Securities and Exchange Commission Washington, DC 20549 FORM 8-K/A Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) - June 28, 1995 Minnesota Power & Light Company A Minnesota Corporation Commission File No. 1-3548 IRS Employer Identification No. 41-0418150 30 West Superior Street Duluth, Minnesota 55802 Telephone - (218) 722-2641 Pursuant to Form 8-K Item 7. instructions, financial statements of ADESA Corporation (ADESA) for the interim period ended June 30, 1995, and pro forma financial statements reflecting the acquisition of ADESA are hereby filed as an amendment to Minnesota Power & Light Company's Form 8-K filed July 12, 1995. Item 7. Financial Statements and Exhibits. (a) Financial statements of ADESA Corporation ADESA Corporation Condensed Consolidated Balance Sheet
Note: The balance sheet at December 31, 1994, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes. 1June 30, 1995 December 31, 1994 ------------- ----------------- (Unaudited) (Note) Assets Current assets Cash and cash equivalents $ 17,977,097 $ 10,203,992 Trade receivables, net 62,258,026 48,790,083 Other current assets 5,033,288 4,637,150 ------------ ------------ Total current assets 85,268,411 63,631,225 Property and equipment, net 87,540,292 71,114,221 Intangible assets, net 38,991,941 38,571,513 Other assets 190,784 407,388 ------------ ------------ Total assets $211,991,428 $173,724,347 ============ ============ Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued expenses $ 48,945,827 $ 26,747,798 Notes payable 25,346,242 20,647,135 Current portion of long-term debt 4,975,166 4,994,649 ------------ ------------ Total current liabilities 79,267,235 52,389,582 Long-term debt 44,473,321 37,894,509 Deferred income taxes 614,435 452,113 Minority interest in equity of subsidiary 1,505,588 1,289,280 Shareholders' equity Common stock 66,181,978 66,162,853 Retained earnings 20,106,295 15,751,929 Cumulative translation adjustment (157,424) (215,919) ------------ ------------ Total shareholders' equity 86,130,849 81,698,863 ------------ ------------ Total liabilities and shareholders' equity $211,991,428 $173,724,347 ============ ============ ADESA Corporation Condensed Consolidated Statement of Income (Unaudited)
See accompanying notes. 2Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 ----------- ------------ ----------- ----------- Operating revenues $30,527,481 $23,538,560 $60,136,826 $45,109,884 Operating expenses Direct 11,301,643 8,555,340 22,420,970 16,863,376 Selling, general and administrative Operating 12,165,059 8,421,864 24,366,301 16,236,532 Depreciation 1,087,122 852,350 2,098,230 1,596,835 Amortization 751,143 941,131 1,500,601 1,876,444 ----------- ----------- ----------- ----------- Operating income 5,222,514 4,767,875 9,750,724 8,536,697 Other income (expense) Interest income 150,577 59,625 304,620 126,917 Interest expense (1,548,587) (828,883) (2,820,621) (1,505,537) Other, net (106,554) 129,407 (216,308) 201,368 ----------- ----------- ----------- ----------- (1,504,564) (639,851) (2,732,309) (1,177,252) ----------- ----------- ----------- ----------- Income before income taxes 3,717,950 4,128,024 7,018,415 7,359,445 Income taxes (1,360,225) (1,656,200) (2,664,005) (2,913,905) ----------- ----------- ----------- ----------- Net income $ 2,357,725 $ 2,471,824 $ 4,354,410 $ 4,445,540 =========== =========== =========== =========== Weighted average shares outstanding 11,424,710 11,254,918 11,410,931 11,250,911 =========== =========== =========== =========== Earnings per share $0.21 $0.22 $0.38 $0.40 =========== =========== =========== =========== ADESA Corporation Condensed Consolidated Statement of Cash Flows (Unaudited)
See accompanying notes. 3Six Months Ended June 30, 1995 1994 ----------- ----------- Operating activities Net income $ 4,354,410 $ 4,445,540 Adjustments to reconcile net income to net cash provided (used) by operating activities Depreciation 2,098,230 1,596,835 Amortization 1,500,601 1,876,444 Gain on disposal of assets (110,387) (12,835) Minority interest in subsidiary earnings 216,308 76,795 Changes in operating assets and liabilities Trade receivables (13,467,943) (21,090,889) Other current assets (396,138) (3,574,957) Accounts payable and accrued expenses 22,198,029 26,154,986 ----------- ----------- Net cash provided by operating activities 16,393,110 9,471,919 Investing activities Purchases of property and equipment, net (18,413,914) (13,444,572) Other assets (1,656,043) (2,175,189) ----------- ----------- Net cash used by investing activities (20,069,957) (15,619,761) Financing activities Proceeds from notes and long-term debt 13,927,691 14,781,409 Payments on notes and long-term debt (2,526,556) (9,302,947) Proceeds from sale of common stock 19,125 - ----------- ----------- Net cash provided by financing activities 11,420,260 5,478,462 Effect of exchange rate changes on cash 29,692 (118,614) ----------- ----------- Net increase (decrease) in cash 7,773,105 (787,994) Cash and cash equivalents at beginning of period 10,203,992 11,902,141 ----------- ----------- Cash and cash equivalents at end of period $17,977,097 $11,114,147 =========== =========== ADESA CORPORATION Notes to Condensed Consolidated Financial Statements - (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ADESA, all adjustments (consisting of only normal recurring accruals) considered necessary to present fairly the consolidated financial statements have been included. Quarterly results of operations are not necessarily indicative of annual results. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in ADESA's annual report on Form 10-K for the year ended December 31, 1994. 2. Business Segments ----------------- Selected second quarter 1995 income data by business segment is as follows: Auction Services Financial Services Total ---------------- ------------------ ----------- Operating revenues $28,634,538 $1,892,943 $30,527,481 =========== ========== =========== Operating income $ 4,060,237 $1,162,277 $ 5,222,514 =========== ========== =========== Total assets presented by business segment and inclusive of ADESA's headquarters as of June 30, 1995, were as follows: Auction services $171,985,232 Financial services 27,152,411 Corporate headquarters 12,853,785 ------------ $211,991,428 ============ 3. Per-Share Data -------------- Earnings per share data are based on the weighted average number of shares outstanding during the applicable periods, including the effect of dilutive stock options. 4. Subsequent Event ---------------- ADESA currently has three United States auctions which sell rental repurchase units under separate master contracts with General Motors (GM). These contracts do not require GM to sell any minimum number of vehicles through ADESA's auctions and may be terminated upon 30 days' notice. In 1995 GM requested that auctions bid for the right to sell rental repurchase units under three-year contracts commencing January 1, 1996. ADESA was invited in February 1995 to take part in this process and on May 10, 1995, submitted a bid for all of ADESA's United States auctions including a greenfield auction in Manville, New Jersey. On August 24, 1995, GM awarded contracts to seven of ADESA's auctions. 4 (b) Pro forma financial information Pro Forma Condensed Financial Information (Unaudited) On July 1, 1995, Minnesota Power & Light Company (Minnesota Power or the Company) acquired 80 percent of ADESA for $167 million in cash. The Company accounted for the acquisition as a purchase and recorded approximately $140 million of goodwill, which will be amortized over a 40 year period. Proceeds from the sale of the paper and pulp business combined with proceeds from the sale of securities investments were used to fund the purchase of ADESA. The following unaudited pro forma balance sheet as of June 30, 1995, combines the historical consolidated balance sheet of Minnesota Power and ADESA to reflect the July 1, 1995, acquisition as if it had occurred on June 30, 1995. The unaudited pro forma combined statement of income for the six months ended June 30, 1995, and for the year ended December 31, 1994, are based on the historical consolidated statements of income of Minnesota Power and ADESA and reflect the acquisition as if it had occurred on January 1 of the respective periods. On June 30, 1995, Minnesota Power sold its investment in the paper and pulp business for $118 million in cash and realized a $1.5 million after-tax loss from the sale. Minnesota Power's financial statements as of June 30, 1995, reflect this transaction as discontinued operations. The historical consolidated statement of income of Minnesota Power for the year ended December 31, 1994, has been restated to classify the operating results of the paper and pulp business as discontinued operations. The unaudited pro forma combined statement of income for the six months ended June 30, 1995, and for the year ended December 31, 1994, reflect exiting Reach All Partnership (Reach All), the truck-mounted lifting equipment manufacturing business immediately prior to January 1 of the respective periods. The following 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 Minnesota Power and ADESA. The following information is not necessarily indicative of the financial position or operating results that would have occurred had the acquisition and disposition transactions been consummated on the date, or at the beginning of the periods, for which the acquisition and disposition are being given effect nor is it necessarily indicative of future operating results or financial position. 5 Minnesota Power Unaudited Pro Forma Combined Balance Sheet June 30, 1995 In Thousands
6Historical Pro Forma ------------------------- ----------------------------- Minnesota Adjustments Power ADESA (Note 1) Combined -------------------------------------------------------------------------------------------------------- Assets Plant and Other Assets Electric utility operations $ 786,387 $ 786,387 Water utility operations 307,456 307,456 Auto redistribution operations - $ 87,731 $ (3,180) 84,551 Investments and corporate services 219,285 - (4,117) 215,168 ---------- -------- -------- ---------- Total plant and other assets 1,313,128 87,731 (7,297) 1,393,562 Intangible Assets 1,740 38,992 117,339 158,071 Cash and Funds Held by Trustee 290,693 17,977 (147,751) 160,919 Other Current Assets 159,388 67,291 (777) 225,902 Deferred Charges 107,207 - (3,282) 103,925 ---------- -------- -------- ---------- Total Assets $1,872,156 $211,991 $(41,768) $2,042,379 -------------------------------------------------------------------------------------------------------- Capitalization and Liabilities Capitalization Common stock $ 372,634 $ 66,182 $(66,182) $ 372,634 Unearned ESOP shares (74,505) - - (74,505) Net unrealized gain on securities investments 245 - - 245 Retained earnings 279,370 20,106 (20,106) 279,370 Cumulative translation adjustment - (157) 157 - ---------- -------- -------- ---------- Total common stock equity 577,744 86,131 (86,131) 577,744 Preferred stock 48,547 - - 48,547 Long-term debt 568,725 44,473 - 613,198 ---------- -------- -------- ---------- Total capitalization 1,195,016 130,604 (86,131) 1,239,489 Current Liabilities 299,537 79,267 - 378,804 Deferred Credits 377,603 2,120 44,363 424,086 ---------- -------- -------- ---------- Total Capitalization and Liabilities $1,872,156 $211,991 $(41,768) $2,042,379 -------------------------------------------------------------------------------------------------------- Note 1 - Pro forma adjustments necessary to reflect the acquisition of ADESA are as follows: Debit Credit -------- -------- Elimination of ADESA's historical equity accounts and net intangibles Common stock $ 66,182 Retained earnings 20,106 Cumulative translation adjustment $ 157 Intangible assets net of accumulated amortization 38,301 Cash payments to acquire 80 percent of ADESA net of cash retained Cash payment to shareholders 161,786 Cost of ADESA common stock acquired previously 4,117 Acquisition costs previously deferred 3,282 Cash retained by ADESA for acquisition and capital expenditures 14,035 Fair value adjustment of assets and liabilities acquired Auto redistribution operations 3,180 Other current assets 777 Deferred credits 1,945 Intangible assets including customer lists, organizational costs, noncompete and employment contracts, and $140 million of goodwill representing the excess of cost over net assets acquired 155,640 Fair value of minority shareholders' interest 42,418 -------- -------- $255,963 $255,963 ======== ======== Minnesota Power Unaudited Pro Forma Combined Statement of Income For the Six Months Ended June 30, 1995 In Thousands Except Per Share Amounts
7Historical Pro Forma ----------------------- ------------------------ Minnesota Adjustments Power ADESA (Note 1) Combined ------------------------------------------------------------------------------------------------ Operating Revenue and Income Electric utility operations $237,865 $237,865 Water utility operations 34,816 34,816 Auto redistribution operations - $60,136 60,136 Investments and corporate services 21,341 305 $(3,613) 18,033 -------- ------- ------- -------- Total operating revenue and income 294,022 60,441 (3,613) 350,850 -------- ------- ------- -------- Operating Expenses Fuel and purchased power 84,422 - - 84,422 Operations 123,117 26,020 2,285 151,422 Administrative and general 35,250 24,582 418 60,250 Interest expense 22,489 2,821 - 25,310 -------- ------- ------- -------- Total operating expenses 265,278 53,423 2,703 321,404 -------- ------- ------- -------- Income (Loss) from Equity Investments (3,908) - 8,528 4,620 -------- ------- ------- -------- Operating Income from Continuing Operations 24,836 7,018 2,212 34,066 Income Tax Expense (Benefit) (9,892) 2,664 2,260 (4,968) -------- ------- ------- -------- Income from Continuing Operations 34,728 $ 4,354 $ (48) 39,034 ======= ======= Dividends on Preferred Stock 1,600 1,600 -------- -------- Earnings from Continuing Operations Available for Common Stock $ 33,128 $ 37,434 ======== ======== Average Shares of Common Stock 28,409 28,409 Earnings Per Share of Common Stock from Continuing Operations $ 1.17 $ 1.32 ------------------------------------------------------------------------------------------------ Note 1 - Pro forma adjustments necessary to reflect the acquisition of ADESA and disposition of Reach All are as follows: Debit Credit ------- ------- Reduction of investment income due to the sale of portfolio securities to fund the acquisition of ADESA $ 3,613 Net increase in operating expenses due to the following: Amortization of goodwill on a straight-line basis over 40 years 1,744 Amortization of other intangibles on a straight-line basis over 2 to 40 years 835 Change in depreciation expense resulting from purchase accounting 56 Reduction of management fees relating to the sale of portfolio securities $ 350 Minority shareholders' 20 percent interest in ADESA's earnings 418 Includes the disposition of Reach All 8,528 Income tax effect relating to adjustments , and 2,260 ------- ------- $ 8,926 $ 8,878 ======= ======= Minnesota Power Unaudited Pro Forma Combined Statement of Income For the Year Ended December 31, 1994 In Thousands Except Per Share Amounts
8Historical Pro Forma ----------------------- ------------------------ Minnesota Adjustments Power ADESA (Note 1) Combined ------------------------------------------------------------------------------------------------ Operating Revenue and Income Electric utility operations $453,182 $453,182 Water utility operations 91,224 91,224 Auto redistribution operations - $95,476 95,476 Investments and corporate services 37,761 694 $ (3,641) 34,814 -------- ------- -------- -------- Total operating revenue and income 582,167 96,170 (3,641) 674,696 -------- ------- -------- -------- Operating Expenses Fuel and purchased power 157,687 - - 157,687 Operations 220,733 42,809 4,517 268,059 Administrative and general 79,846 35,768 650 116,264 Interest expense 46,750 4,147 - 50,897 -------- ------- -------- -------- Total operating expenses 505,016 82,724 5,167 592,907 -------- ------- -------- -------- Income from Equity Investments 2,972 - 5,166 8,138 -------- ------- -------- -------- Operating Income from Continuing Operations 80,123 13,446 (3,642) 89,927 Income Tax Expense 20,658 5,663 994 27,315 -------- ------- -------- -------- Income from Continuing Operations 59,465 $ 7,783 $ (4,636) 62,612 ======= ======== Dividends on Preferred Stock 3,200 3,200 -------- -------- Earnings from Continuing Operations Available for Common Stock $ 56,265 $ 59,412 ======== ======== Average Shares of Common Stock 28,239 28,239 Earnings Per Share of Common Stock From Continuing Operations $ 1.99 $ 2.10 ------------------------------------------------------------------------------------------------ Note 1 - Pro forma adjustments necessary to reflect the acquisition of ADESA and disposition of Reach All are as follows: Debit Credit ------- ------- Reduction of investment income due to the sale of portfolio securities to fund the acquisition of ADESA $ 3,641 Net increase in operating expenses due to the following: Amortization of goodwill on a straight-line basis over 40 years 3,488 Amortization of other intangibles on a straight-line basis over 2 to 40 years 1,670 Change in depreciation expense resulting from purchase accounting 111 Reduction of management fees relating to the sale of portfolio securities $ 752 Minority shareholders' 20 percent interest in ADESA's earnings 650 Includes the disposition and operations of Reach All 5,166 Income tax effect relating to adjustments , and 994 ------- ------- $10,554 $ 5,918 ======= ======= 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. Minnesota Power & Light Company ------------------------------- (Registrant) September 8, 1995 D.G. Gartzke ------------------------------- D.G. Gartzke Senior Vice President - Finance and Chief Financial Officer