SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) - SEPTEMBER 20, 2004
ALLETE, INC.
(Exact name of Registrant as specified in its charter)
MINNESOTA 1-3548 41-0418150
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
30 WEST SUPERIOR STREET
DULUTH, MINNESOTA 55802-2093
(Address of principal executive offices, including zip code)
(218) 279-5000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
/ / Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Reference is made to the 2003 Form 10-K of ALLETE, Inc. (ALLETE or Company) for
background information on the following update. Unless otherwise indicated,
cited references are to ALLETE's 2003 Form 10-K.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Ref. Page 11 - Sixth and Tenth Paragraphs
Ref. Page 38 - Fourth Full Paragraph through Tenth Paragraph
Ref. Form 10-Q for the quarter ended March 31, 2004, Page 20 - Last Paragraph
Ref. Form 10-Q for the quarter ended March 31, 2004, Page 21 - First Paragraph
Ref. Form 8-K dated and filed June 16, 2004
Ref. Form 10-Q for the quarter ended June 30, 2004, Page 24 - Last Paragraph
Ref. Form 8-K dated and filed August 25, 2004
At 11:59 a.m. Eastern Time on September 20, 2004, ALLETE completed the spin-off
of ADESA, Inc. (ADESA), previously a majority owned subsidiary. The spin-off was
completed by distributing to ALLETE shareholders all of ALLETE's shares of ADESA
common stock. One share of ADESA common stock was distributed for each
outstanding share of ALLETE common stock held at the close of business on
September 13, 2004, the record date. ALLETE held 88.6 million shares, or 93.4
percent, of the outstanding common stock of ADESA.
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR
On August 24, 2004 ALLETE's Board of Directors approved an amendment to the
Company's Articles of Incorporation, as amended and restated as of May 8, 2001,
which decreases the number of authorized shares of the Company's common stock,
without par value (Common Stock) from 130,000,000 shares to 43,333,333 shares
(Reverse Split Amendment) in accordance with a one-for-three reverse stock
split, which was approved at the same meeting. The Reverse Split Amendment was
effective at 12:00 p.m. Eastern Time on September 20, 2004, the effective time
of the one-for-three reverse stock split. A copy of the press release in which
ALLETE announced the one-for-three reverse stock split was filed as an exhibit
to the Company's Current Report on Form 8-K dated and filed August 25, 2004.
ITEM 8.01 OTHER EVENTS
Ref. Page 12 - First Full Paragraph
Ref. Form 10-Q for the quarter ended June 30, 2004, Page 31 - Item 5 - Second
Paragraph
In June 2004 Florida enacted legislation which provides that gains or losses
resulting from the purchase or condemnation of a utility's assets, which results
in the loss of customers and revenue served by such assets, are to be borne by
the shareholders of the utility. In accordance with this legislation, on
September 21, 2004 the Florida Public Service Commission closed all dockets
related to its investigations into the ratemaking considerations of the gain on
sale of Florida Water Services Corporation's (Florida Water) assets. Florida
Water is a wholly owned subsidiary of ALLETE.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired - Not applicable
(b) Pro Forma Financial Information
On September 20, 2004 ALLETE completed the spin-off of ADESA, its majority owned
subsidiary. The following unaudited pro forma financial information has been
prepared from, and should be read in conjunction with, the historical
consolidated financial statements and related notes thereto of ALLETE. The
following information is not necessarily indicative of the financial position or
operating results that would have occurred had the spin-off of ADESA occurred on
such date, or at the beginning of the periods, for which the spin-off are being
given effect nor is it necessarily indicative of future operating results or
financial position of ALLETE.
All common shares and per share amounts have been adjusted for all periods to
reflect ALLETE's September 20, 2004 one-for-three reverse stock split.
ALLETE Form 8-K dated September 21, 2004 1
ALLETE
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2004
Millions - Unaudited
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
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ASSETS
Current Assets
Cash and Cash Equivalents $ 602.9 $ (274.9) $ 328.0
Restricted Cash 155.8 (155.8) -
Accounts Receivable 551.3 (479.9) 71.4
Inventories 40.7 (6.5) 34.2
Prepayments and Other 15.6 (6.3) 9.3
Discontinued Operations 9.6 - 9.6
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Total Current Assets 1,375.9 (923.4) 452.5
Property, Plant and Equipment - Net 1,484.7 (555.8) 928.9
Investments 184.6 (36.4) 148.2
Goodwill 509.5 (509.5) -
Other Intangible Assets 30.7 (30.7) -
Other Assets 88.0 (21.0) 67.0
Discontinued Operations 8.2 - 8.2
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TOTAL ASSETS $3,681.6 $(2,076.8) $1,604.8
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts Payable $ 396.0 $ (364.1) $ 31.9
Accrued Taxes and Interest 43.5 (19.5) 24.0
Long-Term Debt Due Within One Year 320.1 (161.1) 159.0
Other 98.8 (75.8) 23.0
Discontinued Operations 15.0 (6.1) 8.9
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Total Current Liabilities 873.4 (626.6) 246.8
Long-Term Debt 790.9 (398.6) 392.3
Accumulated Deferred Income Taxes 182.2 (17.7) 164.5
Minority Interest 74.3 (66.7) 7.6
Other Liabilities 157.5 (8.6) 148.9
Discontinued Operations 2.7 - 2.7
Commitments and Contingencies
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Total Liabilities 2,081.0 (1,118.2) 962.8
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SHAREHOLDERS' EQUITY
Common Stock Without Par Value,
43.3 Shares Authorized
29.5 and 29.1 Shares Outstanding 963.7 (594.5) 369.2
Unearned ESOP Shares (43.8) - (43.8)
Accumulated Other Comprehensive Gain (Loss) 8.4 (17.0) (8.6)
Retained Earnings 672.3 (347.1) 325.2
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Total Shareholders' Equity 1,600.6 (958.6) 642.0
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,681.6 $(2,076.8) $1,604.8
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The accompanying notes are an integral part of these statements.
2 ALLETE Form 8-K dated September 21, 2004
ALLETE
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Millions Except Per Share Amounts - Unaudited
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
----------------------------------- -----------------------------------
PRO FORMA PRO PRO FORMA PRO
HISTORICAL ADJUSTMENT FORMA HISTORICAL ADJUSTMENT FORMA
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OPERATING REVENUE
Energy Services $366.2 $366.2 $337.6 $337.6
Automotive Services 479.8 $(479.8) - 473.6 $(473.6) -
Investments 27.8 27.8 21.6 21.6
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Total Operating Revenue 873.8 (479.8) 394.0 832.8 (473.6) 359.2
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OPERATING EXPENSES
Fuel and Purchased Power 146.1 146.1 132.3 132.3
Operations 513.9 (344.7) 169.2 500.3 (347.5) 152.8
Depreciation and Amortization 43.0 (18.1) 24.9 42.8 (17.0) 25.8
Interest 26.9 (8.7) 18.2 32.9 (8.1) 24.8
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Total Operating Expenses 729.9 (371.5) 358.4 708.3 (372.6) 335.7
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OPERATING INCOME
FROM CONTINUING OPERATIONS 143.9 (108.3) 35.6 124.5 (101.0) 23.5
INCOME TAX EXPENSE 57.9 (42.7) 15.2 49.4 (40.2) 9.2
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INCOME FROM CONTINUING OPERATIONS $ 86.0 $ (65.6) $ 20.4 $ 75.1 $ (60.8) $ 14.3
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AVERAGE SHARES OF COMMON STOCK
Basic 28.2 28.2 27.5 27.5
Diluted 28.4 28.4 27.5 27.5
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EARNINGS PER SHARE OF COMMON STOCK
FROM CONTINUING OPERATIONS
Basic $3.05 $(2.33) $0.72 $2.73 $(2.21) $0.52
Diluted $3.03 $(2.31) $0.72 $2.73 $(2.21) $0.52
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The accompanying notes are an integral part of these statements.
ALLETE Form 8-K dated September 21, 2004 3
ALLETE
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2003
Millions Except Per Share Amounts - Unaudited
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
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OPERATING REVENUE
Energy Services $ 659.6 $659.6
Automotive Services 922.3 $(922.3) -
Investments 36.9 36.9
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Total Operating Revenue 1,618.8 (922.3) 696.5
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OPERATING EXPENSES
Fuel and Purchased Power 252.5 252.5
Operations 978.2 (681.4) 296.8
Depreciation and Amortization 86.5 (35.3) 51.2
Interest 66.6 (16.0) 50.6
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Total Operating Expenses 1,383.8 (732.7) 651.1
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OPERATING INCOME FROM CONTINUING OPERATIONS 235.0 (189.6) 45.4
INCOME TAX EXPENSE 91.9 (74.8) 17.1
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INCOME FROM CONTINUING OPERATIONS $ 143.1 $(114.8) $ 28.3
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AVERAGE SHARES OF COMMON STOCK
Basic 27.6 27.6
Diluted 27.8 27.8
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EARNINGS PER SHARE OF COMMON STOCK
FROM CONTINUING OPERATIONS
Basic $5.19 $(4.16) $1.03
Diluted $5.15 $(4.13) $1.02
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The accompanying notes are an integral part of these statements.
4 ALLETE Form 8-K dated September 21, 2004
ALLETE
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2002
Millions Except Per Share Amounts - Unaudited
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
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OPERATING REVENUE
Energy Services $ 626.0 $626.0
Automotive Services 835.8 $(835.8) -
Investments 32.5 32.5
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Total Operating Revenue 1,494.3 (835.8) 658.5
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OPERATING EXPENSES
Fuel and Purchased Power 234.8 234.8
Operations 916.2 (627.7) 288.5
Depreciation and Amortization 81.7 (32.8) 48.9
Interest 70.5 (21.2) 49.3
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Total Operating Expenses 1,303.2 (681.7) 621.5
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OPERATING INCOME FROM CONTINUING OPERATIONS 191.1 (154.1) 37.0
INCOME TAX EXPENSE 72.2 (59.9) 12.3
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INCOME FROM CONTINUING OPERATIONS $ 118.9 $ (94.2) $ 24.7
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AVERAGE SHARES OF COMMON STOCK
Basic 27.0 27.0
Diluted 27.2 27.2
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EARNINGS PER SHARE OF COMMON STOCK
FROM CONTINUING OPERATIONS
Basic $4.40 $(3.49) $0.91
Diluted $4.37 $(3.46) $0.91
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The accompanying notes are an integral part of these statements.
ALLETE Form 8-K dated September 21, 2004 5
ALLETE
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2001
Millions Except Per Share Amounts - Unaudited
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
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OPERATING REVENUE
Energy Services $ 618.7 $618.7
Automotive Services 832.1 $(832.1) -
Investments 74.8 74.8
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Total Operating Revenue 1,525.6 (832.1) 693.5
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OPERATING EXPENSES
Fuel and Purchased Power 233.1 233.1
Operations 918.4 (635.1) 283.3
Depreciation and Amortization 88.9 (42.7) 46.2
Interest 83.0 (35.3) 47.7
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Total Operating Expenses 1,323.4 (713.1) 610.3
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OPERATING INCOME FROM CONTINUING OPERATIONS 202.2 (119.0) 83.2
INCOME TAX EXPENSE 73.3 (44.2) 29.1
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INCOME FROM CONTINUING OPERATIONS $ 128.9 $ (74.8) $ 54.1
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AVERAGE SHARES OF COMMON STOCK
Basic 25.3 25.3
Diluted 25.5 25.5
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EARNINGS PER SHARE OF COMMON STOCK
FROM CONTINUING OPERATIONS
Basic $5.09 $(2.95) $2.14
Diluted $5.05 $(2.93) $2.12
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The accompanying notes are an integral part of these statements.
6 ALLETE Form 8-K dated September 21, 2004
NOTE 1. PRO FORMA PRESENTATION
The spin-off of ADESA will be accounted for as a discontinued operation under
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," when ALLETE issues financial
statements subsequent to the consummation of the spin-off transaction. The
unaudited pro forma financial information reflects ADESA as a discontinued
operation and, accordingly, ADESA's net assets and results of operations are
excluded from the continuing operations of ALLETE. The unaudited pro forma
balance sheet as of June 30, 2004 presents the historical consolidated balance
sheet of ALLETE adjusted to reflect the spin-off of ADESA as if it had occurred
on June 30, 2004.
NOTE 2. ACCOUNTING FOR SPIN-OFF
The pro forma adjustments reflect the distribution of shares of ADESA's common
stock to ALLETE shareholders. The distribution was made from ALLETE's retained
earnings to the extent of ADESA's undistributed earnings ($347.1 million at June
30, 2004) with the remainder made from common stock ($594.5 million at June 30,
2004).
Employee stock options outstanding at the date of the spin-off will be converted
to reflect the spin-off and one-for-three reverse stock split. This conversion
will be done to preserve the noncompensatory nature of the options under
Financial Accounting Standards Board Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation."
NOTE 3. REVERSE STOCK SPLIT
ALLETE's one-for-three reverse stock split of its common stock was effective
September 20, 2004 after the spin-off of ADESA. The following presents a
comparison of pre- and post-split pro forma basic and diluted average shares of
common stock and earnings per share of common stock.
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------------ ------------------------
PRO FORMA PRE-SPLIT POST-SPLIT PRE-SPLIT POST-SPLIT
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Average Shares of Common Stock
Basic 84.7 28.2 82.4 27.5
Diluted 85.2 28.4 82.6 27.5
Earnings Per Share of Common Stock
from Continuing Operations
Basic $0.24 $0.72 $0.17 $0.52
Diluted $0.24 $0.72 $0.17 $0.52
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YEAR ENDED DECEMBER 31,
2003 2002 2001
-------------------------------------------------------------------------
PRO FORMA PRE-SPLIT POST-SPLIT PRE-SPLIT POST-SPLIT PRE-SPLIT POST-SPLIT
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Average Shares of Common Stock
Basic 82.8 27.6 81.1 27.0 75.8 25.3
Diluted 83.3 27.8 81.7 27.2 76.5 25.5
Earnings Per Share of Common Stock
from Continuing Operations
Basic $0.34 $1.03 $0.31 $0.91 $0.71 $2.14
Diluted $0.34 $1.02 $0.30 $0.91 $0.71 $2.12
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ALLETE Form 8-K dated September 21, 2004 7
(c) Exhibits
Exhibit
Number
-------
3 - Amendment to ALLETE, Inc. Articles of Incorporation, effective
12:00 p.m. Eastern Time on September 20, 2004.
4 - Certificate of Adjustment to the Rights Agreement, dated as of
July 24, 1996, between Minnesota Power & Light Company (now
ALLETE, Inc.) and the Corporate Secretary of the Company, as
Rights Agent.
--------------------
READERS ARE CAUTIONED THAT FORWARD-LOOKING STATEMENTS SHOULD BE READ IN
CONJUNCTION WITH ALLETE'S DISCLOSURES UNDER THE HEADING: "SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995" LOCATED ON PAGE 9 OF
THIS FORM 8-K.
8 ALLETE Form 8-K dated September 21, 2004
SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, ALLETE is hereby filing cautionary statements
identifying important factors that could cause ALLETE's actual results to differ
materially from those projected in forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) made by or on
behalf of ALLETE in this Current Report on Form 8-K, in presentations, in
response to questions or otherwise. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases such as "anticipates," "believes," "estimates," "expects," "intends,"
"plans," "projects," "will likely result," "will continue" or similar
expressions) are not statements of historical facts and may be forward-looking.
Forward-looking statements involve estimates, assumptions, risks and
uncertainties and are qualified in their entirety by reference to, and are
accompanied by, the following important factors, which are difficult to predict,
contain uncertainties, are beyond our control and may cause actual results or
outcomes to differ materially from those contained in forward-looking
statements:
- ALLETE's ability to successfully implement our strategic objectives;
- war and acts of terrorism;
- prevailing governmental policies and regulatory actions, including those of
the United States Congress, state legislatures, the Federal Energy Regulatory
Commission, the Minnesota Public Utilities Commission, the Florida Public
Service Commission, the Public Service Commission of Wisconsin, and various
county regulators and city administrators, about allowed rates of return,
financings, industry and rate structure, acquisition and disposal of assets
and facilities, operation and construction of plant facilities, recovery of
purchased power and capital investments, and present or prospective wholesale
and retail competition (including but not limited to transmission costs);
- unanticipated effects of restructuring initiatives in the electric industry;
- economic and geographic factors, including political and economic risks;
- changes in and compliance with environmental and safety laws and policies;
- weather conditions;
- natural disasters;
- wholesale power market conditions;
- population growth rates and demographic patterns;
- the effects of competition, including competition for retail and wholesale
customers;
- pricing and transportation of commodities;
- changes in tax rates or policies or in rates of inflation;
- unanticipated project delays or changes in project costs;
- unanticipated changes in operating expenses and capital expenditures;
- capital market conditions;
- competition for economic expansion or development opportunities;
- ALLETE's ability to manage expansion and integrate acquisitions; and
- the outcome of legal and administrative proceedings (whether civil or
criminal) and settlements that affect the business and profitability of
ALLETE.
Additional disclosures regarding factors that could cause ALLETE's results and
performance to differ from results or performance anticipated by this report are
discussed in Item 7 under the heading "Factors that May Affect Future Results"
beginning on page 46 of ALLETE's 2003 Form 10-K. Risk factors associated with
our Automotive Services business are no longer applicable to ALLETE as that
business was spun-off as of September 20, 2004. Any forward-looking statement
speaks only as of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which that statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time and it
is not possible for management to predict all of these factors, nor can it
assess the impact of each of these factors on the businesses of ALLETE or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statement.
Readers are urged to carefully review and consider the various disclosures made
by ALLETE in its 2003 Form 10-K and in ALLETE's other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the factors that may affect ALLETE's business.
ALLETE Form 8-K dated September 21, 2004 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLETE, Inc.
September 21, 2004 James K. Vizanko
-------------------------------------------------
James K. Vizanko
Senior Vice President and Chief Financial Officer
10 ALLETE Form 8-K dated September 21, 2004
EXHIBIT INDEX
EXHIBIT
NUMBER
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3 - Amendment to ALLETE, Inc. Articles of Incorporation, effective 12:00
p.m. Eastern Time on September 20, 2004.
4 - Certificate of Adjustment to the Rights Agreement, dated as of July 24,
1996, between Minnesota Power & Light Company now ALLETE, Inc.) and
the Corporate Secretary of the Company, as Rights Agent.
ALLETE Form 8-K dated September 21, 2004