Integrys Energy Group Inc. (TEG) reported adjusted earnings of 89 cents per share, declining 11% from the year-ago earnings of $1.00 per share. The earnings trailed the Zacks Consensus Estimate by 5.3%.

The decrease in earnings was due to lackluster performance from Integrys Energy Service business and rate case effects related to the company’s subsidiary, Wisconsin Public Service Corporation.

GAAP earnings were 86 cents in the reported quarter compared with 49 cents in the fourth quarter 2011. The difference between GAAP and pro forma earnings of 3 cents was due to a non-cash loss associated with derivative and inventory accounting activities.

In 2012, Integrys Energy’s adjusted earnings were $3.26 per share versus $3.34 per share in 2011. Earnings marginally fell short of the Zacks Consensus Estimate of $3.29 per share.

The company also reported yearly GAAP earnings of $3.55 per share, higher than the year-ago figure of $2.87 per share.

Total Revenue

Integrys Energy’s quarterly revenue was $1,197.2 million, up 6.2% from $1,127.3 million in the prior-year quarter. Revenue also beat the Zacks Consensus Estimate by 14%.

Utility segment revenue was $842.6 million in the reported quarter, falling 2% from $858.8 million in the year-ago period. This was on account of unfavorable returns from the wholesale as well as retail electric utility businesses owing to mild weather conditions, partially offset by positive rate changes in the natural gas business.

In 2012, the company’s top line plummeted 10.1% to $4,212.4 million from $4,685.9 million in the prior year. The 2012 top line also fell behind the Zacks Consensus Estimate by 13%.

Operating Highlights

In the reported quarter, Integrys Energy’s fuel, natural gas and power costs dropped 5.6% to $399.9 million from $423.7 million in year-ago quarter. Operating and maintenance costs, however, increased 6.7% year over year to $282.7 million in fourth quarter 2012. Total cost for the quarter was $1,078.4 million compared with $1,065.9 million in the year-ago quarter.

Operating income increased 93.5% to $118.8 million from $61.4 million in the year-ago quarter. The minimal cost increase offset by greater revenue upsurge led to higher profit.

Interest expense for the quarter remained flat at $30.2 million from the comparable year-ago period.

Financial Update

Cash and cash equivalents of Integrys Energy as of Dec 31, 2012 were $27.4 million, down from $28.1 million as of Dec 31, 2011. Long-term debt rose to $1,931.7 million from $1,845.0 million as of Dec 31, 2011.

Net cash generated from operating activities at the end of 2012 was $569.0 million versus $717.8 million in the corresponding period last year. Capital expenditure for the twelve-month period totaled $594.3 million, compared with $310.1 million in the year-ago period.