Integrys Energy : Reports Second Quarter 2014 Earnings

For Release: 08/06/2014

Chicago - August 6, 2014 - Integrys Energy Group, Inc. (NYSE: TEG) recognized earnings on a Generally Accepted Accounting Principles (GAAP) basis and an adjusted basis as follows:

* This news release includes non-GAAP financial measures. Schedules that provide details on these measures and reconcile these measures to the most comparable GAAP figures are included with this news release.

Adjusted earnings exclude the effects of certain items that are not comparable from one period to the next.

Adjusted earnings decreased $19.2 million from the second quarter of 2013 to the second quarter of 2014. Higher operating expenses at both the natural gas and electric utility segments drove the decrease.

Operating expenses at the natural gas utility segment increased mainly due to higher natural gas distribution costs. These costs were up due to higher repairs and maintenance expense for The Peoples Gas Light and Coke Company due to higher costs to meet existing compliance requirements and to repair leaks. Higher depreciation and amortization expense across the natural gas utilities also contributed to the increase in operating expenses.

Increased maintenance costs drove an increase in operating expenses at the electric utility segment, primarily due to planned major outages at Wisconsin Public Service Corporation's Fox Energy Center and Weston 4 plant in 2014.

An increase in Integrys Energy Services' adjusted earnings partially offset the decreases at the utilities, mainly due to the acquisition of Compass Energy Services in May of 2013, as well as growth in existing markets.

Integrys Energy Group's guidance range for 2014 diluted earnings per share on a GAAP basis is $3.77 to $3.91. This guidance assumes the availability of generation units, normal weather conditions for the rest of the year, and ownership of Integrys Energy Services' retail energy business through December 31, 2014. Integrys Energy Group is not estimating the impact of derivative and inventory fair value accounting activities for 2014. The company's guidance range for 2014 diluted earnings per share - adjusted is $3.33 to $3.47.

A supplemental data package has been posted on Integrys Energy Group's website. It includes this news release, as well as financial statements, non-GAAP financial information, guidance information for diluted earnings per share, and quarterly financial information by reportable segment. The supplemental data package can be found at http://www.integrysgroup.com/investor/presentations.aspx.

An earnings conference call is scheduled for 8 a.m. Central time on Thursday, August 7, 2014. The call can be accessed 15 minutes prior to the scheduled start time by dialing 888-788-9425. Callers will be required to supply EARNINGS as the passcode and MR. STEVEN ESCHBACH as the leader. A replay of the conference call will be available through November 5, 2014, by dialing 888-403-4662.

Investors may also listen to the live conference or a replay on Integrys Energy Group's website at http://www.integrysgroup.com/investor/presentations.aspx.

PowerPoint slides will be posted on the website and will be referred to within the prepared remarks during the call. The slides will be available at 6 a.m. Central time on August 7, 2014.

Financial results in this news release are unaudited. In this news release, Integrys Energy Group makes statements concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. These statements are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future results and conditions. Although Integrys Energy Group believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that such statements will prove correct.

Forward-looking statements involve a number of risks and uncertainties. Some risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements include those described in Item 1A of Integrys Energy Group's Annual Report on Form 10-K for the year ended December 31, 2013, as may be amended or supplemented in Part II, Item 1A of subsequently filed Quarterly Reports on Form 10-Q, and those identified below.

• The timing and resolution of rate cases and related negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory decisions impacting the regulated businesses;
• Federal and state legislative and regulatory changes, including deregulation and restructuring of the electric and natural gas utility industries, financial reform, health care reform, energy efficiency mandates, reliability standards, pipeline integrity and safety standards, and changes in tax and other laws and regulations to which Integrys Energy Group and its subsidiaries are subject;
• The possibility that the proposed merger with Wisconsin Energy Corporation does not close (including, but not limited to, due to the failure to satisfy the closing conditions), disruption from the proposed merger making it more difficult to maintain Integrys Energy Group's business and operational relationships, and the risk that unexpected costs will be incurred during this process;
• The risk that Integrys Energy Group may not complete the sales of Integrys Energy Services and Upper Peninsula Power Company;
• The risk of terrorism or cyber security attacks, including the associated costs to protect assets and respond to such events;
• The risk of failure to maintain the security of personally identifiable information, including the associated costs to notify affected persons and to mitigate their information security concerns;
• Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting generation facilities and renewable energy standards;
• Costs and effects of litigation and administrative proceedings, settlements, investigations, and claims;
• The ability to retain market-based rate authority;
• The effects, extent, and timing of competition or additional regulation in the markets in which Integrys Energy Group's subsidiaries operate;
• Changes in credit ratings and interest rates caused by volatility in the financial markets and actions of rating agencies and their impact on Integrys Energy Group's and its subsidiaries' liquidity and financing efforts;
• The risk of financial loss, including increases in bad debt expense, associated with the inability of Integrys Energy Group's and its subsidiaries' counterparties, affiliates, and customers to meet their obligations;
• The effects of political developments, as well as changes in economic conditions and the related impact on customer energy use, customer growth, and the ability to adequately forecast energy use for Integrys Energy Group's customers;
• The ability to use tax credit and loss carryforwards;
• The investment performance of employee benefit plan assets and related actuarial assumptions, which impact future funding requirements;
• The risk associated with the value of goodwill or other intangible assets and their possible impairment;
• The timely completion of capital projects within estimates, as well as the recovery of those costs through established mechanisms;
• Potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed timely or within budgets (such as the proposed merger with Wisconsin Energy and the pending sales of Integrys Energy Services and Upper Peninsula Power);
• The risks associated with changing commodity prices, particularly natural gas and electricity, and the available sources of fuel, natural gas, and purchased power, including their impact on margins, working capital, and liquidity requirements;
• Changes in technology, particularly with respect to new, developing, or alternative sources of generation;
• Unusual weather and other natural phenomena, including related economic, operational, and/or other ancillary effects of any such events;
• The impact of unplanned facility outages;
• The financial performance of American Transmission Company and its corresponding contribution to Integrys Energy Group's earnings;
• The timing and outcome of any audits, disputes, and other proceedings related to taxes;
• The effectiveness of risk management strategies, the use of financial and derivative instruments, and the related recovery of these costs from customers in rates;
• The effect of accounting pronouncements issued periodically by standard-setting bodies; and
• Other factors discussed in reports Integrys Energy Group files with the United States Securities and Exchange Commission.

Except to the extent required by the federal securities laws, Integrys Energy Group undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Integrys Energy Group is a diversified energy holding company with regulated natural gas and electric utility operations (serving customers in Illinois, Michigan, Minnesota, and Wisconsin), an approximate 34% equity ownership interest in American Transmission Company (a federally regulated electric transmission company operating primarily in Wisconsin, Michigan, Minnesota, and Illinois), and nonregulated energy operations.

• Supplemental Data Package [PDF: 1.04MB / 21 pages]

• Steven P. Eschbach, CFA
  Vice President - Investor Relations
  Integrys Energy Group, Inc.
  (312) 228-5408