text.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
11-K
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X
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
for the fiscal year ended December 31,
2006
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or
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
for the transition period from
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_____________________
to _____________________
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Commission
File Number 33-35050
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A.
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Full
title of the plan and the address of the plan, if different from
that of
the issuer named below:
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Wisconsin
Public Service Corporation
Employee
Stock Ownership Plan
B.
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Name
of issuer of the securities held pursuant to the plan and the address
of
its principal executive office:
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Integrys
Energy Group, Inc.
(formerly
known as WPS Resources Corporation)
130
East Randolph Drive
Chicago,
IL 60601
The
Exhibit Index is on page 15 of the sequentially numbered pages.
REQUIRED
INFORMATION
The
following financial statements and
schedules of the Wisconsin Public Service Corporation Employee Stock Ownership
Plan, prepared in accordance with the financial reporting requirements of the
Employee Retirement Income Securities Act of 1974, as amended, are filed
herewith.
Wisconsin
Public Service
Corporation Employee Stock
Ownership Plan &
Trust
Financial
Statements as of and for the Years Ended
December 31, 2006 and 2005,
Supplemental
Schedule as of December 31, 2006, and Report of
Independent
Registered Public Accounting Firm
WISCONSIN
PUBLIC SERVICE CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN & TRUST
TABLE
OF CONTENTS
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Page
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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1
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FINANCIAL
STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER
31, 2006 AND 2005:
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Statements
of Net Assets Available for Benefits
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2
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Statements
of Changes in Net Assets Available for Benefits
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3
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Notes
to Financial Statements
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4-7
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SUPPLEMENTAL
SCHEDULE—
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8
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Form
5500, Schedule H, Part IV, Line 4i—Schedule of Assets (Held at End of
Year)
as
of December 31, 2006
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9
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NOTE: All
other schedules required by Section 2520.103-10 of the Department
of
Labor’s Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 have been omitted
because
they are not applicable.
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Integrys Energy Group
Employee
Benefits Administrator Committee:
We
have
audited the accompanying statements of net assets available for benefits of
Wisconsin Public Service Corporation Employee Stock Ownership Plan & Trust
(the “Plan”) as of December 31, 2006 and 2005, and the related statements of
changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements based
on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in
the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In
our
opinion, such financial statements present fairly, in all material respects,
the
net assets available for benefits of the Plan as of December 31, 2006 and 2005,
and the changes in net assets available for benefits for the years then ended
in
conformity with accounting principles generally accepted in the United States
of
America.
Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
(held
at end of year) as of December 31, 2006, is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility
of
the Plan’s management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 2006 financial statements and,
in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
May
9,
2007
WISCONSIN
PUBLIC SERVICE CORPORATION
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EMPLOYEE
STOCK OWNERSHIP PLAN & TRUST
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STATEMENTS
OF NET ASSETS AVAILABLE FOR BENEFITS
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AS
OF DECEMBER 31, 2006 AND 2005
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2006
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2005
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ASSETS:
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Investment
in common stock of WPS Resources
Corporation
- at fair market value
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$ |
122,931,541
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$ |
120,757,825
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Receivable
from Wisconsin Public Service Corporation
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172,427
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192,345
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Money
market fund
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223
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96
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Total
assets
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123,104,191
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120,950,266
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NET
ASSETS AVAILABLE FOR BENEFITS
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$ |
123,104,191
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$ |
120,950,266
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See
notes to financial statements.
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WISCONSIN
PUBLIC SERVICE CORPORATION
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EMPLOYEE
STOCK OWNERSHIP PLAN
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STATEMENTS
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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FOR
THE YEARS ENDED DECEMBER 31, 2006 AND 2005
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2006
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2005
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ADDITIONS:
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Employer
contributions
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$ |
8,345,878
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$ |
8,032,013
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Investment
income:
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Dividend
income
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5,150,102
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4,996,477
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Interest
income
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65
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7
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Net
(depreciation) appreciation in fair value of common stock
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(2,258,531 |
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11,364,722
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Total
investment income
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2,891,636
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16,361,206
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Total
additions
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11,237,514
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24,393,219
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DEDUCTIONS:
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Distributions
to participants
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8,753,210
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12,634,339
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Dividend
distributions
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330,379
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313,437
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Total
deductions
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9,083,589
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12,947,776
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Net
increase
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2,153,925
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11,445,443
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NET
ASSETS AVAILABLE FOR BENEFITS:
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Beginning
of year
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120,950,266
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109,504,823
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End
of year
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$ |
123,104,191
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$ |
120,950,266
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See
notes to financial statements.
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WISCONSIN
PUBLIC SERVICE CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN & TRUST
NOTES
TO FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
1.
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DESCRIPTION
OF THE PLAN
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The
following brief description of the Wisconsin Public Service Corporation Employee
Stock Ownership Plan & Trust (the “Plan”) is provided for general
information purposes only. Participants should refer to the Plan document,
as
amended, for more complete information.
General—Wisconsin
Public Service Corporation (the “Company”), a wholly owned subsidiary of
Integrys Energy Group, Inc. (“Integrys”) (known as WPS Resources Corporation
prior to its merger with Peoples Energy on February 21, 2007), established
the
Plan effective January 1, 1975 as a defined contribution employee stock
ownership plan. The Plan invests principally in Integrys common stock. The
Plan
is designed to comply with Section 4975(e)(7) and the regulations thereunder
of
the Internal Revenue Code of 1986, as amended (the “Code”), and is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).
Overall
responsibility for administering the Plan rests with the Employee Benefits
Administrator Committee (the “Committee”) which consists of Integrys employees.
Wells Fargo Bank N.A. (“Trustee”) is responsible for the management and control
of the Plan’s assets and has discretionary responsibility for the investments
and management of such assets. Wells Fargo Bank N.A., is also the recordkeeper
for the Plan and maintains the individual participant accounts.
Eligibility—Employees
of Integrys and its participating subsidiaries are generally eligible to
participate in the Plan except for limited-term employees (unless limited-term
employees work 1,000 hours and/or are participating in the Company’s Employee
Savings Plan) and non-administrative employees of Upper Peninsula Power Company
(“UPPCO”). Employees of Empire State, Michigan Gas Utilities Corporation,
Minnesota Energy Resources Corporation (subsidiaries of Integrys), and Wisconsin
River Power Company, an affiliate of Integrys, also are not eligible to
participate. Limited-term employees are defined under the Plan as employees
of
the Company or any affiliate who are hired for a limited period of time, such
as
temporary summer help or as a student employee who is scheduled to perform
services during summer or semester breaks.
Participant
Accounts—The Plan is a defined contribution plan under
which separate individual accounts are established for each participant. At
the
end of each quarter, each participant’s account is allocated its proportionate
number of shares and any change in fair market value since the preceding
quarter. Fair market value is determined by the number of shares held and the
closing price of the Company’s stock for the coinciding day.
Vesting—Participants
are immediately vested in their accounts.
Employer
Contributions—Part of the Company contributions to the
Plan reflect amounts included in the cost of service for rate setting purposes
by the Public Service Commission of Wisconsin and Federal Energy Regulatory
Commission.
Contributions
for administrative employees are determined using a formula that is different
than the formula for determining contributions for non-administrative employees.
Contributions to the Plan on behalf of eligible administrative employees are
made in Integrys common stock with a value equal to a 100% match on the first
4%
and a 50% match on the next 2% of eligible pay that each participant defers
into
the Wisconsin Public Service Corporation Administrative Employees’ Savings Plan.
The total match is limited to a maximum of 5% of eligible pay. Such
contributions totaled $5,988,380 and $5,446,153 for 2006 and 2005, respectively.
Company contributions to the Plan on behalf of eligible non-administrative
employees are based on 2% of a participant’s gross pay, as defined. Also
pursuant to a union contract with Local 310, the Company contributes to the
Plan
on behalf of eligible non-administrative employees an additional 1.7% of a
participant’s base pay. Contributions for non-administrative employees totaled
$2,357,498 and $2,585,860 for 2006 and 2005, respectively.
Investments—Contributions
to the Plan are non-participant directed. The Plan is invested primarily in
Integrys Energy Group, Inc. common stock.
Payment
of Benefits—Benefits paid to participants represent the amount
paid during the year to participants who elected to receive the distribution
of
their vested account balance. Non-administrative participants may withdraw
from
their account shares that have been held at least 84 months. Administrative
participants may withdraw from their account shares that were received prior
to
January 1, 2001, and held for at least 84 months. For administrative
employees, shares received after January 1, 2001, may be withdrawn only
upon termination or retirement.
Former
employees may elect to receive distributions quarterly as described in the
Plan
document, or may defer distribution until the year they attain age 69.
Participants who die, become disabled or retire are entitled to distribution
at
the next withdrawal opportunity. To the extent provided for by a qualified
domestic relations order, and as determined by the administrator, a lump sum
payment may be made to an alternate payee under such order at the next
withdrawal opportunity. Fractional shares are paid in cash.
Dividend
Distributions—Each eligible participant may elect, for dividends
declared and payable on stock that is allocated to the participant account,
to
be paid in cash directly to the participant or be reinvested in the
participant’s account.
Voting
Rights—Each participant is entitled to exercise voting rights
attributable to the shares allocated to the participant’s account. Each
participant is notified by the Trustee prior to the time that such rights are
to
be exercised. The Trustee is not permitted to vote any share for which
instructions have not been given by a participant.
Termination—Although
it has not expressed any intention to do so, the Company reserves the right
to
terminate the Plan at anytime, subject to Plan provisions and applicable
provisions of ERISA. If the Plan were to terminate, each participant’s interest
in the Plan would be distributed to each participant or to each participant’s
beneficiary as prescribed by the Plan and the Code at the time of termination.
Upon termination of the Plan, the Committee shall direct the Trustee to pay
all
liabilities and expenses of the Plan.
2.
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SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
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Basis
of Accounting—The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America.
Investment
Valuation and Income Recognition—Investments in Integrys Energy
Group, Inc. common stock are stated at fair market value based on the closing
price reported by the New York Stock Exchange at year-end. Dividends are
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Purchases and sales of securities are recorded on a trade date
basis.
Contributions
Receivable—The Plan records employer contributions receivable when
earned by the participants.
Operating
Expenses—All expenses of maintaining the Plan are initially paid
by the Company, with reimbursement from affiliates for their share of these
expenses, and thus are not reflected in the Plan’s financial statements. Such
expenses paid by Integrys were $156,447 and $112,314 for the plan years ended
December 31, 2006 and 2005, respectively.
Payment
of Benefits—Benefit payments to participants are recorded upon
distribution. There were no benefits payable as of December 31, 2006 and
2005.
Use
of Estimates—The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires Plan management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, and changes therein and disclosure
of
contingent assets and liabilities. Actual results could differ from those
estimates.
Risks
and Uncertainties—The Plan utilizes various investment
instruments, but primarily investments in shares of Integrys Energy Group,
Inc.
common stock. Investment securities, in general, are exposed to various risks,
such as interest rate, credit, and overall market volatility. Due to the level
of risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near
term
and that such changes could materially affect the amounts reported in the
financial statements.
3.
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INVESTMENT
IN COMMON STOCK
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The
Plan is primarily invested in shares of Integrys Energy Group, Inc. common
stock. These shares are held in a bank-administered trust fund.
The
fair market value and net (depreciation) appreciation in fair market value
for
the years ended December 31, 2006 and 2005, are as follows:
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Number
of
Shares
at
December
31,
2006
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Fair
Value at
December
31,
2006
($54.03
Per
Share)
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Fair
value of Integrys Energy Group, Inc. common stock - held by the
Plan
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2,275,246
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$ |
122,931,541
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Number
of
Shares
at
December
31,
2005
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Fair
Value at
December
31,
2005
($55.31
Per
Share)
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Fair
value of Integrys Energy Group, Inc. common stock - held by the
Plan
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|
2,183,291
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$ |
120,757,825
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2006
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2005
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Net
(depreciation) appreciation in fair value of investments
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$ |
(2,258,531 |
) |
|
$ |
11,364,722
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4.
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EXEMPT
PARTY-IN-INTEREST
TRANSACTIONS
|
Certain
Plan short-term investments are made in shares of money market funds managed
by
Wells Fargo Bank N.A. Wells Fargo Bank N.A. is the trustee as defined by the
Plan and, therefore, these transactions qualify as exempt party-in-interest
transactions.
At
December 31, 2006 and 2005, the Plan held 2,275,246 and 2,183,291 shares,
respectively, of common stock of Integrys Energy Group, Inc., the sponsoring
employer, with a cost basis of $79,253,346 and $71,783,992, respectively. During
the years ended December 31, 2006 and 2005, the Plan recorded dividend income
of
$5,150,102 and $4,996,477, respectively, from investments in common stock of
Integrys Energy Group, Inc.
5.
|
FEDERAL
INCOME TAX STATUS
|
The
Internal Revenue Service has determined and informed the Company by a letter
dated March 5, 2003, that the Plan and related trust were designed in
accordance with applicable regulations of the Internal Revenue Code (“IRC”). The
Plan has been amended since receiving the determination letter. However, the
Company and the Plan administrator believe that the Plan is currently designed
and operated in compliance with applicable requirements of the IRC and the
Plan
and related trust continue to be tax-exempt. Therefore, no provision for income
taxes has been included in the Plan’s financial statements.
*
* * *
* *
SUPPLEMENTAL
SCHEDULE FURNISHED
PURSUANT
TO
DEPARTMENT
OF LABOR’S RULES AND REGULATIONS
WISCONSIN
PUBLIC SERVICE CORPORATION
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EMPLOYEE
STOCK OWNERSHIP PLAN
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FORM
5500, SCHEDULE H, PART IV, LINE 4i -
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SCHEDULE
OF ASSETS (HELD AT END OF YEAR)
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AS
OF DECEMBER 31, 2006
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Description
of Investment,
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Including
Maturity Date, Rate
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Identity
of Issue, Borrower,
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of
Interest, Collateral, Par,
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Current
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Lessor,
or Similar Party
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or
Maturity Value
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Cost
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Value
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Integrys
Energy Group, Inc.*
|
2,275,246
shares of common stock
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|
$ |
79,253,346
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|
$ |
122,931,541
|
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|
Wells
Fargo Short-Term Investment
|
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Money
Market Fund*
|
223
shares
|
|
|
223
|
|
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|
223
|
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|
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$ |
79,253,569
|
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$ |
122,931,764
|
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*
Indicates a party-in-interest.
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SIGNATURES
The
Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the Plan Administrator of the Wisconsin Public Service Corporation
Employee Stock Ownership Plan has duly caused this Annual Report to be signed
on
its behalf by the undersigned hereunto duly authorized, in the City of Green
Bay
and the State of Wisconsin this 21st day of June
2007.
WISCONSIN
PUBLIC SERVICE CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
PLAN
ADMINISTRATOR
/s/
Diane L. Ford
Diane
L. Ford
Member
Plan Administrator Committee
/s/
William J. Guc
William
J. Guc
Member
Plan Administrator Committee
/s/
Bradley A. Johnson
Bradley
A. Johnson
Member
Plan Administrator Committee
/s/
Thomas A. Nardi
Thomas
A. Nardi
Member
Plan Administrator Committee
/s/
Joseph P. O'Leary
Joseph
P. O'Leary
Member
Plan Administrator Committee
/s/
Bernard J. Treml
Bernard
J. Treml
Member
Plan Administrator Committee
EXHIBIT
INDEX
WISCONSIN
PUBLIC SERVICE CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
FORM
11-K
Exhibit
No.
|
Exhibit
|
Page
Number in
Sequentially
Numbered
Form
11-K
|
|
|
|
23.1
|
Consent
of Deloitte & Touche LLP
|
|