##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number:
    001-32576
      ITC HOLDINGS CORP.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Michigan

32-0058047(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)   39500 Orchard Hill Place, Suite 200
 Novi, Michigan 48375
 (Address Of Principal Executive
    Offices, Including Zip Code)
 (248) 374-7100
 (Registrants Telephone
    Number, Including Area Code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, without par value


New York Stock Exchange  Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer
    þ

Accelerated filer
    o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





ITC Holdings
    Corp.
  Form 10-K
    for the Fiscal Year Ended December 31, 2007
  INDEX
  PagePart I


3Item 1.

Business


3Item 1A.

Risk Factors


13Item 1B.

Unresolved Staff Comments


25Item 2.

Properties


25Item 3.

Legal Proceedings


26Item 4.

Submission of Matters to a Vote of Security
    Holders


26Part II


26Item 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


26Item 6.

Selected Financial Data


28Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


56Item 8.

Financial Statements and Supplementary Data


57Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


112Item 9A.

Controls and Procedures


112Item 9B.

Other Information


112Part III


112Item 10.

Directors, Executive Officers, and Corporate
    Governance


112Item 11.

Executive Compensation


113Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


113Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


113Item 14.

Principal Accounting Fees and Services


113Part IV


113Item 15.

Exhibits and Financial Statement Schedules


113Signatures


119Exhibits


120Form of Amended and Restated Executive Group Special Bonus Plan of Registrant, dated November 12, 2007Form of Amended and Restated Special Bonus Plan of the Registrant, dated November 12, 2007Employee Stock Purchase Plan, as amended June 8, 2007Commitment Increase Supplements, dated December 27, 2007List of SubsidiariesConsent of Deloitte & Touche LLPCertification of Chief Executive Officer Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification Pursuant to Section 906   1




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DEFINITIONS
    ITC Holdings
    Corp. and its subsidiaries
  
    ITC Grid Development are references to ITC Grid
    Development, LLC, a wholly-owned subsidiary of ITC Holdings;
    ITC Holdings are references to ITC Holdings Corp.
    and not any of its subsidiaries;
    ITC Midwest are references to ITC Midwest LLC, a
    wholly-owned subsidiary of ITC Holdings;
    ITCTransmission are references to International
    Transmission Company, a wholly-owned subsidiary of ITC Holdings;
    METC are references to Michigan Electric
    Transmission Company, LLC, a wholly-owned subsidiary of MTH;
    MTH are references to Michigan Transco Holdings,
    Limited Partnership, the sole member of METC and a wholly owned
    subsidiary of ITC Holdings;
    Regulated Operating Subsidiaries are references to
    ITCTransmission, METC, and ITC Midwest together; and
    We, our and us are
    references to ITC Holdings together with all of its subsidiaries.  Other
    definitions
  
    ATC are references to American Transmission Company,
    LLC, an affiliate of IP&L;
    Consumers Energy are references to Consumers Energy
    Company, a wholly-owned subsidiary of CMS Energy Corporation;
    Detroit Edison are references to The Detroit Edison
    Company, a wholly-owned subsidiary of DTE Energy;
    DTE Energy are references to DTE Energy Company;
    FERC are references to the Federal Energy Regulatory
    Commission;
    FPA are references to the Federal Power Act;
    IP&L are references to Interstate Power and
    Light Company, an Alliant Energy Corporation subsidiary;
    ISO are references to Independent System Operators;
    IUB are references to the Iowa Utilities Board;
    kV are references to kilovolts (one kilovolt
    equaling 1,000 volts);
    kW are references to kilowatts (one kilowatt
    equaling 1,000 watts);
    MISO are references to the Midwest Independent
    Transmission System Operator, Inc., a FERC-approved RTO, which
    oversees the operation of the bulk power transmission system for
    a substantial portion of the midwestern United States and
    Manitoba, Canada, and of which ITCTransmission, METC and ITC
    Midwest are members;
    MPUC are references to the Minnesota Public
    Utilities Commission;
    MW are references to megawatts (one megawatt
    equaling 1,000,000 watts);
    NERC are references to the North American Electric
    Reliability Corporation;
    NOLs are references to net operating loss
    carryforwards for income taxes; and
    RTO are references to Regional Transmission
    Organizations. 2




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PART I  ITEM 1.
    BUSINESS.  Overview
        Development of
    Business
      Segments
   3




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Operations
    
    asset planning;
    engineering, design and construction;
    maintenance; and
    real time operations.    Asset
    Planning
  and/or
    Engineering,
    Design and Construction
    Maintenance
   4




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Real Time
    Operations
  ITCTransmission
    and METC
  Joint Control Area Operator.
  System Operations. day-to-day
  ITC
    Midwest
      Operating
    Contracts
  ITCTransmission
    Master Operating Agreement. day-to-day
  Generator Interconnection and Operation
    Agreement.
 5




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Coordination and Interconnection
    Agreement.
  METC
    Amended and Restated Easement Agreement.
    right-of-way
 6




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50-year 30-day
  Amended and Restated Operating
    Agreement. 50-year
  Amended and Restated Purchase and Sale Agreement for
    Ancillary Services.
  Amended and Restated Distribution-Transmission
    Interconnection Agreement. agreed-upon
  Amended and Restated Generator Interconnection
    Agreement.
 7




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ITC
    Midwest
  Distribution-Transmission Interconnection
    Agreement.
  Large Generator Interconnection Agreement.
  Transition Services Agreement.
  Operating Agreement.
  Regulatory
    Environment
     8




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Federal
    Regulation
  not-for-profit
     9




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State
    Regulation
    Michigan
    Iowa
    Minnesota
    Illinois
    Missouri
   10




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Sources of
    Revenue
    Seasonality
    true-up
  Principal
    Customers
    Billing
   11




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Competition
    Employees
      Environmental
    Matters
         12




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Filings Under the
    Securities Exchange Act of 1934
  Form 10-K, Form 10-Q, Form 8-K,
  
    Corporate Governance Guidelines;
    Code of Business Conduct and Ethics; and
    Committee Charters for the Audit and Finance Committee,
    Compensation Committee and Nominating/Corporate Governance
    Committee.    1-800-SEC-0330. http://www.sec.gov
  ITEM 1A.
    RISK
    FACTORS.  Risks Related to
    Our Business
  Certain
    elements of our Regulated Operating Subsidiaries cost
    recovery through rates can be challenged, which could result in
    lowered rates and/or refunds of amounts previously collected and
    thus have an adverse effect on our business, financial
    condition, results of operations and cash flows. We have also
    made certain commitments to federal and state regulators with
    respect to, among other things, our rates in connection with
    recent acquisitions (including the ITC Midwest acquisition) that
    could have an adverse effect on our business, financial
    condition, results of operations and cash flows.
  and/or and/or
   13




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and/or
  and/or
    Approval of
    the ITC Midwest acquisition by state regulatory authorities in
    Iowa and Minnesota has been appealed. If such proceedings are
    decided in a manner that is unfavorable to us, all or part of
    the orders approving the ITC Midwest acquisition in Iowa and
    Minnesota could be reversed, which could have a material adverse
    effect on our business, financial condition, results of
    operations and cash flows.
   14




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Our Regulated
    Operating Subsidiaries actual capital expenditures may be
    lower than planned, which would decrease expected rate base and
    therefore our revenues.
    The
    regulations to which we are subject may limit our ability to
    raise capital and/or pursue acquisitions, development
    opportunities or other transactions or may subject us to
    liabilities.
    and/or
  Changes in
    federal energy laws, regulations or policies could impact cash
    flows and could reduce the dividends we may be able to pay our
    stockholders.
   15




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and/or
    If the network
    load or
    point-to-point
    transmission service on our Regulated Operating
    Subsidiaries transmission systems is lower than expected,
    the timing of collection of our revenues would be
    delayed.
  true-up
  Each of our
    Regulated Operating Subsidiaries depends on its primary customer
    for a substantial portion of its revenues, and any material
    failure by those primary customers to make payments for
    transmission services would adversely affect our revenues and
    our ability to service our debt obligations and affect our
    ability to pay dividends.
    METC does not
    own the majority of the land on which its transmission assets
    are located. Additionally, a significant amount of the land on
    which ITCTransmissions and ITC Midwests assets are
    located is subject to easements, mineral rights and other
    similar encumbrances and a significant amount of
    ITCTransmissions and ITC Midwests other property
    consists of
 16




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easements. As a result, our Regulated Operating
    Subsidiaries must comply with the provisions of various
    easements, mineral rights and other similar encumbrances, which
    may adversely impact their ability to complete construction
    projects in a timely manner.
  rights-of-way,
  Deregulation
    and/or increased competition may adversely affect our Regulated
    Operating Subsidiaries customers, or Detroit
    Edisons, Consumers Energys and IP&Ls
    customers, which in turn may reduce our revenues.
  ,
  Hazards
    associated with high-voltage electricity transmission may result
    in suspension of our Regulated Operating Subsidiaries
    operations or the imposition of civil or criminal
    penalties.
    Our Regulated
    Operating Subsidiaries are subject to environmental regulations
    and to laws that can give rise to substantial liabilities from
    environmental contamination.
   17




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Our Regulated
    Operating Subsidiaries are subject to various regulatory
    requirements. Violations of these requirements, whether
    intentional or unintentional, may result in penalties that,
    under some circumstances, could have a material adverse effect
    on our results of operations, financial condition and cash
    flows.
   18




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Acts of war,
    terrorist attacks and threats or the escalation of military
    activity in response to such attacks or otherwise may negatively
    affect our business, financial condition and results of
    operations.
    Risks Related to
    ITC Midwests acquisition of IP&Ls electric
    transmission assets
  The purchase
    price for IP&Ls electric transmission assets is
    subject to adjustment and, therefore, the final purchase price
    cannot be determined at this time.
    We may
    encounter difficulties integrating IP&Ls electric
    transmission assets into our business and may not fully attain
    or retain, or achieve within a reasonable time frame, expected
    strategic objectives and other expected benefits of the ITC
    Midwest acquisition.
    
    the challenges of separating IP&Ls electric
    transmission assets into stand-alone ownership by ITC Midwest
    and integrating these assets with our business;
    the costs of integrating IP&Ls electric transmission
    assets may be higher than we expect and may require more
    resources, capital expenditures and management attention than
    anticipated;
    delay of capital investments in IP&Ls transmission
    system due to uncertainty around the timing of procurement of
    construction materials;
    employees important to the operation of IP&Ls
    electric transmission assets may decide not to continue to be
    employed by us; and
    we may be unable to anticipate or manage risks that are unique
    to the historical business of IP&Ls electric
    transmission assets, including those related to its workforce,
    customer demographics and information systems.   19




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If one or both
    of ITC Midwests operating agreements with IP&L and
    ATC were terminated early, ITC Midwest may face a shortage of
    labor or replacement contractors to provide the services
    formerly provided by IP&L and ATC.
    Our pro forma
    financial information is not necessarily representative of the
    results we would have achieved and does not purport to represent
    what our consolidated results of operations would have been had
    ITC Midwests acquisition of the electric transmission
    business of IP&L occurred on the dates
    presented.
    Full financial statements for the electric transmission
    business of IP&L are not available.
  Rule 3-05 Regulation S-X.
  IP&Ls electric transmission business has no
    operating history as a stand-alone business. Therefore, its
    historical financial information is not necessarily
    representative of the results we would have achieved during the
    periods presented as a stand-alone company and may not be a
    reliable indicator of our future results.
 20




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
    The historical financial results of IP&Ls electric
    transmission business reflects allocations of corporate expenses
    from IP&L. Those allocations may be different from the
    comparable expenses we would have incurred had the acquired
    electric transmission assets been operated as a stand-alone
    business due to a number of factors, including the likelihood
    that we will not be able to realize the benefits of operating as
    an integrated utility achieved by IP&L. Additionally, the
    historical financial results of IP&Ls electric
    transmission business exclude certain items, such as the
    allowance for equity funds used during construction.
    Significant changes may occur in the cost structure, management,
    financing and business operations of the electric transmission
    assets ITC Midwest acquired from IP&L as a result of having
    to operate as a subsidiary of ITC Holdings. These changes could
    result in increased costs associated with the loss of synergies,
    stand-alone costs for services currently provided by IP&L,
    and the need for additional personnel to perform services
    currently provided by IP&L and ATC. In addition, we have
    negotiated certain operating contracts with IP&L and ATC
    that govern operation of the transmission system for at least
    12 months from the closing date of the acquisition.
    The ratemaking principles applicable to IP&L differ in
    certain respects from those used by the FERC, which regulates
    ITC Midwest. IP&Ls retail electric base rates in Iowa
    and Minnesota were based on historical test years with
    IP&Ls retail electric base rates developed using a
    cost-of-service
    approach. The
    cost-of-service
    approach was used to develop IP&Ls revenue
    requirement which was comprised of operating expenses (direct
    and indirect), depreciation, taxes, interest, and a
    rate-of-return
    allowance on IP&Ls investment in rate base assets.
    Therefore, to prepare financial data for IP&Ls
    electric transmission business, a portion of these expenses was
    allocated across IP&Ls operations. The ratemaking
    principles used by IP&Ls state regulators differ in
    certain respects from those used by the FERC, which regulates
    ITC Midwest. Accordingly, the electric transmission revenues
    used to develop pro forma financial information are not
    indicative of revenues that we may earn.    For an additional risk related to the ITC Midwest
    acquisition, see Risk Factors  Risks Related to
    our Business  Approval of the ITC Midwest acquisition
    by state regulatory authorities in Iowa and Minnesota has been
    appealed. If such proceedings are decided in a manner that is
    unfavorable to us, all or part of the orders approving the ITC
    Midwest acquisition in Iowa and Minnesota could be reversed,
    which could have a material adverse effect on our business,
    financial condition, results of operations and cash
    flows.
  Risks Related to
    Our Structure
  ITC Holdings
    is a holding company with no operations, and unless we receive
    dividends or other payments from our subsidiaries, we will be
    unable to pay dividends and fulfill our other cash
    obligations.
   21




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Risks Relating to
    Our Financial Leverage
  We are highly
    leveraged and our dependence on debt may limit our ability to
    fulfill our debt obligations and/or to obtain additional
    financing.
    
    If future cash flows are insufficient, we may not be able to
    make principal or interest payments on our debt obligations,
    which could result in the occurrence of an event of default
    under one or more of those debt instruments.
    If future cash flows are insufficient, we may need to incur
    further indebtedness in order to make the capital expenditures
    and other expenses or investments planned by us.
    Our indebtedness will have the general effect of reducing our
    flexibility to react to changing business and economic
    conditions insofar as they affect our financial condition and,
    therefore, may pose substantial risk to our shareholders. A
    substantial portion of the dividends and payments in lieu of
    taxes we receive from our Regulated Operating Subsidiaries will
    be dedicated to the payment of interest on our indebtedness,
    thereby reducing the funds available for the payment of
    dividends on our common stock.
    In the event that we are liquidated, any of our senior or
    subordinated creditors and any senior or subordinated creditors
    of our subsidiaries will be entitled to payment in full prior to
    any distributions to the holders of shares of our common stock.
    Our revolving credit facilities mature in March 2012 for ITC
    Holdings, ITCTransmission and METC and in January 2013 for ITC
    Midwest. Our ability to secure additional financing prior to or
    after that time, if needed, may be substantially restricted by
    the existing level of our indebtedness and the restrictions
    contained in our debt instruments.    Certain
    provisions in our debt instruments limit our financial
    flexibility.
    
    incur additional indebtedness;
    engage in sale and lease-back transactions;
    create liens or other encumbrances; 22




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
    enter into mergers, consolidations, liquidations or
    dissolutions, or sell or otherwise dispose of all or
    substantially all of our assets;
    create and acquire subsidiaries; and
    pay dividends or make distributions on our and
    ITCTransmissions capital stock and METCs and ITC
    Midwests member capital.    Adverse
    changes in our credit ratings may negatively affect
    us.
    ITC
    Holdings public offering in October 2006 caused us to
    undergo an ownership change for purposes of
    Section 382 of the Internal Revenue Code of 1986, as
    amended (the Code) which will limit the amount of
    our federal income tax NOLs that we may use to reduce our tax
    liability in a given period.
    Provisions in
    our Articles of Incorporation and bylaws, Michigan corporate law
    and our debt agreements may impede efforts by our shareholders
    to change the direction or management of our
    company.
   23




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
    a requirement that special meetings of our shareholders may be
    called only by our board of directors, the chairman of our board
    of directors, our president or the holders of a majority of the
    shares of our outstanding common stock;
    advance notice requirements for shareholder proposals and
    nominations; and
    the authority of our board to issue, without shareholder
    approval, common or preferred stock, including in connection
    with our implementation of any shareholders rights plan, or
    poison pill.    Provisions in
    our Articles of Incorporation restrict market participants from
    voting or owning 5% or more of the outstanding shares of our
    capital stock.
    Future sales
    of our shares could depress the market price of our common
    stock.
       24




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS.    ITEM 2.
    PROPERTIES.      
    approximately 2,700 circuit miles of overhead and underground
    transmission lines rated at voltages of 120 kV to 345 kV;
    approximately 17,000 transmission towers and poles;
    station assets, such as transformers and circuit breakers, at
    155 stations and substations which either interconnect our
    transmission facilities or connect ITCTransmissions
    facilities with generation or distribution facilities owned by
    others;
    other transmission equipment necessary to safely operate the
    system (e.g., switching stations, breakers and metering
    equipment);
    associated land held in fee, rights of way and easements;
    an approximately 188,000 square feet corporate headquarters
    facility and operations control room that is currently under
    construction in Novi, Michigan and is expected to be completed
    in March 2008, including furniture, fixtures and office
    equipment;
    certain assets contained in an approximately 38,000 square
    feet leased office building in Novi, Michigan. The lease expires
    May 31, 2008. These assets consist primarily of a
    back-up
    transmission operations control room, furniture, fixtures and
    office equipment; and
    an approximately 40,000 square feet facility in Ann Arbor,
    Michigan which provides control area and real time operational
    services for ITCTransmission and METC.      
    approximately 5,400 circuit miles of overhead transmission lines
    rated at voltages of 138 kV to 345 kV;
    approximately 44,000 transmission towers and poles;
    station assets, such as transformers and circuit breakers, at 81
    stations and substations which either interconnect our
    transmission facilities or connect METCs facilities with
    generation or distribution facilities owned by others; and
    other transmission equipment necessary to safely operate the
    system (e.g., switching stations, breakers and metering
    equipment).     25




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rights-of-way,
    
    approximately 6,800 miles of transmission lines rated at
    voltages of 34.5kV to 345kV;
    transmission towers and poles;
    station assets, such as transformers and circuit breakers, at
    approximately 300 stations and substations which either
    interconnect ITC Midwests transmission facilities or
    connect ITC Midwests facilities with generation or
    distribution facilities owned by others;
    other transmission equipment necessary to safely operate the
    system (e.g., switching stations, breakers and metering
    equipment); and
    associated land held in fee, rights of way and easements.      ITEM 3.
    LEGAL
    PROCEEDINGS.      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  Stock Price and
    Dividends
   26




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Year Ended December 31, 2007

High


Low


DividendsQuarter ended December 31, 2007

$
58.58


$
46.24


$
0.2900Quarter ended September 30, 2007

$
51.39


$
40.40


$
0.2900Quarter ended June 30, 2007

$
46.42


$
39.38


$
0.2750Quarter ended March 31, 2007

$
45.12


$
37.90


$
0.2750   Year Ended December 31, 2006

High


Low


DividendsQuarter ended December 31, 2006

$
41.21


$
31.01


$
0.2750Quarter ended September 30, 2006

$
34.50


$
26.39


$
0.2750Quarter ended June 30, 2006

$
27.31


$
24.50


$
0.2625Quarter ended March 31, 2006

$
29.10


$
25.29


$
0.2625         02940-3078.
    Stock
    Repurchases
   27




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ITEM 6.
    SELECTED
    FINANCIAL DATA.     28




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Form 10-K.
  PredecessorITC Holdings and Subsidiaries(c)



ITCTransmissionPeriod fromFebruary 28,2003 (Date ofAcquisition)



Two-MonthThrough



Period EndedYear Ended December 31,


December 31,



February 28,(In thousands, except per share data)

2007


2006


2005


2004


2003(a)



2003(a)OPERATING REVENUES(b)

$
426,249


$
223,622


$
205,274


$
126,449


$
102,362



$
20,936OPERATING EXPENSESOperation and maintenance


81,406



35,441



48,310



24,552



22,902




5,675General and administrative


62,089



40,632



25,198



24,412



26,342




Depreciation and amortization


67,928



40,156



33,197



29,480



21,463




3,665Taxes other than income taxes


33,340



22,156



13,982



20,840



11,499




4,298Termination of management agreements










6,725












Gain on sale of assets


(688
)


(842
)















Total operating expenses


244,075



137,543



127,412



99,284



82,206




13,638OPERATING INCOME


182,174



86,079



77,862



27,165



20,156




7,298OTHER EXPENSES (INCOME)Interest expense


81,863



42,049



28,128



25,585



21,630




Allowance for equity funds used during construction


(8,145
)


(3,977
)


(2,790
)


(1,691
)


(322
)



Loss on extinguishment of debt


349



1,874











11,378




Other income


(3,457
)


(2,348
)


(1,700
)


(1,289
)


(197
)



(147
)Other expense


1,618



1,629



615



283



27




45Total other expenses (income)


72,228



39,227



24,253



22,888



32,516




(102
)INCOME (LOSS) BEFORE INCOME TAXES


109,946



46,852



53,609



4,277



(12,360
)



7,400INCOME TAX PROVISION (BENEFIT)


36,650



13,658



18,938



1,669



(4,306
)



3,915INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE IN
    ACCOUNTING PRINCIPLE


73,296



33,194



34,671



2,608



(8,054
)



3,485CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
    (NET OF TAX OF $16)






29
















NET INCOME (LOSS)

$
73,296


$
33,223


$
34,671


$
2,608


$
(8,054
)


$
3,485Basic earnings (loss) per share

$
1.73


$
0.95


$
1.10


$
0.09


$
(0.27
)



n/aDiluted earnings (loss) per share

$
1.68


$
0.92


$
1.06


$
0.08


$
(0.27
)



n/aWeighted-average basic shares


42,298,478



35,048,049



31,455,065



30,183,886



29,339,394




n/aWeighted-average diluted shares


43,541,306



36,236,944



32,729,842



30,899,548



29,339,394




n/aDividends declared per share

$
1.130


$
1.075


$
0.525


$



$
0.897




n/a   29




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##### Table of Contents



ITC Holdings and Subsidiaries (c)As of December 31,(In thousands)

2007


2006


2005


2004


2003BALANCE SHEET DATA:Cash and cash equivalents

$
2,616


$
13,426


$
24,591


$
14,074


$
8,139Working capital (deficit)


(30,370
)


10,107



19,945



(27,117
)


(17,633
)Property, plant and equipment  net


1,960,433



1,197,862



603,609



513,684



459,393Total assets


3,213,297



2,128,797



916,639



808,847



751,657Total Long Term Debt:ITC Holdings


1,687,193



775,963



266,104



273,485



265,866ITCTransmission


363,331



297,315



251,211



209,945



184,887METC


192,900



189,000











Total Stockholders Equity


563,075



532,244



263,301



196,602



191,246   PredecessorITC Holdings and Subsidiaries(c)






ITCTransmissionPeriod fromFebruary 28,2003 (Date ofAcquisition)



Two-MonthThrough



Period EndedYear Ended December 31,


December 31,



February 28,(In thousands)

2007


2006


2005


2004


2003(a)



2003(a)CASH FLOWS DATA:Capital expenditures

$
287,170


$
167,496


$
118,586


$
76,779


$
26,805



$
5,616     (a)
    
    Annualized financial data for the period from February 28,
    2003 through December 31, 2003 and the two-month period
    ended February 28, 2003 are not indicative of results for
    the full year. Our historical results of operations through
    December 31, 2006 were seasonal, with revenues being
    dependent on peak transmission loads. Higher loads occurred
    during months when cooling demand was higher.(b)
    
    The ITCTransmission rate freeze ended December 31, 2004.
    Additionally, ITCTransmissions and METCs
    implementation of forward-looking Attachment O for rates
    beginning January 1, 2007 resulted in an increase on
    operating revenues for the year ended December 31, 2007.(c)
    
    Refer to Note 4 to the consolidated financial statements
    for a discussion of the METC acquisition and ITC Midwests
    acquisition that affect the comparability of the information
    reflected in selected financial data.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  Safe Harbor
    Statement Under The Private Securities Litigation Reform Act of
    1995
   30




---



##### Table of Contents



Overview
        point-to-point
    
    Capital investment of $210.7 million and $75.5 million
    at ITCTransmission and METC, respectively for the year ended
    December 31, 2007, resulting from our focus on improving
    system reliability;
    ITC Midwests acquisition of the transmission assets of
    IP&L on December 20, 2007 and the related financing
    activities;
    ITCTransmissions and METCs implementation of
    forward-looking Attachment O for rates beginning January 1,
    2007, and its effect on operating revenues for the year ended
    December 31, 2007, including reducing the seasonality of
    operating revenues and net income;
    ITC Midwests implementation of forward-looking Attachment
    O for rates beginning January 1, 2008; 31




---



##### Table of Contents




    The settlement of METCs rate case, which resulted in
    payment to various transmission customers in the aggregate
    amount of $20.0 million in October 2007; and
    Debt issuances in 2006 and 2007 resulting in higher interest
    expense.      Recent
    Developments
  ITC
    Midwests Acquisition of Transmission Assets and Related
    Financing Activities
       32




---



##### Table of Contents



364-day
    METC Rate Case
    Settlement Agreement
  30-day and/or
  20-year 18-year
  Business Combinations.
 33




---



##### Table of Contents



Development
    Activities
    Michigan
    Business Tax
  Accounting for Income Taxes
  Rate Setting and
    Attachment O
  Network
    Transmission Rates
   34




---



##### Table of Contents



Network Transmission Rate

ITCTransmission


METC


ITC MidwestJanuary 1, 2005 to May 31, 2005

$
1.587June 1, 2005 to May 31, 2006

$
1.594June 1, 2006 to December 31, 2006(a)

$
1.744


$
1.524January 1, 2007 to December 31, 2007(b)

$
2.099


$
1.524


$
2.475January 1, 2008 to December 31, 2008

$
2.350


$
1.985


$
2.564     (a)
    
    Our consolidated results of operations include METC revenues for
    the period from October 11, 2006 through December 31,
    2006.(b)
    
    Our consolidated results of operations include revenues from the
    assets acquired by ITC Midwest for the period from
    December 20, 2007 through December 31, 2007.  Forward-Looking
    Attachment O
    point-to-point true-up true-up true-up
  true-up
   35




---



##### Table of Contents



Network
    Transmission Rate Calculation
    Step
    One  Establish Projected Rate Base and Calculate
    Projected Allowed Return
      Step
    Two  Calculate Projected Revenue
    Requirement
    Step
    Three  Calculate Transmission Rate
  point-to-point point-to-point
  Step
    Four  Calculate
    True-up
    Adjustment
  true-up true-up true-up
  Illustration of Attachment O Rate Setting. point-to-point
 36




---



##### Table of Contents



Line


Attachment O Items


Instructions


Amount1


Projected Rate Base (the average of the 13 months ended
    December 31, 2006 through December 31, 2007)





$
741,676,0002


Multiply by Projected 13 month Weighted Average Cost of
    Capital(a)






10.77%3


Projected Allowed Return on Rate Base


(Line 1 × Line 2)


$
79,878,5054


Projected Recoverable Operating Expenses for 2007





$
62,713,0005


Projected Taxes and Depreciation and Amortization for 2007





$
99,915,0006


Projected Gross Revenue Requirements for2007


(Line 3 + Line 4 + Line 5)


$
242,506,5057


Less Projected Revenue Credits for 2007





$
7,238,0008


Plus/(Less)
    True-up
    Adjustment(b)






n/a9


Projected Net Revenue Requirement for 2007


(Line 6 −Line 7 + Line 8)


$
235,268,50510


Projected 2007 Network Load (in kW)






9,342,00011


Annual Network and P-T-P Transmission Rate


(Line 9 divided by Line 10)


$
25.18412


Monthly Network and P-T-P Transmission Rate ($/kW per month)


(Line 11 divided by 12 months)


$
2.099   (a)
    The weighted average cost of capital for purposes of this
    illustration is calculated as follows:  WeightedPercentage of



AverageITC Transmissions



Cost ofTotal Capitalization

Cost of Capital

CapitalDebt


40.00
%

6.10%  (Pre-tax) =


2.44
%Equity


60.00
%

13.88% (After tax) =


8.33
%100.00
%




10.77
%   (b)
    The 2007
    true-up
    adjustment did not impact the 2007 billed network rates. The
    true up adjustment for 2007 will be included as a component of
    the projected net revenue requirement in the 2009 Attachment O
    rate calculation.  Trends and
    Seasonality
  Network
    Revenues
  year-to-year
 37




---



##### Table of Contents



38




---



##### Table of Contents



Point-to-Point
    Revenue
  point-to-point point-to-point point-to-point true-up point-to-point
  Seasonality
   39




---



##### Table of Contents



Monthly Peak Load
    (in MW)
  2007



2006



2005ITC Midwest


METC


ITCTransmission



METC


ITCTransmission



ITCTransmissionJanuary






6,051



7,876








7,754




8,090February






6,227



8,170








7,667




7,672March






6,006



7,739








7,554




7,562April






5,473



7,141








7,035




7,299May






6,981



9,927








10,902




7,678June






8,511



11,761








9,752




12,108July






8,672



11,706








12,392




11,822August






8,955



12,087








12,745




12,308September






7,908



11,033








8,415




10,675October






7,524



10,382




5,642



7,302




9,356November






6,068



7,812




6,103



7,724




7,943December


2,244



6,214



8,022




6,527



8,257




8,344Total


2,244



84,590



113,656




18,272



107,499




110,857   Significant
    Components of Results of Operations
  Revenues
  point-to-point
  Network Revenues
 40




---



##### Table of Contents



multiply
  divide
  Point-to-Point
    Revenues Point-to-point
  Scheduling, Control and Dispatch Revenues
  Other Revenues
  Operating
    Expenses
  Operation and Maintenance Expenses
      General and Administrative Expenses
    Depreciation and Amortization Expenses
 41




---



##### Table of Contents



Taxes other than Income Taxes
  Other items of
    income or expense
  Interest Expense
  Allowance for Equity Funds Used During Construction
    (AFUDC Equity)
  Results of
    Operations
    Year Ended





Percentage


Year Ended





PercentageDecember 31,


Increase


Increase


December 31,


Increase


Increase2007


2006


(Decrease)


(Decrease)


2005


(Decrease)


(Decrease)(In thousands)OPERATING REVENUES

$
426,249


$
223,622


$
202,627



90.6
%

$
205,274


$
18,348



8.9
%OPERATING EXPENSESOperation and maintenance


81,406



35,441



45,965



129.7
%


48,310



(12,869
)


(26.6
)%General and administrative


62,089



40,632



21,457



52.8
%


25,198



15,434



61.3
%Depreciation and amortization


67,928



40,156



27,772



69.2
%


33,197



6,959



21.0
%Taxes other than income taxes


33,340



22,156



11,184



50.5
%


13,982



8,174



58.5
%Termination of management agreements














n/a



6,725



(6,725
)


(100.0
)%Gain on sale of assets


(688
)


(842
)


154



(18.3
)%






(842
)


n/aTotal operating expenses


244,075



137,543



106,532



77.5
%


127,412



10,131



8.0
%OPERATING INCOME


182,174



86,079



96,095



111.6
%


77,862



8,217



10.6
%OTHER EXPENSES (INCOME)Interest expense


81,863



42,049



39,814



94.7
%


28,128



13,921



49.5
%Allowance for equity funds used during construction


(8,145
)


(3,977
)


(4,168
)


104.8
%


(2,790
)


(1,187
)


42.5
%Loss on extinguishment of debt


349



1,874



(1,525
)


(81.4
)%






1,874



n/aOther income


(3,457
)


(2,348
)


(1,109
)


47.2
%


(1,700
)


(648
)


38.1
%Other expense


1,618



1,629



(11
)


(0.7
)%


615



1,014



164.9
%Total other expenses (income)


72,228



39,227



33,001



84.1
%


24,253



14,974



61.7
%INCOME BEFORE INCOME TAXES


109,946



46,852



63,094



134.7
%


53,609



(6,757
)


(12.6
)%INCOME TAX PROVISION


36,650



13,658



22,992



168.3
%


18,938



(5,280
)


(27.9
)%INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE


73,296



33,194



40,102



120.8
%


34,671



(1,477
)


(4.3
)%CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (NET OF
    TAX OF $16)






29



(29
)


(100.0
)%






29



n/aNET INCOME

$
73,296


$
33,223


$
40,073



120.6
%

$
34,671


$
(1,448
)


(4.2
)%  42




---



##### Table of Contents



Operating
    Revenues
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Percentage2007


2006


Increase


IncreaseAmount


Percentage


Amount


Percentage


(Decrease)


(Decrease)(In thousands)Network revenues billed

$
370,549



86.9
%

$
206,514



92.4
%

$
164,035



79.4
%Attachment O revenue accrual (deferral)-net


19,782



4.7
%






0.0
%


19,782



n/aPoint-to-point


19,321



4.5
%


7,012



3.1
%


12,309



175.5
%Scheduling, control and dispatch


14,674



3.4
%


8,274



3.7
%


6,400



77.4
%Other


1,923



0.5
%


1,822



0.8
%


101



5.6
%Total

$
426,249



100.0
%

$
223,622



100.0
%

$
202,627



90.6
%   Transmission
    Attachment O
    revenue accrual (deferral)-net summary
  (In
    thousands)
  Total RevenueLine


Item

ITCTransmission


METC


Accrual (Deferral)-net1


Actual net revenue requirement

$
238,599


$
149,2622


Network revenues billed(a)


238,803



129,2763


Attachment O revenue accrual (deferral)-net (line 1 
    line 2)

$
(204
)

$
19,986
(b)

$
19,782     (a)
    
    Network revenues billed is calculated based on the monthly
    network peak load at ITCTransmission and METC multiplied by the
    monthly network rate of $2.099 for ITCTransmission and $1.524
    for METC during 2007, adjusted for the actual number of days in
    the month.(b)
    
    METC was under a frozen rate during 2007, which was the primary
    reason  for the revenue accrual.  Point-to-point point-to-point
 43




---



##### Table of Contents



Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
    Percentage2006


2005


Increase


IncreaseAmount


Percentage


Amount


Percentage


(Decrease)


(Decrease)(In thousands)Network

$
206,514



92.4
%

$
176,588



86.0
%

$
29,926



16.9
%Point-to-point


7,012



3.1
%


20,336



9.9
%


(13,324
)


(65.5
)%Scheduling, control and dispatch


8,274



3.7
%


6,566



3.2
%


1,708



26.0
%Other


1,822



0.8
%


1,784



0.9
%


38



2.1
%Total

$
223,622



100
%

$
205,274



100
%

$
18,348



8.9
%     Point-to-point Sub-Regional point-to-point
    Operating
    Expenses
  Operation and
    maintenance expenses
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
   44




---



##### Table of Contents



Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
  s
  General and
    administrative expenses
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
   45




---



##### Table of Contents



Depreciation and
    amortization expenses
    Taxes other than
    income taxes
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
    Termination of
    management agreements
    Other expenses
    (income)
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
       46




---



##### Table of Contents



Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
            Income Tax
    Provision
    Liquidity and
    Capital Resources
    
    Fund capital expenditures. We made investments in property,
    plant and equipment of $210.7 million and
    $75.5 million during the year ended December 31, 2007
    at ITCTransmission and METC, respectively. We expect the total
    level of investment of our Regulated Operating Subsidiaries to
    be between $285.0 million and $340.0 million in 2008.
    Our plans with regard to property, plant and equipment
    investments are described in detail above under Trends and
    Seasonality. Additionally, the other development
    activities described above under Recent
    Developments  Development Activities could
    result in significant capital expenditures.
    Fund working capital requirements.
    Fund our debt service requirements. During the year ended
    December 31, 2007, we paid $76.0 million of interest.
    We expect our interest payments to increase during 2008 compared
    to 2007 as a result of additional debt incurred in 2007 and 2008
    in connection with the ITC Midwest acquisition of
    IP&Ls transmission assets.
    Fund dividends to holders of our common stock. During 2007, we
    paid dividends of $48.2 million. During the third quarter
    of 2007, we raised our quarterly cash dividend to $0.290 per
    share from $0.275 per share. Our board of directors intends to
    further increase the dividend rate from time to 47




---



##### Table of Contents



time as necessary for the yield to remain competitive, subject
    to prevailing business conditions, applicable restrictions on
    dividend payments and the availability of capital resources.  
    Fund contributions to our retirement plans. In 2007, we funded
    $4.0 million to our pension retirement plan,
    $1.1 million to our supplemental pension retirement benefit
    plans and $0.4 million to our postretirement plan.
    Fund business development expenses, consisting primarily of
    forecasted expenses of $3.8 million at ITC Grid Development
    and its subsidiaries in 2008. During 2007, we incurred expenses
    of $2.0 million at ITC Grid Development and its
    subsidiaries primarily relating to business development
    activities.        Credit
    Ratings
  Standard and Poors

Moodys InvestorIssuer

Issuance

Ratings Services (a)

Service, Inc. (a)ITC Holdings

Senior Notes

BBB

Baa3ITCTransmission

First Mortgage Bonds

BBB+

A3METC

Senior Secured Notes

BBB

A3ITC Midwest

First Mortgage Bonds

A−

A3     (a)
    
    All credit ratings are on a positive outlook.    Covenants
    
    incur additional indebtedness;
    engage in sale and lease-back transactions; 48




---



##### Table of Contents




    create liens or other encumbrances;
    enter into mergers, consolidations, liquidations or
    dissolutions, or sell or otherwise dispose of all or
    substantially all of our assets;
    create or acquire subsidiaries; and
    pay dividends or make distributions on ITC Holdings and
    ITCTransmissions capital stock or METCs or ITC
    Midwests members capital.    Cash
    Flows
    Year Ended December 31,2007


2006


2005(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
73,296


$
33,223


$
34,671Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


67,928



40,156



33,197Attachment O revenue accrual (deferral)-net, including accrued
    interest


(20,325
)






Deferred income taxes


36,650



13,230



18,625Other


(1,523
)


3,309



1,425Changes in assets and liabilities, exclusive of changes shown
    separately


(20,242
)


(28,050
)


(26,244
)Net cash provided by operating activities


135,784



61,868



61,674CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment


(287,170
)


(167,496
)


(118,586
)ITC Midwest acquisition, including direct acquisition fees


(794,490
)






METC acquisition, including direct acquisition fees and net of
    cash acquired


(254
)


(495,645
)


Other


6,384



1,697



5,650Net cash used in investing activities


(1,075,530
)


(661,444
)


(112,936
)CASH FLOWS FROM FINANCING ACTIVITIESNet borrowing/repayment of long-term debt


865,000



486,086



(46
)Net borrowing/repayment under revolving credit facilities


116,000



(49,800
)


33,800Issuance of common stock


3,402



202,253



54,187Dividends on common stock


(48,168
)


(38,307
)


(17,433
)Other


(7,298
)


(11,821
)


(8,729
)Net cash provided by financing activities


928,936



588,411



61,779NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(10,810
)


(11,165
)


10,517CASH AND CASH EQUIVALENTS  Beginning of period


13,426



24,591



14,074CASH AND CASH EQUIVALENTS  End of period

$
2,616


$
13,426


$
24,591  49




---



##### Table of Contents



Cash Flows
    From Operating Activities
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
  point-to-point
  Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
  point-to-point point-to-point
  Cash Flows
    From Investing Activities
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
    Cash Flows
    From Financing Activities
  Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Year Ended
    December 31, 2006 compared to Year Ended December 31,
    2005
   50




---



##### Table of Contents



Contractual
    Obligations
    Less Than








More Than(In thousands)

Total


1 Year


1-3 Years


4-5 Years


5 YearsLong-term debt:ITC Holdings Senior Notes

$
877,000


$



$



$
267,000


$
610,000ITC Holdings Bridge Facility(a)


765,000



765,000











ITC Holdings revolving credit facility


46,100











46,100



ITCTransmission First Mortgage Bonds


285,000











185,000



100,000ITCTransmission/METC revolving credit facility


96,400











96,400



METC Senior Secured Notes


175,000















175,000Interest payments:ITC Holdings Senior Notes


727,071



51,390



154,171



96,395



425,115ITC Holdings Bridge Facility(a)


2,719



2,719











ITCTransmission First Mortgage Bonds


218,677



14,358



43,073



24,965



136,281METC Senior Secured Notes


80,054



10,063



30,188



20,125



19,678Operating leases


990



774



216







Deferred payables


2,444



1,222



1,222







Purchase obligations


53,196



41,237



11,959







METC Easement Agreement


430,000



10,000



30,000



20,000



370,000Total obligations

$
3,759,651


$
896,763


$
270,829


$
755,985


$
1,836,074     (a)
    
    The $2.7 million interest payment for the ITC Holdings
    Bridge Facility includes only the amount paid upon repayment of
    the facility in January 2008. Not included in our contractual
    obligations as of December 31, 2007 are our expected
    interest payments of $17.7 million in 2008 and
    $34.1 million annually thereafter until maturity (interest
    payable on January 31 and July 31) relating to the debt
    issuances in January 2008 used to repay the ITC Holdings Bridge
    Facility. See Note 9 to the consolidated financial
    statements for terms of the debt issuances in January 2008 to
    repay the ITC Holdings Bridge Facility.     51




---



##### Table of Contents



rights-of-way, rights-of-way 50-year
  Critical
    Accounting Policies
    and/or
  Regulation
  Accounting for
    the Effects of Certain Types of Regulation
    Revenue
    Recognition under Forward-Looking Attachment O
  point-to-point true-up
  true-up No. 92-7, Accounting by Rate-Regulated Utilities for the Effects of
    Certain Alternative Revenue Programs (EITF 92-7).
 52




---



##### Table of Contents



true-up
  ITCTransmissions
    Attachment O Rate Freeze Revenue Deferral
  EITF 92-7. EITF 92-7 EITF 92-7
  Purchase
    Accounting
  Business Combinations
  Business
    Combinations
   53




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##### Table of Contents



Contingent
    Obligations
    
    Changes in existing state or federal regulation by governmental
    authorities having jurisdiction over air quality, water quality,
    control of toxic substances, hazardous and solid wastes, and
    other environmental matters.
    Changes in existing income tax regulations or changes in
    Internal Revenue Service interpretations of existing regulations.
    Identification and evaluation of potential lawsuits or
    complaints in which we may be or have been named as a defendant.
    Resolution or progression of existing matters through the
    legislative process, the courts, the Internal Revenue Service,
    or the Environmental Protection Agency.  Valuation of
    Goodwill
  Goodwill and Other Intangible Assets and/or
  Valuation of
    Share-Based Payment
   54




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##### Table of Contents



Off-Balance Sheet
    Arrangements
    Recent Accounting
    Pronouncements
   55




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Commodity Price
    Risk
    Interest Rate
    Risk
  Fixed Rate
    Long Term Debt
    Revolving
    Credit Facilities
    ITC Holdings
    Bridge Facility
    Credit
    Risk
   56




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA     
 PageManagements Report on Internal Control over
    Financial Reporting

58Report of Independent Registered Public
    Accounting Firm

59Report of Independent Registered Public
    Accounting Firm

60Consolidated Statements of Financial Position as
    of December 31, 2007 and 2006

61Consolidated Statements of Operations for the
    Years Ended December 31, 2007, 2006 and 2005

62Consolidated Statements of Changes in
    Stockholders Equity and Comprehensive Income for the Years
    Ended December 31, 2007, 2006 and 2005

63Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2007, 2006 and 2005

64Notes to Consolidated Financial Statements

65Schedule I  Condensed Financial
    Information of Registrant

115   57




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##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING    Internal
    Control  Integrated Framework
     58




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
  Internal Control  Integrated Framework
          Internal Control  Integrated Framework
    
    59




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
        Internal Control  Integrated Framework
  
    60




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF FINANCIAL POSITION  December 31,(In thousands, except share data)

2007


2006ASSETSCurrent assetsCash and cash equivalents

$
2,616


$
13,426Restricted cash






4,565Accounts receivable


40,919



35,325Inventory


26,315



25,408Deferred income taxes


2,689



21,023Other


3,518



9,926Total current assets


76,057



109,673Property, plant and equipment(net of accumulated
    depreciation and amortization of $879,843 and $608,956,
    respectively)


1,960,433



1,197,862Other assetsGoodwill


959,042



624,385Intangible assets (net of accumulated amortization of $3,025 and
    $0, respectively)


55,382



58,407Regulatory assets- acquisition adjustments


86,054



91,443Regulatory assets- Attachment O revenue accrual (including
    accrued interest of $552)


20,537



Other regulatory assets


29,449



26,183Deferred financing fees (net of accumulated amortization of
    $5,138 and $4,817, respectively)


14,201



14,490Other


12,142



6,354Total other assets


1,176,807



821,262TOTAL ASSETS

$
3,213,297


$
2,128,797LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
47,627


$
33,295Accrued payroll


8,928



5,192Accrued interest


23,088



18,915Accrued taxes


15,065



14,152ITC Midwest acquisition additional purchase price accrual


5,402



METC rate case accrued liability






20,000Other


6,317



8,012Total current liabilities


106,427



99,566Accrued pension and postretirement liabilities


13,934



11,050Deferred income taxes


90,617



75,730Regulatory liabilities


189,727



138,726Other


6,093



9,203Long-term debt


2,243,424



1,262,278STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares
    authorized, 42,916,852 and 42,395,760 shares issued and
    outstanding at December 31, 2007 and 2006, respectively


532,103



526,485Retained earnings


31,864



6,714Accumulated other comprehensive loss


(892
)


(955
)Total stockholders equity


563,075



532,244TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
3,213,297


$
2,128,797    61




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,2007


2006


2005(In thousands, except share and per share data)OPERATING REVENUES

$
426,249


$
223,622


$
205,274OPERATING EXPENSESOperation and maintenance


81,406



35,441



48,310General and administrative


62,089



40,632



25,198Depreciation and amortization


67,928



40,156



33,197Taxes other than income taxes


33,340



22,156



13,982Termination of management agreements










6,725Gain on sale of assets


(688
)


(842
)


Total operating expenses


244,075



137,543



127,412OPERATING INCOME


182,174



86,079



77,862OTHER EXPENSES (INCOME)Interest expense


81,863



42,049



28,128Allowance for equity funds used during construction


(8,145
)


(3,977
)


(2,790
)Loss on extinguishment of debt


349



1,874



Other income


(3,457
)


(2,348
)


(1,700
)Other expense


1,618



1,629



615Total other expenses (income)


72,228



39,227



24,253INCOME BEFORE INCOME TAXES


109,946



46,852



53,609INCOME TAX PROVISION


36,650



13,658



18,938INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE


73,296



33,194



34,671CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE(NET OF TAX OF $16)






29



NET INCOME

$
73,296


$
33,223


$
34,671Basic earnings per share

$
1.73


$
0.95


$
1.10Diluted earnings per share

$
1.68


$
0.92


$
1.06Weighted-average basic shares


42,298,478



35,048,049



31,455,065Weighted-average diluted shares


43,541,306



36,236,944



32,729,842Dividends declared per common share

$
1.130


$
1.075


$
0.525    62




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##### Table of Contents





ITC HOLDINGS
    CORP. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CHANGES IN

STOCKHOLDERS
    EQUITY AND COMPREHENSIVE INCOME  Retained


AccumulatedEarnings


Other


TotalCommon Stock


(Accumulated


Comprehensive


Stockholders


ComprehensiveShares


Amount


Deficit)


Loss


Equity


Income(In thousands, except share data)BALANCE, DECEMBER 31, 2004


30,679,240


$
202,048


$
(5,446
)

$



$
196,602Net income










34,671







34,671


$
34,671Issuance of common stock


2,500,000



53,905











53,905



Repurchase and retirement of common stock


(28,732
)


(804
)










(804
)


Common stock issuance costs






(7,083
)










(7,083
)


Stock option exercises


37,649



282











282



Dividends declared on common stock










(17,433
)






(17,433
)


Issuance of restricted stock


50,502



















Forfeiture of restricted stock


(10,021
)


















Amortization of stock-based compensation, net of forfeitures






2,274











2,274



Excess tax deductions for stock compensation






1,059











1,059



Minimum pension liability adjustment, net of tax $92














(172
)


(172
)


(172
)Comprehensive income





















$
34,499BALANCE, DECEMBER 31, 2005


33,228,638


$
251,681


$
11,792


$
(172
)

$
263,301Net income










33,223







33,223


$
33,223Issuance of common stock


6,580,987



200,549











200,549



Issuance of common stock in MTH and METC Acquisition


2,195,045



72,458











72,458



Repurchase and retirement of common stock


(30,605
)


(1,040
)










(1,040
)


Common stock issuance costs






(2,364
)










(2,364
)


Dividends declared on common stock










(38,307
)






(38,307
)


Stock option exercises


191,685



1,704











1,704



Issuance of restricted stock


236,160



















Forfeiture of restricted stock


(6,150
)






6







6



Amortization of stock-based compensation, net of forfeitures






3,497











3,497



Settlement of interest rate lock cash flow hedges, net of tax
    $522














(969
)


(969
)


(969
)Amortization of interest rate lock cash flow hedges, net of tax
    $8














14



14



14Minimum pension liability adjustment, net of tax $174,
    Note 3














(322
)


(322
)


(322
)Comprehensive income





















$
31,946Reclassify the accumulated minimum pension liability adjustment
    to other regulatory assets, net of tax $266, Note 3














494



494BALANCE, DECEMBER 31, 2006


42,395,760


$
526,485


$
6,714


$
(955
)

$
532,244Net income










73,296







73,296


$
73,296Repurchase and retirement of common stock


(41,867
)


(1,841
)










(1,841
)


Common stock issuance costs






(5
)










(5
)


Dividends declared on common stock










(48,168
)






(48,168
)


Stock option exercises


351,172



3,081











3,081



Shares issued under the Employee Stock Purchase Plan


8,922



321











321



Issuance of restricted stock


228,644



















Forfeiture of restricted stock


(25,779
)






22







22



Amortization of stock-based compensation, net of forfeitures






4,062











4,062



Amortization of interest rate lock cash flow hedges, net of tax
    $34














63



63



63Comprehensive income





















$
73,359BALANCE, DECEMBER 31, 2007


42,916,852


$
532,103


$
31,864


$
(892
)

$
563,075    63




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##### Table of Contents





ITC HOLDINGS
    CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,(In thousands)

2007


2006


2005CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
73,296


$
33,223


$
34,671Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


67,928



40,156



33,197Attachment O revenue accrual  net, including accrued
    interest


(20,325
)






Deferred income tax expense


36,650



13,230



18,625Allowance for equity funds used during construction


(8,145
)


(3,977
)


(2,790
)Stock-based compensation expense


3,377



3,006



1,801Amortization of loss on reacquired debt, deferred financing fees
    and debt discount


4,201



3,333



3,334Other


(956
)


947



(920
)Changes in assets and liabilities, exclusive of changes shown
    separately:Accounts receivable


(3,023
)


996



(4,046
)Inventory


(18,016
)


(3,431
)


(5,646
)Other current assets


6,469



(4,834
)


(1,235
)Accounts payable


9,533



(17,938
)


3,729Accrued interest


4,172



4,112



191Accrued taxes


779



2,130



(5,453
)METC rate case accrued liability


(20,000
)






Point-to-point revenues due to customers






(631
)


(12,903
)Other current liabilities


449



(7,514
)


479Long-term assets and liabilities, net


(605
)


(940
)


(1,360
)Net cash provided by operating activities


135,784



61,868



61,674CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment


(287,170
)


(167,496
)


(118,586
)Acquisition of IP&L transmission assets


(783,113
)






IP&L transmission assets direct acquisition fees


(11,377
)






Acquisition of MTH and METC, net of cash acquired






(484,189
)


MTH and METC direct acquisition fees


(254
)


(11,456
)


Other


6,384



1,697



5,650Net cash used in investing activities


(1,075,530
)


(661,444
)


(112,936
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt


865,000



609,627



Repayment of long-term debt






(123,541
)


(46
)Issuance of ITC Holdings term-loan agreement


25,000







Repayment of ITC Holdings term-loan agreement


(25,000
)






Borrowings under revolving credit facilities


678,200



128,400



74,300Repayments of revolving credit facilities


(562,200
)


(178,200
)


(40,500
)Issuance of common stock


3,402



202,253



54,187Common stock issuance costs


(48
)


(2,321
)


(7,083
)Repurchase and retirement of common stock


(1,841
)


(1,040
)


(804
)Dividends on common stock


(48,168
)


(38,307
)


(17,433
)Debt issuance costs


(5,409
)


(6,969
)


(842
)Settlement on interest rate lock cash flow hedge






(1,491
)


Net cash provided by financing activities


928,936



588,411



61,779NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(10,810
)


(11,165
)


10,517CASH AND CASH EQUIVALENTS  Beginning of period


13,426



24,591



14,074CASH AND CASH EQUIVALENTS  End of period

$
2,616


$
13,426


$
24,591    64




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    GENERAL          2.
    SIGNIFICANT
    ACCOUNTING POLICIES    Principles of Consolidation 
  Use of Estimates 
  Regulation  Accounting for the Effects of Certain Types of
    Regulation
  Cash and Cash Equivalents 
 65




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted cash 
  Consolidated Statements of Cash Flows 
  Year Ended December 31,2007


2006


2005(In thousands)Interest paid (excluding interest capitalized)

$
73,489


$
40,038


$
24,603Income taxes paid


2,058



561



180Supplementary non-cash investing and financing activities:Conversion of restricted stock to ITC Holdings common stock

$
1,266


$
926


$
885Additions to property, plant and equipment(a)


33,998



33,282



14,280Allowance for equity funds used during construction


8,145



3,977



2,790ITC Holdings common stock issued in the METC acquisition






72,458



Assumption of MTH and METC debt and other long term interest
    bearing obligations






307,749



ITCTransmission purchase price adjustment resulting in increased
    (decreased) property, plant and equipment










1,783     (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
    December 31, 2007, 2006 or 2005, respectively, but have
    been or will be included as a cash outflow from investing
    activities for expenditures for property, plant and equipment
    when paid.  Accounts Receivable 
  Inventories 
  Property, Plant and Equipment 
  Regulated Operating Subsidiaries 
 66




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ITC Holdings and non-regulated subsidiaries 
  Software Costs 
  Impairment of Long-Lived Assets 
  Goodwill and Intangible Assets  Goodwill and Other Intangible Assets
  Deferred Financing Fees 
  Regulated Operating Subsidiaries 
 67




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITC Holdings and non-regulated subsidiaries 
  Asset Retirement Obligations  Accounting for Conditional Asset Retirement Obligations Accounting for
    Asset Retirement Obligations and/or
    (In thousands)Asset retirement obligation on January 1, 2007

$
5,346Accretion


383Liability assumed in the ITC Midwest acquisition


348Liability settlements


(108
)Revisions in estimated cash flows


(3,748
)Asset retirement obligation on December 31, 2007

$
2,221   Contingent Obligations 
  Revenues 
  by
  by
  by
   68




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    true-up
  Property Taxes 
  Stock-Based Compensation  Share-Based Payment
    Comprehensive Income (Loss) 
  Income Taxes 
 69




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for Uncertainty in Income Taxes Accounting
    for Income Taxes
    3.
    RECENT ACCOUNTING
    PRONOUNCEMENTS  Statement of
    Financial Accounting Standards No. 141(R), Business
    Combinations
  Business Combinations
  Statement of
    Financial Accounting Standards No. 157, Fair Value
    Measurements
  Fair Value Measurements
  Statement of
    Financial Accounting Standards No. 158, Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R)
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106, and
 70




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Statement of
    Financial Accounting Standards No. 159, The Fair Value
    Option for Financial Assets and Financial Liabilities
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  4.
    ACQUISITIONS  ITC Midwests Acquisition of IP&L Transmission
    Assets 
 71




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                Business
 72




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)Other current assets

$
5,858Property, plant and equipment (net)


512,152Goodwill


330,315Total assets acquired

$
848,325Current liabilities

$
4,204Other regulatory liabilities


43,570Other long-term liabilities


348Total liabilities assumed

$
48,122Net assets acquired

$
800,203   METC Acquisition 
        Pro Forma Financial Information 
 73




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      ITC
    Midwests Acquisition
  
    Increase in interest expense from the effects of ITC
    Holdings borrowings under the $765.0 million Bridge
    Facility in December 2007 to consummate the acquisition;
    Decrease in interest expense for the effects of interest expense
    recorded at IP&Ls electric transmission business
    based on a corporate allocation from its previous parent.
    Interest expense is not allocated through corporate overhead
    expenses subsequent to ITC Midwests acquisition; and
    Increase in federal income tax expense at an assumed rate of 35%
    based on the income tax provision to be recorded at ITC Holdings
    relating to ITC Midwest.    METC
    Acquisition
  
    Increase in interest expense from the effect of ITC
    Holdings issuance of $255.0 million aggregate
    principal amount of 5.875% Senior Notes due
    September 30, 2016, $255.0 million aggregate principal
    amount of 6.375% Senior Notes due September 30, 2036
    and the related interest rate lock agreements associated with
    financing the METC acquisition;
    Issuance and sale by us of 6,580,987 shares of ITC Holdings
    common stock in a public offering in October 2006 associated
    with the METC acquisition;
    Issuance of 2,195,045 shares of our common stock to a
    former shareholder of MTH as part of the METC acquisition;
    Elimination of revenue and operating expense that resulted from
    transactions between us and MTH and METC prior to the METC
    acquisition; and
    Increase in federal income tax expense at an assumed rate of 35%
    based on the income tax provision to be recorded at ITC Holdings
    relating to MTH and METC.    74




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pro FormaFinancial Informationfor the Years EndedDecember 31,(In thousands, except per share data)

2007


2006Operating revenues

$
505,954


$
416,373Income before cumulative effect of a change in accounting
    principle

$
55,502


$
25,480Net income

$
55,502


$
25,509Basic earnings per share

$
1.31


$
0.61Diluted earnings per share

$
1.27


$
0.59Weighted-average basic shares


42,298,478



41,828,435Weighted-average diluted shares


43,541,306



43,017,330   5.
    GOODWILL AND
    INTANGIBLE ASSETS  Goodwill
  ,
    2007


2006(In thousands)Goodwill balance, beginning of period

$
624,385


$
174,256Changes to goodwill:ITC Midwest acquisition


330,315



METC acquisition


5,188



450,129ITCTransmission acquisition


(846
)


Goodwill balance, end of period

$
959,042


$
624,385   ITC
    Midwests Goodwill
   75




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  METCs
    Goodwill
      ITCTransmissions
    Goodwill
    Intangible
    Assets
    6.
    REGULATORY
    MATTERS  Attachment O
    Network Transmission Rates
   76




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Forward-Looking
    Attachment O
    true-up
  true-up No. 92-7, Accounting by Rate-Regulated Utilities for the Effects of
    Certain Alternative Revenue Programs (EITF 92-7). true-up true-up
  true-up true-up
 77




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Network
    Transmission Rates
    Network Transmission Rate

ITCTransmission


METC


ITC MidwestJanuary 1, 2005 to May 31, 2005

$
1.587June 1, 2005 to May 31, 2006

$
1.594June 1, 2006 to December 31, 2006(a)

$
1.744


$
1.524January 1, 2007 to December 31, 2007(b)

$
2.099


$
1.524


$
2.475January 1, 2008 to December 31, 2008

$
2.350


$
1.985


$
2.564     (a)
    
    Our consolidated results of operations for 2006 include METC
    revenues for the period from October 11, 2006 through
    December 31, 2006.(b)
    
    Our consolidated results of operations for 2007 include revenues
    from the assets acquired by ITC Midwest for the period from
    December 20, 2007 through December 31, 2007.  METC Rate Case
    Settlement
  30-day and/or
    20-year 18-year
   78




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        (In thousands)

Regulatory Asset


Intangible Asset


TotalMETC Regulatory Deferrals

$
15,428


$
39,572


$
55,000METC ADIT Deferrals


42,456



18,835



61,291Total

$
57,884


$
58,407


$
116,291          79




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITCTransmission
    Rate Freeze Revenue Deferral
  EITF 92-7. EITF 92-7 EITF 92-7
  Redirected
    Transmission Service
     80




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  MISO Tariff
    Revisions
  No. ER05-273,
  Long Term
    Pricing
  No. EL02-111 through-and-out
    Elimination of
    Transmission Rate Discount
  No. EL05-66
 81




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. EL05-66,
  7.
    REGULATORY ASSETS
    AND LIABILITIES  Regulatory
    Assets
    2007


2006(In thousands)Regulatory Assets:Acquisition adjustments:ITCTransmission ADIT deferral

$
45,957


$
48,987METC ADIT Deferrals


40,097



42,456Attachment O revenue accrual


20,537



Other:METC Regulatory Deferrals


14,657



15,428Unamortized loss on reacquired debt


2,552



4,187AFUDC Equity


8,608



4,468Pensions & postretirement


3,632



2,100Total regulatory assets

$
136,373


$
117,626   ITCTransmission
    ADIT Deferral
    METC ADIT
    Deferrals
   82




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Attachment O
    Revenue Accrual
  true-up true-up true-up true-up true-up true-up
  Regulatory
    Asset  METC Regulatory Deferrals
    Unamortized
    Loss on Reacquired Debt
   83




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    AFUDC
    Equity
  true-up
  Pensions and
    Postretirement
  Employers Accounting
    for Pensions Employers
    Accounting for Postretirement Benefits Other Than Pensions
  Regulatory
    Liabilities
    2007


2006(In thousands)Regulatory Liabilities:Accrued asset removal costs

$
189,515


$
138,726Attachment O revenue deferral (a)


212



Total regulatory liabilities

$
189,727


$
138,726     (a)
    
    Refer to discussion above under Attachment O revenue
    accrual.  Accrued Asset
    Removal Costs
   84




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    8.
    PROPERTY, PLANT
    AND EQUIPMENT  equipment-net
  2007


2006(In thousands)Property, plant and equipment- Regulated Operating Subsidiaries:Plant in service

$
2,637,452


$
1,713,892Construction work in progress


180,779



79,297Other


14,863



8,059ITC Holdings and other


7,182



5,570Total


2,840,276



1,806,818Less accumulated depreciation and amortization


(879,843
)


(608,956
)Property, plant and
    equipment-net

$
1,960,433


$
1,197,862    85




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    LONG-TERM
    DEBT    2007


2006(In thousands)ITC Holdings Bridge Facility

$
765,000


$
ITC Holdings 5.25% Senior Notes due July 15, 2013 (net
    of discount of $658 and $777, respectively)


266,342



266,223ITC Holdings 6.04% Senior Notes, Series A, due
    September 20, 2014


50,000



ITC Holdings 5.875% Senior Notes due September 30,
    2016 (net of discount of $29 and $32, respectively)


254,971



254,968ITC Holdings 6.23% Senior Notes, Series B, due
    September 20, 2017


50,000



ITC Holdings 6.375% Senior Notes due September 30,
    2036 (net of discount of $220 and $228, respectively)


254,780



254,772ITC Holdings Credit Agreement


46,100



ITCTransmission 4.45% First Mortgage Bonds Series A due
    July 15, 2013 (net of discount of $66 and $78, respectively)


184,934



184,922ITCTransmission 6.125% First Mortgage Bonds Series C due
    March 31, 2036 (net of discount of $103 and $107,
    respectively)


99,897



99,893ITCTransmission/METC Credit Agreement


96,400



ITCTransmissions July 16, 2006 Revolving Credit
    Agreement






12,500METC 5.75% Senior Secured Notes due December 10, 2015


175,000



175,000METCs December 8, 2003 Revolving Credit Agreement






14,000Total long-term debt

$
2,243,424


$
1,262,278     (In thousands)2008

$
765,0002009


2010


2011


2012


142,5002013 and thereafter


1,337,000Total long-term debt

$
2,244,500   ITC Holdings
    Bridge Facility
  364-day
 86




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      ITC Holdings
    Senior Notes
    ITCTransmission
    First Mortgage Bonds
    METC Senior
    Secured Notes
    Revolving Credit
    Facilities
  ITC Holdings
    Credit Agreement
   87




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ITCTransmission/METC
    Credit Agreement
    ITC Midwest
    Credit Agreement
    Termination of
    Revolving Credit Facilities
  ITC
    Holdings March 19, 2004 Revolving Credit
    Agreement
    ITCTransmissions
    July 16, 2006 Revolving Credit Agreement
   88




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      METCs
    December 8, 2003 Revolving Credit Agreement
    ITC Midwest
    Acquisition Financing
  ITC Holdings
    Senior Notes
    ITC Midwest
    First Mortgage Bonds
      Interest Rate
    Lock Cash Flow Hedges
     89




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value of
    Long Term Debt
  Fixed Rate
    Long Term Debt
    Revolving
    Credit Facilities
    ITC Holdings
    Bridge Facility
    10.
    EARNINGS PER
    SHARE    (In thousands, except share and per share data)

2006


2005


2004Basic earnings per share:Net income

$
73,296


$
33,223


$
34,671Weighted-average shares outstanding


42,298,478



35,048,049



31,455,065Basic earnings per share

$
1.73


$
0.95


$
1.10Diluted earnings per share:Net income

$
73,296


$
33,223


$
34,671Weighted-average shares outstanding


42,298,478



35,048,049



31,455,065Incremental shares of stock-based awards


1,242,828



1,188,895



1,274,777Weighted-average dilutive shares outstanding


43,541,306



36,236,944



32,729,842Diluted earnings per share

$
1.68


$
0.92


$
1.06  90




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      11.
    INCOME
    TAXES    2007


2006


2005(In thousands)Income tax expense at 35% statutory rate

$
38,481


$
16,398


$
18,763State income taxes


(4,047
)






Valuation allowance  state income taxes


4,047







AFUDC Equity


(2,691
)


(2,909
)


Lobbying expenses not deductible


281



134



137Executive compensation


394







Other  net


185



35



38Income tax provision

$
36,650


$
13,658


$
18,938     2007


2006


2005(In thousands)Current income tax expense

$



$
428


$
313Deferred income tax expense


36,650



13,230



18,625Total income tax provision

$
36,650


$
13,658


$
18,938    91




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006(In thousands)Property, plant and equipment

$
(81,847
)

$
(54,376
)Federal income tax NOLs


32,178



32,677Michigan Business Tax deductions


24,621



METC regulatory deferral(a)


(19,213
)


(19,250
)Acquisition adjustments  ADIT deferral(a)


(13,761
)


(8,811
)Goodwill


(29,144
)


(20,234
)Attachment O revenue accrual (deferral)-net (including accrued
    interest)


(7,730
)


METC rate case accrued liability






7,000Pension and postretirement liabilities


5,861



2,747State income tax NOLs


3,199



Other  net


1,955



5,539Deferred tax asset valuation allowance(b)


(4,047
)


Net deferred tax assets (liabilities)

$
(87,928
)

$
(54,708
)Deferred income tax liabilities

$
(165,443
)

$
(107,238
)Deferred income tax assets


81,562



52,530Deferred tax asset valuation allowance(b)


(4,047
)


Net deferred tax assets (liabilities)

$
(87,928
)

$
(54,708
)     (a)
    
    Described in Note 7.(b)
    
    The deferred tax valuation allowance relates primarily to Iowa
    income tax NOLs that are expected to expire unused.    Accounting for Stock-Based
    Compensation
  Michigan Business
    Tax
   92




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Income
    Taxes
  12.
    LEASES      (In thousands)2008

$
7742009


2162010


2011


2012 and thereafter


Total minimum lease payments

$
990   13.
    RETIREMENT
    BENEFITS AND ASSETS HELD IN TRUST  Retirement Plan
    Benefits
   93




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Asset Category

2007


2006Fixed income securities


48.4
%


49.0
%Equity securities


51.6
%


51.0
%Total


100.0
%


100.0
%       2007


2006


2005(In thousands)Service cost

$
1,493


$
1,165


$
898Interest cost


996



961



577Expected return on plan assets


(650
)


(426
)


(286
)Amortization of prior service cost (credit)


(1,101
)


(23
)


488Amortization of actuarial loss (gain)


1,952



1,835



(3
)Net pension cost

$
2,690


$
3,512


$
1,674  94




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006(In thousands)Change in Benefit Obligation:Beginning projected benefit obligation

$
(16,161
)

$
(18,273
)Service cost


(1,493
)


(1,165
)Interest cost


(996
)


(961
)Actuarial net gain (loss)


(101
)


221Plan amendments


(145
)


4,017Benefits paid


27



Ending projected benefit obligation

$
(18,869
)

$
(16,161
)Change in Plans Assets:Beginning plan assets at fair value

$
8,379


$
6,012Actual return on plan assets


1,072



563Employer contributions


4,000



1,804Benefits paid


(27
)


Ending plan assets at fair value

$
13,424


$
8,379Funded status, underfunded

$
(5,445
)

$
(7,782
)Ending accumulated benefit obligation

$
(16,233
)

$
(13,751
)       September 30,


September 30,2007 Benefit


2006 BenefitObligation


ObligationDiscount rate


6.19
%


5.95
%Annual rate of salary increases


5.00
%


3.50
%     2007


2006


2005Discount rate


5.95
%


5.50
%


5.75
%Annual rate of salary increases


5.00
%


3.50
%


3.50
%Expected long-term rate of return on plan assets


7.00
%


7.00
%


7.00
%  95




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (In thousands)2008


4762009


1,2342010


1,1762011


1,3212012


1,7182013 through 2017


9,996   Other
    Postretirement Benefits
        Asset Category

2007


2006Fixed income securities


42.0
%


38.0
%Equity securities


58.0
%


62.0
%Total


100.0
%


100.0
%   No. 106-2,
 96




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005(In thousands)Service cost

$
982


$
1,181


$
1,001Interest cost


330



272



183Expected return on plan assets


(93
)


(42
)


(12
)Amortization of unrecognized prior service cost


235







Amortization of actuarial (gain) loss


(94
)


76



32Net postretirement cost

$
1,360


$
1,487


$
1,204     2007


2006(In thousands)Change in Benefit Obligation:Beginning accumulated postretirement obligation

$
(4,859
)

$
(4,951
)Service cost


(982
)


(1,181
)Interest cost


(330
)


(272
)Amendments


(2,025
)


Actuarial gain (loss)


(943
)


1,545Ending accumulated postretirement obligation

$
(9,139
)

$
(4,859
)Change in Plans AssetsBeginning plan assets at fair value

$
1,591


$
762Actual return on plan assets


225



96Employer contributions


395



733Ending Plan assets at fair value

$
2,211


$
1,591Funded status, underfunded

$
(6,928
)

$
(3,268
)    97




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    September 30,


September 30,2007 Benefit


2006 BenefitObligation


ObligationDiscount rate


6.19
%


5.95
%Annual rate of salary increases


5.00
%


3.50
%Health care cost trend rate assumed for next year


10.50
%


11.00
%Rate to which the cost trend rate is assumed to decline


5.00
%


5.00
%Year that the rate reaches the ultimate trend rate


2015



2015Annual rate of increase in dental benefit costs


5.00
%


5.00
%     2007


2006


2005Discount rate


5.95
%


5.50
%


5.75
%Annual rate of salary increases


5.00
%


3.50
%


3.50
%Health care cost trend rate assumed for next year


11.00
%


12.00
%


11.00
%Rate to which the cost trend rate is assumed to decline


5.00
%


5.00
%


5.00
%Year that the rate reaches the ultimate trend rate


2015



2015



2014     (In thousands)2008


912009


1902010


2592011


3472012


4302013 through 2017


4,299     One-Percentage-


One-Percentage-Point Increase


Point Decrease(In thousands)Effect on total of service and interest cost

$
243


$
(197
)Effect on postretirement benefit obligation


1,218



(998
)   Defined
    Contribution Plans
   98




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    DEFERRED
    COMPENSATION PLANS  Special Bonus
    Plans
            Accounting for Certain
    Investments in Debt and Equity Securities
  Deferred
    Compensation Plan
   99




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    STOCKHOLDERS
    EQUITY AND STOCK-BASED COMPENSATION  Common
    Stock
  General 
  
    100 million shares of common stock, without par
    value; and
    10 million shares of preferred stock, without par value.    Voting Rights 
  Dividends 
      Liquidation Rights 
 100




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Preemptive and Other Rights 
  Repurchases 
  ITC
    Holdings Common Stock Offerings
            Stock-based
    compensation
   101




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2007


2006


2005(In thousands)Operation and maintenance expenses

$
868


$
472


$
246General and administrative expenses


2,509



2,579



1,555Cumulative effect of a change in accounting principle (before
    tax effect)






(45
)


Property, plant and equipment


707



491



473Total stock-based compensation

$
4,084


$
3,497


$
2,274Total tax benefit recognized for compensation expense

$
1,147


$
1,052


$
630    102




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Options
    WeightedNumber of


AverageOptions


Exercise PriceOutstanding at January 1, 2007 (1,168,831 exercisable with
    a weighted average exercise price of $9.40)


2,650,023


$
13.30Granted


272,712



42.82Exercised


(351,172
)


8.77Forfeited


(68,291
)


21.80Outstanding at December 31, 2007 (1,364,826 exercisable
    with a weighted average exercise price of $11.03)


2,503,272


$
16.92     2007 Options


2006 Options


2005 OptionsWeighted-average grant-date fair value per option

$
9.08


$
6.77


$
3.85Weighted-average expected volatility(a)


21.3
%


22.2
%


24.0
%Weighted-average risk-free interest rate


4.5
%


4.8
%


4.1
%Weighted-average expected term(b)


6.0 years



6.0 years



6.0 yearsWeighted-average expected dividend yield


2.71
%


3.33
%


4.57
%Range of estimated fair values of underlying shares

$
42.82


$
33.00


$
23.00     (a)
    
    We estimate volatility using the volatility of the stock of
    similar companies, as well as our own stock for the 2007, 2006
    and 2005 option awards since we became a publicly traded company
    in July 2005.(b)
    
    The expected term represents the period of time that options
    granted are expected to be outstanding. We estimated the term
    using estimated option exercise activity and expected terms of
    similar companies, given our relatively short history of option
    exercises.     103




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted Stock
    Awards
        Number of


Weighted-Restricted


AverageStock


Grant DateAwards


Fair ValueUnvested restricted stock awards at January 1, 2007


366,035


$
24.82Granted


228,644



48.84Vested


(128,936
)


9.82Forfeited


(25,779
)


34.70Unvested restricted stock awards at December 31, 2007


439,964


$
41.14       16.
    RELATED-PARTY
    TRANSACTIONS   104




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  17.
    JOINTLY OWNED
    UTILITY PLANT/COORDINATED SERVICES      ConstructionNet Investment (a)


Work in Progress(In thousands)Substations

$
87,858


$
1,585Lines


80,108



7Total

$
167,966


$
1,592     (a)
    
    Amount represents our investment in jointly held plant, which
    has been reduced by the ownership interest amounts of other
    parties.  ITCTransmission
    METC
    ITC
    Midwest
   105




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    COMMITMENTS AND
    CONTINGENCIES  Environmental
    Matters
         106




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Litigation
    CSX
    Transportation, Inc.
    Property
    Taxes
    Commitments
   107




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITCTransmission
  Service Level Agreements (SLA) with Detroit
    Edison.
    METC
  Amended and Restated Purchase and Sale Agreement for
    Ancillary Services with Consumers Energy.
  Amended and Restated Easement Agreement with Consumers
    Energy. 50-year
  ITC
    Midwest
  Transition Services Agreement.
 108




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Operating Agreement.
  Concentration of
    Credit Risk
    19.
    SEGMENT
    INFORMATION  Disclosures about Segments of an Enterprise and Related
    Information
  Regulated
    Operating Subsidiaries
    ITC Holdings
    and Other
    109




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  RegulatedOperating


ITC Holdings2007

Subsidiaries(a)


and Other


Reconciliations


Eliminations


Total(In thousands)Operating revenues

$
426,249


$
181


$



$
(181
)

$
426,249Depreciation and amortization


67,637



291











67,928Interest expense


28,336



53,830







(303
)


81,863Income before income taxes


175,568



(65,622
)










109,946Income tax provision (benefit)(b)


39,202



(2,552
)










36,650Net income(b)


136,366



73,296







(136,366
)


73,296Property, plant and equipment, net


1,953,556



6,877











1,960,433Goodwill


959,042















959,042Total assets(c)


3,177,561



2,313,701



(540
)


(2,277,425
)


3,213,297Capital expenditures


287,069



1,062



(961
)






287,170   RegulatedOperating


ITC Holdings2006

Subsidiaries(d)


and Other


Reconciliations


Eliminations


Total(In thousands)Operating revenues

$
223,622


$



$



$



$
223,622Depreciation and amortization


40,142



14











40,156Interest expense


18,758



23,378







(87
)


42,049Income before income taxes


76,212



(29,360
)










46,852Income tax provision (benefit)(b)


22,186



(8,528
)










13,658Cumulative effect of a change in accounting principle


29















29Net income(b)


54,055



33,223







(54,055
)


33,223Property, plant and equipment, net


1,192,305



5,557











1,197,862Goodwill


624,385















624,385Total assets(c)


2,091,574



1,341,360



(1,245
)


(1,302,892
)


2,128,797Capital expenditures


161,926



5,570











167,496   RegulatedOperating


ITC Holdings2005

Subsidiaries


and Other


Reconciliations


Eliminations


Total(In thousands)Operating revenues

$
205,274


$



$



$



$
205,274Depreciation and amortization


33,197















33,197Interest expense


12,849



15,301







(22
)


28,128Income before income taxes


76,442



(22,833
)










53,609Income tax provision (benefit)


26,901



(7,963
)










18,938Net income


49,541



34,671







(49,541
)


34,671Property, plant and equipment, net


603,609















603,609Goodwill


174,256















174,256Total assets(c)


899,576



536,619



(17,353
)


(502,203
)


916,639Capital expenditures


118,586















118,586     (a)
    
    Amounts include the results of operations from the electric
    transmission business acquired by ITC Midwest for the period
    December 20, 2007 through December 31, 2007. 110




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (b)
    
    Income tax provision (benefit) and net income for our Regulated
    Operating Subsidiaries do not include any allocation of taxes
    for ITC Midwest or METC, as they are organized as LLCs
    exempt from federal and state taxation for the periods
    presented. ITC Midwest and METC do include an allowance for
    income taxes for ratemaking purposes.(c)
    
    Reconciliation of total assets results primarily from
    differences in the netting of deferred tax assets and
    liabilities under the provisions of SFAS 109 at our
    Regulated Operating Subsidiaries as compared to the
    classification in our consolidated statement of financial
    position.(d)
    
    Amounts include the results of operations from METC for the
    period October 11, 2006 through December 31, 2006.  20.
    SUPPLEMENTARY
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)    First


Second


Third


Fourth(In thousands, except per share data)

Quarter


Quarter


Quarter


Quarter(a)


Year2007Operating revenue

$
101,274


$
106,303


$
109,272


$
109,400


$
426,249Operating income


42,819



47,820



48,132



43,403



182,174Net income


16,855



19,999



20,800



15,642



73,296Basic earnings per share

$
0.40


$
0.47


$
0.49


$
0.37


$
1.73Diluted earnings per share

$
0.39


$
0.46


$
0.48


$
0.36


$
1.682006Operating revenue

$
39,069


$
48,475


$
63,004


$
73,074


$
223,622Operating income


10,719



19,301



32,967



23,092



86,079Income before cumulative effect of a change in accounting
    principle


2,653



7,999



18,949



3,593



33,194Net income


2,682



7,999



18,949



3,593



33,223Basic earnings per share(b)

$
0.08


$
0.24


$
0.57


$
0.09


$
0.95Diluted earnings per share(b)

$
0.08


$
0.23


$
0.55


$
0.08


$
0.92     (a)
    
    The fourth quarter 2006 amounts include the results of
    operations from MTH and METC for the period October 11, 2006
    through December 31, 2006. The fourth quarter 2007 amounts
    include the results of operations from ITC Midwest for the
    period December 20, 2007 through December 31, 2007.(b)
    
    The basic and diluted earnings per share amounts presented are
    applicable to both the income before cumulative effect of a
    change in accounting principle amount and net income amount. 111




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    ITEM 9A.
    CONTROLS
    AND PROCEDURES.  Form 10-K. Form 10-K.
  Disclosure
    Controls and Procedures
    Rule 13a-15
  Changes in
    Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.   112




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##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.    Equity
    Compensation Plans
      Number of SharesNumber of Shares





Remaining Availableto be Issued


Weighted-Average


for Future IssuanceUpon Exercise of


Exercise Price of


Under EquityPlan Category

Outstanding Options


Outstanding Options


Compensation Plans(a)Equity compensation plans approved by shareholders


2,503


$
16.92



1,105     (a)
    
    The number of shares remaining available for future issuance
    under equity compensation plans has been reduced by 1) the
    common shares issued through December 31, 2007 upon
    exercise of stock options; 2) the common shares to be
    issued upon the future exercise of outstanding stock options and
    3) the amount of restricted stock awards granted that have
    not been forfeited.  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES.   PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES         113




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##### Table of Contents



(2)
    Financial Statement Schedule    Regulation S-X
  At the request of any shareholder, ITC Holdings
    will furnish any exhibit upon the payment of a fee of $.10 per
    page to cover the costs of furnishing the exhibit.
 114




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant  ITC HOLDINGS
    CORP.
    CONDENSED STATEMENTS OF FINANCIAL POSITION (PARENT COMPANY
    ONLY)
  December 31,(In thousands)

2007


2006ASSETSCurrent assetsCash and cash equivalents

$
1,520


$
5,737Accounts receivable from subsidiaries


37,387



Deferred income taxes


3,370



Other


424



452Total current assets


42,701



6,189Other assetsInvestment in subsidiaries


2,035,483



1,277,817Intercompany advance to ITC Midwest


175,000



Deferred income taxes


19,245



33,133Deferred financing fees (net of accumulated amortization of
    $2,341 and $1,805, respectively)


8,165



7,541Other


14,754



1,442Total other assets


2,252,647



1,319,933TOTAL ASSETS

$
2,295,348


$
1,326,122LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccrued payable

$
3,950


$
144Accrued payable to subsidiaries






4,170Accrued payroll


8,481



Accrued interest


17,480



13,405Other


112



196Total current liabilities


30,023



17,915Accrued pension and other postretirement liabilities


13,934



Other


1,123



Long-term debt (net of discount of $907 and $1,037,
    respectively)


1,687,193



775,963STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares
    authorized, 42,916,852 and 42,395,760 shares issued and
    outstanding at December 31, 2007 and 2006, respectively


532,103



526,485Retained earnings


31,864



6,714Accumulated other comprehensive loss


(892
)


(955
)Total stockholders equity


563,075



532,244TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,295,348


$
1,326,122    115




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant
  ITC HOLDINGS
    CORP.
    CONDENSED STATEMENTS OF OPERATIONS (PARENT COMPANY
    ONLY)
  Year Ended December 31,(In thousands)

2007


2006


2005Other income

$
833


$
1,225


$
251General and administrative expense


(9,768
)


(3,569
)


(977
)Termination of management agreements










(6,725
)Interest expense


(53,830
)


(22,862
)


(15,301
)Loss on extinguishment of debt


(349
)






Other expense


(754
)


(1,151
)


(81
)LOSS BEFORE INCOME TAXES


(63,868
)


(26,357
)


(22,833
)INCOME TAX BENEFIT


(22,750
)


(9,419
)


(7,963
)LOSS AFTER TAXES


(41,118
)


(16,938
)


(14,870
)EQUITY IN SUBSIDIARIES EARNINGS


114,414



50,161



49,541NET INCOME

$
73,296


$
33,223


$
34,671    116




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant
  ITC HOLDINGS
    CORP.
    CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY
    ONLY)
  Year Ended December 31,(In thousands)

2007


2006


2005CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
73,296


$
33,223


$
34,671Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Equity in subsidiaries earnings


(114,414
)


(50,161
)


(49,541
)Dividends from subsidiaries


82,799



31,313



8,481Deferred income tax expense


(22,750
)


(9,419
)


(7,963
)Intercompany tax payments from subsidiaries


33,681







Stock-based compensation expense


4,084



644



15Amortization of deferred financing fees and debt discount


1,341



703



713Other


(61
)


28



Changes in assets and liabilities, exclusive of changes shown
    separately:Accounts receivable from subsidiaries


(37,871
)






Other current assets


29



(417
)


(35
)Accrued payable


3,215



141



(58
)Accrued payable to subsidiary


(4,170
)


3,450



526Accrued interest


4,075



6,942



(13
)Other current liabilities


8,397



29



(22
)Other long-term assets and liabilities, net


5,561



(1,003
)


(438
)Net cash provided by (used in) operating activities


37,212



15,473



(13,664
)CASH FLOWS FROM INVESTING ACTIVITIESEquity contributions to subsidiaries


(752,504
)


(186,303
)


Intercompany advance to ITC Midwest


(175,000
)






Return of capital from subsidiary


26,997



Acquisition of MTH and METC, net of cash acquired






(484,189
)


MTH and METC direct acquisition fees


(254
)


(11,456
)


Net cash used in investing activities


(900,761
)


(681,948
)


CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt


865,000



509,737



Issuance of ITC Holdings term-loan agreement


25,000







Repayment of ITC Holdings term-loan agreement


(25,000
)






Borrowings under revolving credit facilities


294,700



74,700



18,400Repayments of revolving credit facilities


(248,600
)


(74,700
)


(25,900
)Issuance of common stock


3,402



202,253



54,187Common stock issuance costs


(48
)


(2,321
)


(7,083
)Repurchase and retirement of common stock


(1,841
)


(1,040
)


(804
)Dividends on common stock


(48,168
)


(38,307
)


(17,433
)Debt issuance costs


(5,113
)


(5,231
)


(159
)Interest rate lock settlement






(1,491
)


Net cash provided by financing activities


859,332



663,600



21,208NET INCREASE IN CASH AND CASH EQUIVALENTS


(4,217
)


(2,875
)


7,544CASH AND CASH EQUIVALENTS  Beginning of period


5,737



8,612



1,068CASH AND CASH EQUIVALENTS  End of period

$
1,520


$
5,737


$
8,612Supplementary cash flows information:Interest paid (excluding interest capitalized)

$
48,414


$
15,130


$
14,577Income taxes paid


2,058



561



180Supplementary noncash investing and financing activities:Value of shares issued in MTH and METC acquisition






72,458



Equity transfers to subsidiaries


545



2,853



3,319Conversion of restricted stock to ITC Holdings common stock


1,266



926



885    117




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant
  ITC HOLDINGS
    CORP.
    NOTES TO CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY
    ONLY)
  1.
    GENERAL  Form 10-K.
      2.
    LONG-TERM
    DEBT    (In thousands)2008

$
765,0002009


2010


2011


2012


46,1002013 and thereafter


877,000Total long-term debt

$
1,688,100         3.
    RELATED-PARTY
    TRANSACTIONS   118




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##### Table of Contents



SIGNATURES    ITC HOLDINGS CORP.
  By:
    /s/  Joseph
    L. Welch        Signature

Title

Date/s/  Joseph
    L. WelchJoseph
    L. Welch

Director, President and Chief Executive Officer and Treasurer
    (principal executive officer)

February 29, 2008/s/  Edward
    M. RahillEdward
    M. Rahill

Senior Vice President  Finance and Chief Financial
    Officer (principal financial officer and principal accounting
    officer)

February 29, 2008/s/  Edward
    G. JepsenEdward
    G. Jepsen

Director

February 29, 2008/s/  Richard
    D. McLellanRichard
    D. McLellan

Director

February 29, 2008/s/  William
    J. MuselerWilliam
    J. Museler

Director

February 29, 2008/s/  Hazel
    R. OLearyHazel
    R. OLeary

Director

February 29, 2008/s/  Gordon
    Bennett Stewart, IIIGordon
    Bennett Stewart, III

Director

February 29, 2008/s/  Lee
    C. StewartLee
    C. Stewart

Director

February 29, 2008  119




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##### Table of Contents



EXHIBITS  001-32576.
  Exhibit No.

Description of Exhibit2
.1

Stock Purchase Agreement by and between DTE Energy Company and
    the Registrant, dated December 3, 2002 (filed with
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)2
.2

Purchase Agreement among Evercore Co-Investment
    Partnership II L.P., Evercore METC Capital Partners II
    L.P., MEAP US Holdings, Ltd., Macquarie Essential Assets
    Partnership, TE Power Opportunities Investors, L.P., TE
    Management Shareholders, MICH 1400 LLC, the Registrant, GFI
    Transmission Opportunities GP, LLC, OCM/GFI Power Opportunities
    Fund II, L.P., OCM.GFI Power Opportunities Fund II
    (Cayman) LP, and Macquarie Holdings (USA), Inc., dated as of
    May 11, 2006 (filed with Registrants
    Form 8-K
    filed on May 17, 2006)2
.3

Asset Sale Agreement by and between Interstate Power and Light
    Company and ITC Midwest LLC, dated as of January 18, 2007
    (filed with Registrants
    Form 8-K
    filed on January 24, 2007)2
.4

Parent Guaranty, by the Registrant in favor of Interstate Power
    and Light Company, dated as of January 18, 2007 (filed with
    Registrants
    Form 8-K
    filed on January 24, 2007)3
.1

Amended and Restated Articles of Incorporation of the Registrant
    (filed with Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)3
.2

First Amended and Restated Bylaws of the Registrant (filed with
    Registrants
    Form 8-K
    filed on June 14, 2007)4
.1

Form of Certificate of Common Stock (filed with
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.2

Registration Rights Agreement, dated as of February 28,
    2003, among the Registrant and International Transmission
    Holdings Limited Partnership (filed with Registrants
    Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.3

Indenture, dated as of July 16, 2003, between the
    Registrant and BNY Midwest Trust Company, as trustee (filed
    with Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.4

First Supplemental Indenture, dated as of July 16, 2003,
    supplemental to the Indenture dated as of July 16, 2003,
    between the Registrant and BNY Midwest Trust Company, as
    trustee (filed with Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.5

First Mortgage and Deed of Trust, dated as of July 15,
    2003, between International Transmission Company and BNY Midwest
    Trust Company, as trustee (filed with Registrants
    Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.6

First Supplemental Indenture, dated as of July 15, 2003,
    supplementing the First Mortgage and Deed of Trust dated as of
    July 15, 2003, between International Transmission Company
    and BNY Midwest Trust Company, as trustee (filed with
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.7

Second Supplemental Indenture, dated as of July 15, 2003,
    supplementing the First Mortgage and Deed of Trust dated as of
    July 15, 2003, between International Transmission Company
    and BNY Midwest Trust Company, as trustee (filed with
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.8

Amendment to Second Supplemental Indenture, dated as of
    January 19, 2005, between International Transmission
    Company and BNY Midwest Trust Company, as trustee (filed
    with Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)4
.9

Second Amendment to Second Supplemental Indenture, dated as of
    March 24, 2006, between International Transmission Company
    and BNY Midwest Trust Company, as trustee (filed with
    Registrants
    Form 8-K
    filed on March 30, 2006) 120




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##### Table of Contents



Exhibit No.

Description of Exhibit4
.10

Third Supplemental Indenture, dated as of March 28, 2006,
    supplementing the First Mortgage and Deed of Trust dated as of
    July 15, 2003, between International Transmission Company
    and BNY Midwest Trust Company, as trustee (filed with
    Registrants
    Form 8-K
    filed on March 30, 2006)4
.12

Second Supplemental Indenture, dated as of October 10,
    2006, supplemental to the Indenture dated as of July 16,
    2003, between the Registrant and BNY Midwest Trust Company,
    as trustee (filed with Registrants
    Form 8-K
    filed on October 10, 2006)4
.13

Shareholders Agreement by and between the Registrant and
    Macquarie Essential Assets Partnership, dated as of
    October 10, 2006 (filed with Registrants
    Form 8-K
    filed on October 16, 2006)4
.14

First Mortgage Indenture between Michigan Electric Transmission
    Company, LLC and JPMorgan Chase Bank, dated as of
    December 10, 2003 (filed with Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)4
.15

First Supplemental Indenture, dated as of December 10,
    2003, supplemental to the First Mortgage Indenture between
    Michigan Electric Transmission Company, LLC and JPMorgan Chase
    Bank, dated as of December 10, 2003 (filed with
    Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)4
.16

Second Supplemental Indenture, dated as of December 10,
    2003, supplemental to the First Mortgage Indenture between
    Michigan Electric Transmission Company, LLC and JPMorgan Chase
    Bank, dated as of December 10, 2003 (filed with
    Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)4
.17

ITC Holdings Corp. Note Purchase Agreement, dated as of
    September 20, 2007 (filed with Registrants
    Form 10-Q
    for the quarter ended September 30, 2007)4
.18

Third Supplemental Indenture, dated as of January 24, 2008,
    supplemental to the Indenture dated as of July 16, 2003,
    between the Registrant and The Bank of New York
    Trust Company, N.A. (as successor to BNY Midwest
    Trust Company, as trustee (filed with Registrants
    Form 8-K
    filed on January 25, 2008)4
.19

First Mortgage and Deed of Trust, dated as of January 14,
    2008, between ITC Midwest LLC and The Bank of New York
    Trust Company, N.A., as trustee (filed with
    Registrants
    Form 8-K
    filed on February 1, 2008)4
.20

First Supplemental Indenture, dated as of January 14, 2008,
    supplemental to the First Mortgage Indenture between ITC Midwest
    LLC and The Bank of New York Trust Company, N.A., as
    trustee, dated as of January 14, 2008 (filed with
    Registrants
    Form 8-K
    filed on February 1, 2008)*10
.7

Forms of Management Stockholders Agreements (filed as an
    exhibit to Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.8

Form of First Amendment to Management Stockholders
    Agreement (filed as Exhibit 10.8 to Registrants 2005
    Form 10-K)*10
.9

Forms of Waiver and Agreement for Executive Stockholders (filed
    as an exhibit to Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.10

Form of Waiver and Agreement for Non-Executive Stockholders
    (filed as an exhibit to Registrants Registration Statement
    on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.11

Form of Sale Participation Agreement (filed as an exhibit to
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.13

Amended and Restated 2003 Stock Purchase and Option Plan for Key
    Employees of the Registrant and its Subsidiaries (filed as an
    exhibit to Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.15

Form of Short Term Incentive Plan of the Registrant (filed as an
    exhibit to Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.17

Management Supplemental Benefit Plan (filed as an exhibit to
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657) 121




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##### Table of Contents



Exhibit No.

Description of Exhibit*10
.24

Employment Agreement between the Registrant and Joseph L. Welch
    (filed as an exhibit to Registrants Registration Statement
    on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.25

Form of Employment Agreements between the Registrant and Edward
    M. Rahill, Linda H. Blair, Richard A. Schultz and Jon Jipping
    (filed as an exhibit to Registrants Registration Statement
    on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.26

Form of Employment Agreements between the Registrant and Daniel
    J. Oginsky, Jim D. Cyrulewski, Joseph R. Dudak and Larry Bruneel
    (filed as an exhibit to Registrants Registration Statement
    on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.27

Deferred Compensation Plan (filed as an exhibit to
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)10
.28

Service Level Agreement  Construction and
    Maintenance/ Engineering/System Operations, dated
    February 28, 2003, between The Detroit Edison Company and
    International Transmission Company (filed as an exhibit to
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.29

Executive Supplemental Retirement Plan (filed as an exhibit to
    Registrants Registration Statement on
    Form S-1,
    as amended, Reg.
    No. 333-123657)*10
.34

Form of stock option agreement for executive officers under
    Amended and Restated 2003 Stock Purchase and Option Plan for Key
    Employees of the Registrant and its subsidiaries (filed as
    Exhibit 10.34 to Registrants
    Form 10-Q
    for the quarter ended September 30, 2005)*10
.35

Form of restricted stock award agreement for directors and
    executive officers under Amended and Restated 2003 Stock
    Purchase and Option Plan for Key Employees of the Registrant and
    its subsidiaries (filed as Exhibit 10.35 to
    Registrants 2005
    Form 10-K)*10
.36

Executive Cash Bonus Agreement, dated as of February 8,
    2006, between the Registrant and Daniel J. Oginsky (filed as
    Exhibit 10.36 to Registrants
    Form 8-K
    filed on February 14, 2006)*10
.37

ITC Holdings Corp. 2006 Long-Term Incentive Plan (filed as
    Exhibit 10.37 to Registrants
    Form 8-K
    filed on February 14, 2006)*10
.38

Amendment No. 1 dated as of February 8, 2006, to
    Amended and Restated 2003 Stock Purchase and Option Plan for Key
    Employees of the Registrant (filed as Exhibit 10.38 to
    Registrants
    Form 8-K
    filed on February 14, 2006)*10
.42

Addendum, adopted and effective May 17, 2006, to the
    International Transmission Company Management Supplemental
    Benefit Plan established May 10, 2005 (filed with
    Registrants
    Form 8-K
    filed on May 23, 2006)*10
.43

Second Amendment, adopted May 17, 2006 and effective
    January 1, 2006, to the International Transmission Company
    Executive Supplemental Retirement Plan, established effective
    March 1, 2003 (filed with Registrants
    Form 8-K
    filed on May 23, 2006)*10
.44

Form of Restricted Stock Award Agreement for Non-employee
    Directors under Amended and Restated 2003 Stock Purchase and
    Option Plan for Key Employees of the Registrant and its
    subsidiaries (filed with Registrants
    Form 8-K
    filed on August 18, 2006)*10
.45

Form of Restricted Stock Award Agreement for Employees under the
    Registrants 2006 Long Term Incentive Plan (filed with
    Registrants
    Form 8-K
    filed on August 18, 2006)*10
.46

Form of Stock Option Agreement for Employees under the
    Registrants 2006 Long Term Incentive Plan (filed with
    Registrants
    Form 8-K
    filed on August 18, 2006)*10
.47

Form of Amendment to Management Stockholders Agreement
    (filed with Registrants
    Form 8-K
    filed on August 18, 2006)*10
.48

Summary of Stock Ownership Agreement, effective August 16,
    2006, for Registrants Directors and Executive Officers
    (filed with Registrants
    Form 8-K
    filed on August 18, 2006)*10
.49

Form of Waiver and Agreement for Employees pursuant to the
    Management Stockholders Agreement (filed with
    Registrants
    Form S-1/A
    filed on September 25, 2006)10
.51

Form of Amended and Restated Easement Agreement between
    Consumers Energy Company and Michigan Electric Transmission
    Company (filed with Registrants
    Form 10-Q
    for the quarter ended September 30, 2006) 122




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##### Table of Contents



Exhibit No.

Description of Exhibit10
.52

Amendment and Restatement of the April 1, 2001 Operating
    Agreement by and between Michigan Electric Transmission Company
    and Consumers Energy Company, effective May 1, 2002 (filed
    with Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)10
.53

Amendment and Restatement of the April 1, 2001 Purchase and
    Sale Agreement for Ancillary Services between Consumers Energy
    Company and Michigan Electric Transmission Company, effective
    May 1, 2002 (filed with Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)10
.54

Amendment and Restatement of the April 1, 2001
    Distribution-Transmission Interconnection Agreement by and
    between Michigan Electric Transmission Company, as Transmission
    Provider and Consumers Energy Company, as Local Distribution
    Company, effective May 1, 2002 (filed with
    Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)10
.55

Amendment and Restatement of the April 1, 2001 Generator
    Interconnection Agreement between Michigan Electric Transmission
    Company and Consumers Energy Company (filed with
    Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)10
.56

Non-Competition Agreement, dated as of May 1, 2002, by and
    between Consumers Energy Company, Michigan Transco Holdings,
    Limited Partnership and Michigan Electric Transmission Company,
    LLC (filed with Registrants
    Form 10-Q
    for the quarter ended September 30, 2006)10
.57

Settlement Agreement, dated January 19, 2007, by Michigan
    Electric Transmission Company, LLC, on behalf of itself, Midwest
    Independent Transmission System Operator, Inc., Consumers Energy
    Company, the Michigan Public Power Agency, Michigan South
    Central Power Agency, Wolverine Power Supply Cooperative, Inc.,
    and10
.58

International Transmission Company (filed with Registrants
    Form 8-K
    filed on January 23, 2007) Revolving Credit Agreement,
    dated as of March 29, 2007, among the Registrant, as the
    Borrower, Various Financial Institutions and Other Persons from
    Time to Time Parties Hereto, as the Lenders, JPMorgan Chase
    Bank, N.A., as the Administrative Agent, J.P. Morgan
    Securities Inc., as Sole Lead Arranger and Sole Bookrunner, and
    Comerica Bank, Credit Suisse (Cayman Islands Branch) and Lehman
    Brothers Bank, FSB, as Co-Syndication Agents (filed with
    Registrants
    Form 8-K
    filed on April 4, 2007)10
.59

Revolving Credit Agreement, dated as of March 29, 2007,
    among International Transmission Company and Michigan Electric
    Transmission Company, LLC, as the Borrowers, Various Financial
    Institutions and Other Persons from Time to Time Parties Hereto,
    as the Lenders, JPMorgan Chase Bank, N.A., as the Administrative
    Agent, J.P. Morgan Securities Inc., as Sole Lead Arranger
    and Sole Bookrunner, and Comerica Bank, Credit Suisse (Cayman
    Islands Branch) and Lehman Brothers Bank, FSB, as Co-Syndication
    Agents (filed with Registrants
    Form 8-K
    filed on April 4, 2007)10
.60

Bridge Loan Agreement, dated as of September 26, 2007,
    among the Registrant, as the Borrower, Various Financial
    Institutions and Other Persons from Time to Time Parties Hereto,
    as the Lenders, Lehman Commercial Paper Inc., as the
    Administrative Agent and Lehman Brothers Inc., as Sole Lead
    Arranger and Sole Bookrunner (filed with Registrants
    Form 8-K
    filed on December 21, 2007)10
.61

Form of Distribution-Transmission Interconnection Agreement, by
    and between ITC Midwest LLC, as Transmission Owner and
    Interstate Power and Light Company, as Local Distribution
    Company, dated as of December 17, 2007 (filed with
    Registrants
    Form 8-K
    filed on December 21, 2007)10
.62

Form of Large Generator Interconnection Agreement, entered into
    by the Midwest Independent Transmission System Operator, Inc.,
    Interstate Power and Light Company and ITC Midwest LLC (filed
    with Registrants
    Form 8-K
    filed on December 21, 2007) 123




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##### Table of Contents



Exhibit No.

Description of Exhibit10
.63

Revolving Credit Agreement, dated as of January 29, 2008,
    among ITC Midwest LLC, as the Borrower, Various Financial
    Institutions and Other Persons from Time to Time Parties Hereto,
    as the Lenders, JPMorgan Chase Bank, N.A., as the Administrative
    Agent, J.P. Morgan Securities Inc., as Sole Lead Arranger
    and Sole Bookrunner, Credit Suisse (Cayman Islands Branch), as
    Syndication Agent and Lehman Brothers Bank, FSB, as
    Documentation Agent (filed with Registrants
    Form 8-K
    filed on January 31, 2008)*10
.64

Form of Amended and Restated Executive Group Special Bonus Plan
    of the Registrant, dated November 12, 2007*10
.65

Form of Amended and Restated Special Bonus Plan of the
    Registrant, dated November 12, 2007*10
.66

ITC Holdings Corp. Employee Stock Purchase Plan, as amended
    June 8, 200710
.67

Commitment Increase Supplements of the Lenders, dated
    December 27, 2007, related to the Revolving Credit
    Agreement, dated as of March 29, 2007, among International
    Transmission Company and Michigan Electric Transmission Company,
    LLC, as the Borrowers, Various Financial Institutions and Other
    Persons from Time to Time Parties Hereto, as the Lenders,
    JPMorgan Chase Bank, N.A., as the Administrative Agent,
    J.P. Morgan Securities Inc., as Sole Lead Arranger and Sole
    Bookrunner, and Comerica Bank, Credit Suisse (Cayman Islands
    Branch) and Lehman Brothers Bank, FSB, as Co-Syndication Agents21


List of Subsidiaries23
.1

Consent of Deloitte & Touche LLP relating to the
    Registrant and subsidiaries31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232


Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Management contract or compensatory plan or arrangement. 124