Dispositions

IES Segment – Pending Sale of IES Retail Energy Business

In July 2014, we entered into an agreement to sell the retail energy business portion of IES to Exelon Generation Company, LLC (Exelon) for $60.0 million plus adjusted net working capital at the time of the close. For informational purposes, in the sale agreement the adjusted net working capital balance was calculated at approximately $183 million as of May 31, 2014. Any accounting gain or loss on the sale will be dependent on the fair value of derivative assets and liabilities at the time of sale.

The transaction is conditioned on approval by FERC and is subject to the notification and reporting requirements under the Hart-Scott-Rodino Act. We expect the sale to be completed in the fourth quarter of 2014 or in the first quarter of 2015. After the close of the sale, we will provide certain transition services at cost to Exelon for up to 15 months.

The retail energy business consists of mostly financial assets and liabilities; therefore, it does not qualify as held for sale under the applicable accounting guidance.

The June 2014 announcement of the potential sale triggered an interim goodwill impairment test. See Note 9, Goodwill and Other Intangible Assets, for more information.

Electric Utility Segment – Pending Sale of UPPCO

In January 2014, we reached a definitive agreement to sell all of the stock of UPPCO to Balfour Beatty Infrastructure Partners LP (BBIP) for approximately $298.8 million. This price is subject to adjustments for various items, including working capital, pension contributions, and the reimbursement of any capital expenditures made by UPPCO in 2014 prior to the sale. BBIP approached us in early 2013 about purchasing UPPCO, and we came to an agreement in January 2014 that was approved by our Board of Directors. The transaction has been approved by all applicable state regulatory commissions but is still subject to approval by the FERC. This sale is expected to close in the third quarter of 2014. Following the sale, we will provide certain administrative and operational services to UPPCO during a transition period of 18 to 30 months.

The pending sale of UPPCO does not meet the requirements under the applicable accounting guidance to qualify as discontinued operations as WPS will have significant continuing cash flows related to certain power purchase transactions that will continue as an external transaction with UPPCO after the sale.

The following table shows the carrying values of the major classes of assets and liabilities related to UPPCO classified as held for sale on the balance sheets:



(Millions)	June 30, 2014		December 31, 2013
Current assets	$	24.6	$	26.5
Property, plant, and equipment, net of accumulated depreciation of $90.5 and $88.9, respectively	193.3		193.8
Other long-term assets	71.8		51.6
Total assets	$	289.7	$	271.9

Current liabilities	$	13.8	$	16.7
Long-term liabilities	29.2		32.4
Total liabilities	$	43.0	$	49.1

In addition to the amounts above, intercompany payables of $2.2 million and $1.6 million at June 30, 2014, and December 31, 2013, respectively, will be included in the sale. These balances were eliminated during consolidation and relate to certain power purchase transactions that will continue as an external transaction with WPS after the sale, as discussed above.

Discontinued Operations

Holding Company and Other Segment

During the three months ended June 30, 2013, we recorded $0.1 million of after-tax losses in discontinued operations at the holding company and other segment. During the six months ended June 30, 2013, we recorded $5.9 million of after-tax gains in discontinued operations at the holding company and other segment. In 2013, we remeasured uncertain tax positions included in our liability for unrecognized tax benefits after effectively settling a state income tax examination. We reduced the provision for income taxes related to this remeasurement.

IES Segment – Potential Sale of Combined Locks Energy Center

IES is currently pursuing the sale of the Combined Locks Energy Center (Combined Locks), a natural gas-fired co-generation facility located in Wisconsin.

Combined Locks had $0.7 million of assets that were classified as held for sale on the balance sheets at June 30, 2014, and December 31, 2013, which included inventories and property, plant, and equipment. During the three months ended June 30, 2014, and 2013, IES recorded after-tax losses of $0.1 million and $0.7 million, respectively, in discontinued operations related to Combined Locks. During the six months ended June 30, 2014, and 2013, IES recorded after-tax losses of $0.2 million and $0.8 million, respectively, in discontinued operations related to Combined Locks.

IES Segment – Sale of WPS Beaver Falls Generation, LLC and WPS Syracuse Generation, LLC

In March 2013, WPS Empire State, Inc., a subsidiary of IES, sold all of the membership interests of WPS Beaver Falls Generation, LLC (Beaver Falls) and WPS Syracuse Generation, LLC (Syracuse), both of which owned natural gas-fired generation plants located in the state of New York. During the six months ended June 30, 2013, IES recorded after-tax earnings of $0.2 million in discontinued operations related to the gain on sale, partially offset by a net loss from operations at Beaver Falls and Syracuse.