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Integrys Energy Group, Inc. Reports Improved 2010 Fourth Quarter Consolidated Financial Results

February 23, 2011

CHICAGO, Feb. 23, 2011 /PRNewswire/ – Integrys Energy Group, Inc. (NYSE: TEG) recognized a 62.5% improvement in earnings, on an adjusted basis, in the fourth quarter of 2010 compared with the fourth quarter of 2009.

Net income attributed to common shareholders on a GAAP (generally accepted accounting principles) basis was $71.7 million ($0.91 diluted earnings per share) for the quarter ended December 31, 2010, compared with $23.2 million ($0.30 diluted earnings per share) for the quarter ended December 31, 2009. During the fourth quarter of 2010, Integrys Energy Group changed its accounting policy related to investment tax credits to provide better matching of the benefit of these credits with the cost of the related investments. As a result, net income attributed to common shareholders for the fourth quarter of 2009 was retrospectively adjusted downward by $0.3 million from what was originally reported for the fourth quarter of 2009.

Excluding the effects of certain items that are not comparable from one period to the next, Integrys Energy Group’s adjusted earnings were $64.2 million ($0.82 diluted earnings per share – adjusted) for the quarter ended December 31, 2010, compared with adjusted earnings of $39.5 million ($0.51 diluted earnings per share – adjusted) for the quarter ended December 31, 2009, an increase of $24.7 million quarter over quarter.

“We ended a very successful 2010 with solid financial results in the fourth quarter,” said Charles A. Schrock, Chairman, President and Chief Executive Officer of Integrys Energy Group. “Considering all we accomplished at the regulated utilities in terms of financial and operational performance and at Integrys Energy Services regarding the completion of our restructuring, 2010 was a very good year.”

Management believes that adjusted earnings and diluted earnings per share – adjusted are useful measures for providing investors with additional insight into our operating performance. Two schedules, which are included at the end of this news release as well as in the supplemental data package on Integrys Energy Group’s website, provide details on these non-GAAP measures. These schedules are titled “Diluted Earnings Per Share Information – Non-GAAP Financial Information” and “Non-GAAP Financial Information Reported by Segment.”

Unless otherwise noted, the discussion below relates to adjusted earnings, and all dollar amounts are reported on an after-tax basis.

FOURTH QUARTER 2010 HIGHLIGHTS

  • Rate increases at certain of the natural gas utilities, partially offset by higher operating expenses, drove the $11.2 million quarter-over-quarter increase in adjusted earnings for the regulated natural gas utility segment.
  • The primary driver of the $5.2 million increase in adjusted earnings for the regulated electric utility segment was an increase in margins due to retail electric rate increases at both regulated electric utilities and lower fuel and purchased power costs at Wisconsin Public Service Corporation during the fourth quarter of 2010, as compared with authorized fuel and purchased power cost recovery rates for the same period.
  • Adjusted earnings for Integrys Energy Services, Inc. increased $4.2 million quarter over quarter, primarily due to an increase in realized margins in the retail electric markets that Integrys Energy Services is continuing to operate in as part of its revised strategy.

FOURTH QUARTER 2010 RESULTS

Significant drivers of the $24.7 million increase in adjusted earnings are described below, by reportable segment:


         During the fourth quarter of 2010, the regulated
         natural gas utility segment recognized adjusted
         earnings of $40.3 million, compared with adjusted
         earnings of $29.1 million during the same quarter
    --   in 2009.

      The $11.2 million increase in adjusted earnings was
       driven by a $14.3 million quarter-over-quarter
       increase in regulated natural gas utility segment
       margins, primarily due to the approximate $17 million
       impact of rate increases at certain of the natural
       gas utilities, which were in place in the fourth
       quarter of 2010, but were not in place in the fourth
       quarter of 2009.

      The increase in regulated natural gas utility segment
       margins was partially offset by a $5.3 million
       increase in operating expenses.  This increase
       primarily resulted from a $3.2 million increase in
       depreciation and amortization expense and a $2.6
       million increase in expenses related to energy
       conservation programs, which were anticipated in our
       recent rate cases.

         During the fourth quarter of 2010, the regulated
         electric utility segment recognized adjusted
         earnings of $11.0 million, compared with adjusted
         earnings of $5.8 million during the same quarter in
         2009.  The $5.2 million increase in adjusted
         earnings primarily resulted from a $6.2 million
    --   increase in margins, driven by:

         An approximate $5 million quarter-over-quarter
         increase due to retail electric rate increases
         at both of the regulated electric utilities that
         were in place in the fourth quarter of 2010 but
     -   were not in place in the fourth quarter of 2009,
         An approximate $4 million quarter-over-quarter
         increase related to lower fuel and purchased
         power costs incurred at Wisconsin Public Service
         during the fourth quarter of 2010 as compared
         with authorized fuel and purchased power cost
     -   recovery rates for the same period, and
         A partially offsetting $1.7 million quarter-
         over-quarter decrease in margins from wholesale
         customers, due to formula rates charged to these
         customers that reflected lower operating
     -   expenses.

         Adjusted earnings from Integrys Energy Group's
         investment in American Transmission Company
         decreased $0.5 million, to $11.6 million in the
         fourth quarter of 2010, from $12.1 million in the
    --   fourth quarter of 2009.

         Adjusted earnings for Integrys Energy Services
         increased $4.2 million, to $6.9 million for the
         fourth quarter of 2010, from $2.7 million for the
    --   fourth quarter of 2009, driven by:

         A $9.2 million decrease in operating expense,
         driven by a decrease in employee payroll and
         benefit expenses, primarily related to the
         reduction in the size of Integrys Energy
     -   Services as a result of the strategy change.
         An approximate $3 million increase in adjusted
         earnings due to a quarter-over-quarter change
         in the effective tax rate.  This change was
         primarily the result of adjustments to deferred
         tax amounts in the fourth quarter of 2009 due to
         anticipated changes in state tax apportionments
     -   as a result of the strategy change.
         A partially offsetting $8.8 million quarter-
         over-quarter decrease in realized margins.  The
         primary driver of this decrease was an $11.4
         million reduction in realized wholesale natural
         gas and electric margins quarter over quarter,
         due to the sale of the wholesale natural gas
         marketing business in the fourth quarter of 2009
         and the sale of the wholesale electric marketing
         business in the first quarter of 2010, both in
         conjunction with Integrys Energy Services'
         strategy change.  This decrease in margins was
         partially offset by a net $3.8 million increase
         in realized retail margins, primarily due to
         increased marketing efforts and a change in
         pricing methodology and customer mix in the
         retail electric markets that Integrys Energy
         Services is continuing to operate in as part of
     -   its revised strategy.

         The holding company and other segment recognized an
         adjusted net loss of $5.6 million during the fourth
         quarter of 2010, compared with an adjusted net loss
         of $10.2 million during the fourth quarter of 2009.
          The majority of the $4.6 million decrease in
          adjusted net loss for the holding company and other
         segment was driven by intercompany income from
         fees, including asset usage fees and credit
         agreement fees, charged under intercompany
         agreements related to services provided to the
         regulated natural gas, regulated electric, and
    --   Integrys Energy Services segments.

2010 FULL YEAR RESULTS

Integrys Energy Group’s earnings improved 19.5%, on an adjusted basis, in 2010 compared with 2009.

Integrys Energy Group recognized net income attributed to common shareholders on a GAAP basis of $220.9 million ($2.83 diluted earnings per share) for 2010, compared with a net loss attributed to common shareholders on a GAAP basis of $69.6 million ($0.91 net loss per share) for 2009. A change in accounting policy in the fourth quarter of 2010 led to a retrospective positive adjustment of $1.3 million to the previously reported 2009 net loss. Net income for 2010 includes the $0.9 million positive impact of this accounting policy change.

Excluding the effects of certain items that are not comparable from one period to the next, Integrys Energy Group’s adjusted earnings were $243.8 million ($3.13 diluted earnings per share – adjusted) for 2010, compared with adjusted earnings of $204.0 million ($2.66 diluted earnings per share – adjusted) for 2009, an increase of $39.8 million year over year.

EARNINGS FORECAST

Our guidance range for 2011 consolidated diluted earnings per share on a GAAP basis remains between $3.28 and $3.61. This guidance assumes operational improvements and rate relief for certain utilities, the availability of generation units, and normal weather conditions.

Our guidance range for 2011 consolidated diluted earnings per share – adjusted also remains between $3.24 and $3.57. This guidance is adjusted for certain items that are not comparable from one period to the next. Please see the “Diluted Earnings Per Share Guidance Information” included at the end of this news release and in the supplemental data package on the company’s website for more detailed information on earnings guidance.

Integrys Energy Group expects a long-term diluted earnings per share – adjusted growth rate of 4% to 6% on an average annualized basis, using 2011 as the base year, through 2015.

Integrys Energy Group’s management will discuss earnings guidance for 2011 during the earnings conference call at 8 a.m. CST on Thursday, February 24, 2011.

“We look forward to 2011 being another successful year,” added Schrock.

SUPPLEMENTAL DATA PACKAGE

Concurrent with this news release, a supplemental data package has been posted on Integrys Energy Group’s corporate website that includes this narrative news release, as well as financial statements, non-GAAP financial information, diluted earnings per share guidance information, and supplemental quarterly financial information by reportable segment.

CONFERENCE CALL

An earnings conference call is scheduled for 8 a.m. CST on Thursday, February 24, 2011. Integrys Energy Group will discuss 2010 fourth quarter and full year financial results, as well as future prospects. To access the call, which is open to the public, call 888788-9425 (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 May 3, 2011, by dialing 866-489-8056 (toll free).

Investors may also listen to the conference live on Integrys Energy Group’s corporate website at http://www.integrysgroup.com/investor/presentations.aspx. An archive of the webcast will be available on the company’s website at http://www.integrysgroup.com/investor/presentations.aspx.

In conjunction with this conference call, Integrys Energy Group will post on its website PowerPoint slides that will be referred to within the prepared remarks during the call. The slides will be available at 6 a.m. CST on February 24.

FORWARD-LOOKING STATEMENTS

Financial results in this news release are unaudited. In this news release, Integrys Energy Group and its subsidiaries make statements concerning expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to assumptions and uncertainties; therefore, actual results may differ materially from those expressed or implied by such forward-looking statements. Although Integrys Energy Group and its subsidiaries believe that these forward-looking statements and the underlying assumptions are reasonable, they cannot provide assurance that such statements will prove correct.

Forward-looking statements include, among other things, statements concerning management’s expectations and projections regarding earnings, regulatory matters, fuel and natural gas costs, sources of electric energy supply, coal and natural gas deliveries, remediation costs, environmental expenditures, liquidity and capital resources, trends, estimates, completion of construction projects, and other matters.

Forward-looking statements involve a number of risks and uncertainties. Some risks that could cause results to differ from any forward-looking statement include those described in Item 1A of Integrys Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2010, as may be amended or supplemented in our Quarterly Reports on Form 10-Q. Other risks and uncertainties include, but are not limited to:

Except to the extent required by the federal securities laws, Integrys Energy Group and its subsidiaries undertake no obligation to publicly update or revise any forwardlooking statements, whether as a result of new information, future events, or otherwise.

About Integrys Energy Group, Inc.

Integrys Energy Group is a diversified holding company with regulated utility operations operating through six wholly owned subsidiaries: Wisconsin Public Service Corporation, The Peoples Gas Light and Coke Company, North Shore Gas Company, Upper Peninsula Power Company, Michigan Gas Utilities Corporation, and Minnesota Energy Resources Corporation; nonregulated operations through its wholly owned subsidiary, Integrys Energy Services, Inc.; and a 34% equity ownership interest in American Transmission Company LLC (an electric transmission company operating in Wisconsin, Michigan, Minnesota, and Illinois).

More information about Integrys Energy Group, Inc. is available online at www.integrysgroup.com.


                            Integrys Energy Group, Inc.

      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) - adjusted and adjusted earnings
    (loss), which are non-GAAP measures.  Management uses these
    measures in its internal performance reporting and for reports to
    the Board of Directors.  We disclose these measures in our quarterly
    earnings releases, on investor conference calls, and during investor
    conferences and related events.  Management believes that diluted
    EPS - adjusted and adjusted earnings (loss) are useful measures for
    providing investors with additional insight into our operating
    performance because they eliminate the effects of certain items that
    are not comparable from one period to the next.  Therefore, these
    measures allow 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 Results for Periods Ended December
    31, 2010 and 2009
                                         Three Months
                                             Ended            Year Ended
                                         December 31         December 31
                                        2010       2009   2010       2009
                                        ----       ----   ----       ----
    Diluted EPS                        $0.91      $0.30  $2.83     $(0.91)

    Special Items (net of taxes):

    Net noncash gains related to
     derivative and inventory
     accounting activities at Integrys
     Energy Services                   (0.09)     (0.19) (0.39)     (0.22)

    Settlement of Integrys Energy
     Services' supply contracts         0.02          -   0.08          -

    Goodwill impairment loss - natural
     gas utility segment                   -          -      -       3.24

    Impairment losses on property,
     plant, and equipment - Integrys
     Energy Services                       -          -   0.33          -

    Restructuring expense              (0.01)      0.18   0.06       0.36

    Net (gain) loss on dispositions
     and foreign currency translation
     gain related to Integrys Energy
     Services' strategy change             -       0.22   0.08       0.23

    Deferred income tax expense
     resulting from enactment of
     federal health care reform
     legislation                       (0.01)         -   0.14          -

    Discontinued operations                -          -      -      (0.04)

    Diluted EPS - adjusted             $0.82      $0.51  $3.13      $2.66
    ======================             =====      =====  =====      =====

     Average Shares of Common Stock -
      Diluted (in millions)             78.5       77.0   78.0       76.8

                                  Integrys Energy Group, Inc.

                      Non-GAAP Financial Information Reported by Segment

    Net income (loss) attributed to common shareholders is adjusted by
    reportable segment for special items and their financial impact for
    the quarters ended December 31, 2010 and 2009.
    December 31, 2010
                                                        Electric
                                 Natural              Transmission
    (Millions)                     Gas     Electric    Investment
    ----------                   Utility   Utility    ------------
                                 -------   -------

    Net income (loss)
     attributed to common
     shareholders                  $40.4      $12.0          $11.6

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -              -
    Settlement of Integrys
     Energy Services' supply
     contracts                         -          -              -
    Restructuring expense           (0.1)         -              -
    Net gain on dispositions
     related to Integrys
     Energy Services' strategy
     change                            -          -              -
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                       -       (1.0)             -
    Discontinued operations            -          -              -
    Adjusted earnings (loss)       $40.3      $11.0          $11.6
    ------------------------       -----      -----          -----


                                     Integrys
                                      Energy
    December 31, 2010                Services
                                     --------
    (Millions)                   Core   Other
    ----------                   ----   -----

    Net income (loss)
     attributed to common
     shareholders                 $6.9    $6.4

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -    (7.1)
    Settlement of Integrys
     Energy Services' supply
     contracts                       -     1.6
    Restructuring expense            -    (0.5)
    Net gain on dispositions
     related to Integrys
     Energy Services' strategy
     change                          -    (0.3)
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                     -       -
    Discontinued operations          -    (0.1)
    Adjusted earnings (loss)      $6.9      $-
    ------------------------      ----     ---


    December 31, 2010
                                                Integrys
                                   Holding       Energy
                                   Company        Group
    (Millions)                   and Other    Consolidated
    ----------                    ---------   ------------

    Net income (loss)
     attributed to common
     shareholders                     $(5.6)         $71.7

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -           (7.1)
    Settlement of Integrys
     Energy Services' supply
     contracts                            -            1.6
    Restructuring expense                 -           (0.6)
    Net gain on dispositions
     related to Integrys
     Energy Services' strategy
     change                               -           (0.3)
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                          -           (1.0)
    Discontinued operations               -           (0.1)
    Adjusted earnings (loss)          $(5.6)         $64.2
    ------------------------          -----          -----

    December 31, 2009 Integrys Energy Services
                      ------------------------
                                                        Electric
                                 Natural              Transmission
    (Millions)                     Gas     Electric    Investment
    ----------                   Utility   Utility    ------------
                                 -------   -------

    Net income (loss)
     attributed to common
     shareholders                  $25.0       $0.6          $12.1

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -              -
    Restructuring expense            4.1        5.2              -
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                            -          -              -
    Discontinued operations            -          -              -
    Adjusted earnings (loss)       $29.1       $5.8          $12.1
    ------------------------       -----       ----          -----


    (Millions)                   Core   Other
    ----------                   ----   -----

    Net income (loss)
     attributed to common
     shareholders                 $2.7   $(6.6)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -  (14.5)
    Restructuring expense            -     4.1
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                          -    17.2
    Discontinued operations          -    (0.2)
    Adjusted earnings (loss)      $2.7      $-
    ------------------------      ----     ---


                                                Integrys
                                   Holding       Energy
                                   Company        Group
    (Millions)                   and Other    Consolidated
    ----------                    ---------   ------------

    Net income (loss)
     attributed to common
     shareholders                    $(10.6)         $23.2

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -          (14.5)
    Restructuring expense               0.4           13.8
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                               -           17.2
    Discontinued operations               -           (0.2)
    Adjusted earnings (loss)         $(10.2)         $39.5
    ------------------------         ------          -----

                                  Integrys Energy Group, Inc.

                      Non-GAAP Financial Information Reported by Segment

    Diluted earnings per share is adjusted by reportable segment for
    special items and their financial impact on diluted earnings per
    share for the quarters ended December 31, 2010 and 2009.
    December 31, 2010
                                                        Electric
                                 Natural              Transmission
                                   Gas     Electric     Investment
                                 Utility   Utility    -------------
                                 -------   -------

    Diluted EPS                    $0.51      $0.15           $0.15

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -               -
    Settlement of Integrys
     Energy Services' supply
     contracts                         -          -               -
    Restructuring expense              -          -               -
    Net gain on dispositions
     related to Integrys
     Energy Services' strategy
     change                            -          -               -
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                       -      (0.01)              -
    Discontinued operations            -          -               -
    Diluted EPS - adjusted         $0.51      $0.14           $0.15
    ----------------------         -----      -----           -----


                                     Integrys
                                      Energy
    December 31, 2010                Services
                                     --------
                                 Core   Other
                                 ----   -----

    Diluted EPS                  $0.09   $0.08

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -  (0.09)
    Settlement of Integrys
     Energy Services' supply
     contracts                       -    0.02
    Restructuring expense            -  (0.01)
    Net gain on dispositions
     related to Integrys
     Energy Services' strategy
     change                          -       -
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                     -       -
    Discontinued operations          -       -
    Diluted EPS - adjusted       $0.09      $-
    ----------------------       -----     ---


    December 31, 2010
                                                 Integrys
                                   Holding        Energy
                                   Company         Group
                                 and Other    Consolidated
                                ----------    -------------

    Diluted EPS                      $(0.07)          $0.91

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -           (0.09)
    Settlement of Integrys
     Energy Services' supply
     contracts                            -            0.02
    Restructuring expense                 -           (0.01)
    Net gain on dispositions
     related to Integrys
     Energy Services' strategy
     change                               -               -
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                          -           (0.01)
    Discontinued operations               -               -
    Diluted EPS - adjusted           $(0.07)          $0.82
    ----------------------           ------           -----

    December 31, 2009 Integrys Energy Services
                      ------------------------
                                                        Electric
                                 Natural              Transmission
                                   Gas     Electric    Investment
                                 Utility   Utility    ------------
                                 -------   -------

    Diluted EPS                    $0.32      $0.01          $0.16

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -              -
    Restructuring expense           0.05       0.07              -
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                            -          -              -
    Discontinued operations            -          -              -
    Diluted EPS - adjusted         $0.37      $0.08          $0.16
    ----------------------         -----      -----          -----


                                 Core   Other
                                 ----   -----

    Diluted EPS                  $0.03   $(0.08)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -    (0.19)
    Restructuring expense            -     0.05
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                          -     0.22
    Discontinued operations          -        -
    Diluted EPS - adjusted       $0.03       $-
    ----------------------       -----      ---


                                                Integrys
                                   Holding       Energy
                                   Company        Group
                                 and Other    Consolidated
                                  ---------   ------------

    Diluted EPS                      $(0.14)         $0.30

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -          (0.19)
    Restructuring expense              0.01           0.18
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                               -           0.22
    Discontinued operations               -              -
    Diluted EPS - adjusted           $(0.13)         $0.51
    ----------------------           ------          -----

                                  Integrys Energy Group, Inc.

                      Non-GAAP Financial Information Reported by Segment

    Net income (loss) attributed to common shareholders is adjusted by
    reportable segment for special items and their financial impact for
    the years ended December 31, 2010 and 2009.
    December 31, 2010
                                                        Electric
                                 Natural              Transmission
    (Millions)                     Gas     Electric    Investment
    ----------                   Utility   Utility    ------------
                                 -------   -------

    Net income (loss)
     attributed to common
     shareholders                  $84.0     $109.8          $46.2

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -              -
    Settlement of Integrys
     Energy Services' supply
     contracts                         -          -              -
    Impairment losses on
     property, plant, and
     equipment                         -          -              -
    Restructuring expense           (0.1)      (0.2)             -
    Net loss on dispositions
     and foreign currency
     translation gain related
     to Integrys Energy
     Services' strategy change         -          -              -
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                     6.5        3.5              -
    Discontinued operations            -          -              -
    Adjusted earnings (loss)       $90.4     $113.1          $46.2
    ------------------------       -----     ------          -----


                                     Integrys
                                      Energy
    December 31, 2010                Services
                                      --------
    (Millions)                   Core   Other
    ----------                   ----   -----

    Net income (loss)
     attributed to common
     shareholders                $15.7   $(12.4)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -    (30.6)
    Settlement of Integrys
     Energy Services' supply
     contracts                       -      6.4
    Impairment losses on
     property, plant, and
     equipment                       -     25.9
    Restructuring expense            -      5.0
    Net loss on dispositions
     and foreign currency
     translation gain related
     to Integrys Energy
     Services' strategy change       -      5.9
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                     -        -
    Discontinued operations          -     (0.2)
    Adjusted earnings (loss)     $15.7       $-
    ------------------------     -----      ---


    December 31, 2010
                                                Integrys
                                   Holding       Energy
                                   Company        Group
    (Millions)                   and Other    Consolidated
    ----------                    ---------   ------------

    Net income (loss)
     attributed to common
     shareholders                    $(22.4)        $220.9

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -          (30.6)
    Settlement of Integrys
     Energy Services' supply
     contracts                            -            6.4
    Impairment losses on
     property, plant, and
     equipment                            -           25.9
    Restructuring expense                 -            4.7
    Net loss on dispositions
     and foreign currency
     translation gain related
     to Integrys Energy
     Services' strategy change            -            5.9
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                        0.8           10.8
    Discontinued operations               -           (0.2)
    Adjusted earnings (loss)         $(21.6)        $243.8
    ------------------------         ------         ------

    December 31, 2009 Integrys Energy Services
                      ------------------------
                                                        Electric
                                 Natural              Transmission
    (Millions)                     Gas     Electric    Investment
    ----------                   Utility   Utility    ------------
                                 -------   -------

    Net income (loss)
     attributed to common
     shareholders                $(172.1)     $88.9          $45.5

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -              -
    Goodwill impairment loss       248.8          -              -
    Restructuring expense            4.1        5.2              -
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                            -          -              -
    Discontinued operations            -          -              -
    Adjusted earnings (loss)       $80.8      $94.1          $45.5
    ------------------------       -----      -----          -----


    (Millions)                   Core   Other
    ----------                   ----   -----

    Net income (loss)
     attributed to common
     shareholders                $18.9   $(15.1)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -    (16.9)
    Goodwill impairment loss         -        -
    Restructuring expense            -     17.5
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                          -     17.3
    Discontinued operations          -     (2.8)
    Adjusted earnings (loss)     $18.9       $-
    ------------------------     -----      ---


                                                Integrys
                                   Holding       Energy
                                   Company        Group
    (Millions)                   and Other    Consolidated
    ----------                    ---------   ------------

    Net income (loss)
     attributed to common
     shareholders                    $(35.7)        $(69.6)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -          (16.9)
    Goodwill impairment loss              -          248.8
    Restructuring expense               0.4           27.2
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                               -           17.3
    Discontinued operations               -           (2.8)
    Adjusted earnings (loss)         $(35.3)        $204.0
    ------------------------         ------         ------

                                  Integrys Energy Group, Inc.

                       Non-GAAP Financial Information Reported by Segment

    Diluted earnings per share is adjusted by reportable segment for
    special items and their financial impact on diluted earnings per
    share for the years ended December, 2010 and 2009.
    December 31, 2010
                                                        Electric
                                Natural              Transmission
                                  Gas     Electric     Investment
                                Utility   Utility    -------------
                                -------   -------

    Diluted EPS                   $1.08      $1.41           $0.59

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                  -          -               -
    Settlement of Integrys
     Energy Services' supply
     contracts                        -          -               -
    Impairment losses on
     property, plant, and
     equipment                        -          -               -
    Restructuring expense             -          -               -
    Net loss on dispositions
     and foreign currency
     translation gain related
     to Integrys Energy
     Services' strategy
     change                           -          -               -
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                   0.08       0.05               -
    Discontinued operations           -          -               -
    Diluted EPS - adjusted        $1.16      $1.46           $0.59
    ----------------------        -----      -----           -----


                                 Integrys Energy
    December 31, 2010                Services
                                 ---------------
                                 Core    Other
                                 ----    -----

    Diluted EPS                   $0.20   $(0.16)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                  -    (0.39)
    Settlement of Integrys
     Energy Services' supply
     contracts                        -     0.08
    Impairment losses on
     property, plant, and
     equipment                        -     0.33
    Restructuring expense             -     0.06
    Net loss on dispositions
     and foreign currency
     translation gain related
     to Integrys Energy
     Services' strategy
     change                           -     0.08
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                      -        -
    Discontinued operations           -        -
    Diluted EPS - adjusted        $0.20       $-
    ----------------------        -----      ---


    December 31, 2010
                                                Integrys
                                  Holding        Energy
                                  Company         Group
                                and Other    Consolidated
                               ----------    -------------

    Diluted EPS                     $(0.29)          $2.83

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                     -           (0.39)
    Settlement of Integrys
     Energy Services' supply
     contracts                           -            0.08
    Impairment losses on
     property, plant, and
     equipment                           -            0.33
    Restructuring expense                -            0.06
    Net loss on dispositions
     and foreign currency
     translation gain related
     to Integrys Energy
     Services' strategy
     change                              -            0.08
    Deferred income tax
     expense resulting from
     enactment of federal
     health care reform
     legislation                      0.01            0.14
    Discontinued operations              -               -
    Diluted EPS - adjusted          $(0.28)          $3.13
    ----------------------          ------           -----

    December 31, 2009 Integrys Energy Services
                      ------------------------
                                                        Electric
                                 Natural              Transmission
                                   Gas     Electric    Investment
                                 Utility   Utility    ------------
                                 -------   -------

    Diluted EPS                   $(2.24)     $1.16          $0.59

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                   -          -              -
    Goodwill impairment loss        3.24          -              -
    Restructuring expense           0.05       0.07              -
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                            -          -              -
    Discontinued operations            -          -              -
    Diluted EPS - adjusted         $1.05      $1.23          $0.59
    ----------------------         -----      -----          -----


                                 Core   Other
                                 ----   -----

    Diluted EPS                  $0.25   $(0.20)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                 -    (0.22)
    Goodwill impairment loss         -        -
    Restructuring expense            -     0.23
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                          -     0.23
    Discontinued operations          -    (0.04)
    Diluted EPS - adjusted       $0.25       $-
    ----------------------       -----      ---


                                                Integrys
                                   Holding       Energy
                                   Company        Group
                                 and Other    Consolidated
                                  ---------   ------------

    Diluted EPS                      $(0.47)        $(0.91)

    Special Items (net of
     taxes)
    ---------------------
    Net noncash gains related
     to derivative and
     inventory accounting
     activities at Integrys
     Energy Services                      -          (0.22)
    Goodwill impairment loss              -           3.24
    Restructuring expense              0.01           0.36
    Net loss on dispositions
     related to Integrys
     Energy Services' strategy
     change                               -           0.23
    Discontinued operations               -          (0.04)
    Diluted EPS - adjusted           $(0.46)         $2.66
    ----------------------           ------          -----

                    Integrys Energy Group, Inc.

          Diluted Earnings Per Share Guidance Information
    2011 Diluted EPS Guidance                      Potential 2011
                                                   --------------
                                                  Low       High
                                                  ---       ----
                                               Scenario  Scenario
                                               --------  --------

     Regulated electric utility segment           $1.19      $1.33

     Regulated natural gas utility segment         1.11       1.19

     Electric transmission investment segment      0.59       0.61

     Integrys Energy Services
          Core                                     0.52       0.57
          Other                                    0.04       0.04

     Holding company and other segment            (0.17)     (0.13)

    Diluted EPS                                   $3.28      $3.61
    ===========                                   =====      =====
    Average Shares of Common Stock - Diluted
     (in millions)                                 79.0       79.0
    ----------------------------------------       ----       ----
    Information on Special Items:
    Diluted earnings per share guidance is adjusted for
     special items and their financial impact on the diluted
     earnings per share guidance for 2011.
    Diluted EPS                                   $3.28      $3.61

     Special Items (net of taxes)
     ----------------------------
     Net noncash gains related to derivative
      and inventory accounting activities at
      Integrys Energy Services                    (0.04)     (0.04)
    Diluted EPS - adjusted                        $3.24      $3.57
    ======================                        =====      =====
     Average Shares of Common Stock - Diluted
      (in millions)                                79.0       79.0
     ----------------------------------------      ----       ----

Key Assumptions for 2011:

  • Operational improvements and rate relief for certain utilities
  • Availability of generation units
  • Normal weather conditions

SOURCE Integrys Energy Group, Inc.


Source: newswire