Basis of Presentation

As used in these notes, the term "financial statements" refers to the condensed consolidated financial statements. This includes the condensed consolidated statements of income, condensed consolidated statements of comprehensive income, condensed consolidated balance sheets, and condensed consolidated statements of cash flows, unless otherwise noted. In this report, when we refer to "us," "we," "our," or "ours," we are referring to Integrys Holding, Inc. When we refer to the "WEC Merger," we are referring to the acquisition of Integrys Energy Group, Inc. by Wisconsin Energy Corporation, which was completed on June 29, 2015.

We prepare our financial statements in conformity with the rules and regulations of the SEC for Quarterly Reports on Form 10-Q and in accordance with GAAP. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2014. Financial results for an interim period may not give a true indication of results for the year.

Our balance sheet reflects the historical basis of our assets and liabilities as we did not elect pushdown accounting for the WEC Merger. This is consistent with how our financial statements are viewed by our regulators.

In management’s opinion, these unaudited financial statements include all adjustments necessary for a fair presentation of financial results. All adjustments are normal and recurring, unless otherwise noted. All intercompany transactions have been eliminated in consolidation.

Reclassifications

As a result of the WEC Merger, we adopted the financial statement presentation policies of our parent company. See Note 2, WEC Merger, for more information on the merger. The previously reported items below were reclassified to conform to the current period presentation. Only material reclassifications are quantified below.

Statements of Income:


•	Certain amortizations of regulatory deferrals were reclassified from operating and maintenance expense to cost of sales, depreciation and amortization expense, and miscellaneous income.


•	Payroll taxes of $7.0 million and $16.4 million for the three and six months ended June 30, 2014, respectively, were reclassified from taxes other than income taxes to operating and maintenance expense. The taxes other than income taxes line item was also renamed to property and revenue taxes.


•	Certain expenses in cost of sales were reclassified to operating revenues, operating and maintenance expense, and depreciation and amortization expense. The amounts reclassified to operating and maintenance expense were $3.4 million and $7.1 million for the three and six months ended June 30, 2014, respectively.


•	Equity in earnings of transmission affiliate is now shown separately on the statements of income. Earnings from our other equity method investments were reclassified to miscellaneous income.


•	Preferred stock dividends of subsidiary were reclassified to interest expense.


•	Noncontrolling interest in subsidiaries was reclassified to miscellaneous income.

Balance Sheets:


•	Current regulatory assets of $47.2 million and $71.7 million were reclassified to accounts receivable and long-term regulatory assets, respectively.


•	Equity investment in transmission affiliate is now shown separately on the balance sheets. Our other equity method investments of $13.9 million were reclassified to other long-term assets.


•	Current regulatory liabilities of $44.8 million and $108.9 million were reclassified to energy costs refundable through rate adjustments and long-term regulatory liabilities, respectively.


•	Noncontrolling interest in subsidiaries was reclassified to other long-term liabilities.

Statements of Cash Flows:


•	Preferred stock dividend payments were reclassified from financing activities to operating activities.


•	Various other line items within the operating, investing, and financing activities sections were reclassified; however, there was no impact on the total cash flows of these sections.

We also reorganized our business segments during the second quarter of 2015. All prior period amounts impacted by this change were reclassified to conform to the new presentation. See Note 20, Segments of Business, for more information on our business segments.

The assets associated with PDL's Combined Locks Energy Center were reclassified out of held for sale on our December 31, 2014 balance sheet.