CHICAGO, Aug. 6 /PRNewswire-FirstCall/ -- Integrys Energy Group, Inc. (NYSE:TEG), today reported income from continuing operations of $24.8 million ($0.31 diluted earnings per share from continuing operations) for the quarter ended June 30, 2008, compared with a loss from continuing operations of $39.6 million ($0.53 loss per share from continuing operations) for the quarter ended June 30, 2007.
Additional details regarding Integrys Energy Group's financial results for the quarter ended June 30, 2008 are as follows: Integrys Energy Group's Results
(Millions, except share amounts) 2008 2007 Change Income (loss) from continuing operations $24.8 $(39.6) -
Basic earnings (loss) per share from
continuing operations $0.31 $(0.53) -
Diluted earnings (loss) per share from
continuing operations $0.31 $(0.53) - Income (loss) available for common
shareholders $24.1 $(16.4) -
Basic earnings (loss) per share $0.31 $(0.22) -
Diluted earnings (loss) per share $0.31 $(0.22) - Average shares of common stock
Basic 76.6 76.0 0.8 %
Diluted 76.9 76.0 1.2 %
Integrys Energy Group recognized income available for common shareholders of $24.1 million ($0.31 diluted earnings per share) for the quarter ended June 30, 2008, compared with a net loss of $16.4 million ($0.22 net loss per share) for the quarter ended June 30, 2007.
Significant factors impacting the change in earnings and earnings per share were as follows: -- The net loss from the regulated natural gas utility segment increased
$5.3 million (132.5%), from a net loss of $4.0 million during the
second quarter of 2007, to a net loss of $9.3 million during the second
quarter of 2008. The change was driven by the following:
-- A non-cash after-tax goodwill impairment in the amount of
$6.5 million was recognized for North Shore Gas Company in the
second quarter of 2008. -- The change in the effective tax rate from the second quarter of
2007 to the second quarter of 2008 had a negative
quarter-over-quarter impact on natural gas segment operating
results. Quarter-over-quarter changes in the effective tax rate
occur as a result of adjustments required by generally accepted
accounting principles (GAAP) to ensure the year-to-date interim
effective tax rate reflects the projected annual effective tax
rate. An approximate $6 million income tax benefit at the natural
gas segment in the second quarter of 2007, drove a decrease in
quarter-over-quarter earnings. -- Pre-tax operating and maintenance expenses at the natural gas
utilities increased $8.6 million ($5.2 million after-tax), from
$114.9 million ($68.9 million after-tax) during the second quarter
of 2007, to $123.5 million ($74.1 million after-tax) during the
second quarter of 2008, driven by $3.1 million of higher
quarter-over-quarter street restoration costs at The Peoples Gas
Light and Coke Company and a combined $2.0 million of amortization
expense related to regulatory assets recorded at Peoples Gas and
North Shore Gas for costs to achieve merger synergies and costs
related to the 2007/2008 rate case. -- Partially offsetting the items discussed above, margins at the
natural gas utilities increased $23.5 million ($14.1 million
after-tax), from $144.6 million during the second quarter of 2007,
to $168.1 million during the second quarter of 2008. A rate
increase at Peoples Gas that was effective in the first quarter of
2008 had an approximate $18 million ($10.8 million after-tax)
positive impact on the quarter-over-quarter margin. A 4.5%
increase in natural gas throughput volumes, driven by colder
weather conditions, had an estimated $3 million ($1.8 million
after-tax) favorable quarter-over-quarter impact on margin. -- Regulated electric utility segment earnings increased $5.2 million
(34.7%), from earnings of $15.0 million for the quarter ended June 30,
2007, to earnings of $20.2 million for the same quarter in 2008. The
quarter-over-quarter increase in earnings at the regulated electric
utility segment was driven by an $8.0 million ($4.8 million after-tax)
increase in operating income at Wisconsin Public Service Corporation's
electric utility, resulting primarily from the following:
-- Fuel and purchased power costs at Wisconsin Public Service were
approximately $7 million ($4.2 million after-tax) lower than what
was recovered in rates during the quarter ended June 30, 2008,
compared with fuel and purchased power costs that were
approximately $2 million ($1.2 million after-tax) higher than what
was recovered in rates during the same quarter in 2007, which drove
a $5.4 million after-tax increase in operating income
quarter-over-quarter. As a result of approximately $23 million of
higher than anticipated energy costs in the first quarter of 2008,
the Public Service Commission of Wisconsin approved an interim rate
increase effective March 22, 2008, and subsequently approved a
higher final rate increase effective July 4, 2008. In the second
quarter of 2008, the interim rate increase enabled Wisconsin Public
Service to recover approximately $7 million of the $23 million of
under-recovered fuel and purchased power costs incurred in the
first quarter of 2008. With the approved rate increase and
assuming stable fuel costs, Wisconsin Public Service anticipates it
will recover approximately 80% of the remaining $16 million of
unrecovered fuel and purchased power costs by year end. -- Also contributing to the increase in Wisconsin Public Service's
regulated electric operating income, electric maintenance expenses
decreased $5.8 million ($3.5 million after-tax), driven primarily
by significant planned outages in the second quarter of 2007 at the
Weston 3 power plant and the De Pere Energy Center. -- Partially offsetting the items discussed above, a 7.9%
quarter-over-quarter decrease in residential sales volumes and a
2.2% quarter-over-quarter decrease in sales volumes to commercial
and industrial customers negatively impacted Wisconsin Public
Service's quarter-over-quarter electric utility operating income. The decrease in electric sales volumes was driven by cooler weather
in the second quarter of 2008, compared with the same quarter in
2007, which contributed an approximate $1 million after-tax
quarter-over-quarter decrease in operating income. Weather
normalized volumes were also down for these customer classes as
customers are conserving energy as a result of high energy prices
and a general slowdown in the economy. It is estimated that the
decrease in weather normalized sales volumes contributed an
approximate $2 million after-tax decrease in operating income
quarter-over-quarter. -- Financial results at Integrys Energy Services, Inc. increased
$53.0 million, from a net loss of $44.0 million for the quarter ended
June 30, 2007, to earnings of $9.0 million for the same quarter in
2008, driven by the following:
-- Integrys Energy Services recognized a combined $121.1 million
($72.7 million after-tax) increase in retail and wholesale electric
margins, driven by derivative accounting treatment of customer
supply contracts. Integrys Energy Services recognized
$70.5 million ($42.3 million after-tax) of unrealized gains on
derivative contracts in the second quarter of 2008, compared with
$50.2 million ($30.1 million after-tax) of unrealized losses during
the same period in 2007. These non-cash unrealized gains and
losses result from the application of derivative accounting rules
to customer supply contracts, requiring that these derivative
instruments be valued at current market prices. No gain or loss is
recognized on the corresponding customer sales contracts, which are
not considered derivative instruments. As a result, Integrys
Energy Services generally expects to experience non-cash losses on
supply contracts in periods of declining market prices and non-cash
gains in periods of increasing market prices. These non-cash gains
and losses will ultimately reverse as the related sales contracts
settle. Electric prices experienced an increase from April 1, 2008
to June 30, 2008, compared with a decrease over the same period in
2007. -- Integrys Energy Services also recognized a $15.2 million net loss
from its investment in a synthetic fuel production facility during
the three months ended June 30, 2007. Production and sale of
synthetic fuel by Integrys Energy Services ended when
Section 29/45K of the Internal Revenue Code, which provided for
Section 29/45K federal tax credits from the production and sale of
synthetic fuel, expired effective December 31, 2007. -- Partially offsetting the increases noted above, Integrys Energy
Services' natural gas margins decreased $62.9 million
($37.7 million after-tax), driven by an $84.8 million
($50.9 million after-tax) decrease in quarter-over-quarter margins
related to derivative accounting treatment, partially offset by a
$21.9 million ($13.2 million after-tax) increase in
quarter-over-quarter realized natural gas margins. -- Unrealized losses were $84.2 million ($50.5 million after-tax)
in the second quarter of 2008, compared with unrealized gains of
$0.6 million ($0.4 million after-tax) in the second quarter of
2007. Period-by-period variability in the margin contributed by
Integrys Energy Services' retail and wholesale natural gas
operations was primarily related to changes in the fair market
value of basis swaps utilized to mitigate market price risk
associated with natural gas transportation contracts and certain
natural gas sales contracts, as well as contracts utilized to
mitigate market price risk related to certain natural gas
storage contracts. These non-cash unrealized gains and losses
result from the application of derivative accounting rules to
the basis and other swaps (requiring that these derivative
instruments be valued at current market prices), without a
corresponding market value offset related to the physical
natural gas transportation contracts, the natural gas sales
contracts, or the natural gas storage contracts (as these
contracts are not considered derivative instruments). Therefore, no gain or loss is recognized on the transportation
contracts, customer sales contracts, or natural gas storage
contracts until physical settlement of these contracts occurs. -- Realized natural gas margins increased $21.9 million
($13.2 million after-tax), from $18.0 million ($10.8 million
after-tax) in the second quarter of 2007, to $39.9 million
($24.0 million after-tax) in the second quarter of 2008. This
increase was driven by realized wholesale natural gas margins
that were $15.8 million ($9.5 million after-tax) higher
quarter-over-quarter, primarily as a result of realized gains on
natural gas storage transactions and increased emphasis on
structured wholesale natural gas transactions through continued
expansion into new markets. The margin from retail natural gas
operations in Illinois also increased $4.6 million ($2.8 million
after-tax) quarter-over-quarter, driven by further market
penetration in Illinois and a quarter-over-quarter reduction in
the amortization of certain customer contracts that were
required to be marked to fair value and recorded as intangible
assets as a result of the acquisition of the nonregulated
operations of Peoples Energy Corporation. -- Financial results at the Holding Company and Other segment improved
$10.4 million, from a net loss of $6.2 million during the quarter ended
June 30, 2007, to earnings of $4.2 million for the quarter ended
June 30, 2008, due primarily to the following:
-- Interest expense decreased $7.1 million ($4.3 million after-tax),
resulting from the repayment of short-term debt and commercial
paper with a portion of proceeds received from the sale of the oil
and natural gas production business in the third quarter of 2007,
as well as a quarter-over-quarter decrease in working capital
requirements at Integrys Energy Services. -- Earnings from Integrys Energy Group's approximate 34% ownership
interest in American Transmission Company LLC increased
$3.9 million ($2.3 million after-tax), from after-tax earnings of
$7.2 million in the second quarter of 2007, to after-tax earnings
of $9.5 million in the second quarter of 2008. -- Operating income at the Holding Company and Other segment increased
$8.6 million ($5.2 million after-tax). In the second quarter of
2007, compared with the same quarter in 2008, operating expenses
were higher as a result of severance, relocation, and other
expenses recorded related to the Peoples Energy merger. Also,
Integrys Business Support LLC realized operating income of
$1.2 million ($0.7 million after-tax), related to return on capital
included within its service charges in 2008. Integrys Business
Support is a wholly owned subsidiary of Integrys Energy Group that
was formed and became operational in January 2008 to achieve a
significant portion of the cost synergies anticipated from the
merger of Integrys Energy Group with Peoples Energy through the
consolidation and efficient delivery of various support services
and to provide more consistent and transparent allocation of costs
throughout Integrys Energy Group and its subsidiaries. -- In connection with the Peoples Energy merger on February 21, 2007,
Integrys Energy Group announced its intent to divest of Peoples Energy
Production Company, which was sold in the third quarter of 2007. During the quarter ended June 30, 2007, Peoples Energy Production
recognized earnings of $24.0 million as a component of discontinued
operations.
EARNINGS FORECAST
Integrys Energy Group continues to manage its portfolio of businesses to achieve long-term growth in its utility and nonregulated operations, while maintaining an emphasis on regulated growth. The company's emphasis on regulated growth has been demonstrated by the Peoples Energy merger in 2007, ongoing expansion of its generation fleet, and the acquisition of retail natural gas distribution operations in Michigan and Minnesota during 2006. The company utilizes financial tools commonly used in the industry to help mitigate risk for the benefit of both shareholders and customers. Also, the company's asset management strategy continues to deliver shareholder return from certain asset transactions. The company's long-term diluted earnings per share growth rate target remains at 6% to 8% on an average annualized basis (using 2008 as the basis for this growth), with fluctuations in any given year that may be above or below that target range.
The company anticipates generating earnings per diluted share in 2008 within the range of $3.33 to $3.53. For the remainder of 2008, this guidance assumes normal weather conditions, the availability of generation units, the anticipated merger impacts relating to transition costs and anticipated purchase accounting adjustments, anticipated merger synergy savings, and recently obtained rate relief for certain utilities. The diluted earnings per share guidance excludes the impact of mark-to-market volatility for all of 2008 (such mark-to-market volatility is expected to include about $20 million of mark-to-market after-tax losses for all of 2008 relating to contracts terminating in 2008 which had net mark-to-market after-tax gains recognized in 2007).
The projected guidance range for 2008 diluted earnings per share from continuing operations - adjusted is anticipated to be between $3.63 and $3.83. Diluted earnings per share from continuing operations - adjusted guidance provides investors with additional insight into the company's operating performance because it eliminates the effects of certain items that are not comparable from one period to the next. Please see the "Diluted Earnings per Share Information - Non-GAAP Financial Information" included at the end of this press release and also included with the supplemental data package the company's Web site (to be available at approximately 6:00 a.m. CDT on August 7, 2008) for a reconciliation of diluted earnings per share from continuing operations to diluted earnings per share from continuing operations - adjusted.
CONFERENCE CALL An earnings conference call is scheduled for 8 a.m. CDT on Thursday, August 7, 2008. Executive management of Integrys Energy Group will discuss 2008 second quarter financial results and prospects for 2008. To access the call, which is open to the public, call 888-690-9634 (toll free) 15 minutes prior to the scheduled start time. Callers will be required to supply EARNINGS as the passcode and MR. STEVEN ESCHBACH as the leader. Callers will be placed on hold with music until the call begins. A replay of the conference call will be available through November 4, 2008, by dialing 800- 308-7858 (toll free).
Investors may also listen to the conference live on Integrys Energy Group's corporate Web site at http://www.integrysgroup.com/investor/presentations.aspx. An archive of the Webcast will be available on the company's Web site at http://www.integrysgroup.com/investor/presentations.aspx.
In conjunction with this conference call, Integrys Energy Group will post on its Web site PowerPoint slides that will be referred to within the prepared remarks during the call. The slides will be available at 6:00 a.m. CDT on August 7.
FORWARD-LOOKING STATEMENTS Financial results in this news release are unaudited. This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. You can identify these statements by the fact that they do not relate strictly to historical or current facts and often include words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," and other similar words. Although the company believes it has been prudent in its plans and assumptions, there can be no assurance that indicated results will be realized. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from those anticipated.
Forward-looking statements speak only as of the date on which they are made, and the company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. The company recommends that you consult any further disclosures it makes on related subjects in its 10-Q, 8-K, and 10-K reports to the Securities and Exchange Commission.
The following is a cautionary list of risks and uncertainties that may affect the assumptions, which form the basis of forward-looking statements relevant to the company's business. These factors, and other factors not listed here, could cause actual results to differ materially from those contained in forward-looking statements.
-- Unexpected costs and/or unexpected liabilities related to the Peoples
Energy merger;
-- Integrys Energy Group may be unable to achieve the forecasted synergies
in connection with the Peoples Energy merger, or it may take longer or
cost more than expected to achieve these synergies;
-- Resolution of pending and future rate cases and negotiations (including
the recovery of deferred costs) and other regulatory decisions
impacting Integrys Energy Group's regulated businesses;
-- The impact of recent and future federal and state regulatory changes,
including legislative and regulatory initiatives regarding deregulation
and restructuring of the electric and natural gas utility industries
and possible future initiatives to address concerns about global
climate change, changes in environmental, tax, and other laws and
regulations to which Integrys Energy Group and its subsidiaries are
subject, as well as changes in the application of existing laws and
regulations;
-- Current and future litigation, regulatory investigations, proceedings
or inquiries, including but not limited to, manufactured gas plant site
cleanup and the contested case proceeding regarding the Weston 4 air
permit;
-- Resolution of audits or other tax disputes with the Internal Revenue
Service and various state, local, and Canadian revenue agencies;
-- The effects, extent, and timing of additional competition or regulation
in the markets in which our subsidiaries operate;
-- Available sources and costs of fuels and purchased power;
-- Investment performance of employee benefit plan assets;
-- Advances in technology;
-- Effects of and changes in political and legal developments, as well as
economic conditions and the related impact on customer demand in the
United States and Canada;
-- Potential business strategies, including mergers, acquisitions, and
construction or disposition of assets or businesses, which cannot be
assured to be completed timely or within budgets;
-- The direct or indirect effects of terrorist incidents, natural
disasters, or responses to such events;
-- The impacts of changing financial market conditions, credit ratings,
and interest rates on our financing efforts, and the risks associated
with changing commodity prices (particularly natural gas and
electricity);
-- Weather and other natural phenomena, in particular the effect of
weather on natural gas and electricity sales;
-- The effect of accounting pronouncements issued periodically by
standard-setting bodies; and
-- Other factors discussed in the 2007 Annual Report on Form 10-K and in
other reports filed by Integrys Energy Group from time to time with the
Securities and Exchange Commission.
About Integrys Energy Group, Inc. Integrys Energy Group, Inc. (NYSE:TEG), headquartered in Chicago, Illinois, is a holding company for energy related subsidiaries, which includes regulated utilities and nonregulated subsidiaries. The six regulated utilities consist of:
-- The Peoples Gas Light and Coke Company, a natural gas utility serving
approximately 830,000 customers in the City of Chicago. -- Wisconsin Public Service Corporation, an electric and natural gas
utility serving approximately 433,000 electric customers and
314,000 natural gas customers in northeastern Wisconsin and an adjacent
portion of Michigan's Upper Peninsula. -- Minnesota Energy Resources Corporation, a natural gas utility serving
approximately 207,000 customers throughout Minnesota. -- Michigan Gas Utilities Corporation, a natural gas utility serving
approximately 165,000 customers in lower Michigan. -- North Shore Gas Company, a natural gas utility serving approximately
158,000 customers in the northern suburbs of Chicago. -- Upper Peninsula Power Company, an electric utility serving
approximately 52,000 customers in Michigan's Upper Peninsula. The company's principal nonregulated subsidiary is:
-- Integrys Energy Services, Inc., a diversified nonregulated energy
supply and services company serving residential, commercial,
industrial, and wholesale customers in developed competitive markets in
the United States and Canada. More information about Integrys Energy Group is available online at http://www.integrysgroup.com/.
-- Unaudited Financial Statements to Follow --
INTEGRYS ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (Unaudited) Three Months Ended Six Months Ended
June 30 June 30
(Millions, except per share data) 2008 2007 2008 2007 Nonregulated revenue $2,601.1 $1,649.9 $5,013.4 $3,426.7
Utility revenue 816.1 711.8 2,393.0 1,681.6
Total revenues 3,417.2 2,361.7 7,406.4 5,108.3 Nonregulated cost of fuel, natural
gas, and purchased power 2,544.8 1,650.9 4,829.3 3,314.6
Utility cost of fuel, natural gas,
and purchased power 483.3 420.2 1,589.6 1,072.0
Operating and maintenance expense 251.8 251.9 538.4 438.6
Goodwill impairment loss 6.5 - 6.5 -
Depreciation and amortization
expense 55.9 50.6 107.1 90.8
Taxes other than income taxes 21.8 22.0 47.7 43.1
Operating income (loss) 53.1 (33.9) 287.8 149.2 Miscellaneous income 22.7 21.6 40.8 33.9
Interest expense (33.5) (42.6) (71.4) (79.0)
Minority interest - - - 0.1
Other expense (10.8) (21.0) (30.6) (45.0) Income (loss) before taxes 42.3 (54.9) 257.2 104.2
Provision (benefit) for income
taxes 17.5 (15.3) 95.8 26.6
Income (loss) from continuing
operations 24.8 (39.6) 161.4 77.6 Discontinued operations, net of
tax 0.1 24.0 0.1 47.0
Income (loss) before preferred
stock dividends of subsidiary 24.9 (15.6) 161.5 124.6 Preferred stock dividends of
subsidiary 0.8 0.8 1.6 1.6
Income (loss) available for common
shareholders $24.1 ($16.4) $159.9 $123.0
Average shares of common stock
Basic 76.6 76.0 76.6 66.8
Diluted 76.9 76.0 76.9 67.1 Earnings (loss) per common share
(basic)
Income (loss) from continuing
operations $0.31 ($0.53) $2.09 $1.14
Discontinued operations, net
of tax - $0.31 - $0.70
Earnings (loss) per common
share (basic) $0.31 ($0.22) $2.09 $1.84 Earnings (loss) per common share
(diluted)
Income (loss) from continuing
operations $0.31 ($0.53) $2.08 $1.13
Discontinued operations, net
of tax - $0.31 - $0.70
Earnings (loss) per common
share (diluted) $0.31 ($0.22) $2.08 $1.83 Dividends per common share
declared $0.670 $0.660 $1.340 $1.243
INTEGRYS ENERGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30 December 31
(Millions) 2008 2007 Assets
Cash and cash equivalents $46.0 $41.2
Accounts receivable - net of reserves
of $63.9 and $51.3, respectively 1,565.7 1,405.3
Accrued unbilled revenues 264.2 464.7
Inventories 1,017.3 663.4
Assets from risk management activities 3,447.6 840.7
Regulatory assets 166.7 141.7
Other current assets 163.0 169.3
Current assets 6,670.5 3,726.3 Property, plant, and equipment, net
of accumulated depreciation of
$2,653.0 and $2,602.2, respectively 4,538.6 4,463.8
Regulatory assets 1,061.5 1,102.3
Assets from risk management activities 1,357.7 459.3
Goodwill 944.4 948.3
Pension assets 101.0 101.4
Other 453.9 433.0
Total assets $15,127.6 $11,234.4 Liabilities and Shareholders' Equity
Short-term debt $260.5 $468.2
Current portion of long-term debt 5.0 55.2
Accounts payable 1,789.6 1,331.8
Liabilities from risk management activities 3,279.0 813.5
Regulatory liabilities 180.6 77.9
Deferred income taxes 13.5 13.9
Temporary LIFO liquidation credit 98.8 -
Other current liabilities 485.0 487.7
Current liabilities 6,112.0 3,248.2 Long-term debt 2,258.6 2,265.1
Deferred income taxes 494.2 494.4
Deferred investment tax credits 37.4 38.3
Regulatory liabilities 318.2 292.4
Environmental remediation liabilities 695.3 705.6
Pension and postretirement benefit obligations 254.8 247.9
Liabilities from risk management activities 1,245.1 372.0
Asset retirement obligations 143.6 140.2
Other 226.4 143.4
Long-term liabilities 5,673.6 4,699.3 Commitments and contingencies Preferred stock of subsidiary with no
mandatory redemption 51.1 51.1
Common stock equity 3,290.9 3,235.8
Total liabilities and shareholders' equity $15,127.6 $11,234.4
INTEGRYS ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) Six Months Ended
June 30
(Millions) 2008 2007
Operating Activities
Income before preferred stock dividends of
subsidiary $161.5 $124.6
Adjustments to reconcile income before preferred
stock dividends of subsidiary to net cash
provided by operating activities
Discontinued operations, net of tax (0.1) (47.0)
Goodwill impairment loss 6.5 -
Depreciation and amortization expense 107.1 90.8
Recovery of MISO Day 2 expenses 9.4 2.9
Refund of non-qualified decommissioning trust (0.3) (27.3)
Recoveries and refunds of other regulatory
assets and liabilities 26.0 23.0
Amortization of nonregulated customer
contract intangibles 10.1 15.1
Net unrealized gains on nonregulated energy
contracts (45.9) (6.7)
Pension and postretirement expense 24.5 35.4
Pension and postretirement funding (10.5) (4.4)
Deferred income taxes and investment tax
credit 6.4 18.2
Gains due to settlement of contracts pursuant
to the merger with PEC - (4.0)
Loss on sale of property, plant and equipment 2.1 -
Equity income, net of dividends (5.8) 1.6
Other (28.6) (22.0)
Changes in working capital
Receivables, net (44.5) 548.5
Inventories (294.3) (57.2)
Other current assets 16.3 62.6
Accounts payable 475.7 (249.0)
Temporary LIFO liquidation credit 98.8 (85.6)
Other current liabilities (79.0) (68.9)
Net cash provided by operating activities 435.4 350.6 Investing Activities
Capital expenditures (198.5) (155.0)
Proceeds from the sale of property, plant and
equipment - 2.3
Purchase of equity investments and other
acquisitions (17.5) (34.9)
Cash paid for transaction costs pursuant to the
merger with PEC - (13.8)
Acquisition of natural gas operations
in Michigan and Minnesota - 1.7
Cash paid for the transmission interconnection (17.4) (23.9)
Restricted cash for repayment of long-term debt - 22.0
Proceeds received from the transmission
interconnection 99.7 -
Other 1.8 6.4
Net cash used for investing activities (131.9) (195.2) Financing Activities
Short-term debt, net (207.7) (66.3)
Gas loans, net 68.9 (7.5)
Repayment of long-term debt (54.6) (25.0)
Payment of dividends
Preferred stock (1.6) (1.6)
Common stock (101.9) (76.9)
Issuance of common stock - 25.2
Other (1.8) 2.1
Net cash used for financing activities (298.7) (150.0) Change in cash and cash equivalents - continuing
operations 4.8 5.4
Change in cash and cash equivalents - discontinued
operations
Net cash provided by operating activities - 40.1
Net cash used for investing activities - (37.0)
Change in cash and cash equivalents 4.8 8.5
Cash and cash equivalents at beginning of period 41.2 23.2
Cash and cash equivalents at end of period $46.0 $31.7
Diluted Earnings Per Share Information - Non-GAAP Financial Information Non-GAAP Financial Information
Integrys Energy Group prepares financial statements in accordance with accounting principles generally accepted in the United States (GAAP). Along with this information, we disclose and discuss diluted earnings per share (EPS) from continuing operations - adjusted, which is a non-GAAP measure. Management uses the measure in its internal performance reporting and for reports to the Board of Directors. We disclose this measure in our quarterly earnings releases, on investor conference calls, and during investor conferences and related events. Management believes that diluted EPS from continuing operations - adjusted is a useful measure for providing investors with additional insight into our operating performance because it eliminates the effects of certain items that are not comparable from one period to the next. Therefore, this measure allows investors to better compare our financial results from period to period. The presentation of this additional information is not meant to be considered in isolation or as a substitute for our results of operations prepared and presented in conformance with GAAP.
Actual Quarter and Year-to-Date for Periods Ended June 30, 2008 and 2007 Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Diluted EPS from continuing
operations $0.31 $(0.53) $2.08 $1.13
Diluted EPS from discontinued
operations - 0.31 - 0.70
Total Diluted EPS $0.31 $(0.22) $2.08 $1.83
Average Shares of Common
Stock - Diluted 76.9 76.0 76.9 67.1
Information on Special Items:
Diluted earnings per share from continuing operations, as adjusted for
special items and their financial impact on diluted earnings per share
from continuing operations for the three and six months ended June 30,
2008 and 2007 are as follows: Diluted EPS from continuing operations $0.31 $(0.53) $2.08 $1.13 Adjustments (net of taxes):
Goodwill impairment 0.08 - 0.08 -
External transition costs related to
Peoples Energy merger 0.03 0.02 0.06 0.03
Impacts of purchase accounting
adjustments due to Peoples Energy
merger 0.01 0.04 0.08 0.07
Integrys Energy Services' power
contract in Maine liquidated in 2005 - - - 0.01
Synfuel - realized and unrealized oil
option gains/losses, tax credits,
production costs, premium amortization,
deferred gain recognition, and royalties - 0.20 (0.01) (0.06)
Diluted EPS from continuing
operations - adjusted $0.43 $(0.27) $2.29 $1.18 Weather impact - regulated utilities (as
compared to normal)
Electric impact - favorable/
(unfavorable) $(0.01) $0.01 $ - $ -
Natural gas impact - favorable/
(unfavorable) - (0.02) 0.11 (0.09)
Total weather impact $(0.01) $(0.01) $0.11 $(0.09)
Diluted Earnings Per Share Information - Non-GAAP Financial Information Actual 2007 with 2008 Forecast Potential 2008 Diluted
EPS Ranges
Actual Low High
2007 Scenario Scenario
Diluted EPS from continuing
operations $2.48 $3.33 $3.53
Diluted EPS from discontinued
operations 1.02 - -
Total Diluted EPS $3.50 $3.33 $3.53
Average Shares of Common
Stock - Diluted 71.8 76.9 76.9 Information on Special Items:
Diluted earnings per share from continuing operations, as adjusted for
special items and their financial impact on the actual 2007 diluted
earnings per share from continuing operations and the 2008 diluted
earnings per share from continuing operations guidance are as follows: Diluted EPS from continuing
operations $2.48 $3.33 $3.53 Adjustments (net of taxes):
Synfuel - realized and unrealized
oil option gains/losses, tax
credits, production costs,
premium amortization, deferred
gain recognition, and royalties (0.24) - -
Gains on asset sales (0.02) - -
Integrys Energy Services' power
contract in Maine liquidated in
2005 0.01 - -
Goodwill impairment - 0.08 0.08
Impacts of purchase accounting
adjustments due to Peoples Energy
merger 0.14 0.09 0.09
External transition costs related
to Peoples Energy merger 0.15 0.13 0.13
Diluted EPS from continuing
operations - adjusted $2.52 $3.63 $3.83 Weather impact - regulated
utilities (as compared to normal)
Electric impact - favorable/
(unfavorable) $0.03 $ - $ -
Natural gas impact - favorable/
(unfavorable) (0.16) 0.11 0.11
Total weather impact $(0.13) $0.11 $0.11
DATASOURCE: Integrys Energy Group, Inc.
CONTACT: Steven P. Eschbach, CFA, Vice President - Investor Relations of Integrys Energy Group, Inc., +1-312-228-5408 Web site: http://www.integrysgroup.com/
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