##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-32576
 ITC HOLDINGS CORP.
  Michigan
    
    32-0058047(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 27175 Energy Way
Novi, MI 48377
 (248) 946-3000
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



ITC Holdings Corp.
Form 10-Q for the Quarterly Period Ended September 30, 2008
 INDEX
 PagePart I. Financial InformationItem 1. Financial Statements
    
    
    4Condensed Consolidated Statements of Financial Position (Unaudited)
    
    
    4Condensed Consolidated Statements of Operations (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28Part II. Other Information
    
    
    28Item 1A. Risk Factors
    
    
    28Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit Index
  2




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##### Table of Contents



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, an indirect,
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
 
    
    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 Company;
    
    FERC are references to the Federal Energy Regulatory Commission;
    
    IP&L are references to Interstate Power and Light Company, an Alliant Energy
Corporation subsidiary;
    
    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 regional transmission organization, 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;
    
    MW are references to megawatts (one megawatt equaling 1,000,000 watts); and
    
    NERC are references to the North American Electric Reliability Corporation.
 3




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
 September 30,
    
    
    December 31,(in thousands, except share data)
    
    2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    36,012
    
    
    $
    2,616Accounts receivable
    
    
    57,584
    
    
    
    40,919Inventory
    
    
    19,158
    
    
    
    26,315Deferred income taxes
    
    
    27,246
    
    
    
    2,689Regulatory assets- Attachment O revenue accrual (including accrued interest of $1,364)
    
    
    16,862
    
    
    
    Other
    
    
    4,992
    
    
    
    3,518Total current assets
    
    
    161,854
    
    
    
    76,057Property, plant and equipment(net of accumulated depreciation and amortization of $916,632
and $879,843, respectively)
    
    
    2,206,072
    
    
    
    1,960,433Other assetsGoodwill
    
    
    959,811
    
    
    
    959,042Intangible assets (net of accumulated amortization of $5,294 and $3,025, respectively)
    
    
    53,113
    
    
    
    55,382Regulatory assets- Attachment O revenue accrual (including accrued interest of $476 and
$552, respectively)
    
    
    55,306
    
    
    
    20,537Other regulatory assets
    
    
    112,001
    
    
    
    115,503Deferred financing fees (net of accumulated amortization of $7,515 and $5,138, respectively)
    
    
    20,122
    
    
    
    14,201Other
    
    
    27,306
    
    
    
    12,142Total other assets
    
    
    1,227,659
    
    
    
    1,176,807TOTAL ASSETS
    
    $
    3,595,585
    
    
    $
    3,213,297LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    75,709
    
    
    $
    47,627Accrued payroll
    
    
    11,104
    
    
    
    8,928Accrued interest
    
    
    13,641
    
    
    
    23,088Accrued taxes
    
    
    10,466
    
    
    
    15,065ITC Midwests asset acquisition additional purchase price accrual
    
    
    
    
    
    
    5,402Refundable deposits from generators for transmission network upgrades
    
    
    13,954
    
    
    
    2,352Other
    
    
    4,174
    
    
    
    3,965Total current liabilities
    
    
    129,048
    
    
    
    106,427Accrued pension and postretirement liabilities
    
    
    17,193
    
    
    
    13,934Deferred income taxes
    
    
    169,057
    
    
    
    90,617Regulatory liabilities
    
    
    195,234
    
    
    
    189,727Other
    
    
    5,838
    
    
    
    6,093Long-term debt
    
    
    2,163,446
    
    
    
    2,243,424STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares authorized, 49,629,489 and 42,916,852
shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively
    
    
    846,329
    
    
    
    532,103Retained earnings
    
    
    70,284
    
    
    
    31,864Accumulated other comprehensive loss
    
    
    (844
    )
    
    
    (892
    )Total stockholders equity
    
    
    915,769
    
    
    
    563,075TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,595,585
    
    
    $
    3,213,297
  4




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ITC HOLDINGS CORP. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007OPERATING REVENUES
    
    $
    163,279
    
    
    $
    109,272
    
    
    $
    465,809
    
    
    $
    316,850OPERATING EXPENSESOperation and maintenance
    
    
    33,271
    
    
    
    22,451
    
    
    
    87,628
    
    
    
    62,494General and administrative
    
    
    20,640
    
    
    
    13,376
    
    
    
    59,983
    
    
    
    40,603Depreciation and amortization
    
    
    23,869
    
    
    
    17,060
    
    
    
    69,639
    
    
    
    49,893Taxes other than income taxes
    
    
    10,552
    
    
    
    8,253
    
    
    
    31,750
    
    
    
    25,089Net (gain)/loss on sale of assets
    
    
    515
    
    
    
    
    
    
    
    (930
    )
    
    
    Total operating expenses
    
    
    88,847
    
    
    
    61,140
    
    
    
    248,070
    
    
    
    178,079OPERATING INCOME
    
    
    74,432
    
    
    
    48,132
    
    
    
    217,739
    
    
    
    138,771OTHER EXPENSES (INCOME)Interest expense
    
    
    30,547
    
    
    
    20,084
    
    
    
    91,263
    
    
    
    59,156Allowance for equity funds used during construction
    
    
    (2,672
    )
    
    
    (2,339
    )
    
    
    (8,052
    )
    
    
    (5,192
    )Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    349Other income
    
    
    (847
    )
    
    
    (1,128
    )
    
    
    (1,909
    )
    
    
    (2,847
    )Other expense
    
    
    1,494
    
    
    
    175
    
    
    
    2,928
    
    
    
    844Total other expenses (income)
    
    
    28,522
    
    
    
    16,792
    
    
    
    84,230
    
    
    
    52,310INCOME BEFORE INCOME TAXES
    
    
    45,910
    
    
    
    31,340
    
    
    
    133,509
    
    
    
    86,461INCOME TAX PROVISION
    
    
    17,865
    
    
    
    10,540
    
    
    
    51,282
    
    
    
    28,807NET INCOME
    
    $
    28,045
    
    
    $
    20,800
    
    
    $
    82,227
    
    
    $
    57,654Basic earnings per share
    
    $
    0.57
    
    
    $
    0.49
    
    
    $
    1.70
    
    
    $
    1.36Diluted earnings per share
    
    $
    0.56
    
    
    $
    0.48
    
    
    $
    1.66
    
    
    $
    1.33Weighted-average basic shares
    
    
    49,035,446
    
    
    
    42,369,352
    
    
    
    48,449,303
    
    
    
    42,244,470Weighted-average diluted shares
    
    
    50,245,145
    
    
    
    43,592,868
    
    
    
    49,653,897
    
    
    
    43,474,222Dividends declared per common share
    
    $
    0.305
    
    
    $
    0.290
    
    
    $
    0.885
    
    
    $
    0.840
  5




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ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Nine months endedSeptember 30,(in thousands)
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    82,227
    
    
    $
    57,654Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization expense
    
    
    69,639
    
    
    
    49,893Attachment O revenue accrual  including accrued interest
    
    
    (51,619
    )
    
    
    (9,931
    )Deferred income tax expense
    
    
    49,644
    
    
    
    28,807Allowance for equity funds used during construction
    
    
    (8,052
    )
    
    
    (5,192
    )Stock-based compensation expense
    
    
    4,671
    
    
    
    2,402Amortization of loss on reacquired debt, deferred financing fees and debt discounts
    
    
    4,234
    
    
    
    3,144Other
    
    
    (893
    )
    
    
    (123
    )Changes in assets and liabilities, exclusive of changes shown separately:Accounts receivable
    
    
    (15,353
    )
    
    
    (7,117
    )Inventory
    
    
    (3,375
    )
    
    
    (13,258
    )Other current assets
    
    
    (1,474
    )
    
    
    5,705Accounts payable
    
    
    11,844
    
    
    
    15,112Accrued interest
    
    
    (9,445
    )
    
    
    (11,339
    )Accrued taxes
    
    
    (4,456
    )
    
    
    (9,083
    )Other current liabilities
    
    
    3,645
    
    
    
    (3,131
    )Non-current assets and liabilities, net
    
    
    (1,207
    )
    
    
    (2,903
    )Net cash provided by operating activities
    
    
    130,030
    
    
    
    100,640CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment
    
    
    (288,974
    )
    
    
    (214,319
    )ITC Midwests asset acquisition additional purchase price
    
    
    (4,714
    )
    
    
    ITC Midwests asset acquisition direct fees
    
    
    (1,008
    )
    
    
    (1,818
    )Other
    
    
    6,194
    
    
    
    926Net cash used in investing activities
    
    
    (288,502
    )
    
    
    (215,211
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt
    
    
    657,782
    
    
    
    100,000Repayment of long-term debt
    
    
    (765,000
    )
    
    
    Borrowings under ITC Holdings Term Loan Agreement
    
    
    
    
    
    
    25,000Repayment of ITC Holdings Term Loan Agreement
    
    
    
    
    
    
    (25,000
    )Borrowings under revolving credit agreements
    
    
    480,511
    
    
    
    455,400Repayments of revolving credit agreements
    
    
    (453,500
    )
    
    
    (416,100
    )Issuance of common stock
    
    
    310,237
    
    
    
    2,860Common stock issuance costs
    
    
    (797
    )
    
    
    (5
    )Dividends on common stock
    
    
    (43,793
    )
    
    
    (35,751
    )Repurchase and retirement of common stock
    
    
    
    
    
    
    (1,841
    )Debt issuance costs
    
    
    (5,409
    )
    
    
    (1,056
    )Refundable deposits from generators for transmission network upgrades
    
    
    14,189
    
    
    
    Repayment of refundable deposits from generators for transmission network upgrades
    
    
    (2,352
    )
    
    
    Net cash provided by financing activities
    
    
    191,868
    
    
    
    103,507NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    33,396
    
    
    
    (11,064
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    2,616
    
    
    
    13,426CASH AND CASH EQUIVALENTS  End of period
    
    $
    36,012
    
    
    $
    2,362
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1. GENERAL
    Supplementary Cash Flows Information
 Nine months endedSeptember 30,(in thousands)
    
    2008
    
    2007Supplementary cash flows information:Interest paid (excluding interest capitalized)
    
    $
    96,475
    
    
    $
    67,606Income taxes paid
    
    
    1,312
    
    
    
    2,058Supplementary noncash investing and financing activities:Additions to property, plant and equipment (a)
    
    
    53,656
    
    
    
    35,865Allowance for equity funds used during construction
    
    
    8,052
    
    
    
    5,192
 
 (a)
    
    Amounts consist primarily of current liabilities for construction labor and materials that
have not been included in investing activities. These amounts have not been paid for as of
September 30, 2008 or 2007, respectively, but have been or will be included as a cash outflow
from investing activities for expenditures for property, plant and equipment when paid. Comprehensive Income
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    28,045
    
    
    $
    20,800
    
    
    $
    82,227
    
    
    $
    57,654Amortization of
interest rate lock
cash flow hedges,
net of tax of $9
for the three
months ended
September 30, 2008
and 2007,
respectively, and
net of tax of $26
for the nine months
ended September 30,
2008 and 2007,
respectively
    
    
    16
    
    
    
    16
    
    
    
    48
    
    
    
    48Comprehensive income
    
    $
    28,061
    
    
    $
    20,816
    
    
    $
    82,275
    
    
    $
    57,702
 2. RECENT ACCOUNTING PRONOUNCEMENTS
 FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities
 7




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Participating Securities and the Two-Class
Method under FASB Statement No. 128
 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 Effective Date of FASB Statement No. 157
 Fair Value Measurements
  Accounting for Certain Investments in Debt and Equity Securities
 8




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Fair Value Measurements at Reporting Date UsingQuoted prices in
    
    
    
    
    
    Significantactive markets for
    
    Significant other
    
    unobservableidentical assets
    
    observable inputs
    
    inputs(in thousands)
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Cash equivalents
    
    $
    35,319
    
    
    $
    
    
    
    $
    Trading securities
    
    $
    5,710
    
    
    $
    
    
    
    $
    
 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
132(R) Accounting for the Effects of Certain Types of Regulation Employers Accounting
for Pensions Employers
Accounting for Postretirement Benefits Other Than Pensions
   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
 Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133
 Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133 Accounting for
Derivative Instruments and Hedging Activities
 9




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##### Table of Contents



Statement of Financial Accounting Standards No. 162, The Hierarchy of Generally Accepted Accounting
Principles
 The Hierarchy of Generally Accepted
Accounting Principles
 3. ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
 ITC Midwests Acquisition of IP&L Transmission Assets
  Business Combinations
   Intangible Assets
  (in thousands)2008
    
    $
    3,0252009
    
    
    3,0252010
    
    
    3,0252011
    
    
    3,0252012
    
    
    3,0252013 and thereafter
    
    
    40,257Total
    
    $
    55,382
 10




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##### Table of Contents



4. REGULATORY MATTERS
 Attachment O Network Transmission Rates
   Forward-Looking Attachment O
   Accounting by Rate-Regulated Utilities for the Effects of Certain
Alternative Revenue Programs
  Long Term Pricing
   11




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5. LONG-TERM DEBT
 ITC Midwests Asset Acquisition Debt Financing
 ITC Holdings Bridge Facility
   ITC Holdings Senior Notes
  ITC Midwest Series A Bonds
  ITCTransmission Series D Bonds
  12




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Revolving Credit Agreements
  ITC Holdings Revolving Credit Agreement
  ITCTransmission/METC Revolving Credit Agreement
  ITC Midwest Revolving Credit Agreement
  6. EQUITY
 ITC Holdings Sales Agency Financing Agreement
  Public Securities Offering
  Long Term Incentive Plan Grants
  13




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Stock Option Exercises
  7. EARNINGS PER SHARE
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Basic earnings per share:Net income
    
    $
    28,045
    
    
    $
    20,800
    
    
    $
    82,227
    
    
    $
    57,654Weighted-average shares outstanding
    
    
    49,035,446
    
    
    
    42,369,352
    
    
    
    48,449,303
    
    
    
    42,244,470Basic earnings per share
    
    $
    0.57
    
    
    $
    0.49
    
    
    $
    1.70
    
    
    $
    1.36Diluted earnings per share:Net income
    
    $
    28,045
    
    
    $
    20,800
    
    
    $
    82,227
    
    
    $
    57,654Weighted-average shares outstanding
    
    
    49,035,446
    
    
    
    42,369,352
    
    
    
    48,449,303
    
    
    
    42,244,470Incremental shares of stock-based awards
    
    
    1,209,699
    
    
    
    1,223,516
    
    
    
    1,204,594
    
    
    
    1,229,752Weighted-average dilutive shares outstanding
    
    
    50,245,145
    
    
    
    43,592,868
    
    
    
    49,653,897
    
    
    
    43,474,222Diluted earnings per share
    
    $
    0.56
    
    
    $
    0.48
    
    
    $
    1.66
    
    
    $
    1.33
   8. TAXES
 Michigan Business Tax
 Accounting for Income Taxes
 9. RETIREMENT BENEFITS AND ASSETS HELD IN TRUST
  Retirement Plan Benefits
  14




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Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    498
    
    
    $
    373
    
    
    $
    1,479
    
    
    $
    1,120Interest cost
    
    
    293
    
    
    
    249
    
    
    
    871
    
    
    
    747Expected return on plan assets
    
    
    (261
    )
    
    
    (162
    )
    
    
    (777
    )
    
    
    (488
    )Amortization of prior service cost
    
    
    (232
    )
    
    
    (275
    )
    
    
    (686
    )
    
    
    (826
    )Amortization of unrecognized loss
    
    
    455
    
    
    
    488
    
    
    
    1,343
    
    
    
    1,465Net pension cost
    
    $
    753
    
    
    $
    673
    
    
    $
    2,230
    
    
    $
    2,018
 Other Postretirement Benefits
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    406
    
    
    $
    246
    
    
    $
    1,225
    
    
    $
    737Interest cost
    
    
    167
    
    
    
    82
    
    
    
    504
    
    
    
    247Expected return on plan assets
    
    
    (54
    )
    
    
    (23
    )
    
    
    (163
    )
    
    
    (70
    )Amortization of prior service cost
    
    
    145
    
    
    
    59
    
    
    
    436
    
    
    
    176Amortization of unrecognized actuarial loss
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    (70
    )Net postretirement cost
    
    $
    664
    
    
    $
    340
    
    
    $
    2,002
    
    
    $
    1,020
 Defined Contribution Plans
  10. CONTINGENCIES
 Litigation
  CSX Transportation, Inc.
  15




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##### Table of Contents



11. SEGMENT INFORMATION
 Disclosures about Segments of an Enterprise and Related Information
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,OPERATING REVENUES:
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Regulated Operating Subsidiaries
    
    $
    163,304
    
    
    $
    109,272
    
    
    $
    465,859
    
    
    $
    316,850ITC Holdings and other
    
    
    69
    
    
    
    58
    
    
    
    208
    
    
    
    116Intercompany eliminations
    
    
    (94
    )
    
    
    (58
    )
    
    
    (258
    )
    
    
    (116
    )Total Operating Revenues
    
    $
    163,279
    
    
    $
    109,272
    
    
    $
    465,809
    
    
    $
    316,850
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,INCOME BEFORE INCOME TAXES
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Regulated Operating Subsidiaries
    
    $
    68,354
    
    
    $
    46,402
    
    
    $
    200,279
    
    
    $
    130,429ITC Holdings and other
    
    
    (22,444
    )
    
    
    (15,062
    )
    
    
    (66,770
    )
    
    
    (43,968
    )Total Income Before Income Taxes
    
    $
    45,910
    
    
    $
    31,340
    
    
    $
    133,509
    
    
    $
    86,461
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,NET INCOME:
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Regulated Operating Subsidiaries (a)
    
    $
    47,103
    
    
    $
    36,076
    
    
    $
    139,011
    
    
    $
    101,402ITC Holdings and other
    
    
    28,045
    
    
    
    20,800
    
    
    
    82,227
    
    
    
    57,654Intercompany eliminations
    
    
    (47,103
    )
    
    
    (36,076
    )
    
    
    (139,011
    )
    
    
    (101,402
    )Total Net Income
    
    $
    28,045
    
    
    $
    20,800
    
    
    $
    82,227
    
    
    $
    57,654
 September 30,
    
    
    December 31,ASSETS:
    
    2008
    
    
    2007(in thousands)Regulated Operating Subsidiaries
    
    $
    3,539,514
    
    
    $
    3,177,561ITC Holdings and other
    
    
    2,317,842
    
    
    
    2,313,701Reconciliations(b)
    
    
    (1,881
    )
    
    
    (540
    )Intercompany eliminations
    
    
    (2,259,890
    )
    
    
    (2,277,425
    )Total Assets
    
    $
    3,595,585
    
    
    $
    3,213,297
 
 (a)
    
    Net income for our Regulated Operating Subsidiaries does not include any allocation of
federal taxes for METC, as METC and its immediate parent company file as a partnership for
federal income tax purposes and are exempt from federal income taxation. METC does include an
allowance for income taxes for ratemaking purposes.(b)
    
    Reconciliations of total assets result 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. 16




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
    
    unless we receive dividends or other payments from our Regulated Operating Subsidiaries,
we will be unable to pay dividends to our stockholders and fulfill our cash obligations;
    
    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 ITC Midwests asset acquisition) that could have an adverse effect
on our business, financial condition, results of operations and cash flows;
    
    approval of ITC Midwests asset acquisition by state regulatory authorities in Iowa may
be subject to further challenge. If such proceedings are decided in a manner that is
unfavorable to us, all or part of the orders approving ITC Midwests asset acquisition in
Iowa could be reversed, which could have a material adverse effect on our business,
financial condition, results of operations and cash flows;
    
    our Regulated Operating Subsidiaries actual capital expenditures may be lower than
planned, which would decrease their respective expected rate bases and therefore our
revenues;
    
    the regulations to which we are subject may limit our ability to raise capital and/or
pursue acquisitions or development opportunities or other transactions or may subject us to
liabilities;
    
    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;
    
    changes in federal energy laws, regulations or policies could reduce the dividends we may
be able to pay our stockholders;
    
    adverse changes in interest rates or our credit ratings may negatively affect us;
    
    hazards associated with high-voltage electricity transmission, such as explosions, fires,
inclement weather, floods and other natural disasters, mechanical failure and related
matters, may result in suspension of our Regulated Operating Subsidiaries operations,
unexpected expenses or the imposition of civil or criminal penalties;
    
    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;
    
    each of our Regulated Operating Subsidiaries depends on its primary customer for a
substantial portion of its revenues (Detroit Edison for ITCTransmission, Consumers Energy
for METC and IP&L for ITC Midwest), 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;
    
    METC does not own the majority of the land on which its transmission assets are located.
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 and ITC Midwests other property consists of
easements. As a result each of 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;
 17




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##### Table of Contents




    
    deregulation and/or increased competition may adversely affect customers of our Regulated
Operating Subsidiaries, or customers of Detroit Edison, Consumers Energy or IP&L, which may
affect our ability to collect revenues;
    
    we are subject to environmental regulations and to laws that can give rise to substantial
liabilities from environmental contamination;
    
    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;
    
    we may encounter difficulties consolidating 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 ITC Midwests asset
acquisition;
    
    if one or both of ITC Midwests operating agreements with IP&L and American Transmission
Company, LLC were terminated early, ITC Midwest may face a shortage of labor or replacement
contractors to provide the services formerly provided by IP&L and American Transmission
Company, LLC;
    
    we are highly leveraged and our dependence on debt may limit our ability to fulfill our
debt obligations, pay dividends and/or obtain additional financing;
    
    certain provisions in our debt instruments may limit our financial flexibility;
    
    we have limitations on the amount of federal income tax net operating loss carryforwards
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;
    
    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;
    
    our Regulated Operating Subsidiaries ability to raise capital may be restricted which
may, in turn, restrict our ability to make capital expenditures or pay dividends to our
stockholders; and
    
    other risk factors discussed herein and listed from time to time in our public filings
with the Securities and Exchange Commission (SEC).
  OVERVIEW
  18




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##### Table of Contents



Recent Developments
  
    
    Capital investment of $91.3 million, $85.4 million and $110.4 million at ITCTransmission,
METC and ITC Midwest, respectively, for the nine months ended September 30, 2008, 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 (described in Notes 3, 5 and 6 to the condensed consolidated
financial statements);
    
    Lower than expected monthly peak loads at ITCTransmission and METC and the resulting
effect on operating cash flows; and
    
    Debt issuances and borrowings under our revolving credit agreements in 2007 and 2008 to
fund capital investment at our Regulated Operating Subsidiaries, resulting in higher
interest expense.
  Financial Markets
  Iowa Flood Damage
  19




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##### Table of Contents



Development Activities
  Trends and Seasonality
 Network Revenues
   Ten-Year Capital
    
    
    Capital InvestmentInvestment Program
    
    
    
    
    
    
    Amounts throughRegulated Operating Subsidiary
    
    2008-2017 (a)
    
    
    Expected in 2008
    
    September 30, 2008 (b)ITCTransmission
    
    $700 million
    
    
    $115 million  $120 million
    
    $91.3 millionMETC
    
    $1,150 million
    
    
    $110 million  $120 million
    
    $85.4 millionITC Midwest
    
    $1,050 million
    
    
    $120 million  $140 million
    
    $110.4 million
 
 (a)
    
    The expected amounts for our ten-year program do not include $150 million at ITCTransmission
and METC and $250 million at ITC Midwest for estimated transmission network upgrades for
generator interconnections due to a high degree of uncertainty on whether these projects will
ultimately be built and because they could replace other transmission projects currently being
planned. This estimate for network upgrades could change significantly due to factors beyond
our control, such as changes in the MISO queue for generation projects and whether the
generator meets the various criteria of Attachment FF of the MISO Transmission and Energy
Market Tariff for the project to qualify as a refundable network upgrade, among other factors.
In addition, these amounts do not include any possible capital investment associated with the projects discussed
under Recent Developments Development Activities. 20




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##### Table of Contents



(b)
    
    Capital investment amounts differ from cash expenditures for property, plant and equipment
included in our consolidated statements of cash flows due in part to differences in
construction costs incurred compared to cash paid during that period, as well as payments for
major equipment inventory that are included in cash expenditures but not included in capital
investment until transferred to construction work in progress, among other factors.  Seasonality and Attachment O Revenue Accrual
    Monthly Peak Load (in MW) (a)
 2008
    
    2007
    
    2006ITC Midwest
    
    METC
    
    ITCTransmission
    
    ITC Midwest
    
    METC
    
    ITCTransmission
    
    METC
    
    ITCTransmissionJanuary
    
    
    2,974
    
    
    
    6,215
    
    
    
    7,890
    
    
    
    
    
    
    
    6,051
    
    
    
    7,876
    
    
    
    
    
    
    
    7,754February
    
    
    2,890
    
    
    
    6,159
    
    
    
    7,715
    
    
    
    
    
    
    
    6,227
    
    
    
    8,170
    
    
    
    
    
    
    
    7,667March
    
    
    2,733
    
    
    
    5,797
    
    
    
    7,532
    
    
    
    
    
    
    
    6,006
    
    
    
    7,739
    
    
    
    
    
    
    
    7,554April
    
    
    2,455
    
    
    
    5,223
    
    
    
    6,926
    
    
    
    
    
    
    
    5,473
    
    
    
    7,141
    
    
    
    
    
    
    
    7,035May
    
    
    2,431
    
    
    
    5,320
    
    
    
    7,051
    
    
    
    
    
    
    
    6,981
    
    
    
    9,927
    
    
    
    
    
    
    
    10,902June
    
    
    2,888
    
    
    
    7,243
    
    
    
    10,624
    
    
    
    
    
    
    
    8,511
    
    
    
    11,761
    
    
    
    
    
    
    
    9,752July
    
    
    3,376
    
    
    
    7,911
    
    
    
    11,016
    
    
    
    
    
    
    
    8,672
    
    
    
    11,706
    
    
    
    
    
    
    
    12,392August
    
    
    3,259
    
    
    
    7,818
    
    
    
    10,890
    
    
    
    
    
    
    
    8,955
    
    
    
    12,087
    
    
    
    
    
    
    
    12,745September
    
    
    3,191
    
    
    
    7,667
    
    
    
    10,311
    
    
    
    
    
    
    
    7,908
    
    
    
    11,033
    
    
    
    
    
    
    
    8,415October
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,524
    
    
    
    10,365
    
    
    
    5,642
    
    
    
    7,302November
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,200
    
    
    
    7,812
    
    
    
    6,103
    
    
    
    7,724December
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,244
    
    
    
    6,215
    
    
    
    8,022
    
    
    
    6,527
    
    
    
    8,257Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,244
    
    
    
    84,723
    
    
    
    113,639
    
    
    
    18,272
    
    
    
    107,499
 
 (a)
    
    Each of our Regulated Operating Subsidiaries is part of a joint rate zone. The load data
presented is for all transmission owners in the respective joint rate zone and is used for
billing network revenues. Each of our Regulated Operating Subsidiaries makes up the
significant portion of billed network revenues within their respective joint rate zone. 21




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##### Table of Contents



(in thousands)Line
    
    Item
    
    
    ITCTransmission
    
    
    METC
    
    
    ITC Midwest
    
    
    Total1
    
    Estimated net revenue requirement
    
    $
    195,065
    
    
    $
    129,842
    
    
    $
    95,5932
    
    Network revenues billed (a)
    
    
    187,882
    
    
    
    118,235
    
    
    
    64,0413
    
    Nine months ended September 30, 2008 Attachment O revenue accrual (line 1  line 2)
    

    $
    7,183
    
    
    $
    11,607
    
    
    $
    31,552
    
    
    $
    50,342
 
 (a)
    
    Network revenues billed at our Regulated Operating Subsidiaries is calculated based on the
joint zone monthly network peak load multiplied by our effective monthly network rates of
$2.350 per kW/month, $1.985 per kW/month and $2.446 per kW/month applicable to
ITCTransmission, METC and ITC Midwest, respectively, adjusted for the actual number of days in
the month. RESULTS OF OPERATIONS
  Results of Operations and Variances
 Three months ended
    
    
    
    
    
    
    Percentage
    
    
    Nine months ended
    
    
    
    
    
    
    PercentageSeptember 30,
    
    
    Increase
    
    
    increase
    
    
    September 30,
    
    
    Increase
    
    
    increase(in thousands)
    
    2008
    
    
    2007
    
    
    (decrease)
    
    
    (decrease)
    
    
    2008
    
    
    2007
    
    
    (decrease)
    
    
    (decrease)OPERATING REVENUES
    
    $
    163,279
    
    
    $
    109,272
    
    
    $
    54,007
    
    
    
    49.4
    %
    
    $
    465,809
    
    
    $
    316,850
    
    
    $
    148,959
    
    
    
    47.0
    %OPERATING EXPENSESOperation and maintenance
    
    
    33,271
    
    
    
    22,451
    
    
    
    10,820
    
    
    
    48.2
    %
    
    
    87,628
    
    
    
    62,494
    
    
    
    25,134
    
    
    
    40.2
    %General and administrative
    
    
    20,640
    
    
    
    13,376
    
    
    
    7,264
    
    
    
    54.3
    %
    
    
    59,983
    
    
    
    40,603
    
    
    
    19,380
    
    
    
    47.7
    %Depreciation and amortization
    
    
    23,869
    
    
    
    17,060
    
    
    
    6,809
    
    
    
    39.9
    %
    
    
    69,639
    
    
    
    49,893
    
    
    
    19,746
    
    
    
    39.6
    %Taxes other than income taxes
    
    
    10,552
    
    
    
    8,253
    
    
    
    2,299
    
    
    
    27.9
    %
    
    
    31,750
    
    
    
    25,089
    
    
    
    6,661
    
    
    
    26.5
    %Net (gain)/loss on sale of assets
    
    
    515
    
    
    
    
    
    
    
    515
    
    
    
    n/a
    
    
    
    (930
    )
    
    
    
    
    
    
    (930
    )
    
    
    n/aTotal operating expenses
    
    
    88,847
    
    
    
    61,140
    
    
    
    27,707
    
    
    
    45.3
    %
    
    
    248,070
    
    
    
    178,079
    
    
    
    69,991
    
    
    
    39.3
    %OPERATING INCOME
    
    
    74,432
    
    
    
    48,132
    
    
    
    26,300
    
    
    
    54.6
    %
    
    
    217,739
    
    
    
    138,771
    
    
    
    78,968
    
    
    
    56.9
    %OTHER EXPENSES (INCOME)Interest expense
    
    
    30,547
    
    
    
    20,084
    
    
    
    10,463
    
    
    
    52.1
    %
    
    
    91,263
    
    
    
    59,156
    
    
    
    32,107
    
    
    
    54.3
    %Allowance for equity funds used
during construction
    
    
    (2,672
    )
    
    
    (2,339
    )
    
    
    (333
    )
    
    
    14.2
    %
    
    
    (8,052
    )
    
    
    (5,192
    )
    
    
    (2,860
    )
    
    
    55.1
    %Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    349
    
    
    
    (349
    )
    
    
    (100.0
    )%Other income
    
    
    (847
    )
    
    
    (1,128
    )
    
    
    281
    
    
    
    (24.9
    )%
    
    
    (1,909
    )
    
    
    (2,847
    )
    
    
    938
    
    
    
    (32.9
    )%Other expense
    
    
    1,494
    
    
    
    175
    
    
    
    1,319
    
    
    
    753.7
    %
    
    
    2,928
    
    
    
    844
    
    
    
    2,084
    
    
    
    246.9
    %Total other expenses (income)
    
    
    28,522
    
    
    
    16,792
    
    
    
    11,730
    
    
    
    69.9
    %
    
    
    84,230
    
    
    
    52,310
    
    
    
    31,920
    
    
    
    61.0
    %INCOME BEFOREINCOME TAXES
    
    
    45,910
    
    
    
    31,340
    
    
    
    14,570
    
    
    
    46.5
    %
    
    
    133,509
    
    
    
    86,461
    
    
    
    47,048
    
    
    
    54.4
    %INCOME TAX PROVISION
    
    
    17,865
    
    
    
    10,540
    
    
    
    7,325
    
    
    
    69.5
    %
    
    
    51,282
    
    
    
    28,807
    
    
    
    22,475
    
    
    
    78.0
    %NET INCOME
    
    $
    28,045
    
    
    $
    20,800
    
    
    $
    7,245
    
    
    
    34.8
    %
    
    $
    82,227
    
    
    $
    57,654
    
    
    $
    24,573
    
    
    
    42.6
    %
 22




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##### Table of Contents



Operating Revenues
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
  Percentage2008
    
    
    2007

    
    
    Increase
    
    
    increase(in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    (decrease)
    
    
    (decrease)Network revenues
    
    $
    146,884
    
    
    
    90.0
    %
    
    $
    99,451
    
    
    
    91.0
    %
    
    $
    47,433
    
    
    
    47.7
    %Point-to-point
    
    
    5,845
    
    
    
    3.6
    %
    
    
    5,118
    
    
    
    4.7
    %
    
    
    727
    
    
    
    14.2
    %Scheduling, control and dispatch
    
    
    4,993
    
    
    
    3.0
    %
    
    
    4,253
    
    
    
    3.9
    %
    
    
    740
    
    
    
    17.4
    %Regional cost sharing revenues
    
    
    4,606
    
    
    
    2.8
    %
    
    
    
    
    
    
    0.0
    %
    
    
    4,606
    
    
    
    n/aOther
    
    
    951
    
    
    
    0.6
    %
    
    
    450
    
    
    
    0.4
    %
    
    
    501
    
    
    
    111.3
    %Total
    
    $
    163,279
    
    
    
    100.0
    %
    
    $
    109,272
    
    
    
    100.0
    %
    
    $
    54,007
    
    
    
    49.4
    %
     Nine months ended September 30, 2008 compared to nine months ended September 30, 2007
  Percentage2008
    
    
    2007
    
    
    Increase
    
    
    increase(in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    (decrease)
    
    
    (decrease)Network revenues
    
    $
    420,500
    
    
    
    90.3
    %
    
    $
    291,715
    
    
    
    92.1
    %
    
    $
    128,785
    
    
    
    44.1
    %Point-to-point
    
    
    17,806
    
    
    
    3.8
    %
    
    
    12,548
    
    
    
    3.9
    %
    
    
    5,258
    
    
    
    41.9
    %Scheduling, control and dispatch
    
    
    13,270
    
    
    
    2.8
    %
    
    
    11,133
    
    
    
    3.5
    %
    
    
    2,137
    
    
    
    19.2
    %Regional cost sharing revenues
    
    
    11,971
    
    
    
    2.6
    %
    
    
    
    
    
    
    0.0
    %
    
    
    11,971
    
    
    
    n/aOther
    
    
    2,262
    
    
    
    0.5
    %
    
    
    1,454
    
    
    
    0.5
    %
    
    
    808
    
    
    
    55.6
    %Total
    
    $
    465,809
    
    
    
    100.0
    %
    
    $
    316,850
    
    
    
    100.0
    %
    
    $
    148,959
    
    
    
    47.0
    %
     23




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##### Table of Contents



Operating Expenses
 Operation and maintenance expenses
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
  Nine months ended September 30, 2008 compared to nine months ended September 30, 2007
  General and administrative expenses
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
  Nine months ended September 30, 2008 compared to nine months ended September 30, 2007
  Depreciation and amortization expenses
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
  Nine months ended September 30, 2008 compared to nine months ended September 30, 2007
  24




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##### Table of Contents



Taxes other than income taxes
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
  Nine months ended September 30, 2008 compared to nine months ended September 30, 2007
  Net (gain)/loss on sale of assets
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
  Nine months ended September 30, 2008 compared to nine months ended September 30, 2007
  Other expenses (income)
 Three and nine months ended September 30, 2008 compared to three and nine months ended
September 30, 2007
   Income Tax Provision
 Three and nine months ended September 30, 2008 compared to three and nine months ended
September 30, 2007
  LIQUIDITY AND CAPITAL RESOURCES
  25




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##### Table of Contents




    
    Fund capital expenditures. Our plans with regard to property, plant and equipment
investments are described in detail above under Trends and Seasonality. Additionally, we
are pursuing other development activities as described above under Recent Developments
Development Activities that could result in significant capital expenditures.
    
    Fund working capital requirements.
    
    Fund our debt service requirements, which are described in more detail under
Contractual Obligations in our Form 10-K for the year ended December 31, 2007 and as
updated in this Form 10-Q. We expect our interest payments to increase during 2008 compared
to 2007 as a result of additional debt incurred in 2007 and 2008, primarily in connection
with ITC Midwests acquisition of IP&Ls transmission assets and our capital expenditures.
    
    Fund dividends to holders of our common stock.
    
    Fund contributions to our retirement plans, as described in Note 9 to the condensed
consolidated financial statements. The impact of the growth in number of participants in our
retirement benefit plans, the recent financial market conditions that have caused a decrease
in the value of our retirement plan assets and changes in the requirements of the Pension
Protection Act may require contributions to our retirement plans to be higher than we have
experienced in the past.
    
    Fund business development expenses, consisting primarily of expenses at ITC Grid
Development and its subsidiaries in 2008.
    Cash Flows From Operating Activities
  Cash Flows From Investing Activities
  26




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##### Table of Contents



Cash Flows From Financing Activities
  CONTRACTUAL OBLIGATIONS
  CRITICAL ACCOUNTING POLICIES
  RECENT ACCOUNTING PRONOUNCEMENTS
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Fixed Rate Long-Term Debt
  Revolving Credit Agreements
  27




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##### Table of Contents



Other
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  ITC Midwest Acquisition Regulatory Approval
  28




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##### Table of Contents



Approval of ITC Midwests asset acquisition by state regulatory authorities in Iowa may be
subject to further challenge. If such proceedings are decided in a manner that is unfavorable to
us, all or part of the orders approving ITC Midwests asset
acquisition in Iowa could be reversed, which could have a material adverse effect on our
business, financial condition, results of operations and cash flows.
  ITC Midwest Purchase Price Adjustment
  29




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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit No.
    
    Description of Document10.71
    
    Form of Amendment to Stock Option Agreement under 2003 Plan (Initial Option)
(August 2008) (filed with Registrants Form 8-K filed on August 19, 2008)10.72
    
    Form of Amendment to Stock Option Agreement under 2003 Plan (IPO Option) (August
2008) (filed with Registrants Form 8-K filed on August 19, 2008)10.73
    
    Form of Amendment to Restricted Stock Agreement under 2003 Plan (August 2008)
(filed with Registrants Form 8-K filed on August 19, 2008)10.74
    
    Form of Amendment to Management Stockholders Agreement (August 2008) (filed with
Registrants Form 8-K filed on August 19, 2008)10.75
    
    Form of Amendment to Stock Option Agreements under 2006 LTIP (August 2008) (filed
with Registrants Form 8-K filed on August 19, 2008)10.76
    
    Form of Amendment to Restricted Stock Agreements under 2006 LTIP (August 2008)
(filed with Registrants Form 8-K filed on August 19, 2008)10.77
    
    Form of Stock Option Agreement under 2006 LTIP (August 2008) (filed with
Registrants Form 8-K filed on August 19, 2008)10.78
    
    Form of Restricted Stock Award Agreement under 2006 LTIP (August 2008) (filed with
Registrants Form 8-K filed on August 19, 2008)31.1
    
    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
 30




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##### Table of Contents



SIGNATURES
   ITC HOLDINGS CORP.By:
    /s/ Joseph L. WelchJoseph L. WelchPresident, Chief Executive Officer and Treasurer
(principal executive officer)By:
    /s/ Edward M. RahillEdward M. RahillSenior Vice President  Finance and
Chief Financial Officer
(principal financial officer and
principal accounting officer) 31