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) - JANUARY 24, 2003 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, PRO FORMA FINANCIAL INFORMATION 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 January 24, 2003 announcing 2002 earnings. ALLETE Form 8-K dated January 24, 2003 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; - market factors affecting supply and demand for used vehicles; - wholesale power market 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; - 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 recent acquisitions; and - the outcome of 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 January 24, 2003
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. January 24, 2003 James K. Vizanko ----------------------------------------- James K. Vizanko Vice President, Chief Financial Officer and Treasurer ALLETE Form 8-K dated January 24, 2003 3
EXHIBIT INDEX EXHIBIT NUMBER - -------------------------------------------------------------------------------- 99 - ALLETE News Release dated January 24, 2003 announcing 2002 earnings. ALLETE Form 8-K dated January 24, 2003
Exhibit 99 [GRAPHIC OMITTED] For Release: January 24, 2003 CONTACT: Eric Olson 218-723-3947 eolson@allete.com INVESTOR Tim Thorp CONTACT: 218-723-3953 tthorp@allete.com NEWS ALLETE REPORTS 2002 EARNINGS, 2003 EXPECTATIONS ----------------------------------------------- (Duluth, Minn.)-ALLETE, Inc. (NYSE: ALE) today reported 2002 earnings of $1.68 per share, compared with earnings of $1.81 in 2001. Excluding one-time events, earnings were $1.80 per share in 2002 and $1.87 in 2001. Net income was $137.2 million in 2002 on revenue of $1.507 billion, compared with $138.7 million net income on revenue of $1.526 billion in 2001. "We navigated through a challenging year while accomplishing several important goals," said Dave Gartzke, ALLETE's chairman, president and CEO. "We simplified our company by exiting non-strategic businesses. This strengthened our balance sheet and allowed us to focus on our two core businesses. We continued our efforts to communicate this new focus to investors." One-time events in 2002 include final exit charges related to the automotive transport and Electric Odyssey retail businesses, as well as a charge related to the indefinite delay of an electric generation project in Superior, Wis. In 2001, ALLETE recognized a portion of the exit charge from the automotive transport business. AUTOMOTIVE SERVICES grew net income by 24% in 2002 despite relatively flat auction vehicle sales. At ADESA, growth was due to mandated goodwill accounting changes, lower interest expense and increased auction efficiency. Automotive Finance Corporation financed 42,000 more vehicles - an increase of 5%. At ENERGY SERVICES, total kilowatt-hour sales were up 11% for the year in part due to sales from nonregulated generation that began in 2002. Low wholesale prices, however, resulted in net income declining by 8%, excluding the Superior generation project. INVESTMENTS AND CORPORATE CHARGES declined by $19.5 million from 2001, mainly due to the liquidation of the company's securities portfolio during the year and the largest real estate sale in the company's history which improved earnings in 2001. Net income from DISCONTINUED OPERATIONS increased by $9.8 million in 2002, largely from the suspension of depreciation expense at the company's Water Services businesses. The pending sale of Florida Water Services for $492.5 million is expected to close in mid-February. (MORE)
ALLETE NEWS RELEASE PAGE 2 - -------------------------------------------------------------------------------- "The proceeds from the sale will give us the ability to reduce debt, which will further strengthen our balance sheet and keep us financially well-positioned," Gartzke said. "Our two core businesses remain strong and are poised for earnings growth in their respective markets as economic conditions improve." Gartzke expects earnings at Automotive Services to grow by about 15% in 2003. Earnings at Energy Services are expected to decrease slightly from 2002 levels. "If wholesale power prices improve, so too will our profitability at Energy Services," he added. 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 financing; Minnesota Power, a low-cost electric utility that serves some of the largest industrial customers in the United States; and significant real estate holdings in Florida. 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. ### [GRAPHIC OMITTED] 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 DECEMBER 31, 2002 AND 2001 Millions Except Per Share Amounts QUARTER ENDED YEAR TO DATE 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------ OPERATING REVENUE Energy Services $ 162.1 $ 144.4 $ 630.3 $ 618.7 Automotive Services 200.9 205.9 844.1 832.1 Investments 3.3 10.2 32.5 74.8 - ------------------------------------------------------------------------------------------------------------ Total Operating Revenue 366.3 360.5 1,506.9 1,525.6 - ------------------------------------------------------------------------------------------------------------ OPERATING EXPENSES Fuel and Purchased Power 64.4 53.7 239.1 233.1 Operations 266.2 252.4 1,008.0 1,007.3 Interest 14.3 16.9 62.2 74.7 - ------------------------------------------------------------------------------------------------------------ Total Operating Expenses 344.9 323.0 1,309.3 1,315.1 - ------------------------------------------------------------------------------------------------------------ OPERATING INCOME FROM CONTINUING OPERATIONS 21.4 37.5 197.6 210.5 DISTRIBUTIONS ON REDEEMABLE PREFERRED SECURITIES OF ALLETE CAPITAL I 1.5 1.5 6.0 6.0 INCOME TAX EXPENSE 6.6 11.2 72.6 74.2 - ------------------------------------------------------------------------------------------------------------ INCOME FROM CONTINUING OPERATIONS 13.3 24.8 119.0 130.3 INCOME FROM DISCONTINUED OPERATIONS 4.8 0.7 18.2 8.4 - ------------------------------------------------------------------------------------------------------------ NET INCOME $ 18.1 $ 25.5 $ 137.2 $ 138.7 - ------------------------------------------------------------------------------------------------------------ AVERAGE SHARES OF COMMON STOCK Basic 81.8 79.6 81.1 75.8 Diluted 82.3 80.4 81.7 76.5 - ------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE OF COMMON STOCK Basic - Continuing Operations $0.16 $0.30 $1.47 $1.72 Discontinued Operations 0.06 0.01 0.22 0.11 - ------------------------------------------------------------------------------------------------------------ $0.22 $0.31 $1.69 $1.83 - ------------------------------------------------------------------------------------------------------------ Diluted - Continuing Operations $0.16 $0.30 $1.46 $1.70 Discontinued Operations 0.06 0.01 0.22 0.11 - ------------------------------------------------------------------------------------------------------------ $0.22 $0.31 $1.68 $1.81 - ------------------------------------------------------------------------------------------------------------ DIVIDENDS PER SHARE OF COMMON STOCK $0.275 $0.2675 $1.10 $1.07 - ------------------------------------------------------------------------------------------------------------ ALLETE, INC. CONSOLIDATED BALANCE SHEET FOR THE PERIODS ENDED DECEMBER 31, 2002 AND 2001 Millions 2002 2001 - ----------------------------------------------------------------------- ASSETS Current Assets $ 658.4 $ 895.5 Property, Plant and Equipment 1,364.9 1,323.3 Investments 170.9 155.4 Goodwill 499.8 494.4 Other 107.3 103.6 Discontinued Operations 345.9 310.3 - ----------------------------------------------------------------------- TOTAL ASSETS $3,147.2 $3,282.5 - ----------------------------------------------------------------------- 2002 2001 - ----------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $ 738.2 $ 704.5 Long-Term Debt 661.3 933.8 Other Liabilities 277.4 270.5 Discontinued Operations 162.9 154.9 Mandatorily Redeemable Preferred Securities of ALLETE Capital I 75.0 75.0 Shareholders' Equity 1,232.4 1,143.8 - ----------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,147.2 $3,282.5 - -----------------------------------------------------------------------
ALLETE NEWS RELEASE PAGE 4 - ---------------------------------------------------------------------- QUARTER ENDED YEAR TO DATE DECEMBER 31, DECEMBER 31, ALLETE, INC. 2002 2001 2002 2001 - -------------------------------------------------------------------------------------------------------------------------- NET INCOME Millions Energy Services
$ 5.5 $11.5 $ 41.8 $ 51.7 Automotive Services 14.1 15.6 92.9 74.8 Investments and Corporate Charges (6.3) (2.3) (15.7) 3.8 - -------------------------------------------------------------------------------------------------------------------------- Income from Continuing Operations 13.3 24.8 119.0 130.3 Income from Discontinued Operations 4.8 0.7 18.2 8.4 - -------------------------------------------------------------------------------------------------------------------------- Net Income $18.1 $25.5 $137.2 $138.7 - -------------------------------------------------------------------------------------------------------------------------- DILUTED EARNINGS PER SHARE Continuing Operations $0.16 $0.30 $1.46 $1.70 Discontinued Operations 0.06 0.01 0.22 0.11 - -------------------------------------------------------------------------------------------------------------------------- $0.22 $0.31 $1.68 $1.81 - -------------------------------------------------------------------------------------------------------------------------- QUARTER ENDED YEAR TO DATE DECEMBER 31, DECEMBER 31, ALLETE, INC. 2002 2001 2002 2001 - --------------------------------------------------------------------------------------------------------------------------- STATISTICAL DATA CORPORATE Common Stock High $23.80 $25.85 $31.10 $26.89 Low $18.65 $21.14 $18.50 $20.19 Close $22.68 $25.20 $22.68 $25.20 Book Value $14.39 $13.63 $14.39 $13.63 ENERGY SERVICES Millions of Kilowatthours Sold Utility Retail Residential 285.7 254.3 1,044.4 997.5 Commercial 319.9 301.1 1,257.0 1,233.9 Industrial 1,795.4 1,627.0 6,946.2 6,549.3 Other 20.9 18.6 77.4 75.3 Resale 395.4 462.6 1,806.7 2,085.8 - --------------------------------------------------------------------------------------------------------------------------- 2,817.3 2,663.6 11,131.7 10,941.8 Nonregulated 321.3 38.5 1,149.2 140.4 - --------------------------------------------------------------------------------------------------------------------------- 3,138.6 2,702.1 12,280.9 11,082.2 AUTOMOTIVE SERVICES Vehicles Sold Wholesale 393,000 408,000 1,741,000 1,761,000 Total Loss 44,000 45,000 175,000 148,000 - --------------------------------------------------------------------------------------------------------------------------- 437,000 453,000 1,916,000 1,909,000 Conversion Rate - Wholesale Vehicles 55.1% 54.5% 59.0% 58.1% Vehicles Financed 231,000 228,000 946,000 904,000 EBITDAL (Millions) During the fourth quarter of 2002 ALLETE included a $5.5 million, or $0.07 per share, one-time non-cash charge related to the indefinite delay of a generation project in Superior, Wisconsin. Discontinued operations included the operating results of ALLETE's Water Services businesses, the auto transport business and the retail store. During the first six months of 2002 ALLETE included $3.9 million, or $0.05 per share, in charges to complete the exit from the auto transport business and the retail business. During the fourth quarter of 2001 ALLETE recognized a $4.4 million, or $0.06 per share, estimated charge to exit the auto transport business. $43.2 $47.7 $229.8 $221.2 - ---------------- Earnings Before Interest, Taxes, Depreciation, Amortization and Lease Expense