STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

The changes in stockholders’ equity for the nine months endedSeptember 30, 2013 were as follows:

									Accumulated
									Other			Total
	Common Stock					Retained			Comprehensive			Stockholders’
(in thousands, except share and per share data)	Shares		Amount			Earnings			Income (Loss)			Equity
BALANCE, DECEMBER 31, 2012	52,248,514		$	989,334		$	443,569		$	(18,048	)	$	1,414,855
Net income	—		—			156,569			—			156,569
Repurchase and retirement of common stock	(50,388	)	(4,508		)	—			—			(4,508		)
Dividends declared on common stock ($1.18 per share)	—		—			(61,821		)	—			(61,821		)
Stock option exercises	143,514		6,860			—			—			6,860
Shares issued under the Employee Stock Purchase Plan	19,024		1,353			—			—			1,353
Issuance of restricted stock	121,811		—			—			—			—
Forfeiture of restricted stock	(11,121	)	—			—			—			—
Share-based compensation, net of forfeitures	—		10,670			—			—			10,670
Other comprehensive income, net of tax	—		—			—			24,555			24,555
BALANCE, SEPTEMBER 30, 2013	52,471,354		$	1,003,709		$	538,317		$	6,507		$	1,548,533

The changes in stockholders’ equity for the nine months endedSeptember 30, 2012 were as follows:

									Accumulated
									Other			Total
	Common Stock					Retained			Comprehensive			Stockholders’
(in thousands, except share and per share data)	Shares		Amount			Earnings			Loss			Equity
BALANCE, DECEMBER 31, 2011	51,323,368		$	943,444		$	330,816		$	(15,368	)	$	1,258,892
Net income	—		—			139,620			—			139,620
Repurchase and retirement of common stock	(69,183	)	(4,896		)	—			—			(4,896		)
Dividends declared on common stock ($1.0825 per share)	—		—			(55,677		)	—			(55,677		)
Stock option exercises	108,693		3,796			—			—			3,796
Shares issued under the Employee Stock Purchase Plan	18,107		1,133			—			—			1,133
Issuance of restricted stock	153,381		—			—			—			—
Forfeiture of restricted stock	(9,929	)	—			—			—			—
Share-based compensation, net of forfeitures	—		11,378			—			—			11,378
Other	—		403			—			—			403
Other comprehensive loss, net of tax	—		—			—			(5,440		)	(5,440		)
BALANCE, SEPTEMBER 30, 2012	51,524,437		$	955,258		$	414,759		$	(20,808	)	$	1,349,209

Accumulated Other Comprehensive Income

The following table provides the components of changes in AOCI for the three and nine months ended September 30, 2013 and 2012:

	Three months ended					Nine months ended
	September 30,					September 30,
(in thousands)	2013		2012			2013			2012
Balance at the beginning of period	$	6,310	$	(19,492	)	$	(18,048	)	$	(15,368	)
Derivative instruments
Reclassification of gain relating to interest rate cash flow hedges from AOCI (net of tax of $71 and $9 for the three months ended September 30, 2013 and 2012, respectively, and net of tax of $90 and $21 for the nine months ended September 30, 2013 and 2012, respectively) (a)	110		15			139			52
Gain (loss) on interest rate swaps relating to interest rate cash flow hedges (net of tax of $862 for the three months ended September 30, 2012 and net of tax of $15,652 and $3,545 for the nine months ended September 30, 2013 and 2012, respectively)	—		(1,331		)	24,329			(5,492		)
Derivative instruments, net of tax	110		(1,316		)	24,468			(5,440		)
Available-for-sale securities
Unrealized gain on available-for-sale securities (net of tax of $56 for the three and nine months ended September 30, 2013)	87		—			87			—
Available-for-sale securities, net of tax	87		—			87			—
Total other comprehensive income (loss), net of tax	197		(1,316		)	24,555			(5,440		)
Balance at the end of period	$	6,507	$	(20,808	)	$	6,507		$	(20,808	)

____________________________

(a) Reclassified from AOCI to interest expense — net.

ITC Holdings Sales Agency Financing Agreement

On July 27, 2011, ITC Holdings entered into a Sales Agency Financing Agreement with Deutsche Bank Securities Inc. as sales agent (the “SAFA”). Under the terms of the SAFA, ITC Holdings may issue and sell shares of common stock, without par value, from time to time, up to an aggregate sales proceeds amount of $250.0 million. The SAFA terminates in July 2014. The agreements relating to the Entergy Transaction generally prohibit us from issuing shares under the SAFA until approximately two years after the closing except under certain limited circumstances. The shares of common stock may be offered in one or more selling periods. Any shares of common stock sold under the SAFA will be offered at market prices prevailing at the time of sale. Moreover, ITC Holdings will specify to the sales agent (i) the aggregate selling price of the shares of common stock to be sold during each selling period, and (ii) the minimum price below which sales may not be made. ITC Holdings will pay a commission equal to a mutually agreed upon rate with its agent, not to exceed 2% of the sales price of all shares of common stock sold through its agent under the SAFA, plus expenses. The shares we would issue under the SAFA have been registered under ITC Holdings’ shelf registration statement on Form S-3 (File No. 333-187994) filed on April 18, 2013 with the SEC. No shares have been issued under the SAFA as of September 30, 2013.