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) - JULY 19, 2000 MINNESOTA POWER, INC. A Minnesota Corporation Commission File No. 1-3548 IRS Employer Identification No. 41-0418150 30 West Superior Street Duluth, Minnesota 55802-2093 Telephone - (218) 722-2641
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS The following exhibit of Minnesota Power, Inc. is filed herewith in accordance with Item 601 of Regulation S-K: Exhibit Number 99 - Minnesota Power, Inc. News Release dated July 19, 2000 -1-
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, Inc. --------------------------------- (Registrant) July 19, 2000 D. G. Gartzke --------------------------------- D. G. Gartzke Senior Vice President - Finance and Chief Financial Officer -2-
EXHIBIT INDEX Exhibit Number 99 - Minnesota Power, Inc. News Release dated July 19, 2000
EXHIBIT 99
[MINNESOTA POWER LOGO] For Release: July 19, 2000
Contact: Terry M. Johnson
218-723-3934
tmjohnson@mnpower.com
NEWS Investor Tim Thorp
Contact: 218-723-3953
tthorp@mnpower.com
MINNESOTA POWER SECOND QUARTER NET INCOME
-----------------------------------------
INCREASED 30 PERCENT, EXCLUDING ACE LIMITED GAIN
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Propelled by continued strong performance across all business units, MINNESOTA
POWER, INC. (NYSE: MPL) reported a 30 percent increase in operating net income
for the second quarter. Operating earnings per share also increased 30 percent
for the second quarter to 48 cents per share compared to 37 cents last year.
Excluding a one-time transaction relating to the company's investment in ACE
Limited (described below), 2000 second quarter operating net income was $33.8
million on quarterly revenue of $327 million versus $26.0 million of operating
net income on $279.2 million of revenue a year ago.
"I am pleased with the quarter-over-quarter increases for all of our business
segments," said Edwin L. Russell, chief executive officer of Minnesota Power.
"This steady progress reflects the growth in value of each business as well as
the company as a whole. We continue to demonstrate a successful transition to a
multi-services company."
AUTOMOTIVE SERVICES continued its double-digit growth with a 23 percent increase
in net income from the same quarter last year. The number of vehicles financed
increased 16 percent, and the number of vehicles sold was up 14 percent. As
announced in June, the company expects to complete two large auction
acquisitions. These acquisitions will increase the number of cars sold by 60
percent in the near term with additional growth potential in the future.
Continued strong retail sales and reduced operating and maintenance expenses in
ELECTRIC SERVICES and a growing customer base and increased consumption in WATER
SERVICES allowed each segment to increase net income eight percent over the same
quarter last year.
Bolstered by real estate sales, the INVESTMENTS segment income increased to
$10.2 million for the quarter versus $6.4 million a year ago.
ACE LIMITED TRANSACTION: Minnesota Power recorded a one-time gain of 44 cents
per share in the second quarter of 2000 resulting from the sale of 4.7 million
shares of ACE Limited stock. Proceeds of $127 million were redeployed in the
Automotive Services business. Total earnings per share for the quarter are 92
cents.
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Minnesota Power, Inc. is a multi-services company with corporate headquarters in
Duluth, Minnesota. Minnesota Power holdings include: the second largest
wholesale automobile auction network in North America; the leading provider of
independent auto dealer inventory financing; the largest investor-owned water
utilities in Florida and North Carolina; significant real estate holdings in
Florida and a low-cost electric utility that serves some of the largest
industrial customers in the United States. For more information about Minnesota
Power, visit the company's web site at www.mnpower.com.
---------------
The statements contained in this release and statements that the company may
make orally in connection with this release that are not historical facts are
forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by the company with the Securities and Exchange
Commission.
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MINNESOTA POWER, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30, 2000 AND 1999
Millions Except Per Share Amounts
QUARTER ENDED YEAR TO DATE
2000 1999 2000 1999
- ------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUE
Electric Services $ 138.9 $ 135.3 $ 280.5 $ 267.5
Automotive Services 129.7 104.0 249.2 200.8
Water Services 31.7 29.9 59.7 54.3
Investments 26.7 10.0 60.2 14.3
------- ------- -------- --------
Total Operating Revenue 327.0 279.2 649.6 536.9
------- ------- -------- --------
OPERATING EXPENSES
Fuel and Purchased Power 55.1 52.3 109.9 99.9
Operations 199.6 170.9 399.1 334.9
Interest Expense 15.2 14.4 31.5 28.6
------- ------- -------- --------
Total Operating Expenses 269.9 237.6 540.5 463.4
------- ------- -------- --------
OPERATING INCOME BEFORE CAPITAL RE AND ACE 57.1 41.6 109.1 73.5
INCOME (LOSS) FROM INVESTMENT IN CAPITAL RE AND
RELATED DISPOSITION OF ACE 48.0 (13.4) 48.0 (15.8)
------- ------- -------- --------
OPERATING INCOME 105.1 28.2 157.1 57.7
DISTRIBUTIONS ON REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY 1.5 1.5 3.0 3.0
INCOME TAX EXPENSE 39.4 24.8 59.5 31.9
------- ------- -------- --------
NET INCOME 64.2 1.9 94.6 22.8
DIVIDENDS ON PREFERRED STOCK 0.3 0.5 0.8 1.0
------- ------- -------- --------
EARNINGS AVAILABLE FOR COMMON STOCK $ 63.9 $ 1.4 $ 93.8 $ 21.8
======= ======= ======== ========
AVERAGE SHARES OF COMMON STOCK 69.6 68.2 69.4 68.0
BASIC AND DILUTED
EARNINGS PER SHARE OF COMMON STOCK $0.92 $0.02 $1.35 $0.32
MINNESOTA POWER, INC.
CONSOLIDATED BALANCE SHEET
Millions
JUN. 30, DEC. 31,
2000 1999
- -----------------------------------------------------------------------
ASSETS
Current Assets $ 707.9 $ 564.5
Property, Plant and Equipment 1,311.5 1,258.8
Investments 109.0 197.2
Goodwill 322.2 181.0
Other 109.6 111.1
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TOTAL ASSETS $ 2,560.2 $ 2,312.6
========= =========
JUN. 30, DEC. 31,
2000 1999
- ------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 600.6 $ 398.3
Long-Term Debt 720.1 712.8
Other Liabilities 277.8 289.2
Mandatorily Redeemable Preferred
Securities of MP&L Capital I 75.0 75.0
Redeemable Serial Preferred Stock - 20.0
Stockholders' Equity 886.7 817.3
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,560.2 $ 2,312.6
========= =========
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QUARTER ENDED YEAR TO DATE
JUNE 30, JUNE 30,
MINNESOTA POWER, INC. 2000 1999 2000 1999
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NET INCOME
Millions
Electric Services $ 9.3 $ 8.6 $ 20.0 $ 19.6
Automotive Services 14.7 12.0 26.6 21.6
Water Services 4.1 3.8 6.5 5.7
Investments 10.2 6.4 21.7 9.3
Corporate Charges (4.5) (4.8) (10.6) (9.3)
------ ------- ------- -------
Net Income Before Capital Re and ACE 33.8 26.0 64.2 46.9
Capital Re and ACE Transactions 30.4 (24.1) 30.4 (24.1)
------ ------- ------- -------
Net Income $ 64.2 $ 1.9 $ 94.6 $ 22.8
BASIC AND DILUTED EARNINGS PER SHARE
Before Capital Re and ACE Transactions $ 0.48 $ 0.37 $ 0.91 $ 0.67
Capital Re and ACE Transactions 0.44 (0.35) 0.44 (0.35)
------ ------- ------ -------
$ 0.92 $ 0.02 $ 1.35 $ 0.32
STATISTICAL DATA
CORPORATE
Common Stock
High 20 3/4 21 13/16 20 3/4 22 3/32
Low 16 18 15/16 14 3/4 18 15/16
Close 17 5/16 19 7/8 17 5/1 19 7/8
Book Value $11.79 $10.77 $11.79 $10.77
ELECTRIC SERVICES
Millions of Kilowatthours Sold
Retail
Residential 192.0 191.8 449.9 445.9
Commercial 245.0 237.7 521.7 504.3
Industrial 1,719.4 1,619.3 3,438.3 3,261.1
Other 17.3 17.1 35.6 34.9
Resale 686.1 815.8 1,534.0 1,459.7
------- ------- ------- -------
2,859.8 2,881.7 5,979.5 5,705.9
AUTOMOTIVE SERVICES
Vehicles Sold 307,000 270,000 602,000 530,000
Vehicles Financed 202,000 175,000 397,000 323,000
EBITDAL (Millions) $39.6 $32.1 $74.0 $59.9
WATER SERVICES
Millions of Gallons Billed
Florida Water Services
Water 5,713.7 5,285.8 9,951.9 9,019.8
Wastewater 1,471.2 1,389.2 2,760.6 2,509.1
Heater Utilities
Water 973.3 773.0 1,656.8 1,263.0
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In May 2000 Minnesota Power sold its investment in ACE Limited (ACE) common stock, which resulted in an after-tax gain
of $30.4 million, or $0.44 per share. The ACE shares were received in December 1999 upon completion of ACE's merger
with Capital Re Corporation (Capital Re). During 1999 Minnesota Power recorded an aggregate $36.2 million, or
$0.52 per share after-tax non-cash charge in connection with the valuation and exchange of its investment in Capital Re
stock for the ACE shares, including a $24.1 million, or $0.35 per share charge in the second quarter.
Earnings Before Interest, Taxes, Depreciation, Amortization and Lease Expense
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