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, 2002 ALLETE, 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) 279-5000 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS The following exhibit of ALLETE, Inc. is filed herewith in accordance with Item 601 of Regulation S-K: Exhibit Number ------- 99 - ALLETE News Release dated July 19, 2002. ALLETE Form 8-K dated July 19, 2002 1 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 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 the control of ALLETE and may cause actual results or outcomes to differ materially from those contained in forward-looking statements: - 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 North Carolina Utilities Commission, the Public Service Commission of Wisconsin and various county regulators, 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) as well as general vehicle-related laws, including vehicle brokerage and auction laws; - unanticipated impacts 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; - population growth rates and demographic patterns; - the effects of competition, including the competition for retail and wholesale customers, as well as suppliers and purchasers of vehicles; - pricing and transportation of commodities; - market demand, including structural market changes; - 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; - our ability to manage expansion and integrate recent acquisitions; and - legal and administrative proceedings (whether civil or criminal) and settlements that affect the business and profitability of ALLETE. Any forward-looking statement speaks only as of the date on which that statement is made, and ALLETE undertakes 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 those factors, nor can it assess the impact of each of those 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. 2 ALLETE Form 8-K dated July 19, 2002 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. July 19, 2002 James K. Vizanko ------------------------------------------ James K. Vizanko Vice President, Chief Financial Officer and Treasurer ALLETE Form 8-K dated July 19, 2002 3 EXHIBIT INDEX Exhibit Number - -------------------------------------------------------------------------------- 99 ALLETE News Release dated July 19, 2002 ALLETE Form 8-K dated July 19, 2002
Exhibit 99 [ALLETE LOGO] For Release: July 19, 2002 Contact: Eric Olson 218-723-3947 eolson@allete.com NEWS Investor Tim Thorp Contact: 218-723-3953 tthorp@allete.com ALLETE REPORTS SECOND-QUARTER EARNINGS -------------------------------------- Duluth, Minn. -- ALLETE, Inc. (NYSE: ALE) today reported earnings of 47 cents per share for the second quarter of 2002. Net income was $38.8 million on quarterly operating revenue of $376.7 million. Excluding exit charges related to the vehicle transport businesses, earnings were 50 cents per share for the quarter. In the second quarter of 2001, ALLETE reported $42.5 million of net income on operating revenue of $405.1 million, and earnings per share of 57 cents. Last year's results included the largest real estate transaction in company history. "We remain bullish on our core businesses," said David Gartzke, ALLETE Chairman, President, and CEO. "We remain committed to our strategy that looks for ways to increase the value of our company." Earnings from AUTOMOTIVE SERVICES increased by $8.7 million in the quarter compared with the second quarter of 2001. The 42 percent earnings increase came from mandated goodwill accounting changes, lower interest expense and increased auction efficiency. The receivables portfolio at Automotive Finance Corporation rose by 12 percent for the quarter compared with last year. ENERGY SERVICES earnings for the quarter were about the same as last year. While total kilowatt-hour sales were higher than in the second quarter of 2001, weak prices in the wholesale energy market contributed to flat earnings. For the second quarter, ALLETE recorded a loss of $5.7 million in INVESTMENTS AND CORPORATE CHARGES, compared with $9.2 million in income during the same period last year. During the second quarter of 2001, the company realized an $11.1 million gain on its largest real estate transaction ever. Difficult market conditions in the second quarter of 2002 contributed to less than acceptable returns from ALLETE's securities portfolio, which will be liquidated to eliminate future exposure to market uncertainties. Proceeds from this liquidation will be used to reduce the company's debt balance. WATER SALE UPDATE - ----------------- The company remains engaged in discussions relating to the proposed sale of ALLETE Water Services. The Florida Governmental Utility Authority has informed us it may not be taking any action regarding its potential purchase of Florida Water Services assets until September. Meanwhile, ALLETE continues to examine other opportunities for the sale of Florida Water. ALLETE has hired an investment banker to facilitate the sale of Heater Utilities and Georgia Water Services. That sale process is now in progress. The company expects to close both transactions in late 2002 or early 2003. (more) ALLETE NEWS RELEASE PAGE 2 - -------------------------------------------------------------------------------- EARNINGS GUIDANCE - ----------------- ALLETE is revising its earnings-per-share estimate for 2002 to be in the $2.00 to $2.10 range excluding the 5 cents of year-to-date exit charges as well as any gain from the sale of Water Services assets. This estimate reflects year-to-date performance, the planned liquidation of the securities portfolio, operating losses incurred prior to the exit from the vehicle transport business, and lower wholesale power prices for the year. The company continues to expect that Automotive Services will grow earnings by 30 percent in 2002 over 2001. ALLETE's corporate headquarters are located in Duluth, Minnesota. ALLETE's holdings include ADESA, the second largest wholesale vehicle auction network in North America; AFC, the leading provider of independent auto dealer inventory financing; Minnesota Power, a low-cost electric utility that serves some of the largest industrial customers in the United States; and Florida real estate investments. For more information about ALLETE, visit the company's Web site at www.allete.com. THE STATEMENTS CONTAINED IN THIS RELEASE AND STATEMENTS THAT ALLETE 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 ALLETE WITH THE SECURITIES AND EXCHANGE COMMISSION. #### [LOGO] recycled paper ALLETE - 30 West Superior Street, Duluth, Minnesota 55802 www.allete.com ALLETE NEWS RELEASE PAGE 3 - --------------------------------------------------------------------------------
ALLETE, INC. CONSOLIDATED STATEMENT OF INCOME FOR THE PERIODS ENDED JUNE 30, 2002 AND 2001 Millions Except Per Share Amounts QUARTER ENDED YEAR TO DATE 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING REVENUE Energy Services $ 154.1 $ 147.5 $ 297.0 $ 306.5 Automotive Services 217.6 214.7 431.1 419.6 Investments 5.0 42.9 21.6 55.9 - ------------------------------------------------------------------------------------------------------------------------------------ Total Operating Revenue 376.7 405.1 749.7 782.0 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING EXPENSES Fuel and Purchased Power 59.2 56.8 108.6 119.2 Operations 244.5 262.2 495.8 505.0 Interest 16.2 18.8 32.1 38.1 - ------------------------------------------------------------------------------------------------------------------------------------ Total Operating Expenses 319.9 337.8 636.5 662.3 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME FROM CONTINUING OPERATIONS 56.8 67.3 113.2 119.7 DISTRIBUTIONS ON REDEEMABLE PREFERRED SECURITIES OF ALLETE CAPITAL I 1.5 1.5 3.0 3.0 INCOME TAX EXPENSE 22.1 26.3 43.6 46.5 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM CONTINUING OPERATIONS 33.2 39.5 66.6 70.2 INCOME FROM DISCONTINUED OPERATIONS 5.6 3.0 7.4 5.2 - ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME $ 38.8 $ 42.5 $ 74.0 $ 75.4 - ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE SHARES OF COMMON STOCK Basic 81.0 73.7 80.7 72.7 Diluted 81.7 74.3 81.3 73.3 - ------------------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE OF COMMON STOCK Basic - Continuing Operations $0.41 $0.54 $0.83 $0.97 Discontinued Operations 0.07 0.04 0.09 0.07 - ------------------------------------------------------------------------------------------------------------------------------------ $0.48 $0.58 $0.92 $1.04 - ------------------------------------------------------------------------------------------------------------------------------------ Diluted - Continuing Operations $0.40 $0.53 $0.82 $0.96 Discontinued Operations 0.07 0.04 0.09 0.07 - ------------------------------------------------------------------------------------------------------------------------------------ $0.47 $0.57 $0.91 $1.03 - ------------------------------------------------------------------------------------------------------------------------------------ DIVIDENDS PER SHARE OF COMMON STOCK $0.275 $0.2675 $0.55 $0.535 - ------------------------------------------------------------------------------------------------------------------------------------
ALLETE, INC. CONSOLIDATED BALANCE SHEET Millions JUN. 30, DEC. 31, 2002 2001 - -------------------------------------------------------------------------------- ASSETS Current Assets $ 958.1 $ 909.9 Property, Plant and Equipment 1,368.6 1,323.3 Investments 129.2 141.0 Goodwill 501.0 494.4 Other 114.7 103.6 Discontinued Operations 330.3 310.3 - -------------------------------------------------------------------------------- TOTAL ASSETS $3,401.9 $ 3,282.5 - -------------------------------------------------------------------------------- JUN. 30, DEC. 31, 2002 2001 - -------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $ 753.9 $ 704.5 Long-Term Debt 935.2 933.8 Other Liabilities 266.9 270.5 Discontinued Operations 160.7 154.9 Mandatorily Redeemable Preferred Securities of ALLETE Capital I 75.0 75.0 Shareholders' Equity 1,210.2 1,143.8 - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,401.9 $3,282.5 - -------------------------------------------------------------------------------- ALLETE NEWS RELEASE PAGE 4 - --------------------------------------------------------------------------------
QUARTER ENDED YEAR TO DATE JUNE 30, JUNE 30, ALLETE, INC. 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME Millions Energy Services $ 9.7 $ 9.8 $18.8 $22.2 Automotive Services 29.2 20.5 53.9 38.6 Investments and Corporate Charges (5.7) 9.2 (6.1) 9.4 - ------------------------------------------------------------------------------------------------------------------------------------ Income from Continuing Operations 33.2 39.5 66.6 70.2 Income from Discontinued Operations 5.6 3.0 7.4 5.2 - ------------------------------------------------------------------------------------------------------------------------------------ Net Income $38.8 $42.5 $74.0 $75.4 - ------------------------------------------------------------------------------------------------------------------------------------ DILUTED EARNINGS PER SHARE Continuing Operations $0.40 $0.53 $0.82 $0.96 Discontinued Operations 0.07 0.04 0.09 0.07 - ------------------------------------------------------------------------------------------------------------------------------------ $0.47 $0.57 $0.91 $1.03 - ------------------------------------------------------------------------------------------------------------------------------------ Included a $0.8 million, or $0.01 per share, charge related to the exit from ALLETE's Canadian auto transport business. Discontinued operations included the operating results of ALLETE's Water Services businesses, the Great Rigs auto transport company and the Electric Odyssey retail business. For the six months ended June 30, 2002, ALLETE included $3.1 million, or $0.04 per share, in charges to complete the exit from the auto transport company and the retail business. A total of $2.3 million, or $0.02 per share, was reported during the first quarter of 2002.
QUARTER ENDED YEAR TO DATE JUNE 30, JUNE 30, ALLETE, INC. 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ STATISTICAL DATA CORPORATE Common Stock High $31.10 $26.13 $31.10 $26.13 Low $27.09 $22.04 $24.25 $20.19 Close $27.10 $22.50 $27.10 $22.50 Book Value $14.21 $13.40 $14.21 $13.40 ENERGY SERVICES Millions of Kilowatthours Sold Regulated Retail Residential 232.8 217.6 518.6 511.7 Commercial 295.1 288.3 609.6 606.9 Industrial 1,755.2 1,714.9 3,405.0 3,322.0 Other 17.8 17.8 37.6 37.2 Resale 400.8 404.5 843.7 1,074.4 - ----------------------------------------------------------------------------------------------------------------------------------- 2,701.7 2,643.1 5,414.5 5,552.2 Merchant 197.1 - 242.8 - - ----------------------------------------------------------------------------------------------------------------------------------- 2,898.8 2,643.1 5,657.3 5,552.2 AUTOMOTIVE SERVICES Vehicles Sold Wholesale 454,000 458,000 915,000 924,000 Total Loss 47,000 34,000 94,000 69,000 - ----------------------------------------------------------------------------------------------------------------------------------- 501,000 492,000 1,009,000 993,000 Conversion Rate - Wholesale Vehicles 59.7% 58.5% 62.6% 61.0% Vehicles Financed 241,000 232,000 478,000 453,000 EBITDAL (Millions) $68.0 $60.2 $128.7 $117.7 - --------------- Earnings Before Interest, Taxes, Depreciation, Amortization and Lease Expense