Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 24, 2014 | |
Entity Information [Line Items] | ' | ' |
Entity Registrant Name | 'ITC HOLDINGS CORP. | ' |
Entity Central Index Key | '0001317630 | ' |
Trading Symbol | 'ITC | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 155,734,925 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $11,596 | $34,275 |
Accounts receivable | 119,363 | 89,348 |
Inventory | 30,563 | 31,986 |
Deferred income taxes | 25,359 | 17,225 |
Regulatory assets — revenue accruals, including accrued interest | 5,623 | 6,334 |
Prepaid and other current assets | 8,994 | 12,370 |
Total current assets | 201,498 | 191,538 |
Property, plant and equipment (net of accumulated depreciation and amortization of $1,365,379 and $1,330,094, respectively) | 5,337,474 | 4,846,526 |
Other assets | ' | ' |
Goodwill | 950,163 | 950,163 |
Intangible assets (net of accumulated amortization of $24,088 and $21,616, respectively) | 49,198 | 49,328 |
Other regulatory assets | 185,532 | 179,068 |
Deferred financing fees (net of accumulated amortization of $12,702 and $15,261, respectively) | 29,363 | 25,585 |
Other | 54,136 | 40,035 |
Total other assets | 1,268,392 | 1,244,179 |
TOTAL ASSETS | 6,807,364 | 6,282,243 |
Current liabilities | ' | ' |
Accounts payable | 115,857 | 111,145 |
Accrued payroll | 19,649 | 21,930 |
Accrued interest | 34,888 | 53,049 |
Accrued taxes | 26,648 | 29,805 |
Regulatory liabilities — revenue deferrals, including accrued interest | 38,156 | 33,120 |
Refundable deposits from generators for transmission network upgrades | 19,284 | 23,283 |
Debt maturing within one year | 200,000 | 200,000 |
Other | 15,902 | 27,047 |
Total current liabilities | 470,384 | 499,379 |
Accrued pension and postretirement liabilities | 59,205 | 53,704 |
Deferred income taxes | 662,349 | 562,938 |
Regulatory liabilities — revenue deferrals, including accrued interest | 62,585 | 36,447 |
Regulatory liabilities — accrued asset removal costs | 67,344 | 67,571 |
Refundable deposits from generators for transmission network upgrades | 7,004 | 19,328 |
Other | 21,404 | 17,032 |
Long-term debt | 3,840,141 | 3,412,112 |
Commitments and contingent liabilities (Note 11) | ' | ' |
STOCKHOLDERS’ EQUITY | ' | ' |
Common stock, without par value, 300,000,000 shares authorized, 155,731,299 and 157,500,795 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 890,974 | 1,014,435 |
Retained earnings | 720,036 | 592,970 |
Accumulated other comprehensive income | 5,938 | 6,327 |
Total stockholders’ equity | 1,616,948 | 1,613,732 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $6,807,364 | $6,282,243 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (Parentheticals) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Property, plant and equipment, accumulated depreciation and amortization | $1,365,379 | $1,330,094 |
Intangible assets, accumulated amortization | 24,088 | 21,616 |
Deferred financing fees, accumulated amortization | $12,702 | $15,261 |
Common stock, par value | $0 | $0 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 155,731,299 | 157,500,795 |
Common stock, shares outstanding | 155,731,299 | 157,500,795 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
OPERATING REVENUES | $270,134 | $238,782 | $791,951 | $685,903 |
OPERATING EXPENSES | ' | ' | ' | ' |
Operation and maintenance | 29,038 | 29,725 | 79,735 | 83,906 |
General and administrative | 28,812 | 31,902 | 87,082 | 110,767 |
Depreciation and amortization | 31,936 | 29,802 | 94,609 | 87,583 |
Taxes other than income taxes | 19,205 | 16,728 | 57,474 | 49,492 |
Other operating (income) and expenses — net | -289 | -197 | -750 | -542 |
Total operating expenses | 108,702 | 107,960 | 318,150 | 331,206 |
OPERATING INCOME | 161,432 | 130,822 | 473,801 | 354,697 |
OTHER EXPENSES (INCOME) | ' | ' | ' | ' |
Interest expense — net | 47,328 | 44,062 | 138,491 | 123,527 |
Allowance for equity funds used during construction | -4,921 | -8,290 | -14,865 | -25,315 |
Loss on extinguishment of debt | 0 | 0 | 29,074 | 0 |
Other income | -244 | -786 | -618 | -824 |
Other expense | 761 | 2,164 | 3,696 | 5,388 |
Total other expenses (income) | 42,924 | 37,150 | 155,778 | 102,776 |
INCOME BEFORE INCOME TAXES | 118,508 | 93,672 | 318,023 | 251,921 |
INCOME TAX PROVISION | 44,635 | 34,688 | 120,678 | 95,352 |
NET INCOME | $73,873 | $58,984 | $197,345 | $156,569 |
Basic earnings per common share | $0.47 | $0.37 | $1.26 | $1 |
Diluted earnings per common share | $0.47 | $0.37 | $1.25 | $0.99 |
Dividends declared per common share | $0.16 | $0.14 | $0.45 | $0.39 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
NET INCOME | $73,873 | $58,984 | $197,345 | $156,569 |
OTHER COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Derivative instruments, net of tax (Note 6) | 169 | 110 | -413 | 24,468 |
Available-for-sale securities, net of tax (Note 6) | -86 | 87 | 24 | 87 |
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | 83 | 197 | -389 | 24,555 |
TOTAL COMPREHENSIVE INCOME | $73,956 | $59,181 | $196,956 | $181,124 |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
NET INCOME | $197,345 | $156,569 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization expense | 94,609 | 87,583 |
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest | 29,175 | 30,369 |
Deferred income tax expense | 86,935 | 69,733 |
Allowance for equity funds used during construction | -14,865 | -25,315 |
Loss on extinguishment of debt | 29,074 | 0 |
Other | 15,474 | 13,113 |
Changes in assets and liabilities, exclusive of changes shown separately: | ' | ' |
Accounts receivable | -24,057 | -31,115 |
Inventory | 1,423 | 1,075 |
Prepaid and other current assets | 3,377 | 11,208 |
Accounts payable | -16,382 | 4,044 |
Accrued payroll | -1,710 | -1,707 |
Accrued interest | -18,161 | -14,538 |
Accrued taxes | -3,156 | -10,467 |
Other current liabilities | -13,486 | 7,979 |
Other non-current assets and liabilities, net | -4,694 | -6,328 |
Net cash provided by operating activities | 360,901 | 292,203 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Expenditures for property, plant and equipment | -549,599 | -630,485 |
Proceeds from sale of marketable securities | 199 | 42,174 |
Purchases of marketable securities | -5,490 | -43,398 |
Other | 2,624 | -3,340 |
Net cash used in investing activities | -552,266 | -635,049 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Issuance of long-term debt | 498,664 | 933,025 |
Borrowings under revolving credit agreements | 1,397,800 | 890,400 |
Borrowings under term loan credit agreements | 110,000 | 535,000 |
Retirement of long-term debt — including debt retirement costs | -248,494 | -452,000 |
Repayments of revolving credit agreements | -1,319,500 | -1,004,100 |
Repayments under term loan credit agreements | -39,000 | -475,000 |
Issuance of common stock | 19,666 | 8,213 |
Dividends on common and restricted stock | -70,279 | -61,821 |
Refundable deposits from generators for transmission network upgrades | 5,833 | 26,898 |
Repayment of refundable deposits from generators for transmission network upgrades | -22,155 | -30,279 |
Repurchase and retirement of common stock | -108,136 | -4,508 |
Forward contract of accelerated share repurchase program | -46,000 | 0 |
Other | -9,713 | 1,535 |
Net cash provided by financing activities | 168,686 | 367,363 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | -22,679 | 24,517 |
CASH AND CASH EQUIVALENTS — Beginning of period | 34,275 | 26,187 |
CASH AND CASH EQUIVALENTS — End of period | $11,596 | $50,704 |
GENERAL
GENERAL | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
GENERAL [Abstract] | ' | |||||||
GENERAL | ' | |||||||
GENERAL | ||||||||
These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2013 included in ITC Holdings’ annual report on Form 10-K for such period. | ||||||||
The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission (“SEC”) Regulation S-X as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates. | ||||||||
The condensed consolidated financial statements are unaudited, but in our opinion include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year. | ||||||||
Supplementary Cash Flows Information | ||||||||
Nine months ended | ||||||||
September 30, | ||||||||
(in thousands) | 2014 | 2013 | ||||||
Supplementary cash flows information: | ||||||||
Interest paid (net of interest capitalized) | $ | 154,410 | $ | 135,058 | ||||
Income taxes paid — net | 25,744 | 11,593 | ||||||
Supplementary non-cash investing and financing activities: | ||||||||
Additions to property, plant and equipment (a) | $ | 92,557 | $ | 74,694 | ||||
Allowance for equity funds used during construction | 14,865 | 25,315 | ||||||
____________________________ | ||||||||
(a) | Amounts consist of current liabilities for construction labor and materials that have not been included in investing activities. These amounts have not been paid for as of September 30, 2014 or 2013, respectively, but have been or will be included as a cash outflow from investing activities for expenditures for property, plant and equipment when paid. |
RECENT_ACCOUNTING_PRONOUNCEMEN
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
Revenue Recognition | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance requiring entities to apply a new model for recognizing revenue from contracts with customers. The guidance will supersede the current revenue recognition guidance and require entities to evaluate their revenue recognition arrangements using a five step model to determine when a customer obtains control of a transferred good or service. The guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted using a full or modified retrospective application. We are currently in the process of evaluating our revenue arrangements under the issued guidance and have not yet determined its impact to our results of operations, cash flows and financial position. |
REGULATORY_MATTERS
REGULATORY MATTERS | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Regulated Operations [Abstract] | ' | ||||
REGULATORY MATTERS | ' | ||||
REGULATORY MATTERS | |||||
Start-Up, Development and Pre-Construction Regulatory Assets | |||||
As of September 30, 2014, we have recorded a total of $14.0 million of regulatory assets for start-up, development and pre-construction expenses, including associated carrying charges, incurred by ITC Great Plains, which include certain costs incurred for the Kansas Electric Transmission Authority (“KETA”) Project and the Kansas V-Plan Project prior to construction. ITC Great Plains made a filing with the FERC under Section 205 of the FPA in May 2013 to recover these start-up, development and pre-construction expenses, including associated carrying charges, in future rates. If FERC authorization is received, ITC Great Plains will include the unamortized balance of the regulatory assets in its rate base and will amortize them over a 10-year period beginning at the later of the project in-service date or the FERC authorization date. The amortization expense will be recovered through ITC Great Plains’ cost-based formula rate template beginning in the period in which amortization begins. | |||||
Order on Formula Rate Protocols | |||||
In 2012, the FERC issued an order initiating a proceeding pursuant to Section 206 of the FPA to determine whether the formula rate protocols under the MISO Tariff are sufficient to ensure just and reasonable rates. Our MISO Regulated Operating Subsidiaries were named in the order. In May 2013, the FERC issued an order that determined the formula rate protocols are insufficient to ensure just and reasonable rates and directed MISO and its member transmission owners (“TOs”) to file revised formula rate protocols. In September 2013, MISO and its TOs, including our MISO Regulated Operating Subsidiaries, filed revised formula rate protocols which will require our MISO Regulated Operating Subsidiaries to provide additional information for certain aspects of the formula rates used to calculate their respective annual revenue requirements. On March 20, 2014, FERC issued an order conditionally accepting MISO and its TOs’ September 2013 filing and required a further compliance filing, which MISO and its TOs made on May 19, 2014. We do not expect the revised formula rate protocols to impact our results of operations, cash flows or financial condition. | |||||
FERC Audit Refund | |||||
See “FERC Audit Refund” in Note 11 for a discussion of the FERC audit refund. | |||||
Rate of Return on Equity and Capital Structure Complaint | |||||
See “Rate of Return on Equity and Capital Structure Complaint” in Note 11 for a discussion of the complaint. | |||||
Cost-Based Formula Rates with True-Up Mechanism | |||||
The transmission rates at our Regulated Operating Subsidiaries are set annually, using the FERC-approved formula rates, and the rates remain in effect for a one-year period. By completing their formula rate templates on an annual basis, our Regulated Operating Subsidiaries are able to adjust their transmission rates to reflect changing operational data and financial performance, including the amount of network load on their transmission systems (for our MISO Regulated Operating Subsidiaries), operating expenses and additions to property, plant and equipment when placed in service, among other items. The FERC-approved formula rates do not require further action or FERC filings for the calculated joint zone rates to go into effect, although the rates are subject to legal challenge at the FERC. Our Regulated Operating Subsidiaries will continue to use formula rates to calculate their respective annual revenue requirements unless the FERC determines the rates to be unjust and unreasonable or another mechanism is determined by the FERC to be just and reasonable. | |||||
Our cost-based formula rate templates include a true-up mechanism, whereby our Regulated Operating Subsidiaries compare their actual revenue requirements to their billed revenues for each year to determine any over- or under-collection of revenue requirements. The over- or under-collection typically results from differences between the projected revenue requirement used to establish the billing rate and actual revenue requirement at each of our Regulated Operating Subsidiaries, or from differences between actual and projected monthly peak loads at our MISO Regulated Operating Subsidiaries. Revenue is recognized for services provided during each reporting period based on actual revenue requirements calculated using the formula rate templates. Our Regulated Operating Subsidiaries accrue or defer revenues to the extent that the actual revenue requirement for the reporting period is higher or lower, respectively, than the amounts billed relating to that reporting period. The amount of accrued or deferred revenues is reflected in customer bills within two years under the provisions of the formula rate templates. | |||||
The current and non-current regulatory assets are recorded in the condensed consolidated statements of financial position in regulatory assets — revenue accruals, including accrued interest and other non-current assets, respectively. The current and non-current regulatory liabilities are recorded in regulatory liabilities — revenue deferrals, including accrued interest. The net changes in regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ formula rate revenue accruals and deferrals, including accrued interest, were as follows during the nine months ended September 30, 2014: | |||||
(in thousands) | Total | ||||
Balance as of December 31, 2013 | $ | (60,196 | ) | ||
Net refund of 2012 revenue deferrals and accruals, including accrued interest | 20,445 | ||||
Net revenue deferral for the nine months ended September 30, 2014 | (47,843 | ) | |||
Net accrued interest payable for the nine months ended September 30, 2014 | (1,777 | ) | |||
Balance as of September 30, 2014 | $ | (89,371 | ) | ||
Regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ formula rate revenue accruals and deferrals and associated accrued interest are recorded in the condensed consolidated statements of financial position as follows: | |||||
(in thousands) | Total | ||||
Current assets | $ | 5,623 | |||
Non-current assets — other | 5,747 | ||||
Current liabilities | (38,156 | ) | |||
Non-current liabilities | (62,585 | ) | |||
Balance as of September 30, 2014 | $ | (89,371 | ) |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
GOODWILL AND INTANGIBLE ASSETS | ' |
GOODWILL AND INTANGIBLE ASSETS | |
Goodwill | |
At September 30, 2014 and December 31, 2013, we had goodwill balances recorded at ITCTransmission, METC and ITC Midwest of $173.4 million, $453.8 million and $323.0 million, respectively, which resulted from the ITCTransmission acquisition, the METC acquisition and ITC Midwest’s asset acquisition, respectively. | |
Intangible Assets | |
We have recorded intangible assets as a result of the METC acquisition in 2006. The carrying value of these assets was $35.0 million and $37.2 million (net of accumulated amortization of $23.4 million and $21.2 million) as of September 30, 2014 and December 31, 2013, respectively. | |
We have also recorded intangible assets for payments and obligations made by ITC Great Plains to certain TOs to acquire rights which are required under the SPP tariff to designate ITC Great Plains to build, own and operate projects within the SPP region, including the KETA Project and the Kansas V-Plan Project. The carrying amount of these intangible assets was $14.2 million and $12.1 million (net of accumulated amortization of $0.6 million and $0.4 million) as of September 30, 2014 and December 31, 2013, respectively. | |
During the three months ended September 30, 2014 and 2013, we recognized $0.9 million and $0.8 million, respectively, of amortization expense of our intangible assets and $2.5 million and $2.4 million for the nine months ended September 30, 2014 and 2013, respectively. For each of the next five years, we expect the annual amortization of our intangible assets that have been recorded as of September 30, 2014 to be $3.3 million per year. |
DEBT
DEBT | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||||
DEBT | ' | |||||||||||||||||
DEBT | ||||||||||||||||||
Derivative Instruments and Hedging Activities | ||||||||||||||||||
We may use derivative financial instruments, including interest rate swap contracts, to manage our exposure to fluctuations in interest rates. The use of these financial instruments mitigates exposure to these risks and the variability of our operating results. We are not a party to leveraged derivatives and do not enter into derivative financial instruments for trading or speculative purposes. On August 18, 2014, ITC Holdings entered into a 10-year forward starting interest rate swap agreement with a notional amount of $25.0 million. The interest rate swap manages interest rate risk associated with the forecasted future issuance of fixed-rate debt related to the expected refinancing of the maturing ITC Holdings 5.875% Senior Notes, due September 30, 2016. As of September 30, 2014, ITC Holdings had $139.4 million outstanding under the 5.875% Senior Notes subsequent to the cash tender offer described below. | ||||||||||||||||||
The 10-year term interest rate swap calls for ITC Holdings to receive interest quarterly at a variable rate equal to LIBOR and to pay interest semi-annually at a fixed rate of 3.217% effective for the 10-year period beginning September 30, 2016 after the agreement has been terminated. The agreement includes a mandatory early termination provision and will be terminated no later than the effective date of the interest rate swap of September 30, 2016. The interest rate swap has been determined to be highly effective at offsetting changes in the fair value of the forecasted interest cash flows associated with the expected debt issuance attributable to changes in benchmark interest rates from the trade date of the interest rate swap to the issuance date of the debt obligation. On October 8, 2014, ITC Holdings entered into an additional interest rate swap contract with terms comparable to the interest rate swap described above, consisting of an additional $25.0 million notional amount of a 10-year term interest rate swap with a fixed rate of 3.075%. | ||||||||||||||||||
As of September 30, 2014, there has been no material ineffectiveness recorded in the condensed consolidated statement of operations. The interest rate swap qualifies for hedge accounting treatment, whereby any gain or loss recognized from the trade date to the effective date for the effective portion of the hedge is recorded net of tax in accumulated other comprehensive income (“AOCI”). This amount will be accumulated and amortized as a component of interest expense over the life of the forecasted debt. As of September 30, 2014, the fair value of the derivative instrument was an asset of $0.1 million recorded to other non-current assets. The interest rate swap does not contain credit-risk-related contingent features. Refer to Note 10 for additional fair value information. | ||||||||||||||||||
In May 2014, we executed, settled and terminated $150.0 million of 10-year interest rate swaps in conjunction with the Senior Notes issued at ITC Holdings described below. A summary of the terminated interest rate swaps is provided below: | ||||||||||||||||||
Interest Rate Swaps | Amount | Weighted Average Fixed Rate of Interest Rate Swaps | Comparable Reference Rate of Senior Notes | Loss on Derivative | Settlement Date | |||||||||||||
(amounts in millions) | ||||||||||||||||||
10-year interest rate swaps | $ | 150 | 2.65% | 2.53% | $ | 1.6 | May-14 | |||||||||||
The interest rate swaps qualified for hedge accounting treatment and the loss of $1.6 million was recognized as of September 30, 2014 for the effective portion of the hedges and recorded net of tax in AOCI. This amount will be amortized as a component of interest expense over the lives of the related debt. | ||||||||||||||||||
ITC Holdings | ||||||||||||||||||
On December 20, 2013, ITC Holdings entered into an unsecured, unguaranteed term loan credit agreement, due September 30, 2016, with an initial borrowing capacity of $200.0 million which was borrowed in full as of March 31, 2014. As of September 30, 2014 and December 31, 2013, ITC Holdings had $161.0 million and $140.0 million outstanding under this agreement, respectively. The term loan bears interest at a variable rate, subject to adjustment based on ITC Holdings’ credit rating. The proceeds were used for general corporate purposes, including the repayment of borrowings under the ITC Holdings’ revolving credit agreement. The weighted-average interest rate on the borrowing outstanding under this agreement was 1.3% at September 30, 2014. | ||||||||||||||||||
In May 2014, ITC Holdings commenced a cash tender offer for any and all of the outstanding $255.0 million ITC Holdings 5.875% Senior Notes due September 30, 2016 and $255.0 million ITC Holdings 6.375% Senior Notes due September 30, 2036, under which $115.6 million of the 5.875% Senior Notes and $54.7 million of the 6.375% Senior Notes were validly tendered on May 30, 2014. All of the Senior Notes validly tendered were subsequently retired with the proceeds from the $400.0 million 3.65% Senior Notes described below. ITC Holdings incurred a loss on extinguishment of debt of $29.1 million related to the tender premium and the write-off of deferred debt issuance costs and other expenses. | ||||||||||||||||||
On June 4, 2014, ITC Holdings issued $400.0 million aggregate principal amount of its 3.65% Senior Notes, due June 15, 2024. The proceeds from the issuance were used for the cash tender offer described above and for general corporate purposes, primarily the repayment of borrowings under the ITC Holdings revolving credit agreement. The ITC Holdings Senior Notes are issued under its indentures. All issuances of ITC Holdings Senior Notes are unsecured. | ||||||||||||||||||
ITCTransmission | ||||||||||||||||||
On June 10, 2014, ITCTransmission issued $75.0 million of the total face amount of $100.0 million of 4.27% First Mortgage Bonds, Series F, due June 10, 2044 (“First Mortgage Bonds”). ITCTransmission issued the remaining $25.0 million of First Mortgage Bonds on August 22, 2014. The proceeds from both issuances were used for general corporate purposes, primarily the repayment of borrowings under the ITCTransmission revolving credit agreement. All of ITCTransmission’s First Mortgage Bonds are issued under its First Mortgage and Deed of Trust and secured by a first mortgage lien on substantially all of its property. | ||||||||||||||||||
METC | ||||||||||||||||||
On January 31, 2014, METC entered into an unsecured, unguaranteed term loan credit agreement, under which METC borrowed the maximum of $50.0 million available under the agreement. The proceeds were used for general corporate purposes, primarily the repayment of borrowings under the METC revolving credit agreement. The term loan is scheduled to mature on February 2, 2015 and bears interest at a variable rate, subject to adjustment based on METC’s credit rating. The weighted average interest rate on the borrowing outstanding under the term loan was 1.2% at September 30, 2014. | ||||||||||||||||||
ITC Great Plains | ||||||||||||||||||
In October 2014, ITC Great Plains priced $150.0 million of 4.16% First Mortgage Bonds, Series A, due 2044. The proceeds will be used to repay the $100.0 million borrowed under the ITC Great Plains’ term loan and for general corporate purposes, including the repayment of borrowings under the ITC Great Plains’ revolving credit agreement. ITC Great Plains’ First Mortgage Bonds will be issued under its First Mortgage and Deed of Trust and secured by a first mortgage lien on substantially all of its property. | ||||||||||||||||||
Revolving Credit Agreements | ||||||||||||||||||
On March 28, 2014, ITC Holdings and its Regulated Operating Subsidiaries entered into new unsecured, unguaranteed revolving credit agreements maturing in March 2019, which replaced their existing revolving credit agreements. At September 30, 2014, ITC Holdings and its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available: | ||||||||||||||||||
(amounts in millions) | Total | Outstanding | Unused | Weighted Average | Commitment | |||||||||||||
Available | Balance (a) | Capacity | Interest Rate on | Fee Rate (b) | ||||||||||||||
Capacity | Outstanding Balance | |||||||||||||||||
ITC Holdings | $ | 400 | $ | 45 | $ | 355 | 1.40% | (c) | 0.175 | % | ||||||||
ITCTransmission | 100 | 2.4 | 97.6 | 1.10% | (d) | 0.1 | % | |||||||||||
METC | 100 | 41.3 | 58.7 | 1.10% | (d) | 0.1 | % | |||||||||||
ITC Midwest | 250 | 162.4 | 87.6 | 1.20% | (d) | 0.1 | % | |||||||||||
ITC Great Plains | 150 | 98.4 | 51.6 | 1.20% | (e) | 0.125 | % | |||||||||||
Total | $ | 1,000.00 | $ | 349.5 | $ | 650.5 | ||||||||||||
____________________________ | ||||||||||||||||||
(a) | Included within long-term debt. | |||||||||||||||||
(b) | Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. | |||||||||||||||||
(c) | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |||||||||||||||||
(d) | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |||||||||||||||||
(e) | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.125% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.125%, subject to adjustments based on ITC Great Plains' credit rating. | |||||||||||||||||
Covenants | ||||||||||||||||||
Our debt instruments contain numerous financial and operating covenants that place significant restrictions on certain transactions, such as incurring additional indebtedness, engaging in sale and lease-back transactions, creating liens or other encumbrances, entering into mergers, consolidations, liquidations or dissolutions, creating or acquiring subsidiaries, selling or otherwise disposing of all or substantially all of our assets and paying dividends. In addition, the covenants require us to meet certain financial ratios, such as maintaining certain debt to capitalization ratios and maintaining certain interest coverage ratios. As of September 30, 2014, we were in compliance with all debt covenants. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||
STOCKHOLDERS' EQUITY | ' | ||||||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||
The changes in stockholders’ equity for the nine months ended September 30, 2014 were as follows: | |||||||||||||||||||
Accumulated | |||||||||||||||||||
Other | Total | ||||||||||||||||||
Common Stock | Retained | Comprehensive | Stockholders’ | ||||||||||||||||
(in thousands, except share and per share data) | Shares | Amount | Earnings | Income | Equity | ||||||||||||||
BALANCE, DECEMBER 31, 2013 | 157,500,795 | $ | 1,014,435 | $ | 592,970 | $ | 6,327 | $ | 1,613,732 | ||||||||||
Net income | — | — | 197,345 | — | 197,345 | ||||||||||||||
Repurchase and retirement of common stock | (3,018,225 | ) | (108,136 | ) | — | — | (108,136 | ) | |||||||||||
Dividends declared on common stock ($0.4475 per share) | — | — | (70,279 | ) | — | (70,279 | ) | ||||||||||||
Stock option exercises | 977,491 | 18,095 | — | — | 18,095 | ||||||||||||||
Shares issued under the Employee Stock Purchase Plan | 53,056 | 1,571 | — | — | 1,571 | ||||||||||||||
Issuance of restricted stock | 305,718 | — | — | — | — | ||||||||||||||
Forfeiture of restricted stock | (87,536 | ) | — | — | — | — | |||||||||||||
Share-based compensation, net of forfeitures | — | 11,009 | — | — | 11,009 | ||||||||||||||
Forward contract of accelerated share repurchase program | — | (46,000 | ) | — | — | (46,000 | ) | ||||||||||||
Other comprehensive loss, net of tax | — | — | — | (389 | ) | (389 | ) | ||||||||||||
BALANCE, SEPTEMBER 30, 2014 | 155,731,299 | $ | 890,974 | $ | 720,036 | $ | 5,938 | $ | 1,616,948 | ||||||||||
The changes in stockholders’ equity for the nine months ended September 30, 2013 were as follows: | |||||||||||||||||||
Accumulated | |||||||||||||||||||
Other | Total | ||||||||||||||||||
Common Stock | Retained | Comprehensive | Stockholders’ | ||||||||||||||||
(in thousands, except share and per share data) | Shares | Amount | Earnings | Income (Loss) | Equity | ||||||||||||||
BALANCE, DECEMBER 31, 2012 | 156,745,542 | $ | 989,334 | $ | 443,569 | $ | (18,048 | ) | $ | 1,414,855 | |||||||||
Net income | — | — | 156,569 | — | 156,569 | ||||||||||||||
Repurchase and retirement of common stock | (151,164 | ) | (4,508 | ) | — | — | (4,508 | ) | |||||||||||
Dividends declared on common stock ($0.3933 per share) | — | — | (61,821 | ) | — | (61,821 | ) | ||||||||||||
Stock option exercises | 430,542 | 6,860 | — | — | 6,860 | ||||||||||||||
Shares issued under the Employee Stock Purchase Plan | 57,072 | 1,353 | — | — | 1,353 | ||||||||||||||
Issuance of restricted stock | 365,433 | — | — | — | — | ||||||||||||||
Forfeiture of restricted stock | (33,363 | ) | — | — | — | — | |||||||||||||
Share-based compensation, net of forfeitures | — | 10,670 | — | — | 10,670 | ||||||||||||||
Other comprehensive income, net of tax | — | — | — | 24,555 | 24,555 | ||||||||||||||
BALANCE, SEPTEMBER 30, 2013 | 157,414,062 | $ | 1,003,709 | $ | 538,317 | $ | 6,507 | $ | 1,548,533 | ||||||||||
Accumulated Other Comprehensive Income | |||||||||||||||||||
The following table provides the components of changes in AOCI for the three and nine months ended September 30, 2014 and 2013: | |||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||
Balance at the beginning of period | $ | 5,855 | $ | 6,310 | $ | 6,327 | $ | (18,048 | ) | ||||||||||
Derivative instruments | |||||||||||||||||||
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense — net (net of tax of $88 and $71 for the three months ended September 30, 2014 and 2013, respectively, and net of tax of $243 and $90 for the nine months ended September 30, 2014 and 2013, respectively) | 122 | 110 | 340 | 139 | |||||||||||||||
Reclassification of loss relating to interest rate cash flow hedges from AOCI to loss on extinguishment of debt (net of tax of $83 for the nine months ended September 30, 2014) | — | — | 117 | — | |||||||||||||||
Gain (loss) on interest rate swaps relating to interest rate cash flow hedges (net of tax of $34 for the three months ended September 30, 2014 and $621 and $15,652 for the nine months ended September 30, 2014 and 2013, respectively) | 47 | — | (870 | ) | 24,329 | ||||||||||||||
Derivative instruments, net of tax | 169 | 110 | (413 | ) | 24,468 | ||||||||||||||
Available-for-sale securities | |||||||||||||||||||
Unrealized net gain on available-for-sale securities (net of tax of $63 and $16 for the three and nine months ended September 30, 2014, respectively, and $56 for the three and nine months ended September 30, 2013) | (86 | ) | 87 | 24 | 87 | ||||||||||||||
Available-for-sale securities, net of tax | (86 | ) | 87 | 24 | 87 | ||||||||||||||
Total other comprehensive income (loss), net of tax | 83 | 197 | (389 | ) | 24,555 | ||||||||||||||
Balance at the end of period | $ | 5,938 | $ | 6,507 | $ | 5,938 | $ | 6,507 | |||||||||||
Stock Split | |||||||||||||||||||
In January 2014, we filed an amendment to our Articles of Incorporation, as previously approved by our shareholders, to increase the number of authorized shares of common stock to 300 million shares. On February 6, 2014, our board of directors declared a three-for-one split of our common stock to be accomplished by means of a stock distribution on February 28, 2014 to shareholders of record on February 18, 2014. As a result of the stock split and other issuances and retirements during the nine months ended September 30, 2014, our outstanding shares increased from approximately 52.5 million shares (unadjusted for the three-for-one stock split) as of December 31, 2013 to 155.7 million shares as of September 30, 2014. In addition, all unvested restricted stock awards, outstanding stock option awards and share reserves under our share-based compensation plans as discussed in Note 7 were adjusted under the terms of the respective agreements for this three-for-one split. The share and per share data in this Form 10-Q reflects the three-for-one stock split effective February 28, 2014, unless otherwise noted. | |||||||||||||||||||
Accelerated Share Repurchase Program | |||||||||||||||||||
On June 19, 2014, ITC Holdings entered into an accelerated share repurchase agreement of up to $150.0 million (minimum of $130.0 million) with JP Morgan Chase (“JP Morgan”) (the “ASR program”), which is part of the Board of Directors authorized share repurchase program for up to $250.0 million approved in April 2014 and expiring in December 2015. Under the ASR program, ITC Holdings paid $150.0 million to JP Morgan and received an initial delivery of 2.9 million shares with a fair market value of $104.0 million, based on the closing market price of $35.80 per share at the commencement of the ASR program. The final number of shares delivered under the ASR program will be based on the volume-weighted average share price of our common stock during the term of the transaction, less an agreed upon discount and adjusted for the initial share delivery. The ASR program is expected to be completed by the end of 2014. As of September 30, 2014, there have been no settlements under the ASR program. | |||||||||||||||||||
The $46.0 million unsettled portion of the ASR program meets the criteria to be accounted for as a forward contract indexed to our stock and qualifies as an equity instrument. ITC Holdings recorded the $150.0 million payment as a reduction to common stock, which included the $104.0 million of initial shares repurchased and the unsettled forward contract of $46.0 million as of September 30, 2014. The initial delivery of shares resulted in an immediate reduction to our common stock outstanding used to calculate our earnings per share disclosed in Note 8. | |||||||||||||||||||
ITC Holdings Sales Agency Financing Agreement | |||||||||||||||||||
On July 27, 2011, ITC Holdings entered into a Sales Agency Financing Agreement with Deutsche Bank Securities Inc. as sales agent (the “SAFA”). Under the terms of the SAFA, ITC Holdings was able to issue and sell shares of common stock, without par value, from time to time, up to an aggregate sales proceeds amount of $250.0 million. No shares were issued under the SAFA prior to its expiration on July 27, 2014. |
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
SHARE-BASED COMPENSATION | ' |
SHARE-BASED COMPENSATION | |
Long-Term Incentive Plan Grants | |
On May 20, 2014, pursuant to the Second Amended and Restated 2006 Long-Term Incentive Plan (“LTIP”), we granted 652,900 options to purchase shares of our common stock with an exercise price of $36.73 per share, which was the closing price of our common stock on the date of grant. The options vest in three equal annual installments with the first installment vesting on May 20, 2015. In addition, on May 20, 2014, pursuant to the LTIP, we granted 259,014 shares of restricted stock at a fair value of $36.73 per share. Holders of restricted stock have all the rights of a holder of common stock of ITC Holdings, including dividend and voting rights. The restricted stock vests three years after the grant date. The holder of the restricted stock may not sell, transfer or pledge their shares of restricted stock until vesting occurs. | |
Stock Option Exercises | |
We issued 977,491 and 499,014 shares of our common stock during the nine months ended September 30, 2014 and the year ended December 31, 2013, respectively, due to the exercise of stock options. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share, Basic and Diluted [Abstract] | ' | |||||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||||
EARNINGS PER SHARE | ||||||||||||||||
We report both basic and diluted earnings per share. Our restricted stock and deferred stock units contain rights to receive nonforfeitable dividends and thus, are participating securities requiring the two-class method of computing earnings per share. A reconciliation of both calculations for the three and nine months ended September 30, 2014 and 2013 is presented in the following table (see additional information below under “Stock Split” for the recast share and per share data for the three and nine months ended September 30, 2013 as a result of the three-for-one stock split): | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands, except share, per share data and percentages) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 73,873 | $ | 58,984 | $ | 197,345 | $ | 156,569 | ||||||||
Less: dividends declared and paid — common and restricted shares | (25,296 | ) | (22,299 | ) | (70,279 | ) | (61,820 | ) | ||||||||
Undistributed earnings | 48,577 | 36,685 | 127,066 | 94,749 | ||||||||||||
Percentage allocated to common shares (a) | 99.2 | % | 99.1 | % | 99.2 | % | 99 | % | ||||||||
Undistributed earnings — common shares | 48,188 | 36,355 | 126,049 | 93,802 | ||||||||||||
Add: dividends declared and paid — common shares | 25,100 | 22,098 | 69,708 | 61,240 | ||||||||||||
Numerator for basic and diluted earnings per common share | $ | 73,288 | $ | 58,453 | $ | 195,757 | $ | 155,042 | ||||||||
Denominator: | ||||||||||||||||
Basic earnings per common share — weighted average common shares outstanding | 154,386,994 | 155,958,879 | 155,661,516 | 155,627,361 | ||||||||||||
Incremental shares for stock options and employee stock purchase plan — weighted average assumed conversion | 1,364,896 | 1,307,394 | 1,470,041 | 1,251,432 | ||||||||||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 155,751,890 | 157,266,273 | 157,131,557 | 156,878,793 | ||||||||||||
Per common share net income: | ||||||||||||||||
Basic | $ | 0.47 | $ | 0.37 | $ | 1.26 | $ | 1 | ||||||||
Diluted | $ | 0.47 | $ | 0.37 | $ | 1.25 | $ | 0.99 | ||||||||
____________________________ | ||||||||||||||||
(a) | Weighted average common shares outstanding | 154,386,994 | 155,958,879 | 155,661,516 | 155,627,361 | |||||||||||
Weighted average restricted shares | 1,230,250 | 1,428,531 | 1,295,812 | 1,498,719 | ||||||||||||
(participating securities) | ||||||||||||||||
Total | 155,617,244 | 157,387,410 | 156,957,328 | 157,126,080 | ||||||||||||
Percentage allocated to common shares | 99.2 | % | 99.1 | % | 99.2 | % | 99 | % | ||||||||
The incremental shares for stock options and employee stock purchase plan (“ESPP”) shares are included in the diluted earnings per share calculation using the treasury stock method, unless the effect of including them would be anti-dilutive. The outstanding stock options and ESPP shares and the anti-dilutive stock options and ESPP shares excluded from the diluted earnings per share calculations were as follows: | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Outstanding stock options and ESPP shares (as of September 30) | 4,637,551 | 5,238,300 | ||||||||||||||
Anti-dilutive stock options and ESPP shares (for the three and nine months ended September 30) | 642,507 | 916,902 | ||||||||||||||
Stock Split | ||||||||||||||||
Below are the effects of the stock split on earnings per share for the three and nine months ended September 30, 2013: | ||||||||||||||||
(in thousands, except per share and share data) | Reported | Adjustment | Adjusted | |||||||||||||
For the three months ended September 30, 2013 | ||||||||||||||||
Numerator for basic and diluted earnings per common share | $ | 58,453 | $ | — | $ | 58,453 | ||||||||||
Denominator: | ||||||||||||||||
Basic earnings per common share — weighted average common shares | 51,986,293 | 103,972,586 | 155,958,879 | |||||||||||||
Incremental shares for stock options and employee stock purchase plan | 435,798 | 871,596 | 1,307,394 | |||||||||||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 52,422,091 | 104,844,182 | 157,266,273 | |||||||||||||
Per common share net income: | ||||||||||||||||
Basic | $ | 1.12 | $ | (0.75 | ) | $ | 0.37 | |||||||||
Diluted | $ | 1.12 | $ | (0.75 | ) | $ | 0.37 | |||||||||
For the nine months ended September 30, 2013 | ||||||||||||||||
Numerator for basic and diluted earnings per common share | $ | 155,042 | $ | — | $ | 155,042 | ||||||||||
Denominator: | ||||||||||||||||
Basic earnings per common share — weighted average common shares | 51,875,787 | 103,751,574 | 155,627,361 | |||||||||||||
Incremental shares for stock options and employee stock purchase plan | 417,144 | 834,288 | 1,251,432 | |||||||||||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 52,292,931 | 104,585,862 | 156,878,793 | |||||||||||||
Per common share net income: | ||||||||||||||||
Basic | $ | 2.99 | $ | (1.99 | ) | $ | 1 | |||||||||
Diluted | $ | 2.96 | $ | (1.97 | ) | $ | 0.99 | |||||||||
Below are the effects of the stock split on other disclosures included for earnings per share for the three and nine months ended September 30, 2013: | ||||||||||||||||
Percentage Allocated to Common Shares | ||||||||||||||||
Reported | Adjustment | Adjusted | ||||||||||||||
For the three months ended September 30, 2013 | ||||||||||||||||
Weighted-average common shares outstanding | 51,986,293 | 103,972,586 | 155,958,879 | |||||||||||||
Weighted-average restricted shares (participating securities) | 476,177 | 952,354 | 1,428,531 | |||||||||||||
Total | 52,462,470 | 104,924,940 | 157,387,410 | |||||||||||||
Percentage allocated to common shares | 99.1 | % | — | % | 99.1 | % | ||||||||||
For the nine months ended September 30, 2013 | ||||||||||||||||
Weighted-average common shares outstanding | 51,875,787 | 103,751,574 | 155,627,361 | |||||||||||||
Weighted-average restricted shares (participating securities) | 499,573 | 999,146 | 1,498,719 | |||||||||||||
Total | 52,375,360 | 104,750,720 | 157,126,080 | |||||||||||||
Percentage allocated to common shares | 99 | % | — | % | 99 | % | ||||||||||
Outstanding and Anti-dilutive Stock Options and ESPP Shares | ||||||||||||||||
The outstanding stock options and the ESPP shares as of September 30, 2013 and the anti-dilutive stock options and ESPP shares excluded from the diluted earnings per share calculations for the three and nine months ended September 30, 2013 were as follows: | ||||||||||||||||
Reported | Adjusted | |||||||||||||||
30-Sep-13 | Adjustment | 30-Sep-13 | ||||||||||||||
Outstanding stock options and ESPP shares | 1,746,100 | 3,492,200 | 5,238,300 | |||||||||||||
Anti-dilutive stock options and ESPP shares | 305,634 | 611,268 | 916,902 | |||||||||||||
Impacts of the Accelerated Share Repurchase Program | ||||||||||||||||
The basic shares outstanding as of September 30, 2014 include the impacts of the initial delivery of 2.9 million shares received under the ASR program, as described in Note 6. The forward contract component of the ASR program of $46.0 million is excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2014 based on the volume-weighted average price calculated as of September 30, 2014, which results in an anti-dilutive impact on earnings per share. The final settlement amount may increase or decrease earnings per share at the settlement date depending upon the volume-weighted average share price of our common stock during the term of the transaction. |
RETIREMENT_BENEFITS_AND_ASSETS
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | ' | |||||||||||||||
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | ||||||||||||||||
Retirement Plan Benefits | ||||||||||||||||
We have a qualified retirement plan for eligible employees, comprised of a traditional final average pay plan and a cash balance plan. The traditional final average pay plan is noncontributory, covers select employees, and provides retirement benefits based on years of benefit service, average final compensation and age at retirement. The cash balance plan is also noncontributory, covers substantially all employees, and provides retirement benefits based on eligible compensation and interest credits. Our funding practice for the qualified retirement plan is to contribute amounts necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974, plus additional amounts as we determine appropriate. During the second quarter of 2014, we contributed $3.8 million to the defined benefit retirement plan. We do not expect to make any additional contributions to this plan in 2014. | ||||||||||||||||
We also have two supplemental nonqualified, noncontributory, retirement benefit plans for selected management employees. The plans provide for benefits that supplement those provided by our other retirement plans. We contributed $5.1 million to these supplemental nonqualified, noncontributory, retirement benefit plans during the second quarter of 2014. We do not expect to make any additional contributions to these plans in 2014. | ||||||||||||||||
Net pension cost, by component, was as follows for the three and nine months ended September 30, 2014: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 1,267 | $ | 1,315 | $ | 3,800 | $ | 3,946 | ||||||||
Interest cost | 901 | 698 | 2,703 | 2,094 | ||||||||||||
Expected return on plan assets | (885 | ) | (717 | ) | (2,655 | ) | (2,151 | ) | ||||||||
Amortization of prior service credit | (11 | ) | (10 | ) | (32 | ) | (31 | ) | ||||||||
Amortization of unrecognized loss | 386 | 679 | 1,158 | 2,036 | ||||||||||||
Net pension cost | $ | 1,658 | $ | 1,965 | $ | 4,974 | $ | 5,894 | ||||||||
Other Postretirement Benefits | ||||||||||||||||
We provide certain postretirement health care, dental, and life insurance benefits for eligible employees. During the second quarter of 2014, we contributed $1.2 million to the postretirement benefit plan. We expect to make an estimated additional contribution of $5.0 million to the postretirement benefit plan in 2014. | ||||||||||||||||
Net postretirement cost, by component, was as follows for the three and nine months ended September 30, 2014: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 1,462 | $ | 1,443 | $ | 4,385 | $ | 4,330 | ||||||||
Interest cost | 498 | 390 | 1,494 | 1,171 | ||||||||||||
Expected return on plan assets | (341 | ) | (353 | ) | (1,022 | ) | (1,061 | ) | ||||||||
Amortization of unrecognized loss | — | 55 | — | 165 | ||||||||||||
Net postretirement cost | $ | 1,619 | $ | 1,535 | $ | 4,857 | $ | 4,605 | ||||||||
Defined Contribution Plan | ||||||||||||||||
We also sponsor a defined contribution retirement savings plan. Participation in this plan is available to substantially all employees. We match employee contributions up to certain predefined limits based upon eligible compensation and the employee’s contribution rate. The cost of this plan was $0.9 million and $0.7 million for the three months ended September 30, 2014 and 2013, respectively, and $3.0 million and $3.1 million for the nine months ended September 30, 2014 and 2013, respectively. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||
The measurement of fair value is based on a three-tier hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. For the nine months ended September 30, 2014 and the year ended December 31, 2013, there were no transfers between levels. | ||||||||||||
Our assets measured at fair value subject to the three-tier hierarchy at September 30, 2014, were as follows: | ||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||
Quoted Prices in | Significant | Significant | ||||||||||
Active Markets for | Other Observable | Unobservable | ||||||||||
Identical Assets | Inputs | Inputs | ||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | |||||||||
Financial assets measured on a recurring basis: | ||||||||||||
Cash and cash equivalents — cash equivalents | $ | 12,898 | $ | — | $ | — | ||||||
Mutual funds — fixed income securities | 26,629 | — | — | |||||||||
Mutual funds — equity securities | 635 | — | — | |||||||||
Interest rate swap derivative | — | 81 | — | |||||||||
Total | $ | 40,162 | $ | 81 | $ | — | ||||||
Our assets measured at fair value subject to the three-tier hierarchy at December 31, 2013, were as follows: | ||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||
Quoted Prices in | Significant | Significant | ||||||||||
Active Markets for | Other Observable | Unobservable | ||||||||||
Identical Assets | Inputs | Inputs | ||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | |||||||||
Financial assets measured on a recurring basis: | ||||||||||||
Cash and cash equivalents — cash equivalents | $ | 19,000 | $ | — | $ | — | ||||||
Mutual funds — fixed income securities | 21,318 | — | — | |||||||||
Mutual funds — equity securities | 516 | — | — | |||||||||
Total | $ | 40,834 | $ | — | $ | — | ||||||
As of September 30, 2014 and December 31, 2013, we held certain assets and liabilities that are required to be measured at fair value on a recurring basis. The assets consist of investments recorded within cash and cash equivalents and other long-term assets, including investments held in a trust associated with our supplemental nonqualified, noncontributory, retirement benefit plans for selected management employees. Our cash and cash equivalents consist of money market mutual funds that are administered similar to money market funds recorded at cost plus accrued interest to approximate fair value. Our mutual funds consist primarily of publicly traded mutual funds and are recorded at fair value based on observable trades for identical securities in an active market. Changes in the observed trading prices and liquidity of money market funds are monitored as additional support for determining fair value, and losses are recorded in earnings for investment classified as trading securities and other comprehensive income for investments classified as available for sale if fair value falls below recorded cost. | ||||||||||||
The asset related to the derivative consists of an interest rate swap as discussed in Note 5. The fair value of our interest rate swap derivative as of September 30, 2014 is determined based on a discounted cash flow (“DCF”) method using LIBOR swap rates which are observable at commonly quoted intervals. | ||||||||||||
We also held non-financial assets that are required to be measured at fair value on a non-recurring basis. These consist of goodwill and intangible assets. We did not record any impairment charges on long-lived assets and no other significant events occurred requiring non-financial assets and liabilities to be measured at fair value (subsequent to initial recognition) during the nine months ended September 30, 2014. For additional information on our goodwill and intangible assets, please refer to the notes to the consolidated financial statements as of and for the year ended December 31, 2013 included in our Form 10-K for such period and to Note 4 of this Form 10-Q. | ||||||||||||
Fair Value of Financial Assets and Liabilities | ||||||||||||
Fixed Rate Debt | ||||||||||||
Based on the borrowing rates obtained from third party lending institutions currently available for bank loans with similar terms and average maturities from active markets, the fair value of our consolidated long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements, was $3,688.3 million and $3,299.0 million at September 30, 2014 and December 31, 2013, respectively. These fair values represent Level 2 under the three-tier hierarchy described above. The total book value of our consolidated long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements, was $3,379.6 million and $3,100.9 million at September 30, 2014 and December 31, 2013, respectively. | ||||||||||||
Revolving and Term Loan Credit Agreements | ||||||||||||
At September 30, 2014 and December 31, 2013, we had a consolidated total of $660.5 million and $511.2 million, respectively, outstanding under our revolving and term loan credit agreements, which are variable rate loans. The fair value of these loans approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. These fair values represent Level 2 under the three-tier hierarchy described above. | ||||||||||||
Other Financial Instruments | ||||||||||||
The carrying value of other financial instruments included in current assets and current liabilities, including cash and cash equivalents and special deposits, approximates their fair value due to the short-term nature of these instruments. |
COMMITMENTS_AND_CONTINGENT_LIA
COMMITMENTS AND CONTINGENT LIABILITIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENT LIABILITIES | ' |
COMMITMENTS AND CONTINGENT LIABILITIES | |
Environmental Matters | |
Our Regulated Operating Subsidiaries’ operations are subject to federal, state, and local environmental laws and regulations, which impose limitations on the discharge of pollutants into the environment, establish standards for the management, treatment, storage, transportation and disposal of hazardous materials and of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances. Liabilities to investigate or remediate contamination, as well as other liabilities concerning hazardous materials or contamination, such as claims for personal injury or property damage, may arise at many locations, including formerly owned or operated properties and sites where wastes have been treated or disposed of, as well as at properties currently owned or operated by our Regulated Operating Subsidiaries. Such liabilities may arise even where the contamination does not result from noncompliance with applicable environmental laws. Under a number of environmental laws, such liabilities may also be joint and several, meaning that a party can be held responsible for more than its share of the liability involved, or even the entire share. Although environmental requirements generally have become more stringent and compliance with those requirements more expensive, we are not aware of any specific developments that would increase our Regulated Operating Subsidiaries’ costs for such compliance in a manner that would be expected to have a material adverse effect on our results of operations, financial position or liquidity. | |
Our Regulated Operating Subsidiaries’ assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Many of the properties our Regulated Operating Subsidiaries own or operate have been used for many years, and include older facilities and equipment that may be more likely than newer ones to contain or be made from such materials. Some of these properties include aboveground or underground storage tanks and associated piping. Some of them also include large electrical equipment filled with mineral oil, which may contain or previously have contained polychlorinated biphenyls, or PCBs. Our Regulated Operating Subsidiaries’ facilities and equipment are often situated close to or on property owned by others so that, if they are the source of contamination, other’s property may be affected. For example, aboveground and underground transmission lines sometimes traverse properties that our Regulated Operating Subsidiaries do not own, and, at some of our Regulated Operating Subsidiaries’ transmission stations, transmission assets (owned or operated by our Regulated Operating Subsidiaries) and distribution assets (owned or operated by our Regulated Operating Subsidiaries’ transmission customer) are commingled. | |
Some properties in which our Regulated Operating Subsidiaries have an ownership interest or at which they operate are, and others are suspected of being, affected by environmental contamination. Our Regulated Operating Subsidiaries are not aware of any pending or threatened claims against them with respect to environmental contamination, or of any investigation or remediation of contamination at any properties, that entail costs likely to materially affect them. Some facilities and properties are located near environmentally sensitive areas such as wetlands. | |
Claims have been made or threatened against electric utilities for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields associated with electric transmission and distribution lines. While our Regulated Operating Subsidiaries do not believe that a causal link between electromagnetic field exposure and injury has been generally established and accepted in the scientific community, if such a relationship is established or accepted, the liabilities and costs imposed on our business could be significant. We are not aware of any pending or threatened claims against our Regulated Operating Subsidiaries for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields and electric transmission and distribution lines that entail costs likely to have a material adverse effect on our results of operations, financial position or liquidity. | |
Litigation | |
We are involved in certain legal proceedings before various courts, governmental agencies and mediation panels concerning matters arising in the ordinary course of business. These proceedings include certain contract disputes, regulatory matters and pending judicial matters. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that are considered probable of loss. | |
Michigan Sales and Use Tax Audit | |
The Michigan Department of Treasury conducted a sales and use tax audit of ITCTransmission for the audit period April 1, 2005 through June 30, 2008 and has denied ITCTransmission’s use of the industrial processing exemption from use tax it has taken beginning January 1, 2007. ITCTransmission has certain administrative and judicial appeal rights. | |
ITCTransmission believes that its utilization of the industrial processing exemption is appropriate and intends to defend itself against the denial of such exemption. However, it is reasonably possible that the assessment of additional use tax could be sustained after all administrative appeals and litigation have been exhausted. | |
The amount of the potential use tax liability associated with the exemptions taken by ITCTransmission through September 30, 2014 is estimated to be approximately $20.4 million for periods still subject to audit, which includes approximately $3.9 million assessed for the audit period April 1, 2005 through June 30, 2008, including interest. ITCTransmission has not recorded this contingent liability as of September 30, 2014. However, in the event it becomes appropriate to record additional use tax liability relating to this matter, ITCTransmission would record the additional use tax primarily as an increase to the cost of property, plant and equipment, as the majority of purchases for which the exemption was taken relate to equipment purchases associated with capital projects. METC has also taken the industrial processing exemption, estimated to be approximately $10.5 million for periods still subject to audit; however, METC has not recorded any contingent liabilities as of September 30, 2014 associated with this matter. These higher use tax expenses would be included as components of net revenue requirements and resulting rates. | |
FERC Audit Refund | |
The FERC issued an order that identified certain findings and recommendations of certain staff of the FERC relating to specific aspects of the accounting treatment for the acquisition of the transmission assets of IP&L by ITC Midwest that requires adjustments to the MISO Regulated Operating Subsidiaries’ respective annual revenue requirement calculations and corresponding refunds. ITC Midwest, ITCTransmission and METC recorded an aggregate regulatory liability for the refund and related interest of $13.1 million as of December 31, 2013. The amounts are being refunded through the cost-based formula rates in 2014 and as of September 30, 2014, the remaining regulatory liability and related interest was $3.3 million. | |
ITC Midwest Project Commitment | |
In the Minnesota regulatory proceeding to approve ITC Midwest’s December 2007 acquisition of the transmission assets of IP&L, ITC Midwest agreed to build a certain project in Iowa, the 345 kV Salem-Hazelton line, and made a commitment to use commercially reasonable best efforts to complete the project prior to December 31, 2011. In the event ITC Midwest is found to have failed to meet this commitment, the allowed 12.38% rate of return on the actual equity portion of its capital structure would be reduced to 10.39% until such time as ITC Midwest completes the project, and ITC Midwest would refund with interest any amounts collected since the close date of the transaction that exceeded what would have been collected if the 10.39% return on equity (“ROE”) had been used. Certain regulatory approvals were needed from the Iowa Utilities Board (“IUB”) before construction of the project could commence, but due to the IUB’s case schedule, these approvals were not received until the second quarter of 2011. As a result of the delay in the receipt of the necessary regulatory approvals, the project was not completed by December 31, 2011. We have notified the Minnesota Public Utilities Commission that the Salem-Hazleton line was placed into service on April 25, 2013, and requested confirmation from the commission that ITC Midwest has satisfied its commitment and that no refund is due as a result of the project not being completed by December 31, 2011. We believe we used commercially reasonable best efforts to meet the December 31, 2011 deadline, and therefore, we believe the likelihood of any material effect on the financial statements from this matter is remote. | |
Rate of Return on Equity and Capital Structure Complaint | |
On November 12, 2013, Association of Businesses Advocating Tariff Equity, Coalition of MISO Transmission Customers, Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Inc., Minnesota Large Industrial Group, and Wisconsin Industrial Energy Group (the “joint complainants”) filed a complaint with the FERC under Section 206 of the FPA, requesting that the FERC find the regional base rate ROE for all MISO TOs, including ITCTransmission, METC and ITC Midwest (currently set at 12.38%) to be unjust and unreasonable. The joint complainants are seeking a FERC order reducing the base regional ROE used in our formula transmission rate to 9.15%. The complaint also alleged that the rates of any MISO TO using a capital structure with greater than 50% for the equity component are likewise not just and reasonable (ITCTransmission, METC and ITC Midwest use their actual capital structures, which FERC has approved at a target of 60% equity). In addition, the complaint alleged the ROE adders currently approved for certain ITC operating companies, including adders currently utilized by ITCTransmission for being a member of an RTO and adders utilized by ITCTransmission and METC for being an independent transmission owner, are no longer just and reasonable, and sought to have them eliminated. | |
On January 6, 2014, ITCTransmission, METC and ITC Midwest filed responses with the FERC to the Section 206 complaint (jointly with other MISO TOs and through a separate supplemental response), defending the use of the current regional base ROE, the use of current capital structures, and the approved ROE adders for RTO membership and independence. The responses seek dismissal of the complaint, or a denial of it on merits, with prejudice, as the joint complainants failed to meet their burden under Section 206 of the FPA to show that the current regional base ROE, approved capital structures and ROE adders approved for ITCTransmission and METC are no longer just and reasonable. | |
On June 19, 2014, in a separate but related Section 206 complaint against certain ISO New England TOs, FERC adopted a new method for establishing ROEs for electric transmission utilities. The new method is based on a two-step process and uses both short-term and long-term growth projections in establishing ROEs, whereas the previous method used only short-term growth projections. Under this new method, FERC also reiterated its policy of capping the overall ROE, including adders, at the high end of the zone of reasonableness set by the two-step DCF methodology. The new method presented in the ISO New England ROE case will also be used in resolving the MISO ROE case. | |
On October 16, 2014, the FERC set the MISO TO’s base ROE for hearing and denied all other aspects of the complaint, finding that the joint complainants failed to show that the use of actual or FERC-approved capital structures that include more than 50% equity is unjust and unreasonable. FERC also denied the request to terminate ITCTransmission’s and METC’s ROE incentive adders detailed above. The order reiterates that any TO’s total ROE is limited by the high end of the zone of reasonableness and the TO’s ability to implement the full amount of previously granted ROE adders may be affected by the outcome of the hearing. FERC also set the effective date for potential refunds as November 12, 2013. | |
It is reasonably possible that the refund exposure for a potential reduction to the ROEs of our MISO Regulated Operating Subsidiaries could result in a material impact on our results of operations, cash flows and financial condition. The range of potential impact of this matter to our consolidated results of operations, cash flows and financial condition is not estimable due to the uncertainty of the calculation of an authorized ROE along with the zone of reasonableness, which is directly affected by the newly adopted two-step DCF methodology. The ROEs to be established would be dependent on the appropriate proxy group and assumptions for short and long-term growth rates at the time the ROE is ultimately determined. As of September 30, 2014, our MISO Regulated Operating Subsidiaries had a total of approximately $2.6 billion of equity in their capital structures for ratemaking purposes. Based on this level of aggregate equity, we estimate that each 10 basis point reduction in the authorized ROE would reduce annual consolidated net income by approximately $2.6 million. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
We identify reportable segments based on the criteria set forth by the FASB regarding disclosures about segments of an enterprise, including the regulatory environment of our subsidiaries and the business activities performed to earn revenues and incur expenses. The following tables show our financial information by reportable segment: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
OPERATING REVENUES: | September 30, | September 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Regulated Operating Subsidiaries | $ | 270,062 | $ | 238,857 | $ | 792,058 | $ | 686,128 | ||||||||
ITC Holdings and other | 254 | 152 | 438 | 455 | ||||||||||||
Intercompany eliminations | (182 | ) | (227 | ) | (545 | ) | (680 | ) | ||||||||
Total Operating Revenues | $ | 270,134 | $ | 238,782 | $ | 791,951 | $ | 685,903 | ||||||||
Three months ended | Nine months ended | |||||||||||||||
INCOME BEFORE INCOME TAXES: | September 30, | September 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Regulated Operating Subsidiaries | $ | 151,758 | $ | 131,939 | $ | 440,537 | $ | 376,398 | ||||||||
ITC Holdings and other | (33,250 | ) | (38,267 | ) | (122,514 | ) | (124,477 | ) | ||||||||
Total Income Before Income Taxes | $ | 118,508 | $ | 93,672 | $ | 318,023 | $ | 251,921 | ||||||||
Three months ended | Nine months ended | |||||||||||||||
NET INCOME: | September 30, | September 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Regulated Operating Subsidiaries | $ | 93,015 | $ | 82,291 | $ | 269,865 | $ | 234,168 | ||||||||
ITC Holdings and other | 73,873 | 58,984 | 197,345 | 156,569 | ||||||||||||
Intercompany eliminations | (93,015 | ) | (82,291 | ) | (269,865 | ) | (234,168 | ) | ||||||||
Total Net Income | $ | 73,873 | $ | 58,984 | $ | 197,345 | $ | 156,569 | ||||||||
TOTAL ASSETS: | September 30, | December 31, | ||||||||||||||
(in thousands) | 2014 | 2013 | ||||||||||||||
Regulated Operating Subsidiaries | $ | 6,715,197 | $ | 6,174,888 | ||||||||||||
ITC Holdings and other | 3,850,785 | 3,619,759 | ||||||||||||||
Reconciliations / Intercompany eliminations (a) | (3,758,618 | ) | (3,512,404 | ) | ||||||||||||
Total Assets | $ | 6,807,364 | $ | 6,282,243 | ||||||||||||
____________________________ | ||||||||||||||||
(a) | Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our Regulated Operating Subsidiaries as compared to the classification in our condensed consolidated statements of financial position. |
GENERAL_Tables
GENERAL (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
GENERAL [Abstract] | ' | |||||||
Supplementary Cash Flows Information | ' | |||||||
Nine months ended | ||||||||
September 30, | ||||||||
(in thousands) | 2014 | 2013 | ||||||
Supplementary cash flows information: | ||||||||
Interest paid (net of interest capitalized) | $ | 154,410 | $ | 135,058 | ||||
Income taxes paid — net | 25,744 | 11,593 | ||||||
Supplementary non-cash investing and financing activities: | ||||||||
Additions to property, plant and equipment (a) | $ | 92,557 | $ | 74,694 | ||||
Allowance for equity funds used during construction | 14,865 | 25,315 | ||||||
____________________________ | ||||||||
(a) | Amounts consist of current liabilities for construction labor and materials that have not been included in investing activities. These amounts have not been paid for as of September 30, 2014 or 2013, respectively, but have been or will be included as a cash outflow from investing activities for expenditures for property, plant and equipment when paid. |
REGULATORY_MATTERS_Tables
REGULATORY MATTERS (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Regulated Operations [Abstract] | ' | ||||
Net Changes in Regulatory Assets and Liabilities | ' | ||||
The net changes in regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ formula rate revenue accruals and deferrals, including accrued interest, were as follows during the nine months ended September 30, 2014: | |||||
(in thousands) | Total | ||||
Balance as of December 31, 2013 | $ | (60,196 | ) | ||
Net refund of 2012 revenue deferrals and accruals, including accrued interest | 20,445 | ||||
Net revenue deferral for the nine months ended September 30, 2014 | (47,843 | ) | |||
Net accrued interest payable for the nine months ended September 30, 2014 | (1,777 | ) | |||
Balance as of September 30, 2014 | $ | (89,371 | ) | ||
Schedule of Regulatory Assets and Liabilities | ' | ||||
Regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ formula rate revenue accruals and deferrals and associated accrued interest are recorded in the condensed consolidated statements of financial position as follows: | |||||
(in thousands) | Total | ||||
Current assets | $ | 5,623 | |||
Non-current assets — other | 5,747 | ||||
Current liabilities | (38,156 | ) | |||
Non-current liabilities | (62,585 | ) | |||
Balance as of September 30, 2014 | $ | (89,371 | ) |
DEBT_Tables
DEBT (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||||
Schedule of Interest Rate Swap Arrangements | ' | |||||||||||||||||
A summary of the terminated interest rate swaps is provided below: | ||||||||||||||||||
Interest Rate Swaps | Amount | Weighted Average Fixed Rate of Interest Rate Swaps | Comparable Reference Rate of Senior Notes | Loss on Derivative | Settlement Date | |||||||||||||
(amounts in millions) | ||||||||||||||||||
10-year interest rate swaps | $ | 150 | 2.65% | 2.53% | $ | 1.6 | May-14 | |||||||||||
Schedule of Revolving Credit Agreements | ' | |||||||||||||||||
At September 30, 2014, ITC Holdings and its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available: | ||||||||||||||||||
(amounts in millions) | Total | Outstanding | Unused | Weighted Average | Commitment | |||||||||||||
Available | Balance (a) | Capacity | Interest Rate on | Fee Rate (b) | ||||||||||||||
Capacity | Outstanding Balance | |||||||||||||||||
ITC Holdings | $ | 400 | $ | 45 | $ | 355 | 1.40% | (c) | 0.175 | % | ||||||||
ITCTransmission | 100 | 2.4 | 97.6 | 1.10% | (d) | 0.1 | % | |||||||||||
METC | 100 | 41.3 | 58.7 | 1.10% | (d) | 0.1 | % | |||||||||||
ITC Midwest | 250 | 162.4 | 87.6 | 1.20% | (d) | 0.1 | % | |||||||||||
ITC Great Plains | 150 | 98.4 | 51.6 | 1.20% | (e) | 0.125 | % | |||||||||||
Total | $ | 1,000.00 | $ | 349.5 | $ | 650.5 | ||||||||||||
____________________________ | ||||||||||||||||||
(a) | Included within long-term debt. | |||||||||||||||||
(b) | Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. | |||||||||||||||||
(c) | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |||||||||||||||||
(d) | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |||||||||||||||||
(e) | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.125% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.125%, subject to adjustments based on ITC Great Plains' credit rating. |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||
Changes in Stockholders' Equity | ' | ||||||||||||||||||
The changes in stockholders’ equity for the nine months ended September 30, 2014 were as follows: | |||||||||||||||||||
Accumulated | |||||||||||||||||||
Other | Total | ||||||||||||||||||
Common Stock | Retained | Comprehensive | Stockholders’ | ||||||||||||||||
(in thousands, except share and per share data) | Shares | Amount | Earnings | Income | Equity | ||||||||||||||
BALANCE, DECEMBER 31, 2013 | 157,500,795 | $ | 1,014,435 | $ | 592,970 | $ | 6,327 | $ | 1,613,732 | ||||||||||
Net income | — | — | 197,345 | — | 197,345 | ||||||||||||||
Repurchase and retirement of common stock | (3,018,225 | ) | (108,136 | ) | — | — | (108,136 | ) | |||||||||||
Dividends declared on common stock ($0.4475 per share) | — | — | (70,279 | ) | — | (70,279 | ) | ||||||||||||
Stock option exercises | 977,491 | 18,095 | — | — | 18,095 | ||||||||||||||
Shares issued under the Employee Stock Purchase Plan | 53,056 | 1,571 | — | — | 1,571 | ||||||||||||||
Issuance of restricted stock | 305,718 | — | — | — | — | ||||||||||||||
Forfeiture of restricted stock | (87,536 | ) | — | — | — | — | |||||||||||||
Share-based compensation, net of forfeitures | — | 11,009 | — | — | 11,009 | ||||||||||||||
Forward contract of accelerated share repurchase program | — | (46,000 | ) | — | — | (46,000 | ) | ||||||||||||
Other comprehensive loss, net of tax | — | — | — | (389 | ) | (389 | ) | ||||||||||||
BALANCE, SEPTEMBER 30, 2014 | 155,731,299 | $ | 890,974 | $ | 720,036 | $ | 5,938 | $ | 1,616,948 | ||||||||||
The changes in stockholders’ equity for the nine months ended September 30, 2013 were as follows: | |||||||||||||||||||
Accumulated | |||||||||||||||||||
Other | Total | ||||||||||||||||||
Common Stock | Retained | Comprehensive | Stockholders’ | ||||||||||||||||
(in thousands, except share and per share data) | Shares | Amount | Earnings | Income (Loss) | Equity | ||||||||||||||
BALANCE, DECEMBER 31, 2012 | 156,745,542 | $ | 989,334 | $ | 443,569 | $ | (18,048 | ) | $ | 1,414,855 | |||||||||
Net income | — | — | 156,569 | — | 156,569 | ||||||||||||||
Repurchase and retirement of common stock | (151,164 | ) | (4,508 | ) | — | — | (4,508 | ) | |||||||||||
Dividends declared on common stock ($0.3933 per share) | — | — | (61,821 | ) | — | (61,821 | ) | ||||||||||||
Stock option exercises | 430,542 | 6,860 | — | — | 6,860 | ||||||||||||||
Shares issued under the Employee Stock Purchase Plan | 57,072 | 1,353 | — | — | 1,353 | ||||||||||||||
Issuance of restricted stock | 365,433 | — | — | — | — | ||||||||||||||
Forfeiture of restricted stock | (33,363 | ) | — | — | — | — | |||||||||||||
Share-based compensation, net of forfeitures | — | 10,670 | — | — | 10,670 | ||||||||||||||
Other comprehensive income, net of tax | — | — | — | 24,555 | 24,555 | ||||||||||||||
BALANCE, SEPTEMBER 30, 2013 | 157,414,062 | $ | 1,003,709 | $ | 538,317 | $ | 6,507 | $ | 1,548,533 | ||||||||||
Changes in Accumulated Other Comprehensive Income | ' | ||||||||||||||||||
The following table provides the components of changes in AOCI for the three and nine months ended September 30, 2014 and 2013: | |||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||
Balance at the beginning of period | $ | 5,855 | $ | 6,310 | $ | 6,327 | $ | (18,048 | ) | ||||||||||
Derivative instruments | |||||||||||||||||||
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense — net (net of tax of $88 and $71 for the three months ended September 30, 2014 and 2013, respectively, and net of tax of $243 and $90 for the nine months ended September 30, 2014 and 2013, respectively) | 122 | 110 | 340 | 139 | |||||||||||||||
Reclassification of loss relating to interest rate cash flow hedges from AOCI to loss on extinguishment of debt (net of tax of $83 for the nine months ended September 30, 2014) | — | — | 117 | — | |||||||||||||||
Gain (loss) on interest rate swaps relating to interest rate cash flow hedges (net of tax of $34 for the three months ended September 30, 2014 and $621 and $15,652 for the nine months ended September 30, 2014 and 2013, respectively) | 47 | — | (870 | ) | 24,329 | ||||||||||||||
Derivative instruments, net of tax | 169 | 110 | (413 | ) | 24,468 | ||||||||||||||
Available-for-sale securities | |||||||||||||||||||
Unrealized net gain on available-for-sale securities (net of tax of $63 and $16 for the three and nine months ended September 30, 2014, respectively, and $56 for the three and nine months ended September 30, 2013) | (86 | ) | 87 | 24 | 87 | ||||||||||||||
Available-for-sale securities, net of tax | (86 | ) | 87 | 24 | 87 | ||||||||||||||
Total other comprehensive income (loss), net of tax | 83 | 197 | (389 | ) | 24,555 | ||||||||||||||
Balance at the end of period | $ | 5,938 | $ | 6,507 | $ | 5,938 | $ | 6,507 | |||||||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share, Basic and Diluted, by Common Class | ' | |||||||||||||||
Schedule of Basic and Diluted Earnings Per Common Share | ' | |||||||||||||||
A reconciliation of both calculations for the three and nine months ended September 30, 2014 and 2013 is presented in the following table (see additional information below under “Stock Split” for the recast share and per share data for the three and nine months ended September 30, 2013 as a result of the three-for-one stock split): | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands, except share, per share data and percentages) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 73,873 | $ | 58,984 | $ | 197,345 | $ | 156,569 | ||||||||
Less: dividends declared and paid — common and restricted shares | (25,296 | ) | (22,299 | ) | (70,279 | ) | (61,820 | ) | ||||||||
Undistributed earnings | 48,577 | 36,685 | 127,066 | 94,749 | ||||||||||||
Percentage allocated to common shares (a) | 99.2 | % | 99.1 | % | 99.2 | % | 99 | % | ||||||||
Undistributed earnings — common shares | 48,188 | 36,355 | 126,049 | 93,802 | ||||||||||||
Add: dividends declared and paid — common shares | 25,100 | 22,098 | 69,708 | 61,240 | ||||||||||||
Numerator for basic and diluted earnings per common share | $ | 73,288 | $ | 58,453 | $ | 195,757 | $ | 155,042 | ||||||||
Denominator: | ||||||||||||||||
Basic earnings per common share — weighted average common shares outstanding | 154,386,994 | 155,958,879 | 155,661,516 | 155,627,361 | ||||||||||||
Incremental shares for stock options and employee stock purchase plan — weighted average assumed conversion | 1,364,896 | 1,307,394 | 1,470,041 | 1,251,432 | ||||||||||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 155,751,890 | 157,266,273 | 157,131,557 | 156,878,793 | ||||||||||||
Per common share net income: | ||||||||||||||||
Basic | $ | 0.47 | $ | 0.37 | $ | 1.26 | $ | 1 | ||||||||
Diluted | $ | 0.47 | $ | 0.37 | $ | 1.25 | $ | 0.99 | ||||||||
____________________________ | ||||||||||||||||
(a) | Weighted average common shares outstanding | 154,386,994 | 155,958,879 | 155,661,516 | 155,627,361 | |||||||||||
Weighted average restricted shares | 1,230,250 | 1,428,531 | 1,295,812 | 1,498,719 | ||||||||||||
(participating securities) | ||||||||||||||||
Total | 155,617,244 | 157,387,410 | 156,957,328 | 157,126,080 | ||||||||||||
Percentage allocated to common shares | 99.2 | % | 99.1 | % | 99.2 | % | 99 | % | ||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | |||||||||||||||
The outstanding stock options and ESPP shares and the anti-dilutive stock options and ESPP shares excluded from the diluted earnings per share calculations were as follows: | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Outstanding stock options and ESPP shares (as of September 30) | 4,637,551 | 5,238,300 | ||||||||||||||
Anti-dilutive stock options and ESPP shares (for the three and nine months ended September 30) | 642,507 | 916,902 | ||||||||||||||
Effects of Stock Split | ' | |||||||||||||||
Earnings Per Share, Basic and Diluted, by Common Class | ' | |||||||||||||||
Schedule of Basic and Diluted Earnings Per Common Share | ' | |||||||||||||||
Below are the effects of the stock split on earnings per share for the three and nine months ended September 30, 2013: | ||||||||||||||||
(in thousands, except per share and share data) | Reported | Adjustment | Adjusted | |||||||||||||
For the three months ended September 30, 2013 | ||||||||||||||||
Numerator for basic and diluted earnings per common share | $ | 58,453 | $ | — | $ | 58,453 | ||||||||||
Denominator: | ||||||||||||||||
Basic earnings per common share — weighted average common shares | 51,986,293 | 103,972,586 | 155,958,879 | |||||||||||||
Incremental shares for stock options and employee stock purchase plan | 435,798 | 871,596 | 1,307,394 | |||||||||||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 52,422,091 | 104,844,182 | 157,266,273 | |||||||||||||
Per common share net income: | ||||||||||||||||
Basic | $ | 1.12 | $ | (0.75 | ) | $ | 0.37 | |||||||||
Diluted | $ | 1.12 | $ | (0.75 | ) | $ | 0.37 | |||||||||
For the nine months ended September 30, 2013 | ||||||||||||||||
Numerator for basic and diluted earnings per common share | $ | 155,042 | $ | — | $ | 155,042 | ||||||||||
Denominator: | ||||||||||||||||
Basic earnings per common share — weighted average common shares | 51,875,787 | 103,751,574 | 155,627,361 | |||||||||||||
Incremental shares for stock options and employee stock purchase plan | 417,144 | 834,288 | 1,251,432 | |||||||||||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 52,292,931 | 104,585,862 | 156,878,793 | |||||||||||||
Per common share net income: | ||||||||||||||||
Basic | $ | 2.99 | $ | (1.99 | ) | $ | 1 | |||||||||
Diluted | $ | 2.96 | $ | (1.97 | ) | $ | 0.99 | |||||||||
Below are the effects of the stock split on other disclosures included for earnings per share for the three and nine months ended September 30, 2013: | ||||||||||||||||
Percentage Allocated to Common Shares | ||||||||||||||||
Reported | Adjustment | Adjusted | ||||||||||||||
For the three months ended September 30, 2013 | ||||||||||||||||
Weighted-average common shares outstanding | 51,986,293 | 103,972,586 | 155,958,879 | |||||||||||||
Weighted-average restricted shares (participating securities) | 476,177 | 952,354 | 1,428,531 | |||||||||||||
Total | 52,462,470 | 104,924,940 | 157,387,410 | |||||||||||||
Percentage allocated to common shares | 99.1 | % | — | % | 99.1 | % | ||||||||||
For the nine months ended September 30, 2013 | ||||||||||||||||
Weighted-average common shares outstanding | 51,875,787 | 103,751,574 | 155,627,361 | |||||||||||||
Weighted-average restricted shares (participating securities) | 499,573 | 999,146 | 1,498,719 | |||||||||||||
Total | 52,375,360 | 104,750,720 | 157,126,080 | |||||||||||||
Percentage allocated to common shares | 99 | % | — | % | 99 | % | ||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | |||||||||||||||
The outstanding stock options and the ESPP shares as of September 30, 2013 and the anti-dilutive stock options and ESPP shares excluded from the diluted earnings per share calculations for the three and nine months ended September 30, 2013 were as follows: | ||||||||||||||||
Reported | Adjusted | |||||||||||||||
30-Sep-13 | Adjustment | 30-Sep-13 | ||||||||||||||
Outstanding stock options and ESPP shares | 1,746,100 | 3,492,200 | 5,238,300 | |||||||||||||
Anti-dilutive stock options and ESPP shares | 305,634 | 611,268 | 916,902 | |||||||||||||
RETIREMENT_BENEFITS_AND_ASSETS1
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Defined Benefit Plans | ' | |||||||||||||||
Defined Benefit Plan Disclosure | ' | |||||||||||||||
Schedule of Net Defined Benefit Cost Components | ' | |||||||||||||||
Net pension cost, by component, was as follows for the three and nine months ended September 30, 2014: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 1,267 | $ | 1,315 | $ | 3,800 | $ | 3,946 | ||||||||
Interest cost | 901 | 698 | 2,703 | 2,094 | ||||||||||||
Expected return on plan assets | (885 | ) | (717 | ) | (2,655 | ) | (2,151 | ) | ||||||||
Amortization of prior service credit | (11 | ) | (10 | ) | (32 | ) | (31 | ) | ||||||||
Amortization of unrecognized loss | 386 | 679 | 1,158 | 2,036 | ||||||||||||
Net pension cost | $ | 1,658 | $ | 1,965 | $ | 4,974 | $ | 5,894 | ||||||||
Other Postretirement Benefits Plan | ' | |||||||||||||||
Defined Benefit Plan Disclosure | ' | |||||||||||||||
Schedule of Net Defined Benefit Cost Components | ' | |||||||||||||||
Net postretirement cost, by component, was as follows for the three and nine months ended September 30, 2014: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 1,462 | $ | 1,443 | $ | 4,385 | $ | 4,330 | ||||||||
Interest cost | 498 | 390 | 1,494 | 1,171 | ||||||||||||
Expected return on plan assets | (341 | ) | (353 | ) | (1,022 | ) | (1,061 | ) | ||||||||
Amortization of unrecognized loss | — | 55 | — | 165 | ||||||||||||
Net postretirement cost | $ | 1,619 | $ | 1,535 | $ | 4,857 | $ | 4,605 | ||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||
Assets Measured at Fair Value Subject to Three-Tier Hierarchy | ' | |||||||||||
Our assets measured at fair value subject to the three-tier hierarchy at September 30, 2014, were as follows: | ||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||
Quoted Prices in | Significant | Significant | ||||||||||
Active Markets for | Other Observable | Unobservable | ||||||||||
Identical Assets | Inputs | Inputs | ||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | |||||||||
Financial assets measured on a recurring basis: | ||||||||||||
Cash and cash equivalents — cash equivalents | $ | 12,898 | $ | — | $ | — | ||||||
Mutual funds — fixed income securities | 26,629 | — | — | |||||||||
Mutual funds — equity securities | 635 | — | — | |||||||||
Interest rate swap derivative | — | 81 | — | |||||||||
Total | $ | 40,162 | $ | 81 | $ | — | ||||||
Our assets measured at fair value subject to the three-tier hierarchy at December 31, 2013, were as follows: | ||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||
Quoted Prices in | Significant | Significant | ||||||||||
Active Markets for | Other Observable | Unobservable | ||||||||||
Identical Assets | Inputs | Inputs | ||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | |||||||||
Financial assets measured on a recurring basis: | ||||||||||||
Cash and cash equivalents — cash equivalents | $ | 19,000 | $ | — | $ | — | ||||||
Mutual funds — fixed income securities | 21,318 | — | — | |||||||||
Mutual funds — equity securities | 516 | — | — | |||||||||
Total | $ | 40,834 | $ | — | $ | — | ||||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Schedule of Financial Information by Reportable Segment | ' | |||||||||||||||
The following tables show our financial information by reportable segment: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
OPERATING REVENUES: | September 30, | September 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Regulated Operating Subsidiaries | $ | 270,062 | $ | 238,857 | $ | 792,058 | $ | 686,128 | ||||||||
ITC Holdings and other | 254 | 152 | 438 | 455 | ||||||||||||
Intercompany eliminations | (182 | ) | (227 | ) | (545 | ) | (680 | ) | ||||||||
Total Operating Revenues | $ | 270,134 | $ | 238,782 | $ | 791,951 | $ | 685,903 | ||||||||
Three months ended | Nine months ended | |||||||||||||||
INCOME BEFORE INCOME TAXES: | September 30, | September 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Regulated Operating Subsidiaries | $ | 151,758 | $ | 131,939 | $ | 440,537 | $ | 376,398 | ||||||||
ITC Holdings and other | (33,250 | ) | (38,267 | ) | (122,514 | ) | (124,477 | ) | ||||||||
Total Income Before Income Taxes | $ | 118,508 | $ | 93,672 | $ | 318,023 | $ | 251,921 | ||||||||
Three months ended | Nine months ended | |||||||||||||||
NET INCOME: | September 30, | September 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Regulated Operating Subsidiaries | $ | 93,015 | $ | 82,291 | $ | 269,865 | $ | 234,168 | ||||||||
ITC Holdings and other | 73,873 | 58,984 | 197,345 | 156,569 | ||||||||||||
Intercompany eliminations | (93,015 | ) | (82,291 | ) | (269,865 | ) | (234,168 | ) | ||||||||
Total Net Income | $ | 73,873 | $ | 58,984 | $ | 197,345 | $ | 156,569 | ||||||||
TOTAL ASSETS: | September 30, | December 31, | ||||||||||||||
(in thousands) | 2014 | 2013 | ||||||||||||||
Regulated Operating Subsidiaries | $ | 6,715,197 | $ | 6,174,888 | ||||||||||||
ITC Holdings and other | 3,850,785 | 3,619,759 | ||||||||||||||
Reconciliations / Intercompany eliminations (a) | (3,758,618 | ) | (3,512,404 | ) | ||||||||||||
Total Assets | $ | 6,807,364 | $ | 6,282,243 | ||||||||||||
____________________________ | ||||||||||||||||
(a) | Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our Regulated Operating Subsidiaries as compared to the classification in our condensed consolidated statements of financial position. |
GENERAL_Details
GENERAL (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Supplementary cash flows information: | ' | ' | ' | ' | ||
Interest paid (net of interest capitalized) | ' | ' | $154,410 | $135,058 | ||
Income taxes paid — net | ' | ' | 25,744 | 11,593 | ||
Supplementary non-cash investing and financing activities: | ' | ' | ' | ' | ||
Additions to property, plant and equipment | ' | ' | 92,557 | [1] | 74,694 | [1] |
Allowance for equity funds used during construction | $4,921 | $8,290 | $14,865 | $25,315 | ||
[1] | Amounts consist of current liabilities for construction labor and materials that have not been included in investing activities. These amounts have not been paid for as of September 30, 2014 or 2013, respectively, but have been or will be included as a cash outflow from investing activities for expenditures for property, plant and equipment when paid. |
REGULATORY_MATTERS_Net_Changes
REGULATORY MATTERS Net Changes in Regulatory Assets and Liabilities (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Revenue Accruals and Deferrals | ' |
Beginning balance | ($60,196) |
Net refund of 2012 revenue deferrals and accruals, including accrued interest | 20,445 |
Net revenue deferral for the nine months ended September 30, 2014 | -47,843 |
Net accrued interest payable for the nine months ended September 30, 2014 | -1,777 |
Ending balance | ($89,371) |
REGULATORY_MATTERS_Schedule_of
REGULATORY MATTERS Schedule of Regulatory Assets and Liabilities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Revenue Accruals and Deferrals | ' | ' |
Current assets | $5,623 | $6,334 |
Non-current assets — other | 5,747 | ' |
Current liabilities | -38,156 | -33,120 |
Non-current liabilities | -62,585 | -36,447 |
Ending balance | ($89,371) | ($60,196) |
REGULATORY_MATTERS_Additional_
REGULATORY MATTERS Additional Information (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Regulatory Assets | ' |
Transmission rate, applicable period | '1 year |
Revenue true-up amount reflected in customer bill, period of recognition | '2 years |
ITC Great Plains | Start-up, Development and Pre-construction Expenses, Including Associated Carrying Charges | ' |
Regulatory Assets | ' |
Regulatory assets | 14 |
Amortization period (in years) | '10 |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Goodwill and Intangible Assets | ' | ' | ' | ' | ' |
Goodwill | $950,163,000 | ' | $950,163,000 | ' | $950,163,000 |
Intangible assets | 49,198,000 | ' | 49,198,000 | ' | 49,328,000 |
Accumulated amortization | 24,088,000 | ' | 24,088,000 | ' | 21,616,000 |
Amortization expense | 900,000 | 800,000 | 2,500,000 | 2,400,000 | ' |
Expected amortization expense, year one | 3,300,000 | ' | 3,300,000 | ' | ' |
Expected amortization expense, year two | 3,300,000 | ' | 3,300,000 | ' | ' |
Expected amortization expense, year three | 3,300,000 | ' | 3,300,000 | ' | ' |
Expected amortization expense, year four | 3,300,000 | ' | 3,300,000 | ' | ' |
Expected amortization expense, year five | 3,300,000 | ' | 3,300,000 | ' | ' |
ITCTransmission | ' | ' | ' | ' | ' |
Goodwill and Intangible Assets | ' | ' | ' | ' | ' |
Goodwill | 173,400,000 | ' | 173,400,000 | ' | 173,400,000 |
METC | ' | ' | ' | ' | ' |
Goodwill and Intangible Assets | ' | ' | ' | ' | ' |
Goodwill | 453,800,000 | ' | 453,800,000 | ' | 453,800,000 |
Intangible assets | 35,000,000 | ' | 35,000,000 | ' | 37,200,000 |
Accumulated amortization | 23,400,000 | ' | 23,400,000 | ' | 21,200,000 |
ITC Midwest | ' | ' | ' | ' | ' |
Goodwill and Intangible Assets | ' | ' | ' | ' | ' |
Goodwill | 323,000,000 | ' | 323,000,000 | ' | 323,000,000 |
ITC Great Plains | ' | ' | ' | ' | ' |
Goodwill and Intangible Assets | ' | ' | ' | ' | ' |
Intangible assets | 14,200,000 | ' | 14,200,000 | ' | 12,100,000 |
Accumulated amortization | $600,000 | ' | $600,000 | ' | $400,000 |
DEBT_Interest_Rate_Swap_Agreem
DEBT Interest Rate Swap Agreements (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Aug. 18, 2014 | 31-May-14 | Sep. 30, 2014 | Oct. 08, 2014 | Sep. 30, 2014 |
Interest Rate Swap | Interest Rate Swap | Interest Rate Swap | Interest Rate Swap | Interest Rate Swap | ITC Holdings | |||
Subsequent Event | Senior Notes, Due September 30, 2016 | |||||||
Unsecured Debt | ||||||||
Derivative [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Term of contract | ' | ' | ' | '10 years | '10 years | ' | '10 years | ' |
Notional amount | ' | ' | ' | $25,000,000 | $150,000,000 | ' | $25,000,000 | ' |
Long-term debt | 3,379,600,000 | 3,100,900,000 | ' | ' | ' | ' | ' | 139,400,000 |
Fixed interest rate | ' | ' | ' | 3.22% | ' | ' | 3.08% | ' |
Ineffectiveness recorded in the condensed consolidated statement of operations | ' | ' | 0 | ' | ' | ' | ' | ' |
Interest rate swap | ' | ' | 100,000 | ' | ' | 100,000 | ' | ' |
Weighted average fixed rate | ' | ' | ' | ' | 2.65% | ' | ' | ' |
Comparable reference rate | ' | ' | ' | ' | 2.53% | ' | ' | ' |
Loss on derivative | ' | ' | ' | ' | ' | $1,600,000 | ' | ' |
DEBT_Schedule_of_Revolving_Cre
DEBT Schedule of Revolving Credit Agreements (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | ||
Line of Credit Facility | ' | |
Total available capacity | $1,000,000,000 | |
Outstanding balance | 349,500,000 | [1] |
Unused capacity | 650,500,000 | |
ITC Holdings | ' | |
Line of Credit Facility | ' | |
Total available capacity | 400,000,000 | |
Outstanding balance | 45,000,000 | [1] |
Unused capacity | 355,000,000 | |
Weighted average interest rate | 1.40% | [2] |
Commitment fee rate | 0.18% | [3] |
Interest rate description | 'Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |
ITCTransmission | ' | |
Line of Credit Facility | ' | |
Total available capacity | 100,000,000 | |
Outstanding balance | 2,400,000 | [1] |
Unused capacity | 97,600,000 | |
Weighted average interest rate | 1.10% | [4] |
Commitment fee rate | 0.10% | [3] |
Interest rate description | 'Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
METC | ' | |
Line of Credit Facility | ' | |
Total available capacity | 100,000,000 | |
Outstanding balance | 41,300,000 | [1] |
Unused capacity | 58,700,000 | |
Weighted average interest rate | 1.10% | [4] |
Commitment fee rate | 0.10% | [3] |
Interest rate description | 'Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
ITC Midwest | ' | |
Line of Credit Facility | ' | |
Total available capacity | 250,000,000 | |
Outstanding balance | 162,400,000 | [1] |
Unused capacity | 87,600,000 | |
Weighted average interest rate | 1.20% | [4] |
Commitment fee rate | 0.10% | [3] |
Interest rate description | 'Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
ITC Great Plains | ' | |
Line of Credit Facility | ' | |
Total available capacity | 150,000,000 | |
Outstanding balance | 98,400,000 | [1] |
Unused capacity | $51,600,000 | |
Weighted average interest rate | 1.20% | [5] |
Commitment fee rate | 0.13% | [3] |
Interest rate description | 'Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.125% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.125%, subject to adjustments based on ITC Great Plains' credit rating. | |
[1] | Included within long-term debt. | |
[2] | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |
[3] | Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. | |
[4] | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
[5] | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.125% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.125%, subject to adjustments based on ITC Great Plains' credit rating. |
DEBT_Additional_Information_De
DEBT Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 20, 2013 | 30-May-14 | 30-May-14 | Jun. 04, 2014 | Sep. 30, 2014 | Jun. 10, 2014 | Jun. 10, 2014 | Aug. 22, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jan. 31, 2014 | Sep. 30, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | |||||
ITC Holdings | ITC Holdings | ITC Holdings | ITC Holdings | ITC Holdings | ITC Holdings | ITC Holdings | ITC Holdings | ITCTransmission | ITCTransmission | ITCTransmission | ITCTransmission | METC | METC | METC | ITC Great Plains | ITC Great Plains | ITC Great Plains | |||||||||
Term Loan Credit Agreement, Due September 30, 2016 | Term Loan Credit Agreement, Due September 30, 2016 | Term Loan Credit Agreement, Due September 30, 2016 | Term Loan Credit Agreement, Due September 30, 2016 | Senior Notes, Due September 30, 2016 | Senior Notes, Due September 30, 2036 | Senior Notes, Due June 15, 2024 | First Mortgage Bonds, Series F, Due June 10, 2044 | First Mortgage Bonds, Series F, Due June 10, 2044 | First Mortgage Bonds, Series F, Due June 10, 2044 | Term Loan Credit Agreement, Due February 2, 2015 | Term Loan Credit Agreement, Due February 2, 2015 | First Mortgage Bonds, Series A, Due November 26, 2044 | First Mortgage Bonds, Series A, Due November 26, 2044 | |||||||||||||
Unsecured Debt | Unsecured Debt | Unsecured Debt | Unsecured Debt | Unsecured Debt | Unsecured Debt | Unsecured Debt | Secured Debt | Secured Debt | Secured Debt | Unsecured Debt | Unsecured Debt | Expectation | Secured Debt | |||||||||||||
Tranche One | Tranche Two | Subsequent Event | ||||||||||||||||||||||||
Debt Instrument | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Other long-term debt | ' | ' | ' | ' | ' | $161,000,000 | $200,000,000 | $140,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $50,000,000 | ' | ' | ' | ' | ||||
Weighted average interest rate | ' | ' | ' | ' | 1.40% | [1] | 1.30% | ' | ' | ' | ' | ' | ' | 1.10% | [2] | ' | ' | ' | 1.10% | [2] | 1.20% | ' | 1.20% | [3] | ' | ' |
Principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | 255,000,000 | 255,000,000 | 400,000,000 | ' | 100,000,000 | 75,000,000 | 25,000,000 | ' | ' | ' | ' | ' | 150,000,000 | ||||
Amount of validly tendered debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | 115,600,000 | 54,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.65% | ' | 4.27% | ' | ' | ' | ' | ' | ' | ' | 4.16% | ||||
Loss on extinguishment of debt | 0 | 0 | 29,074,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Other long-term debt, maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ||||
Repayment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $100,000,000 | ' | ||||
[1] | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |||||||||||||||||||||||||
[2] | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |||||||||||||||||||||||||
[3] | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.125% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, plus an applicable margin of 0.125%, subject to adjustments based on ITC Great Plains' credit rating. |
STOCKHOLDERS_EQUITY_Changes_in
STOCKHOLDERS' EQUITY Changes in Stockholders' Equity (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Beginning balance, shares | ' | ' | 157,500,795 | ' | ' |
Beginning balance | ' | ' | $1,613,732 | ' | ' |
NET INCOME | 73,873 | 58,984 | 197,345 | 156,569 | ' |
Stock option exercises, shares | ' | ' | 977,491 | ' | 499,014 |
Other comprehensive income (loss), net of tax | 83 | 197 | -389 | 24,555 | ' |
Ending balance, shares | 155,731,299 | ' | 155,731,299 | ' | 157,500,795 |
Ending balance | 1,616,948 | ' | 1,616,948 | ' | 1,613,732 |
Parenthetical Disclosures | ' | ' | ' | ' | ' |
Dividends declared per common share | $0.16 | $0.14 | $0.45 | $0.39 | ' |
Common Stock | ' | ' | ' | ' | ' |
Beginning balance, shares | ' | ' | 157,500,795 | 156,745,542 | 156,745,542 |
Beginning balance | ' | ' | 1,014,435 | 989,334 | 989,334 |
Repurchase and retirement of common stock, shares | ' | ' | -3,018,225 | -151,164 | ' |
Repurchase and retirement of common stock | ' | ' | -108,136 | -4,508 | ' |
Stock option exercises, shares | ' | ' | 977,491 | 430,542 | ' |
Stock option exercises | ' | ' | 18,095 | 6,860 | ' |
Shares issued under the Employee Stock Purchase Plan, shares | ' | ' | 53,056 | 57,072 | ' |
Shares issued under the Employee Stock Purchase Plan | ' | ' | 1,571 | 1,353 | ' |
Issuance of restricted stock, shares | ' | ' | 305,718 | 365,433 | ' |
Forfeiture of restricted stock, shares | ' | ' | -87,536 | -33,363 | ' |
Share-based compensation, net of forfeitures | ' | ' | 11,009 | 10,670 | ' |
Forward contract of accelerated share repurchase program | ' | ' | -46,000 | ' | ' |
Ending balance, shares | 155,731,299 | 157,414,062 | 155,731,299 | 157,414,062 | ' |
Ending balance | 890,974 | 1,003,709 | 890,974 | 1,003,709 | ' |
Retained Earnings | ' | ' | ' | ' | ' |
Beginning balance | ' | ' | 592,970 | 443,569 | 443,569 |
NET INCOME | ' | ' | 197,345 | 156,569 | ' |
Dividends declared on common stock | ' | ' | -70,279 | -61,821 | ' |
Ending balance | 720,036 | 538,317 | 720,036 | 538,317 | ' |
Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' | ' |
Beginning balance | ' | ' | 6,327 | -18,048 | -18,048 |
Other comprehensive income (loss), net of tax | ' | ' | -389 | 24,555 | ' |
Ending balance | 5,938 | 6,507 | 5,938 | 6,507 | ' |
Total Stockholders' Equity | ' | ' | ' | ' | ' |
Beginning balance | ' | ' | 1,613,732 | 1,414,855 | 1,414,855 |
NET INCOME | ' | ' | 197,345 | 156,569 | ' |
Repurchase and retirement of common stock | ' | ' | -108,136 | -4,508 | ' |
Dividends declared on common stock | ' | ' | -70,279 | -61,821 | ' |
Stock option exercises | ' | ' | 18,095 | 6,860 | ' |
Shares issued under the Employee Stock Purchase Plan | ' | ' | 1,571 | 1,353 | ' |
Share-based compensation, net of forfeitures | ' | ' | 11,009 | 10,670 | ' |
Forward contract of accelerated share repurchase program | ' | ' | -46,000 | ' | ' |
Other comprehensive income (loss), net of tax | ' | ' | -389 | 24,555 | ' |
Ending balance | $1,616,948 | $1,548,533 | $1,616,948 | $1,548,533 | ' |
STOCKHOLDERS_EQUITY_Changes_in1
STOCKHOLDERS' EQUITY Changes in Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Equity [Abstract] | ' | ' | ' | ' |
Balance at the beginning of period | $5,855 | $6,310 | $6,327 | ($18,048) |
Derivative instruments | ' | ' | ' | ' |
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense — net (net of tax of $88 and $71 for the three months ended September 30, 2014 and 2013, respectively, and net of tax of $243 and $90 for the nine months ended September 30, 2014 and 2013, respectively) | 122 | 110 | 340 | 139 |
Reclassification of loss relating to interest rate cash flow hedges from AOCI to loss on extinguishment of debt (net of tax of $83 for the nine months ended September 30, 2014) | 0 | 0 | 117 | 0 |
Gain (loss) on interest rate swaps relating to interest rate cash flow hedges (net of tax of $34 for the three months ended September 30, 2014 and $621 and $15,652 for the nine months ended September 30, 2014 and 2013, respectively) | 47 | 0 | -870 | 24,329 |
Derivative instruments, net of tax | 169 | 110 | -413 | 24,468 |
Available-for-sale securities | ' | ' | ' | ' |
Unrealized net gain on available-for-sale securities (net of tax of $63 and $16 for the three and nine months ended September 30, 2014, respectively, and $56 for the three and nine months ended September 30, 2013) | -86 | 87 | 24 | 87 |
Available-for-sale securities, net of tax | -86 | 87 | 24 | 87 |
Total other comprehensive income (loss), net of tax | 83 | 197 | -389 | 24,555 |
Balance at the end of period | 5,938 | 6,507 | 5,938 | 6,507 |
Parenthetical Disclosures | ' | ' | ' | ' |
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense, tax | 88 | 71 | 243 | 90 |
Reclassification of loss relating to interest rate cash flow hedges from AOCI to loss on extinguishment of debt, tax | ' | ' | 83 | ' |
Gain (loss) on interest rate swaps relating to interest rate cash flow hedges, tax | 34 | ' | 621 | 15,652 |
Unrealized net gain on available-for-sale securities, tax | $63 | $56 | $16 | $56 |
STOCKHOLDERS_EQUITY_Additional
STOCKHOLDERS' EQUITY Additional Information (Details) (USD $) | 0 Months Ended | |||||||
Jun. 19, 2014 | Sep. 30, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Dec. 31, 2013 | Jul. 27, 2014 | Jul. 27, 2011 | Dec. 31, 2013 | |
Sales Agency Financing Agreement | Sales Agency Financing Agreement | Reported | ||||||
Stock Issuance Arrangements | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | ' | 300,000,000 | ' | 300,000,000 | 300,000,000 | ' | ' | ' |
Common stock, shares outstanding | ' | 155,731,299 | ' | ' | 157,500,795 | ' | ' | 52,500,000 |
Accelerated share repurchase agreement, maximum amount | $150,000,000 | ' | ' | ' | ' | ' | ' | ' |
Accelerated share repurchase agreement, minimum amount | 130,000,000 | ' | ' | ' | ' | ' | ' | ' |
Share repurchase program, authorized amount | ' | ' | 250,000,000 | ' | ' | ' | ' | ' |
Accelerated share repurchase agreement, cash payment | 150,000,000 | ' | ' | ' | ' | ' | ' | ' |
Accelerated share repurchase agreement, initial share delivery and retirement | 2,900,000 | ' | ' | ' | ' | ' | ' | ' |
Accelerated share repurchase agreement, fair market value of initial delivery | 104,000,000 | ' | ' | ' | ' | ' | ' | ' |
Accelerated share repurchase agreement, share price of initial share delivery | $35.80 | ' | ' | ' | ' | ' | ' | ' |
Settlements under ASR program | ' | 0 | ' | ' | ' | ' | ' | ' |
Accelerated share repurchase agreement, unsettled amount | 46,000,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value | ' | $0 | ' | ' | $0 | ' | $0 | ' |
Common stock, issuable aggregate value | ' | ' | ' | ' | ' | ' | $250,000,000 | ' |
Shares issued | ' | 155,731,299 | ' | ' | 157,500,795 | 0 | ' | ' |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 0 Months Ended | 9 Months Ended | 12 Months Ended |
20-May-14 | Sep. 30, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' |
Granted options | 652,900 | ' | ' |
Granted options, exercised price | $36.73 | ' | ' |
Exercised options | ' | 977,491 | 499,014 |
Stock Options | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' |
Vesting rights | 'three equal annual installments | ' | ' |
Restricted Stock | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' |
Vesting rights | 'three years after the grant date | ' | ' |
Granted restricted stock | 259,014 | ' | ' |
Granted restricted stock, fair value | $36.73 | ' | ' |
EARNINGS_PER_SHARE_Schedule_of
EARNINGS PER SHARE Schedule of Basic and Diluted Earnings Per Common Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Numerator: | ' | ' | ' | ' | ||||
NET INCOME | $73,873 | $58,984 | $197,345 | $156,569 | ||||
Dividends declared and paid | 25,296 | 22,299 | 70,279 | 61,820 | ||||
Undistributed earnings | 48,577 | 36,685 | 127,066 | 94,749 | ||||
Percentage allocated to common shares | 99.20% | [1] | 99.10% | [1] | 99.20% | [1] | 99.00% | [1] |
Numerator for basic and diluted earnings per common share | 73,288 | 58,453 | 195,757 | 155,042 | ||||
Denominator: | ' | ' | ' | ' | ||||
Basic earnings per common share — weighted average common shares outstanding | 154,386,994 | 155,958,879 | 155,661,516 | 155,627,361 | ||||
Incremental shares for stock options and employee stock purchase plan — weighted average assumed conversion | 1,364,896 | 1,307,394 | 1,470,041 | 1,251,432 | ||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 155,751,890 | 157,266,273 | 157,131,557 | 156,878,793 | ||||
Per common share net income: | ' | ' | ' | ' | ||||
Basic | $0.47 | $0.37 | $1.26 | $1 | ||||
Diluted | $0.47 | $0.37 | $1.25 | $0.99 | ||||
Percentage allocated to common shares: | ' | ' | ' | ' | ||||
Weighted average restricted shares (participating securities) | 1,230,250 | 1,428,531 | 1,295,812 | 1,498,719 | ||||
Denominator for Percentage Allocated to Common Shares - Total Weighted-Average Shares Outstanding | 155,617,244 | 157,387,410 | 156,957,328 | 157,126,080 | ||||
Common Stock | ' | ' | ' | ' | ||||
Numerator: | ' | ' | ' | ' | ||||
Dividends declared and paid | 25,100 | 22,098 | 69,708 | 61,240 | ||||
Undistributed earnings | $48,188 | $36,355 | $126,049 | $93,802 | ||||
[1] | Weighted average common shares outstanding154,386,994Â 155,958,879Â 155,661,516Â 155,627,361Weighted average restricted shares (participating securities)1,230,250Â 1,428,531Â 1,295,812Â 1,498,719Â Total155,617,244Â 157,387,410Â 156,957,328Â 157,126,080Â Percentage allocated to common shares99.2%Â 99.1%Â 99.2%Â 99.0% |
EARNINGS_PER_SHARE_Stock_Split
EARNINGS PER SHARE Stock Split (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Earnings Per Share, Basic and Diluted, by Common Class | ' | ' | ' | ' | ||||
Numerator for basic and diluted earnings per common share | $73,288 | $58,453 | $195,757 | $155,042 | ||||
Denominator: | ' | ' | ' | ' | ||||
Basic earnings per common share — weighted average common shares | 154,386,994 | 155,958,879 | 155,661,516 | 155,627,361 | ||||
Incremental shares for stock options and employee stock purchase plan | 1,364,896 | 1,307,394 | 1,470,041 | 1,251,432 | ||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 155,751,890 | 157,266,273 | 157,131,557 | 156,878,793 | ||||
Per common share net income: | ' | ' | ' | ' | ||||
Basic | $0.47 | $0.37 | $1.26 | $1 | ||||
Diluted | $0.47 | $0.37 | $1.25 | $0.99 | ||||
Percentage allocated to common shares: | ' | ' | ' | ' | ||||
Weighted average restricted shares (participating securities) | 1,230,250 | 1,428,531 | 1,295,812 | 1,498,719 | ||||
Denominator for percentage allocated to common shares - total weighted-average shares outstanding | 155,617,244 | 157,387,410 | 156,957,328 | 157,126,080 | ||||
Percentage allocated to common shares | 99.20% | [1] | 99.10% | [1] | 99.20% | [1] | 99.00% | [1] |
Outstanding stock options and ESPP shares | 4,637,551 | 5,238,300 | 4,637,551 | 5,238,300 | ||||
Anti-dilutive stock options and ESPP shares | 642,507 | 916,902 | 642,507 | 916,902 | ||||
Reported | ' | ' | ' | ' | ||||
Earnings Per Share, Basic and Diluted, by Common Class | ' | ' | ' | ' | ||||
Numerator for basic and diluted earnings per common share | ' | 58,453 | ' | 155,042 | ||||
Denominator: | ' | ' | ' | ' | ||||
Basic earnings per common share — weighted average common shares | ' | 51,986,293 | ' | 51,875,787 | ||||
Incremental shares for stock options and employee stock purchase plan | ' | 435,798 | ' | 417,144 | ||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | ' | 52,422,091 | ' | 52,292,931 | ||||
Per common share net income: | ' | ' | ' | ' | ||||
Basic | ' | $1.12 | ' | $2.99 | ||||
Diluted | ' | $1.12 | ' | $2.96 | ||||
Percentage allocated to common shares: | ' | ' | ' | ' | ||||
Weighted average restricted shares (participating securities) | ' | 476,177 | ' | 499,573 | ||||
Denominator for percentage allocated to common shares - total weighted-average shares outstanding | ' | 52,462,470 | ' | 52,375,360 | ||||
Percentage allocated to common shares | ' | 99.10% | ' | 99.00% | ||||
Outstanding stock options and ESPP shares | ' | 1,746,100 | ' | 1,746,100 | ||||
Anti-dilutive stock options and ESPP shares | ' | 305,634 | ' | 305,634 | ||||
Adjustment | ' | ' | ' | ' | ||||
Earnings Per Share, Basic and Diluted, by Common Class | ' | ' | ' | ' | ||||
Numerator for basic and diluted earnings per common share | ' | $0 | ' | $0 | ||||
Denominator: | ' | ' | ' | ' | ||||
Basic earnings per common share — weighted average common shares | ' | 103,972,586 | ' | 103,751,574 | ||||
Incremental shares for stock options and employee stock purchase plan | ' | 871,596 | ' | 834,288 | ||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | ' | 104,844,182 | ' | 104,585,862 | ||||
Per common share net income: | ' | ' | ' | ' | ||||
Basic | ' | ($0.75) | ' | ($1.99) | ||||
Diluted | ' | ($0.75) | ' | ($1.97) | ||||
Percentage allocated to common shares: | ' | ' | ' | ' | ||||
Weighted average restricted shares (participating securities) | ' | 952,354 | ' | 999,146 | ||||
Denominator for percentage allocated to common shares - total weighted-average shares outstanding | ' | 104,924,940 | ' | 104,750,720 | ||||
Percentage allocated to common shares | ' | 0.00% | ' | 0.00% | ||||
Outstanding stock options and ESPP shares | ' | 3,492,200 | ' | 3,492,200 | ||||
Anti-dilutive stock options and ESPP shares | ' | 611,268 | ' | 611,268 | ||||
[1] | Weighted average common shares outstanding154,386,994Â 155,958,879Â 155,661,516Â 155,627,361Weighted average restricted shares (participating securities)1,230,250Â 1,428,531Â 1,295,812Â 1,498,719Â Total155,617,244Â 157,387,410Â 156,957,328Â 157,126,080Â Percentage allocated to common shares99.2%Â 99.1%Â 99.2%Â 99.0% |
EARNINGS_PER_SHARE_Additional_
EARNINGS PER SHARE Additional Information (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Jun. 19, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share, Basic and Diluted [Abstract] | ' | ' | ' | ' | ' |
Outstanding stock options and ESPP shares | ' | 4,637,551 | 5,238,300 | 4,637,551 | 5,238,300 |
Anti-dilutive stock options and ESPP shares | ' | 642,507 | 916,902 | 642,507 | 916,902 |
Accelerated share repurchase agreement, initial share delivery and retirement | 2,900,000 | ' | ' | ' | ' |
Accelerated share repurchase agreement, unsettled amount | $46 | ' | ' | ' | ' |
RETIREMENT_BENEFITS_AND_ASSETS2
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Schedule of Net Defined Benefit Cost Components (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Defined Benefit Plans | ' | ' | ' | ' |
Defined Benefit Plan Disclosure | ' | ' | ' | ' |
Service cost | $1,267 | $1,315 | $3,800 | $3,946 |
Interest cost | 901 | 698 | 2,703 | 2,094 |
Expected return on plan assets | -885 | -717 | -2,655 | -2,151 |
Amortization of prior service credit | -11 | -10 | -32 | -31 |
Amortization of unrecognized loss | 386 | 679 | 1,158 | 2,036 |
Net cost | 1,658 | 1,965 | 4,974 | 5,894 |
Other Postretirement Benefits Plan | ' | ' | ' | ' |
Defined Benefit Plan Disclosure | ' | ' | ' | ' |
Service cost | 1,462 | 1,443 | 4,385 | 4,330 |
Interest cost | 498 | 390 | 1,494 | 1,171 |
Expected return on plan assets | -341 | -353 | -1,022 | -1,061 |
Amortization of unrecognized loss | 0 | 55 | 0 | 165 |
Net cost | $1,619 | $1,535 | $4,857 | $4,605 |
RETIREMENT_BENEFITS_AND_ASSETS3
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||||
In Millions, unless otherwise specified | Jun. 30, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Retirement Plan | Retirement Plan | Supplemental Retirement Benefit Plans | Supplemental Retirement Benefit Plans | Other Postretirement Benefits Plan | Other Postretirement Benefits Plan | Defined Contribution Plan | Defined Contribution Plan | Defined Contribution Plan | Defined Contribution Plan | |
Expectation | Expectation | Expectation | ||||||||
Retirement Benefits Disclosure | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Employer contributions | $3.80 | ' | $5.10 | ' | $1.20 | ' | ' | ' | ' | ' |
Expected additional current year contribution | ' | 0 | ' | 0 | ' | 5 | ' | ' | ' | ' |
Plan cost | ' | ' | ' | ' | ' | ' | $0.90 | $0.70 | $3 | $3.10 |
FAIR_VALUE_MEASUREMENTS_Assets
FAIR VALUE MEASUREMENTS Assets Measured at Fair Value Subject to Three-Tier Hierarchy (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Fair value, level transfers | $0 | $0 |
Recurring Basis | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Total | 40,162,000 | 40,834,000 |
Recurring Basis | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash Equivalents | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Cash and cash equivalents | 12,898,000 | 19,000,000 |
Recurring Basis | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed Income Securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Mutual funds | 26,629,000 | 21,318,000 |
Recurring Basis | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity Securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Mutual funds | 635,000 | 516,000 |
Recurring Basis | Fair Value, Inputs, Level 2 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Total | 81,000 | ' |
Recurring Basis | Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Interest rate swap | $81,000 | ' |
FAIR_VALUE_MEASUREMENTS_Additi
FAIR VALUE MEASUREMENTS Additional Information (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value Disclosures [Abstract] | ' | ' |
Fair value of long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements | $3,688.30 | $3,299 |
Book value of long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements | 3,379.60 | 3,100.90 |
Book value of revolving credit agreements and term loan credit agreements | $660.50 | $511.20 |
COMMITMENTS_AND_CONTINGENT_LIA1
COMMITMENTS AND CONTINGENT LIABILITIES (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
ITCTransmission | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Rate of return on equity | 12.38% | ' |
ITCTransmission | Rate of Return on Equity and Capital Structure Complaint | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Reduced rate of return on equity | 9.15% | ' |
Complaint capital structure, equity percentage | 50.00% | ' |
FERC approved capital structure, equity percentage | 60.00% | ' |
ITCTransmission | Sales and Use Tax Audit | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Potential liability | $20,400,000 | ' |
Recorded contingent liability | 0 | ' |
ITCTransmission | Sales and Use Tax Audit | Audit Period | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Potential liability | 3,900,000 | ' |
METC | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Rate of return on equity | 12.38% | ' |
METC | Rate of Return on Equity and Capital Structure Complaint | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Reduced rate of return on equity | 9.15% | ' |
Complaint capital structure, equity percentage | 50.00% | ' |
FERC approved capital structure, equity percentage | 60.00% | ' |
METC | Sales and Use Tax Audit | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Potential liability | 10,500,000 | ' |
Recorded contingent liability | 0 | ' |
MISO Operating Subsidiaries | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Equity in capital structure for ratemaking purposes | 2,600,000,000 | ' |
Effect on net income from 10 basis point reduction in the authorized base return on equity | 2,600,000 | ' |
MISO Operating Subsidiaries | FERC Audit Refund and Related Interest | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Aggregate regulatory liability | $3,300,000 | $13,100,000 |
ITC Midwest | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Rate of return on equity | 12.38% | ' |
Reduced rate of return on equity | 10.39% | ' |
ITC Midwest | Rate of Return on Equity and Capital Structure Complaint | ' | ' |
Commitments and Contingent Liabilities | ' | ' |
Reduced rate of return on equity | 9.15% | ' |
Complaint capital structure, equity percentage | 50.00% | ' |
FERC approved capital structure, equity percentage | 60.00% | ' |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |||
OPERATING REVENUES: | ' | ' | ' | ' | ' | |||
Operating revenues | $270,134 | $238,782 | $791,951 | $685,903 | ' | |||
INCOME BEFORE INCOME TAXES: | ' | ' | ' | ' | ' | |||
Income before income taxes | 118,508 | 93,672 | 318,023 | 251,921 | ' | |||
NET INCOME: | ' | ' | ' | ' | ' | |||
NET INCOME | 73,873 | 58,984 | 197,345 | 156,569 | ' | |||
TOTAL ASSETS: | ' | ' | ' | ' | ' | |||
Assets | 6,807,364 | ' | 6,807,364 | ' | 6,282,243 | |||
Regulated Operating Subsidiaries | ' | ' | ' | ' | ' | |||
OPERATING REVENUES: | ' | ' | ' | ' | ' | |||
Operating revenues | 270,062 | 238,857 | 792,058 | 686,128 | ' | |||
INCOME BEFORE INCOME TAXES: | ' | ' | ' | ' | ' | |||
Income before income taxes | 151,758 | 131,939 | 440,537 | 376,398 | ' | |||
NET INCOME: | ' | ' | ' | ' | ' | |||
NET INCOME | 93,015 | 82,291 | 269,865 | 234,168 | ' | |||
TOTAL ASSETS: | ' | ' | ' | ' | ' | |||
Assets | 6,715,197 | ' | 6,715,197 | ' | 6,174,888 | |||
ITC Holdings and other | ' | ' | ' | ' | ' | |||
OPERATING REVENUES: | ' | ' | ' | ' | ' | |||
Operating revenues | 254 | 152 | 438 | 455 | ' | |||
INCOME BEFORE INCOME TAXES: | ' | ' | ' | ' | ' | |||
Income before income taxes | 33,250 | 38,267 | 122,514 | 124,477 | ' | |||
NET INCOME: | ' | ' | ' | ' | ' | |||
NET INCOME | 73,873 | 58,984 | 197,345 | 156,569 | ' | |||
TOTAL ASSETS: | ' | ' | ' | ' | ' | |||
Assets | 3,850,785 | ' | 3,850,785 | ' | 3,619,759 | |||
Intercompany eliminations | ' | ' | ' | ' | ' | |||
OPERATING REVENUES: | ' | ' | ' | ' | ' | |||
Operating revenues | 182 | 227 | 545 | 680 | ' | |||
NET INCOME: | ' | ' | ' | ' | ' | |||
NET INCOME | 93,015 | 82,291 | 269,865 | 234,168 | ' | |||
Reconciliations / Intercompany Eliminations | ' | ' | ' | ' | ' | |||
TOTAL ASSETS: | ' | ' | ' | ' | ' | |||
Assets | $3,758,618 | [1] | ' | $3,758,618 | [1] | ' | $3,512,404 | [1] |
[1] | Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our Regulated Operating Subsidiaries as compared to the classification in our condensed consolidated statements of financial position. |