SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
11-K
(Mark
One)
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x
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Annual
Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934
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For the
fiscal year ended DECEMBER 31,
2007
or
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¨
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Transition
Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934
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For the
transition period from to
Commission
File No. 1-3548
MINNESOTA
POWER AND AFFILIATED COMPANIES
RETIREMENT
SAVINGS AND STOCK OWNERSHIP PLAN
(Full
Title of the Plan)
ALLETE,
Inc.
30 West
Superior Street
Duluth,
Minnesota 55802-2093
(Name of
issuer of securities
held
pursuant to the Plan and
the
address of its principal
executive
office)
Index
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Page
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Report
of Independent Public Accounting Firm
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2
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Statement
of Net Assets Available for Benefits –
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December
31, 2007 and 2006
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3
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Statement
of Changes in Net Assets Available for Benefits –
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Year
Ended December 31, 2007
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4
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Notes
to Financial Statements
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5
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Schedule
I: Schedule of Assets (Held at End of
Year) – December 31, 2007
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13
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Signatures
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14
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Note:
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Other
schedules required by 29 CFR 2520.103.10 of the U.S. Department of Labor’s
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are
not applicable.
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ALLETE
2007 RSOP Form 11-K
1
Report
of Independent Registered Public Accounting Firm
To the
Participants and Administrator of the
Minnesota
Power and Affiliated Companies
Retirement
Savings and Stock Ownership Plan
We have
audited the accompanying statement of net assets available for benefits of the
Minnesota Power and Affiliated Companies Retirement Savings and Stock Ownership
Plan (the “Plan”) as of December 31, 2007 and 2006, and the related statement of
changes in net assets available for benefits for the year ended December 31,
2007. These financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We
conducted our audit of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the Plan as of
December 31, 2007 and 2006, and the changes in its net assets available for
benefits for the year ended December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America.
Our audit
was conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules, Schedule of Assets
(Held at End of Year) – December 31, 2007, are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan’s management. These supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/
Reilly, Penner & Benton LLP
Milwaukee,
Wisconsin
June 25,
2008
ALLETE
2007 RSOP Form 11-K
2
Minnesota
Power and Affiliated Companies
Retirement
Savings and Stock Ownership Plan
Statement
of Net Assets Available for Benefits
Thousands
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December
31,
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||||
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2007
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2006
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|||
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Assets
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||||
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Investments
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||||
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Participant
Funds
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$315,907
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$314,595
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||
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Unallocated
Funds
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88,476
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117,217
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404,383
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431,812
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|||
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Contributions
Receivable
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||||
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Participant
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–
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214
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||
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Employer
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1,363
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1,087
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||
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1,363
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1,301
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|||
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Cash
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–
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1
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||
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405,746
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433,114
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|||
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Liabilities
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||||
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Accrued
Interest
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1,456
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1,398
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||
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Due
to Brokers
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69
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–
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||
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Accrued
Administrative Expenses
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–
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–
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Long-Term
Debt
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64,119
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69,818
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65,644
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71,216
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Net
Assets Available for Benefits
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$340,102
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$361,898
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The
accompanying notes are an integral part of these statements.
ALLETE
2007 RSOP Form 11-K
3
Minnesota
Power and Affiliated Companies
Retirement
Savings and Stock Ownership Plan
Statement
of Changes in Net Assets Available for Benefits
Thousands
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Year
Ended December 31, 2007
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|||||||||
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Participant
Funds
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Unallocated
Funds
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||||||||
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Total
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|||||||||
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Investment
Income
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|||||||||
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Dividend
Income
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$
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13,660
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$
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3,948
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$
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17,608
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Interest
Income
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164
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52
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216
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||||||
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Net
Depreciation in Fair Value of Investments
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(9,951)
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(16,127)
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(26,078)
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||||||
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Other
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85
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–
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85
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||||||
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3,958
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(12,127)
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(8,169)
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|||||||
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Contributions
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|||||||||
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Participant
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8,733
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–
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8,733
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||||||
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Employer
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–
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2,227
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2,227
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||||||
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Rollover
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600
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–
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600
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||||||
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9,333
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2,227
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11,560
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|||||||
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Deductions
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|||||||||
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Participants’
Withdrawals
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(18,222)
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–
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(18,222)
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Interest
Expense
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–
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(4,087)
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(4,087)
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||||||
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Administrative
Expenses
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(24)
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–
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(24)
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||||||
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Redemption
Fees
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(4)
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–
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(4)
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||||||
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(18,250)
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(4,087)
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(22,337)
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Transfers
and Allocations
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|||||||||
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Transfers
to Retirement Plans
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(2,850)
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–
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(2,850)
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||||||
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Allocations
to Participants
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10,173
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(10,173)
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–
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||||||
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7,323
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(10,173)
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(2,850)
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Net
Increase (Decrease)
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2,364
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(24,160)
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(21,796)
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Net
Assets Available For Benefits
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|||||||||
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Beginning
of Year
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313,380
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48,518
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361,898
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||||||
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End
of Year
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$
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315,744
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$
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24,358
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$
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340,102
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The
accompanying notes are an integral part of these statements.
ALLETE
2007 RSOP Form 11-K
4
Minnesota
Power and Affiliated Companies
Retirement
Savings and Stock Ownership Plan
Notes
to Financial Statements
Note
1 - Description of the Plan
The
Minnesota Power and Affiliated Companies Retirement Savings and Stock Ownership
Plan (RSOP or Plan) is a contributory defined contribution plan subject to the
provisions of the Employee Retirement Income Security Act of 1974(ERISA), as
amended, and qualifies as an employee stock ownership plan and profit sharing
plan. At December 31, 2007, there were 1,917 participants in the RSOP.
Participating affiliated companies (collectively, the Companies) at December 31,
2007, included:
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·
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ALLETE,
Inc. (ALLETE or Company)
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·
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Minnesota
Power (an operating division of
ALLETE)
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·
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Superior
Water, Light and Power Company
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·
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MP
Affiliate Resources, Inc.
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Effective
October 30, 2006, assets held in the Florida Water Services Corporation
Contributory Profit Sharing Plan were merged with the RSOP. Florida Water
Services Corporation, a wholly owned subsidiary of ALLETE, discontinued its
operations in 2004.
The RSOP
provides eligible employees of the Companies an opportunity to save for
retirement by electing to make before-tax and after-tax contributions through
payroll deduction, and directing the contributions into various 401(k)
investment options. (See Participant Investment Options.) The RSOP also provides
eligible employees of the Companies employee stock ownership benefits in ALLETE
common stock (Common Stock).
Basis
of Presentation
Participant
funds represent the participants’ 401(k) investment funds and shares allocated
to participants in the ALLETE RSOP Stock Fund. Unallocated funds represent
unallocated shares to be allocated to the participants in the ALLETE RSOP Stock
Fund in the future.
Administration
The Plan
is administered for the Companies by the Employee Benefit Plans Committee
(Committee). The mailing address of the Committee is 30 West Superior Street,
Duluth, Minnesota 55802-2093. The Committee consists of 12 members who were
appointed by the Board of Directors of ALLETE. The Board of Directors has the
power to remove members of the Committee from office. Members of the Committee
are all employees of the Companies and receive no compensation for their
services with respect to the Plan.
Committee
responsibilities include determining compliance with the Plan’s eligibility
requirements, as well as, the administration and payment of benefits in a manner
consistent with the terms of the Plan and applicable law. The Committee has the
authority to establish, modify and repeal policies and procedures as it deems
necessary to carry out the provisions of the Plan. The Committee also has the
authority to designate persons to carry out fiduciary responsibilities (other
than trustee responsibilities) under the Plan. The Committee has the power to
appoint an investment manager or managers (as defined by ERISA), attorneys,
accountants and such other persons as it shall deem necessary or desirable in
the administration of the Plan. The Companies or the Plan pays administration
fees and expenses of agents, outside experts, consultants and investment
managers. The Plan charges participants who take participant loans or use the
Plan’s self-managed brokerage account feature for expenses relating to such
loans or accounts.
ALLETE
2007 RSOP Form 11-K
5
Note
1 - Description of the Plan (Continued)
Wachovia
Retirement Services (Wachovia) a service group of Wachovia Corporation and
Wachovia Bank, National Association, is the service provider for the Plan and
handles participant recordkeeping, asset custody, trustee and certain other
administrative responsibilities. Wachovia allows the Plan to value accounts
daily and provides participants with on-line, call center and voice response
capabilities to direct the investment of their account balances. Wachovia Bank,
N.A. (Trustee), which is located at NC1156 Three Wachovia Center 401 South Tryon
Street, TH-14, Charlotte, North Carolina 28288-1156 is the trustee for the Plan.
The Trustee carries $20 million of blanket bond insurance and $10 million of
professional liability insurance.
On June
1, 2006, Wachovia Bank, N.A. purchased the defined contribution recordkeeping
business of Ameriprise Financial, Inc., the parent company of Ameriprise
Financial Services, Inc. and Ameriprise Trust Company. Ameriprise Retirement
Services, a service group of Ameriprise Financial Services, Inc. and Ameriprise
Trust Company, was the service provider for the Plan, and Ameriprise Trust
Company was the trustee for the Plan. Ameriprise continued to provide
recordkeeping and directed trustee services for the Plan until April 1, 2007,
when the transition to Wachovia was completed.
Participant
Investment Options
The
Plan’s 401(k) investment fund options at December 31, 2007, are listed below.
Detailed descriptions of the investment options and risk profiles are available
in the corresponding fund’s prospectus.
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·
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ALLETE
Stock Fund
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·
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Diversified
Bond Group Trust (MP)
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·
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Diversified
Stable Value Trust (MP)
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·
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SSgA
Russell 2000 Index SL Series Class A
Strategy
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·
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Artisan
International Fund
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·
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Dodge
& Cox Stock Fund
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·
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Dodge
& Cox International Stock Fund
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·
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HighMark
Small Cap Value Fund
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·
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MainStay
Large Cap Growth Fund
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·
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The
Oakmark Equity and Income Fund
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·
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Oppenheimer
Developing Markets Fund
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·
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Vanguard
Institutional Index Fund
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·
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Vanguard
Mid-Cap Index Fund
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·
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William
Blair Small Cap Growth Fund
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Participants
may also establish a self-managed brokerage account, which allows the
participant to make investments in or transfers to a wide range of securities,
including publicly traded stocks, bonds and mutual funds. Participants who have
a self-managed brokerage account pay an annual fee in addition to any trading
fees incurred upon investment changes.
Participants
may change their level of contribution, change their investment elections for
future contributions and make transfers between investment options at any time
by contacting Wachovia.
Fund Transfer
Restrictions. In
2006, the Vanguard Mid-Cap Index Fund and the Vanguard Institutional Index Fund
began restricting participants from purchasing shares in these funds for a
period of 60 days from the date the participants transfer shares out of these
funds.
Redemption Fees. Certain
mutual funds charge redemption fees that are paid out of the participant’s
account. A redemption fee is charged when shares are transferred or exchanged
out of the fund before the fund’s minimum holding period has been
met.
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Summary
of
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Effective
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Redemption
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Minimum
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Redemption
Fees by Fund
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Date
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Fee
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Holding
Period
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As
of 12/31/2007
|
|||
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Artisan
International Fund
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June
1, 2005
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2%
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90
days
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HighMark
Small Cap Value Fund
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February
1, 2007
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2%
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30
days
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ALLETE
2007 RSOP Form 11-K
6
Note
1 - Description of the Plan (Continued)
Employee
Stock Ownership Benefits – ALLETE RSOP Stock Fund
ALLETE
sponsors a leveraged employee stock ownership plan (ESOP) within the RSOP.
Eligible employees of the Companies receive Common Stock ownership benefits in
the ALLETE RSOP Stock Fund. These benefits are primarily funded by payments made
by the Plan on a loan (see Loan Account). Shares of Common Stock are allocated
to eligible employees as provided by the Plan (see Basic Account, Special
Account, Partnership Account, Bargaining Unit Account, Matching Account and
Results Sharing Account). The shares of Common Stock allocated to a
participant’s ALLETE RSOP Stock Fund come from the Loan Account, as determined
by ALLETE. Each participant’s account value, however, is determined on a unit
basis and consists of both Common Stock and cash. (See Note 4.) The unit value
is adjusted each business day to reflect investment results, including
cash.
Dividends
are automatically reinvested in Common Stock held in the ALLETE RSOP Stock Fund.
However, participants may make an election, at any time, to receive cash
dividends paid on certain eligible shares. Units within a participant’s Basic
Pre-1989 Account can be withdrawn at any time, while all other units within a
participant’s ALLETE RSOP Stock Fund can be withdrawn when the participant
reaches age 59 1/2 or terminates employment. Participants may transfer all or
any part of their ALLETE RSOP Stock Fund, excluding their Basic Pre-1989
Account, to other 401(k) investment options at any time. Effective January 1,
2007, participants may transfer their Basic Pre-1989 Account to other 401(k)
investment options at any time.
Loan Account. The RSOP was
amended in 1990 to establish a leveraged Loan Account and borrow
$75 million (RSOP Loan) to acquire 2,830,188 newly issued shares of Common
Stock (1,886,792 shares adjusted for stock splits) from ALLETE for the benefit
of eligible participants. Under this amendment, active participants with a Basic
Account are allocated shares to their Special Account with a value at least
equal to: (a) dividends payable on shares held by those participants in the Plan
and (b) tax savings generated from the deductibility of dividends paid on
all shares of Common Stock held in the RSOP as of August 4, 1989. In
accordance with this amendment, a promissory note was issued to ALLETE for
$75 million at a 10.25% interest rate with a term not to exceed
25 years. In 2006, the RSOP loan was refinanced at a 6% interest rate. The
Loan Account may also provide for other allocation types as determined by the
Company.
Basic Account. Participants’
Basic Accounts received shares of Common Stock purchased with incremental
investment tax credit contributions and payroll-based tax credit contributions.
Contributions to the participants’ Basic Accounts ceased after
1986.
Special Account. For the years
1985 through 1989, the Companies received a tax deduction for cash dividends
paid to participants on ALLETE RSOP Stock Fund shares in their Basic Account.
The Companies contributed, to the ALLETE RSOP Stock Fund, an amount equal to the
estimated income tax benefit of the dividend deduction associated with eligible
shares in the Basic Account. Shares of Common Stock purchased with these
contributions were allocated to the participants’ Special Account.
Partnership Account. For the
years 1989 through 2005, partnership allocations were made to each nonunion
participant’s Partnership Account as a fixed percentage of each eligible
participant’s annual salary, plus, to the extent of any additional value to be
allocated in the plan year, an amount based on the ratio of the participant’s
annual compensation to the annual compensation of all eligible participants.
Shares credited to participants’ Partnership Accounts as a fixed-percentage
partnership allocation for the years 1989 through 2001 had a value equal to 2%
of annual compensation; the fixed-percentage partnership allocation for the
years 2002 through 2005 and prorated for the period from January 1 through
September 30, 2006 was 3.5% of annual compensation. Since October 1, 2006, the
fixed-percentage partnership allocation to each nonunion participant hired
before October 1, 2006 has ranged from 6% to 12% of annual compensation
depending on the participant’s age. The fixed-percentage Partnership allocation
to each nonunion participant hired on or after October 1, 2006 is 6% of annual
compensation.
Bargaining Unit Account.
Quarterly non-elective allocations are made to the ALLETE RSOP Stock Fund
equal to 1% of each union participant’s eligible compensation.
ALLETE
2007 RSOP Form 11-K
7
Note
1 - Description of the Plan (Continued)
Matching Account. For nonunion
participants hired before October 1, 2006, quarterly matching allocations were
made to the ALLETE RSOP Stock Fund equal to 50% of each nonunion participant’s
401(k) before-tax contributions, disregarding contributions in excess of 4% of
the participant’s periodic pay for the period through October 1, 2006.
Thereafter, quarterly matching allocations are equal to 100% of each nonunion
participant’s 401(k) before-tax contributions and effective January 1, 2007 Roth
401(k) contributions, disregarding contributions in excess of 4% of the
participant’s periodic pay for the period.
For
nonunion participants hired on or after October 1, 2006, quarterly matching
allocations are made to the ALLETE RSOP Stock Fund equal to 100% of each
nonunion participant’s 401(k) before-tax contributions and effective January 1,
2007 Roth 401(k) contributions, disregarding contributions in excess of 5% of
the participant’s periodic pay for the period.
Results Sharing Account.
Results Sharing Award allocations are made to the ALLETE RSOP Stock Fund
equal to 50% of each nonunion and union participant’s Results Sharing
Award.
Florida Water Account.
Effective October 30, 2006, $5.8 million of assets held in the Florida Water
Services Corporation Contributory Profit Sharing Plan (Florida Water Plan) were
merged with the RSOP. On October 29, 2007, the Company received approximately
$71,000 relating to a class action lawsuit settlement relating to a mutual fund
the Florida Water Plan held. The settlement proceeds were allocated on February
4, 2008 to the Florida Water Plan participants based on their prorate share in
the fund.
Contributions
Participant contributions to
the Plan consist of the following:
|
|
·
|
Before-Tax Contributions.
Before-tax contributions consist of salary reduction contributions,
results sharing contributions and flexible dollar contributions. Total
before-tax contributions in 2007 could not exceed $15,500 for participants
less than age 50 or $20,500 for participants at least age 50, as permitted
under Section 401(k) of the Internal Revenue Code
(Code).
|
|
|
-
|
Salary Reduction
Contributions. Salary reduction contributions are equal to an
amount the participant has elected to reduce his or her compensation
pursuant to a salary reduction
agreement.
|
|
|
-
|
Results Sharing
Contributions. Results sharing contributions are equal to the
portion (up to 50 percent) of the Results Sharing Award the participant
irrevocably elects to forgo and that, pursuant to the ALLETE Results
Sharing Program, would otherwise be paid to the
participant.
|
|
|
·
|
Voluntary Contributions
(After-Tax Contributions). Each participant is also allowed to make
voluntary after-tax contributions to the Plan through payroll deductions.
Total voluntary contributions made by a participant may not exceed 25% of
the participant’s compensation in any pay
period.
|
|
|
·
|
Rollovers. Contributions
by participants may also be made through rollovers from other qualified
plans or individual retirement
accounts.
|
|
|
·
|
Roth 401(k) Contributions.
Participants may make the following types of contributions to the
Plan on an after-tax basis in the form of Roth 401(k)
Contributions:
|
|
|
-
|
Roth Salary Reduction
Contributions. Effective January 1, 2007, salary reduction
contributions are equal to an amount the participant has elected to reduce
his or her compensation pursuant to a salary reduction
agreement.
|
|
|
-
|
Roth Results Sharing
Contributions. Beginning with the award earned for 2007, results
sharing contributions are equal to the portion (up to 50%) of the Results
Sharing Award the participant irrevocably elects to forgo and that,
pursuant to the ALLETE Results Sharing Program, would otherwise be paid to
the participant.
|
Roth
401(k) contributions are in lieu of part or all of the before-tax contributions
participants are otherwise eligible to make.
ALLETE
2007 RSOP Form 11-K
8
Note
1 - Description of the Plan (Continued)
Employer contributions for
each year are paid to the Trustee either in cash or in Common Stock. Expenses
incurred in discretionary activities relating to the design, formation and
modification of the Plan (commonly characterized as “settlor” functions) are
paid by the Companies.
Vesting
and Forfeiture Account
As of
July 1, 2001, all contributions plus actual earnings thereon are fully vested
and nonforfeitable. In 2005, the Plan was amended to allow distribution checks
issued and outstanding for more than 180 days (unclaimed benefits) to be
redeposited into the Plan and treated as forfeitures. The forfeiture account
consists of previously forfeited nonvested accounts and unclaimed benefits,
totaling $233,000 at December 31, 2007 ($273,000 at December 31, 2006) and
is invested in Diversified Stable Value Trust (MP). Dollars from the forfeiture
account may be used to reduce future Plan expenses.
Distributions
and Withdrawals
A
participant may elect, at any time, to receive in cash, future dividends paid on
Common Stock shares in their ALLETE RSOP Stock Fund Basic Pre-1989 or Basic
Post-1989 Account and ALLETE Stock Fund.
Prior to
termination, participants may withdraw, at any time, all or any part of
their:
|
|
·
|
Plan
accounts, if the participant has attained age 59
1/2;
|
|
|
·
|
After-tax
account, regardless of the participant’s age;
or
|
|
|
·
|
Pre-1989
Basic Account, regardless of the participant’s
age.
|
When
participants terminate employment, become disabled or die, they or their
beneficiaries may elect to receive all or any part of their Plan
accounts.
Transfers to Retirement Plans.
Upon retirement, participants may elect to transfer their Plan account balances
to the Minnesota Power and Affiliated Companies Retirement Plan A or Plan B if
the participant is receiving a benefit from one of these retirement plans. The
amount of transfers to these retirement plans totaled $2,850,404 for
2007.
Loan Program. The Plan allows
participants to borrow money from their Plan accounts. The maximum amount a
participant may borrow is equal to the lesser of (a) the participant’s aggregate
before-tax account, after-tax account, Roth 401(k) and rollover account balances
(excluding Roth 401(k) rollover balances), (b) 50% of their total Plan balance,
or (c) $50,000, less the largest outstanding loan balance owed in the prior
12-month period. The loans may not be less than $1,000. The loans are for terms
up to five years for a general-purpose loan and ten years for the
acquisition of a primary residence. A fixed interest rate of the prime rate plus
1% on the first day of the month that the loan is originated is charged until
the loan is repaid. As loans are repaid, generally through payroll deductions,
principal and interest amounts are re-deposited into the participant’s Plan
accounts. Participants are required to pay a $50 loan application fee to cover
the cost of processing the loan.
Plan
Termination
The
Companies reserve the right to reduce, suspend or discontinue their
contributions to the Plan, at any time, or to terminate the Plan in its entirety
subject to the provisions of ERISA and the Code. If the Plan is terminated, all
of the account balances of the participants will be distributed in accordance
with the terms of the Plan.
Note
2 - Summary of Accounting Policies
The Plan
uses the accrual basis of accounting and, accordingly, reflects income in the
year earned and expenses when incurred. Common stock and mutual fund investments
are reported at their fair value based on quoted market prices. Collective fund
investments are reported at net asset value which approximates fair value.
Participants’ loans are reported at estimated fair value which represents
outstanding principal and any related accrued interest.
ALLETE
2007 RSOP Form 11-K
9
Note
2 - Summary of Accounting Policies (Continued)
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and changes therein, and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates.
The Plan
presents, in the statement of changes in net assets available for benefits, the
net appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses on disposed investments and the
unrealized appreciation (depreciation) on those investments owned at year
end.
The Plan
invests in various funds that are a combination of stocks, bonds and other
investment securities. Investment securities are exposed to various risks such
as interest rate, market and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the
near term and that such changes could materially affect the amounts reported in
the statement of net assets available for benefits.
Note
3 - Federal Income Tax Status
A
favorable determination letter dated March 23, 2004, was obtained from the
Internal Revenue Service stating that the RSOP, as amended and restated
effective January 1, 2002, qualified as an employee stock ownership plan and a
profit sharing plan under Section 401(a) of the Code.
An
application for a new determination letter for the RSOP, as amended and restated
effective January 1, 2007, was filed with the Internal Revenue Service on
January 31, 2007. The Committee continues to believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Code. Therefore, no provision for income taxes has been included in the
Plan’s financial statements.
Note
4 - Investments
|
Fair/Net
Asset Value of Investments
|
|||
|
Representing
5% or More of Assets
|
|||
|
At
December 31,
|
2007
|
2006
|
|
|
Thousands
|
|||
|
ALLETE
RSOP Stock Fund
|
$159,913
|
$200,298
|
|
|
Diversified
Stable Value Trust (MP)
|
$45,507
|
$45,093
|
|
|
Vanguard
Institution Index Fund
|
$27,484
|
$28,092
|
|
|
ALLETE
Stock Fund
|
$25,678
|
$28,308
|
|
|
The
Oakmark Equity and Income Fund
|
$24,809
|
$21,430
|
|
|
Oppenheimer
Developing Markets Fund
|
$24,585
|
$19,921
|
ALLETE
2007 RSOP Form 11-K
10
Note
4 – Investments (Continued.)
The
ALLETE RSOP Stock Fund represents shares of Common Stock allocated to
participants, unallocated shares to be allocated to the participants in the
ALLETE RSOP Stock Fund in the future and cash invested in a money market
fund.
|
Number
of
|
Fair
|
|||||
|
ALLETE
RSOP Stock Fund
|
Shares
|
Cost
|
Value
|
|||
|
Thousands
|
||||||
|
December
31, 2007
|
Allocated
|
–
|
Common
Stock
|
1,788
|
$50,420
|
$71,115
|
|
Money
Market
|
322
|
322
|
||||
|
50,742
|
71,437
|
|||||
|
Unallocated
|
–
|
Common
Stock
|
2,235
|
34,294
|
88,469
|
|
|
Money
Market
|
7
|
7
|
||||
|
34,301
|
88,476
|
|||||
|
$85,043
|
$159,913
|
|||||
|
December
31, 2006
|
Allocated
|
–
|
Common
Stock
|
1,766
|
$48,958
|
$82,184
|
|
Money
Market
|
897
|
897
|
||||
|
49,855
|
83,081
|
|||||
|
Unallocated
|
–
|
Common
Stock
|
2,475
|
37,993
|
115,192
|
|
|
Money
Market
|
2,025
|
2,025
|
||||
|
40,018
|
117,217
|
|||||
|
$89,873
|
$200,298
|
For the
ALLETE Stock Fund and the ALLETE RSOP Stock Fund, each participant’s account
value is determined on a unit basis and consists of both Common Stock and cash
invested in a money market fund. The unit value is adjusted each business day to
reflect investment results including cash.
|
ALLETE
Stock Fund
|
ALLETE
RSOP Stock Fund
|
|||||
|
At
December 31,
|
2007
|
2006
|
2007
|
2006
|
||
|
Thousands
|
||||||
|
Number
of Units
|
5,132
|
4,834
|
13,560
|
13,348
|
||
|
Common
Stock
|
$24,868
|
$28,167
|
$71,115
|
$82,184
|
||
|
Money
Market
|
810
|
141
|
322
|
897
|
||
|
Net
Value
|
$25,678
|
$28,308
|
$71,437
|
$83,081
|
||
ALLETE
2007 RSOP Form 11-K
11
Note
5 - Repayment of Loan
The
Trustee repays principal and interest on the RSOP Loan with dividends paid on
the shares of Common Stock in the Loan Account and with certain employer
contributions to the Plan. The shares of Common Stock acquired by the Trustee
are held in the Loan Account, and allocated to the accounts of Plan participants
as the RSOP Loan is repaid.
The RSOP
Loan was obtained from ALLETE. There were 2,221,970 unallocated shares of Common
Stock in the Plan pledged as collateral at December 31, 2007. Prepayments of
principal can be made without penalty. The lender has no rights to shares that
are allocated under the Plan.
|
Principal
Payments
|
|||
|
$70
Million 6% Loan
|
|||
|
Thousands
|
|||
|
2008
|
$
|
–
|
|
|
2009
|
–
|
||
|
2010
|
1,700
|
||
|
2011
|
2,100
|
||
|
2012
|
10,319
|
||
|
2013
|
12,500
|
||
|
2014
|
12,500
|
||
|
2015
|
12,500
|
||
|
2016
|
12,500
|
||
|
$
|
64,119
|
||
Note
6 - Department of Labor Examination
ALLETE
2007 RSOP Form 11-K
12
Schedule
I
Minnesota
Power and Affiliated Companies
Retirement
Savings and Stock Ownership Plan
Plan
Number 002 / Employer Identification Number 41-0418150
Schedule
of Assets (Held at End of Year)
Form
5500 Schedule H Line 4i
At
December 31, 2007
Thousands
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|||
|
Description
of
|
Current
|
||||||
|
Identity
of Issuer
|
Investment
|
Cost
(1)
|
Value
|
||||
|
ALLETE
RSOP Stock Fund
|
|||||||
|
*
|
ALLETE,
Inc.
|
Common
Stock – 4,023 Shares
|
$84,714
|
$159,584
|
|||
|
*
|
Evergreen
Inst Money Market Fund
|
Money
Market
|
329
|
329
|
|||
|
Total
ALLETE RSOP Stock Fund
|
85,043
|
159,913
|
|||||
|
ALLETE
Stock Fund
|
|||||||
|
*
|
ALLETE,
Inc.
|
Common
Stock – 5,132 Shares
|
24,868
|
||||
|
Evergreen
Inst Money Market Fund
|
Money
Market
|
810
|
|||||
|
Total
ALLETE Stock Fund
|
25,678
|
||||||
|
Collective
Fund Securities
|
|||||||
|
*
|
Diversified
Bond Group Trust (MP)
|
Collective
Fund – 857 Shares
|
8,767
|
||||
|
*
|
Diversified
Stable Value Trust (MP)
|
Collective
Fund –4,497 Shares
|
45,507
|
||||
|
*
|
SSgA
Russell 2000 Index SL Series Class A Strategy
|
Collective
Fund – 321 Shares
|
2,988
|
||||
|
Total
Collective Fund Securities
|
57,262
|
||||||
|
Mutual
Fund Securities
|
|||||||
|
Artisan
International Fund
|
Mutual
Fund – 385 Shares
|
11,490
|
|||||
|
Dodge
& Cox International
|
Mutual
Fund – 210 Shares
|
9,655
|
|||||
|
Dodge
& Cox Stock Fund
|
Mutual
Fund – 122 Shares
|
16,865
|
|||||
|
Highmark
Small Cap Value Fund
|
Mutual
Fund – 736 Shares
|
8,951
|
|||||
|
Mainstay
Large Cap Growth Fund
|
Mutual
Fund – 819 Shares
|
5,854
|
|||||
|
The
Oakmark Equity and Income Fund
|
Mutual
Fund – 923 Shares
|
24,809
|
|||||
|
Oppenheimer
Developing Markets Fund
|
Mutual
Fund – 505 Shares
|
24,585
|
|||||
|
Vanguard
Institutional Index Fund
|
Mutual
Fund – 205 Shares
|
27,483
|
|||||
|
Vanguard
Mid-Cap - Institutional Fund
|
Mutual
Fund – 632 Shares
|
13,118
|
|||||
|
William
Blair Small Cap Growth Fund
|
Mutual
Fund – 434 Shares
|
10,372
|
|||||
|
Total
Mutual Fund Securities
|
153,182
|
||||||
|
Self-Managed
Brokerage Accounts
|
5,647
|
||||||
|
*
|
Participant
Loans
|
Loans
Receivable from
|
|||||
|
Participants
– 5% to 13.65%
|
2,701
|
||||||
|
Total
Investments
|
$404,383
|
||||||
|
*
|
Party
in Interest
|
||||||
|
(1)
Not required for participant directed transactions.
|
|||||||
ALLETE
2007 RSOP Form 11-K
13
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, ALLETE, Inc., as
plan administrator, has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
|
Minnesota
Power and Affiliated Companies
|
|||
|
Retirement
Savings and Stock Ownership Plan
|
|||
|
By:
|
ALLETE,
Inc., its Plan Administrator
|
||
|
June
25, 2008
|
Donald
J. Shippar
|
||
|
Donald
J. Shippar
|
|||
|
Chairman,
President and Chief Executive
Officer
|
|||
ALLETE
2007 RSOP Form 11-K
14
Index
to Exhibits
Exhibit
a - Consent
of Independent Registered Public Accounting Firm
ALLETE
2007 RSOP Form 11-K
Exhibit
a
Consent
of Independent Registered Public Accounting Firm
We
consent to the incorporation by reference in the Registration Statement (No.
333-124455) on Form
S-8 of
ALLETE, Inc. of our report dated June 25, 2008, with respect to the statements
of net assets available for benefits of the Minnesota Power and Affiliated
Companies Retirement Savings and Stock Ownership Plan for the years ended
December 31, 2007 and 2006, the related statements of changes in net assets
available for benefits for the year ended December 31, 2007, and the related
supplemental schedules as of December 31, 2007, which report appears in the
December 31, 2007, annual report on Form 11-K of the Minnesota Power and
Affiliated Companies Retirement Savings and Stock Ownership Plan.
/s/
Reilly, Penner & Benton LLP
Reilly,
Penner & Benton LLP
Milwaukee,
Wisconsin
June 25,
2008