Common Equity

We had the following changes to issued common stock:



Balance at December 31, 2011		78,287,906
Balance at December 31, 2012 *		78,287,906
Shares issued
Stock-based compensation		972,718
Stock Investment Plan		298,532
Employee Stock Ownership Plan		248,724
Rabbi trust shares		111,296
Balance at December 31, 2013		79,919,176
Shares issued
Stock Investment Plan		12,151
Employee Stock Ownership Plan		31,764
Balance at December 31, 2014		79,963,091


*	We did not issue equity during 2012.

The following table provides a summary of common stock activity to meet the requirements of our Stock Investment Plan and certain stock-based employee benefit and compensation plans:



Period		Method of meeting requirements
Beginning 02/05/2014		Purchasing shares on the open market
02/05/2013 – 02/04/2014		Issued new shares
01/01/2012 – 02/04/2013		Purchased shares on the open market

Under the merger agreement with Wisconsin Energy Corporation (Wisconsin Energy), we cannot issue shares of our common stock.

The following table reconciles common shares issued and outstanding:



	2014			2013
	Shares	Average Cost *		Shares	Average Cost *
Common stock issued	79,963,091			79,919,176
Less:
Deferred compensation rabbi trust	428,920	$	48.73	473,796	$	48.50
Total common shares outstanding	79,534,171			79,445,380


*	Based on our stock price on the day the shares entered the deferred compensation rabbi trust. Shares paid out of the trust are valued at the average cost of shares in the trust.

Earnings Per Share

The following table reconciles our computation of basic and diluted earnings per share:



(Millions, except per share amounts)	2014			2013			2012
Numerator:
Net income from continuing operations	$	278.1		$	267.5		$	238.9
Discontinued operations, net of tax	1.8			87.3			45.4
Preferred stock dividends of subsidiary	(3.1		)	(3.1		)	(3.1		)
Noncontrolling interest in subsidiaries	0.1			0.1			0.2
Net income attributed to common shareholders — basic	$	276.9		$	351.8		$	281.4
Effect of dilutive securities
Deferred compensation	—			(0.1		)	—
Net income attributed to common shareholders — diluted	$	276.9		$	351.7		$	281.4

Denominator:
Average shares of common stock — basic	80.2			79.5			78.6
Effect of dilutive securities
Stock-based compensation	0.5			0.4			0.5
Deferred compensation	—			0.2			0.2
Average shares of common stock — diluted	80.7			80.1			79.3

Earnings per common share
Basic	$	3.45		$	4.43		$	3.58
Diluted	3.43			4.39			3.55

The calculation of diluted earnings per share excluded the following weighted-average outstanding securities that had an anti-dilutive effect:



(Millions)	2014	2013	2012
Stock-based compensation	0.2	0.3	0.7
Deferred compensation	0.3	0.1	—

Dividend Restrictions

Our ability as a holding company to pay dividends is largely dependent upon the availability of funds from our subsidiaries. Various laws, regulations, and financial covenants impose restrictions on the ability of certain of our utility subsidiaries to transfer funds to us in the form of dividends. Our utility subsidiaries, with the exception of MGU, are prohibited from loaning funds to us, either directly or indirectly.

The PSCW allows WPS to pay dividends on its common stock of no more than 103% of the previous year’s common stock dividend. WPS may return capital to us if its average financial common equity ratio is at least 51% on a calendar-year basis. WPS must obtain PSCW approval if a return of capital would cause its average financial common equity ratio to fall below this level. Our right to receive dividends on the common stock of WPS is also subject to the prior rights of WPS’s preferred shareholders and to provisions in WPS’s restated articles of incorporation, which limit the amount of common stock dividends that WPS may pay if its common stock and common stock surplus accounts constitute less than 25% of its total capitalization.

NSG’s long-term debt obligations contain provisions and covenants restricting the payment of cash dividends and the purchase or redemption of its capital stock.

PGL and WPS have short-term debt obligations containing financial and other covenants, including but not limited to, a requirement to maintain a debt to total capitalization ratio not to exceed 65%. Failure to comply with these covenants could result in an event of default which could result in the acceleration of their outstanding debt obligations.

As of December 31, 2014, total restricted net assets of consolidated subsidiaries were $1,953.0 million. Our equity in undistributed earnings of 50% or less owned investees accounted for by the equity method was $157.5 million at December 31, 2014.

We also have short-term and long-term debt obligations that contain financial and other covenants, including but not limited to, a requirement to maintain a debt to total capitalization ratio not to exceed 65%. Failure to comply with these covenants could result in an event of default which could result in the acceleration of outstanding debt obligations. At December 31, 2014, these covenants did not restrict our retained earnings or the payment of any dividends.

We have the option to defer interest payments on our outstanding Junior Subordinated Notes, from time to time, for one or more periods of up to ten consecutive years per period. During any period in which we defer interest payments, we may not declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment on, any of our capital stock.

Under the merger agreement with Wisconsin Energy, we may not declare or pay any dividends or distributions on our common stock other than the regular quarterly dividend of $0.68 per share.

Except for the restrictions described above and subject to applicable law, we do not have any other significant dividend restrictions.

Capital Transactions with Subsidiaries

During 2014, capital transactions with subsidiaries were as follows (in millions):



Subsidiary	Dividends To Parent		Return Of Capital To Parent		Equity Contributions From Parent
IBS	$	—	$	—	$	25.0
ITF ⁽¹⁾	—		—		50.3
MERC	—		27.0		20.0
MGU	—		13.0		7.0
PGL⁽¹⁾	—		—		65.0
UPPCO	—		12.5		94.4
WPS	111.8		—		55.0
WPS Investments, LLC ⁽²⁾	74.3		—		17.0
Total	$	186.1	$	52.5	$	333.7


⁽¹⁾	ITF and PGL are direct wholly owned subsidiaries of PELLC. As a result, they make distributions to PELLC, and receive equity contributions from PELLC. Subject to applicable law, PELLC does not have any dividend restrictions or limitations on distributions to us.

⁽²⁾

WPS Investments, LLC is a consolidated subsidiary that is jointly owned by us and WPS. In August 2014, UPPCO's ownership interest in WPS Investments, LLC was transferred to us as a result of the sale of UPPCO. At December 31, 2014, the ownership interest held by us and WPS was 89.02% and 10.98%, respectively. Distributions from WPS Investments, LLC are made to the owners based on their respective ownership percentages. During 2014, all equity contributions to WPS Investments, LLC were made solely by us.