Weyers Explains New Strategy to Integrys Energy Shareholders

GREEN BAY, Wis., May 13 /PRNewswire-FirstCall/ – At its Annual Meeting of Shareholders held today at the Weidner Center in Green Bay, Wisconsin, Integrys Energy Group, Inc. (NYSE: TEG) Executive Chairman Larry L. Weyers told the audience that despite a troubled economy that caused the company to rethink its overall strategies, Integrys has made the necessary changes to position it for future growth in the regulated natural gas and electric utility industry.

"It’s been a tough year – tough for the world economy, tough for the United States economy, tough for U.S. corporations, tough for the U.S. workforce, tough for customers, tough for Integrys, and tough for investors," said Weyers. "We made it through a very difficult experience. We have embraced a strategy change that is leading us to divest or downsize our nonregulated subsidiary, Integrys Energy Services."

Weyers explained the decision by characterizing the issues Integrys faced regarding its Energy Services business unit. "Integrys Energy Services has experienced rapid growth in the past few years and is an attractive business," he said, pointing out that 2008 was the "best year ever in creating value" for the subsidiary. However, the financial requirements to support the unit were hampering Integrys Energy Group, given the current economic reality. "This subsidiary requires substantial credit facilities to support its operating model. The credit can be supplied by a parent company with a large balance sheet or more liquid financial markets."

Integrys expects to have additional information on the divestiture in the third or fourth quarter of 2009.

Weyers said, the new strategy and uncertainty around the announcement, as well as questions about the company’s ability to sustain its current dividend led to a significant drop in Integrys Energy’s stock price. Weyers said that as the company demonstrates the soundness of the strategy change, the affordability of the dividend, and the replacement of the lost earnings stream, the stock will rebound. "Partial recovery has already taken place," he said, noting the stock rebounded by around 50% since its 52-week low just a little more than two months earlier.

Weyers said that Integrys expects average annual earnings-per-share growth of 4% to 6% in the long term, with more rapid growth in the near term. He indicated that the company recently announced earnings guidance for 2011 of between $2.80 and $3.20 per share and indicated that the Board had approved payment of the second quarter dividend at a rate of 68 cents per share. The dividend rate was increased to 68 cents per share in the first quarter 2009, marking the 51st consecutive year of increasing dividends and the 69th consecutive year of paying dividends.

Integrys Energy enjoyed several significant events in 2008, including:

• Completion of the Weston 4 Power Plant near Wausau, Wisconsin. Weston 4 has one of the lowest installed capacity costs in the industry. The plant was named "2008 Power Plant of the Year" by POWER magazine and "Best Coal-fired Project for 2008" by POWER ENGINEERING magazine.
• Completion of natural gas laterals to the new Guardian Pipeline extension in Wisconsin, on time and under a revised budget, enabling customers to enjoy the benefits of competitive natural gas pipeline service in northeastern Wisconsin.
• Integration of the natural gas distribution operations acquired from Aquila in 2006 and from the merger with Peoples Energy in 2007. Michigan Gas Utilities, Minnesota Energy Resources, Peoples Gas, and North Shore Gas are now vital components of the Integrys system. The company captured $83 million in synergy savings as a result of the successful merger with Peoples Energy and expects the savings to reach $114 million annually by 2011. The company has also reduced the expected costs to achieve the merger integration by nearly $40 million.

   

With some pride, Weyers told the gathering that Integrys continues to be recognized not only nationally, but globally. In 2008, Integrys Energy Group was selected as the "World’s Most Admired Energy Company" by Fortune Magazine.

Also at the meeting, President and CEO Charlie Schrock presented the company’s Recognition of Valor award to four employees:

• Ken Olson, a Minnesota Energy Resources Field Technician, successfully performed the Heimlich maneuver on a restaurant patron, saving her life.
• Mark Brabant, a Control Operator at Wisconsin Public Service and a volunteer firefighter for the City of Peshtigo, Wisconsin, in November 2008 along with another firefighter, successfully pulled a man from the frigid Peshtigo River.
• Gary Fitch, Lead Field Technician for Minnesota Energy Resources, rescued an accident victim from a rapidly sinking vehicle that had plunged into a pond. The victim was not physically able to exit the vehicle, which was nearly filled with water following the incident.
• Nancy McAllister, Lead Payment Processor at Wisconsin Public Service, recognized that a fellow employee was in distress and called for a rescue squad despite the employee’s assurance that she was fine. The employee underwent emergency surgery later that day.

   

Concluding his remarks, Weyers acknowledged his plan to retire. "This will likely be my last Annual Shareholders’ Meeting," he said. "I would prefer to end my career with a high stock price and satisfied shareholders, but the economy has not cooperated. Nevertheless, I am proud of the accomplishments of this management team and our employees over the last decade. We have created substantial shareholder value, successfully steered the company through the greatest recession in decades, and left Integrys with a solid growth platform. My thanks to the management team and employees that accomplished this, to the Board of Directors who enabled it, and to you, our shareholders, for your support."

Forward Looking Statements

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," "expect," "intend," and other similar words. Forward-looking statements are beyond the ability of Integrys Energy Group to control and, in many cases, Integrys Energy Group cannot predict what factors would cause actual results to differ materially from those indicated by forward-looking statements. Please see Integrys Energy Group’s periodic reports filed with the Securities and Exchange Commission (including its 10-K and 10-Qs) for a listing of certain factors that could cause actual results to differ materially from those contained in forward-looking statements.

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 819,000 customers in the City of Chicago.
• Wisconsin Public Service Corporation, an electric and natural gas utility serving approximately 436,000 electric customers and 316,000 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 210,000 customers throughout Minnesota.
• Michigan Gas Utilities Corporation, a natural gas utility serving approximately 166,000 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.

   

For more information, visit the company’s Web site: www.integrysgroup.com.

SOURCE Integrys Energy Group, Inc.