

6.9

 

 

 

2.4

 

Regulatory adjustment

 

 

(2.5

)

 

 

1.7

 

 

 

(0.7

)

 

 

3.4

 

Net pension cost

 

$

2.8

 

 

$

2.9

 

 

$

6.2

 

 

$

5.8

 

 

 

37


 

 

Pursuant to the provisions of Spire Missouri’s 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. For the three and six months ended March 31, 2021, 1 Alabama plan met the criteria for settlement recognition. The lump-sum payments recognized as settlements for the remeasurement were $12.9. The lump-sum settlement resulted in a loss of $3.8. For the remeasurement, the discount rate for the Alabama plan was updated to 3.2% from 2.95% at September 30, 2020. The Alabama regulatory tariff requires that settlement losses be amortized over the remaining actuarial life of the individuals in the plan— in this case, 11.4 years. Therefore, 0 lump sum settlement expense was recorded in the period ended March 31, 2021. In the quarter ended March 31, 2020, 2 Spire Missouri plans met the criteria for settlement recognition. The lump-sum payments recognized as settlements for the remeasurement were $59.1. The lump-sum settlement resulted in a loss of $21.0. For the remeasurements, the discount rates for the Missouri plans were updated to 2.85% from 3.2% at September 30, 2019.

The funding policy of the Utilities is to contribute an amount not less than the minimum required by government funding standards, nor more than the maximum deductible amount for federal income tax purposes. Fiscal 2021 contributions to Spire Missouri’s pension plans through March 31, 2021 were $28.3 to the qualified trusts and 0ne to non-qualified plans. There were $4.5 of fiscal 2021 contributions to the Spire Alabama pension plans through March 31, 2021.

Contributions to the qualified trusts of Spire Missouri’s pension plans for the remainder of fiscal 2021 are anticipated to be $13.7. Contributions to Spire Alabama’s pension plans for the remainder of fiscal 2021 are anticipated to be $6.6.

Other Postretirement Benefits

Spire and the Utilities provide certain life insurance benefits at retirement. Spire Missouri plans provide for medical insurance after early retirement until age 65. For retirements prior to January 1, 2015, certain Spire Missouri plans provided medical insurance after retirement until death. The Spire Alabama plans provide medical insurance upon retirement until death for certain retirees depending on the type of employee and the date the employee was originally hired.

38


 

The net periodic postretirement benefit cost includes components shown in the following tables.  The components other than the service costs and regulatory adjustment are presented in “Other Income (Expense), Net” in the income statement, except in the event Spire Alabama incurs losses on lump-sum settlements. Any such losses are capitalized in regulatory balances and amortized over the remaining actuarial life of individuals in the plan, and that amortization is presented in “Other Income (Expense), Net.”

 

 

 

Three Months Ended

March 31,

 

 

Six Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Spire

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost – benefits earned during the period

 

$

1.9

 

 

$

1.5

 

 

$

3.7

 

 

$

2.9

 

Interest cost on accumulated postretirement benefit obligation

 

 

1.6

 

 

 

1.5

 

 

 

3.0

 

 

 

3.1

 

Expected return on plan assets

 

 

(4.1

)

 

 

(4.1

)

 

 

(8.1

)

 

 

(8.2

)

Amortization of prior service cost (credit)

 

 

0.2

 

 

 

(0.1

)

 

 

0.5

 

 

 

(0.3

)

Amortization of actuarial gain

 

 

(0.4

)

 

 

(0.5

)

 

 

(0.8

)

 

 

(1.0

)

Subtotal

 

 

(0.8

)

 

 

(1.7

)

 

 

(1.7

)

 

 

(3.5

)

Regulatory adjustment

 

 

3.2

 

 

 

4.0

 

 

 

6.6

 

 

 

8.0

 

Net postretirement benefit cost

 

$

2.4

 

 

$

2.3

 

 

$

4.9

 

 

$

4.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Missouri

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost – benefits earned during the period

 

$

1.5

 

 

$

1.3

 

 

$

3.1

 

 

$

2.6

 

Interest cost on accumulated postretirement benefit obligation

 

 

1.1

 

 

 

1.1

 

 

 

2.2

 

 

 

2.3

 

Expected return on plan assets

 

 

(2.8

)

 

 

(2.9

)

 

 

(5.5

)

 

 

(5.7

)

Amortization of prior service cost (credit)

 

 

0.2

 

 

 

 

 

 

0.4

 

 

 

(0.1

)

Amortization of actuarial gain

 

 

(0.3

)

 

 

(0.5

)

 

 

(0.7

)

 

 

(1.0

)

Subtotal

 

 

(0.3

)

 

 

(1.0

)

 

 

(0.5

)

 

 

(1.9

)

Regulatory adjustment

 

 

3.7

 

 

 

4.5

 

 

 

7.5

 

 

 

8.9

 

Net postretirement benefit cost

 

$

3.4

 

 

$

3.5

 

 

$

7.0

 

 

$

7.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spire Alabama

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost – benefits earned during the period

 

$

0.3

 

 

$

0.1

 

 

$

0.5

 

 

$

0.2

 

Interest cost on accumulated postretirement benefit obligation

 

 

0.4

 

 

 

0.4

 

 

 

0.7

 

 

 

0.7

 

Expected return on plan assets

 

 

(1.3

)

 

 

(1.2

)

 

 

(2.5

)

 

 

(2.4

)

Amortization of prior service (credit) cost

 

 

 

 

 

(0.1

)

 

 

0.1

 

 

 

(0.2

)

Subtotal

 

 

(0.6

)

 

 

(0.8

)

 

 

(1.2

)

 

 

(1.7

)

Regulatory adjustment

 

 

(0.5

)

 

 

(0.5

)

 

 

(0.9

)

 

 

(0.9

)

Net postretirement benefit income

 

$

(1.1

)

 

$

(1.3

)

 

$

(2.1

)

 

$

(2.6

)

 

 

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 (VEBA) and Rabbi Trusts as external funding mechanisms. The assets of the VEBA and Rabbi Trusts consist primarily of money market securities and mutual funds invested in stocks and bonds.

The Utilities’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. There have been 0 contributions to the postretirement plans through March 31, 2021 for Spire Missouri or Spire Alabama, and 0ne are expected to be required for the remainder of the fiscal year.

39


 

9. INFORMATION BY OPERATING SEGMENT

The Company has 2 reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment is the aggregation of the operations of the Utilities. The Gas Marketing segment includes the results of Spire Marketing, a subsidiary engaged in the non-regulated marketing of natural gas and related activities, including utilizing natural gas storage contracts for providing natural gas sales. Other 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 providing interstate natural gas pipeline transportation services;

 

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

 

Spire’s subsidiaries engaged in the operation of a propane pipeline, the 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, Spire Alabama and Spire Storage, sales of natural gas from Spire Missouri and Spire Alabama 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 impairments and other non-recurring or unusual items such as certain regulatory, legislative, or GAAP standard-setting actions.

 

 

 

Gas Utility

 

 

Gas Marketing

 

 

Other

 

 

Eliminations

 

 

Consolidated

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

1,053.0

 

 

$

47.4

 

 

$

4.5

 

 

$

 

 

$

1,104.9

 

Intersegment revenues

 

 

0.1

 

 

 

(14.0

)

 

 

11.1

 

 

 

2.8

 

 

 

 

Total Operating Revenues

 

 

1,053.1

 

 

 

33.4