SCHEDULE I - CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

INTEGRYS ENERGY GROUP, INC. (PARENT COMPANY ONLY)



A. STATEMENTS OF INCOME

Year Ended December 31
(Millions, except per share data)	2014			2013			2012
Merger transaction costs	$	10.4		$	—		$	—
Operating expense	10.6			8.2			6.0
Gain on sale of UPPCO, net of transaction costs	(85.4		)	—			—
Operating income (loss)	64.4			(8.2		)	(6.0		)

Equity earnings from subsidiaries	303.8			314.6			277.3
Miscellaneous income	23.5			18.5			21.2
Interest expense	63.8			52.1			50.0
Other income	263.5			281.0			248.5

Income before taxes	327.9			272.8			242.5
Provision for income taxes	52.8			8.3			6.5
Net income from continuing operations	275.1			264.5			236.0

Discontinued operations from Parent Company, net of tax	(18.9		)	0.6			1.4
Discontinued operations from subsidiaries, net of tax	20.7			86.7			44.0
Net income attributed to common shareholders	$	276.9		$	351.8		$	281.4

Average shares of common stock
Basic	80.2			79.5			78.6
Diluted	80.7			80.1			79.3

Earnings per common share (basic)
Net income from continuing operations	$	3.43		$	3.33		$	3.00
Discontinued operations, net of tax	0.02			1.10			0.58
Earnings per common share (basic)	$	3.45		$	4.43		$	3.58

Earnings per common share (diluted)
Net income from continuing operations	$	3.41		$	3.30		$	2.98
Discontinued operations, net of tax	0.02			1.09			0.57
Earnings per common share (diluted)	$	3.43		$	4.39		$	3.55

The accompanying notes to the Parent Company financial statements are an integral part of these statements.

B. STATEMENTS OF COMPREHENSIVE INCOME


Year Ended December 31
(Millions)	2014			2013			2012
Net income attributed to common shareholders	$	276.9		$	351.8		$	281.4

Other comprehensive income, net of tax:
Cash flow hedges
Unrealized net gains (losses) arising during period, net of tax of $ - million, $ - million, and $0.1 million, respectively	—			0.6			(0.1		)

Reclassification of net (gains) losses to net income, net of tax of $1.2 million, $2.0 million, and $(1.0) million, respectively	(0.1		)	(0.9		)	2.1

Cash flow hedges, net	(0.1		)	(0.3		)	2.0

Defined benefit plans
Pension and other postretirement benefit adjustments arising during period, net of tax of $(5.5) million, $ - million, and $(0.9) million, respectively	(9.6		)	1.1			0.9

Amortization of pension and other postretirement benefit costs included in net periodic benefit cost, net of tax of $0.2 million, $0.9 million, and $0.4 million, respectively	0.3			(0.5		)	(0.1		)

Defined benefit pension plans, net	(9.3		)	0.6			0.8

Other comprehensive income (loss) from subsidiaries, net of tax	5.0			17.4			(1.2		)

Other comprehensive income (loss), net of tax	(4.4		)	17.7			1.6

Comprehensive income attributed to common shareholders	$	272.5		$	369.5		$	283.0

The accompanying notes to the Parent Company financial statements are an integral part of these statements.



C. BALANCE SHEETS

At December 31
(Millions)	2014		2013
Assets
Cash and cash equivalents	$	5.1	$	0.3
Accounts receivable from related parties	31.2		32.2
Interest receivable from related parties	4.8		4.1
Deferred income taxes	0.4		0.6
Notes receivable from related parties	51.6		84.9
Current portion of long-term notes receivable from related parties	2.5		10.0
Other current assets	49.1		47.8
Current assets	144.7		179.9

Total investments in subsidiaries, at equity	4,015.1		4,268.5

Notes receivable from related parties	180.9		224.3
Property and equipment, net of accumulated depreciation of $1.2 and $1.4, respectively	4.3		4.5
Receivables from related parties	19.2		18.3
Deferred income taxes	9.6		22.3
Other long-term assets	181.2		43.9
Total assets	$	4,555.0	$	4,761.7

Liabilities and Equity
Short-term notes payable to related parties	$	126.2	$	165.7
Short-term debt	7.2		123.2
Current portion of long-term debt	—		100.0
Accounts payable to related parties	5.8		0.9
Accounts payable	2.8		1.2
Deferred income taxes	6.2		6.4
Other current liabilities	43.2		2.8
Current liabilities	191.4		400.2

Long-term debt	974.7		974.7
Deferred income taxes	56.9		110.1
Other long-term liabilities	32.3		15.4
Long-term liabilities	1,063.9		1,100.2

Total common shareholders' equity	3,299.7		3,261.3
Total liabilities and equity	$	4,555.0	$	4,761.7

The accompanying notes to the Parent Company financial statements are an integral part of these statements.



D. STATEMENTS OF CASH FLOWS

Year Ended December 31
(Millions)	2014			2013			2012
Operating Activities
Net income attributed to common shareholders	$	276.9		$	351.8		$	281.4
Adjustments to reconcile net income to net cash provided by operating activities
Equity earnings from subsidiaries	(324.5		)	(401.3		)	(321.3		)
Dividends from subsidiaries	176.5			169.6			163.9
Deferred income taxes and investment tax credits	(46.0		)	26.3			11.0
Gain on sale of UPPCO	(86.5		)	—			—
Loss on sale of IES's retail energy business	24.3			—			—
Gain on sale of other assets	(4.0		)	—			—
Other	4.9			2.8			(3.7		)
Changes in working capital
Accounts receivable	0.7			(0.7		)	0.4
Accounts receivable from related parties	0.5			0.6			1.0
Other current assets	12.5			(7.9		)	29.0
Accounts payable	1.6			0.6			(0.5		)
Accounts payable to related parties	2.6			(0.2		)	(0.4		)
Other current liabilities	27.6			(2.4		)	0.9
Net cash provided by operating activities	67.1			139.2			161.7

Investing Activities
Short-term notes receivable from related parties	33.3			(50.4		)	(12.1		)
Issuance of long-term notes receivable to related parties	(20.0		)	(35.0		)	—
Repayment of long-term notes receivable from related parties	71.5			44.5			1.3
Equity contributions to subsidiaries	(218.4		)	(234.6		)	(89.9		)
Return of capital from subsidiaries	52.5			75.0			110.5
Proceeds from the sale of UPPCO	336.7			—			—
Proceeds from the sale of IES's retail energy business	319.2			—			—
Proceeds from the sale of other assets	4.1			—			—
Rabbi trust funding related to potential change in control	(115.5		)	—			—
Net cash provided by (used for) investing activities	463.4			(200.5		)	9.8

Financing Activities
Commercial paper, net	(116.0		)	(85.2		)	115.8
Short-term notes payable to related parties	(45.1		)	(92.3		)	76.2
Repayment of long-term notes payable to related parties	—			—			(21.0		)
Issuance of long-term debt	—			400.0			—
Repayment of long-term debt	(100.0		)	—			(100.0		)
Proceeds from stock option exercises	85.8			38.7			55.8
Shares purchased for stock-based compensation	(127.6		)	—			(75.3		)
Issuance of common stock	2.4			19.2			—
Dividends paid on common stock	(216.3		)	(202.6		)	(211.9		)
Other	(8.9		)	(18.8		)	(10.4		)
Net cash (used for) provided by financing activities	(525.7		)	59.0			(170.8		)

Net change in cash and cash equivalents	4.8			(2.3		)	0.7
Cash and cash equivalents at beginning of year	0.3			2.6			1.9
Cash and cash equivalents at end of year	$	5.1		$	0.3		$	2.6

Cash paid for interest	$	59.4		$	44.4		$	44.4
Cash paid for interest – related parties	0.4			0.7			1.4
Cash paid (received) for income taxes	40.2			(3.0		)	(24.1		)

The accompanying notes to the Parent Company financial statements are an integral part of these statements.

SCHEDULE I - CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

INTEGRYS ENERGY GROUP, INC. (PARENT COMPANY ONLY)

E. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

SUPPLEMENTAL NOTES

Note 1—Summary of Significant Accounting Policies

(a) Basis of Presentation—For Parent Company only presentation, investments in subsidiaries are accounted for using the equity method. The condensed Parent Company financial statements and notes should be read in conjunction with the consolidated financial statements and notes of Integrys Energy Group appearing in this Annual Report on Form 10-K. The consolidated income statements of Integrys Energy Group reflect certain businesses as discontinued operations. The condensed Parent Company income statements also report the earnings of these businesses as discontinued operations.

(b) Cash and Cash Equivalents—Short-term investments with an original maturity of three months or less are reported as cash equivalents.

Note 2—Cash and Cash Equivalents

Significant noncash transactions were:



(Millions)	2014		2013		2012
Equity issued for reinvested dividends	$	—	$	12.0	$	—
Equity issued for stock-based compensation plans	—		16.3		—

The issuance of common stock line item on the Parent Company statements of cash flows does not equal the issuance of common stock line item on the Integrys Energy Group consolidated statements of cash flows. The Parent Company received cash from its subsidiaries and issued common stock to its subsidiaries' employees to facilitate the employee stock ownership plan. These intercompany amounts were eliminated on the Integrys Energy Group consolidated statements of cash flows.

Note 3—Fair Value of Financial Instruments – Related Parties

The following table shows the financial instruments included on the balance sheets of the Parent Company that are not recorded at fair value:



	2014				2013
(Millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term notes receivable from related parties	$	180.9	$	195.0	$	224.3	$	238.5
Current portion of long-term notes receivable from related parties	2.5		2.8		10.0		10.2

Note 4—Short-Term Notes Receivable – Related Parties



(Millions)	2014		2013
IES	$	—	$	23.5
MGU	26.1		21.8
MERC	11.1		20.5
IBS	14.4		10.2
UPPCO	—		8.9
Total	$	51.6	$	84.9

Note 5—Long-Term Notes Receivable – Related Parties



(Millions)	Series	Year Due	2014		2013
WPS Leasing	8.76%	2015	$	2.0	$	2.4
	7.35%	2016	3.4		3.9
UPPCO	6.059%	2017	—		15.0
	3.35%	2018	—		10.0
	5.041%	2020	—		15.0
	3.99%	2023	—		20.0
MERC	6.16%	2016	29.0		29.0
	6.40%	2021	29.0		29.0
	3.99%	2023	29.0		29.0
	3.57%	2024	20.0		—
MGU	5.76%	2016	28.0		28.0
	5.98%	2021	28.0		28.0
	3.00%	2023	15.0		15.0
IBS	6.865%	2014	—		10.0
Total notes receivable – related parties			$	183.4	$	234.3
Less current portion			$	2.5	$	10.0
Total long-term notes receivable – related parties			$	180.9	$	224.3

Note 6—Short-term Notes Payable – Related Parties



(Millions)	2014		2013
PELLC	$	43.5	$	165.7
ITF	8.6		—
PDI	74.1		—
Total	$	126.2	$	165.7