T
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
£
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Minnesota
|
41-0418150
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
Large Accelerated Filer
T
|
Accelerated Filer
£
|
Non-Accelerated Filer
£
|
Smaller Reporting Company
£
|
Page
|
|||
Definitions
|
3
|
||
Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995
|
5
|
||
Part I.
|
Financial Information
|
||
Item 1.
|
Financial Statements (Unaudited)
|
||
Consolidated Balance Sheet -
|
|||
September 30, 2010 and December 31, 2009
|
6
|
||
Consolidated Statement of Income -
|
|||
Quarter and Nine Months Ended September 30, 2010 and 2009
|
7
|
||
Consolidated Statement of Cash Flows -
|
|||
Nine Months Ended September 30, 2010 and 2009
|
8
|
||
Notes to Consolidated Financial Statements
|
9
|
||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
28
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
41
|
|
Item 4.
|
Controls and Procedures
|
42
|
|
Part II.
|
Other Information
|
||
Item 1.
|
Legal Proceedings
|
43
|
|
Item 1A.
|
Risk Factors
|
43
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
43
|
|
Item 3.
|
Defaults Upon Senior Securities
|
43
|
|
Item 4.
|
Reserved
|
43
|
|
Item 5.
|
Other Information
|
43
|
|
Item 6.
|
Exhibits
|
44
|
|
Signatures
|
45
|
Abbreviation or Acronym
|
Term
|
AC
|
Alternating Current
|
AFUDC
|
Allowance for Funds Used During Construction – consisting of the cost of both the debt and equity funds used to finance utility plant additions during construction periods
|
ALLETE
|
ALLETE, Inc.
|
ALLETE Properties
|
ALLETE Properties, LLC and its subsidiaries
|
ARS
|
Auction Rate Securities
|
ATC
|
American Transmission Company LLC
|
Bison I
|
Bison I Wind Project
|
BNI Coal
|
BNI Coal, Ltd.
|
Boswell
|
Boswell Energy Center
|
CO
2
|
Carbon Dioxide
|
Company
|
ALLETE, Inc. and its subsidiaries
|
DC
|
Direct Current
|
EPA
|
Environmental Protection Agency
|
ESOP
|
Employee Stock Ownership Plan
|
FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
Form 10-K
|
ALLETE Annual Report on Form 10-K
|
Form 10-Q
|
ALLETE Quarterly Report on Form 10-Q
|
GAAP
|
United States Generally Accepted Accounting Principles
|
GHG
|
Greenhouse Gases
|
IBEW Local 31
|
International Brotherhood of Electrical Workers Local 31
|
Invest Direct
|
ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
|
kV
|
Kilovolt(s)
|
Laskin
|
Laskin Energy Center
|
Manitoba Hydro
|
Manitoba Hydro-Electric Board
|
Minnesota Power
|
An operating division of ALLETE, Inc.
|
Minnkota Power
|
Minnkota Power Cooperative, Inc.
|
MISO
|
Midwest Independent Transmission System Operator, Inc.
|
MPCA
|
Minnesota Pollution Control Agency
|
MPUC
|
Minnesota Public Utilities Commission
|
MW/MWh
|
Megawatt(s) / Megawatt-hour(s)
|
NDPSC
|
North Dakota Public Service Commission
|
Non-residential
|
Retail commercial, non-retail commercial, office, industrial, warehouse, storage and institutional
|
Abbreviation or Acronym
|
Term
|
NO
2
|
Nitrogen Dioxide
|
NO
X
|
Nitrogen Oxide
|
Note ___
|
Note ___ to the consolidated financial statements in this Form 10-Q
|
Oliver Wind I
|
Oliver Wind I Energy Center
|
Oliver Wind II
|
Oliver Wind II Energy Center
|
Palm Coast Park
|
Palm Coast Park development project in Florida
|
Palm Coast Park District
|
Palm Coast Park Community Development District
|
PPA
|
Power Purchase Agreement(s)
|
PSCW
|
Public Service Commission of Wisconsin
|
Rainy River Energy
|
Rainy River Energy Corporation - Wisconsin
|
SEC
|
Securities and Exchange Commission
|
SO
2
|
Sulfur Dioxide
|
Square Butte
|
Square Butte Electric Cooperative
|
SWL&P
|
Superior Water, Light and Power Company
|
Taconite Harbor
|
Taconite Harbor Energy Center
|
Taconite Ridge
|
Taconite Ridge Energy Center
|
Town Center
|
Town Center at Palm Coast development project in Florida
|
Town Center District
|
Town Center at Palm Coast Community Development District
|
WDNR
|
Wisconsin Department of Natural Resources
|
·
|
our ability to successfully implement our strategic objectives;
|
·
|
prevailing governmental policies, regulatory actions, and legislation including those of the United States Congress, state legislatures, the FERC, the MPUC, the PSCW, the NDPSC, the EPA and other various state, local, and county regulators, and city administrators, about allowed rates of return, financings, industry and rate structure, acquisition and disposal of assets and facilities, real estate development, operation and construction of plant facilities, recovery of purchased power, capital investments and other expenses, present or prospective wholesale and retail competition (including but not limited to transmission costs), zoning and permitting of land held for resale and environmental matters;
|
·
|
our ability to manage expansion and integrate acquisitions;
|
·
|
the potential impacts of climate change and future regulation to restrict the emissions of GHG on our Regulated Operations
;
|
·
|
effects of restructuring initiatives in the electric industry;
|
·
|
economic and geographic factors, including political and economic risks;
|
·
|
changes in and compliance with laws and regulations;
|
·
|
weather conditions;
|
·
|
natural disasters and pandemic diseases;
|
·
|
war and acts of terrorism;
|
·
|
wholesale power market conditions;
|
·
|
population growth rates and demographic patterns;
|
·
|
effects of competition, including competition for retail and wholesale customers;
|
·
|
changes in the real estate market;
|
·
|
pricing and transportation of commodities;
|
·
|
changes in tax rates or policies or in rates of inflation;
|
·
|
project delays or changes in project costs;
|
·
|
availability and management
of construction materials and skilled construction labor for capital projects;
|
·
|
changes in operating expenses
,
capital and land development expenditures;
|
·
|
global and domestic economic conditions affecting us or our customers;
|
·
|
our ability to access capital markets and bank financing;
|
·
|
changes in interest rates and the performance of the financial markets;
|
·
|
our ability to replace a mature workforce and retain qualified, skilled and experienced personnel; and
|
·
|
the outcome of legal and administrative proceedings (whether civil or criminal) and settlements that affect the business and profitability of ALLETE.
|
September 30,
|
December 31,
|
|
2010
|
2009
|
|
Assets
|
||
Current Assets
|
||
Cash and Cash Equivalents
|
$92.3
|
$25.7
|
Accounts Receivable (Less Allowance of $0.9 at September 30, 2010 and
December 31, 2009)
|
112.1
|
118.5
|
Inventories
|
62.9
|
57.0
|
Prepayments and Other
|
26.7
|
24.3
|
Total Current Assets
|
294.0
|
225.5
|
Property, Plant and Equipment - Net
|
1,742.6
|
1,622.7
|
Regulatory Assets
|
282.5
|
293.2
|
Investment in ATC
|
92.0
|
88.4
|
Other Investments
|
134.4
|
130.5
|
Other Non-Current Assets
|
33.6
|
32.8
|
Total Assets
|
$2,579.1
|
$2,393.1
|
Liabilities and Equity
|
||
Liabilities
|
||
Current Liabilities
|
||
Accounts Payable
|
$66.5
|
$62.1
|
Accrued Taxes
|
18.0
|
20.6
|
Accrued Interest
|
12.3
|
11.1
|
Long-Term Debt Due Within One Year
|
1.6
|
5.2
|
Notes Payable
|
1.0
|
1.9
|
Other
|
31.6
|
32.2
|
Total Current Liabilities
|
131.0
|
133.1
|
Long-Term Debt
|
784.2
|
695.8
|
Deferred Income Taxes
|
321.0
|
253.1
|
Regulatory Liabilities
|
46.0
|
47.1
|
Other Non-Current Liabilities
|
312.8
|
325.0
|
Total Liabilities
|
1,595.0
|
1,454.1
|
Commitments and Contingencies (Note 13)
|
||
Equity
|
||
ALLETE’s Equity
|
||
Common Stock Without Par Value, 80.0 Shares Authorized, 35.8 and 35.2 Shares Outstanding
|
634.1
|
613.4
|
Unearned ESOP Shares
|
(38.2)
|
(45.3)
|
Accumulated Other Comprehensive Loss
|
(23.2)
|
(24.0)
|
Retained Earnings
|
402.2
|
385.4
|
Total ALLETE Equity
|
974.9
|
929.5
|
Non-Controlling Interest in Subsidiaries
|
9.2
|
9.5
|
Total Equity
|
984.1
|
939.0
|
Total Liabilities and Equity
|
$2,579.1
|
$2,393.1
|
Quarter Ended
|
Nine Months Ended
|
|||
September 30,
|
September 30,
|
|||
2010
|
2009
|
2010
|
2009
|
|
Operating Revenue
|
||||
Operating Revenue
|
$224.1
|
$178.8
|
$668.9
|
$550.7
|
Prior Year Rate Refunds
|
–
|
–
|
–
|
(7.6)
|
Total Operating Revenue
|
224.1
|
178.8
|
668.9
|
543.1
|
Operating Expenses
|
||||
Fuel and Purchased Power
|
79.0
|
69.8
|
233.1
|
199.4
|
Operating and Maintenance
|
89.8
|
67.5
|
262.9
|
224.7
|
Depreciation
|
20.0
|
16.1
|
59.8
|
46.8
|
Total Operating Expenses
|
188.8
|
153.4
|
555.8
|
470.9
|
Operating Income
|
35.3
|
25.4
|
113.1
|
72.2
|
Other Income (Expense)
|
||||
Interest Expense
|
(9.7)
|
(8.3)
|
(28.1)
|
(25.4)
|
Equity Earnings in ATC
|
4.5
|
4.4
|
13.4
|
12.9
|
Other
|
0.6
|
0.8
|
3.8
|
3.8
|
Total Other Expense
|
(4.6)
|
(3.1)
|
(10.9)
|
(8.7)
|
Income Before Non-Controlling Interest and
Income Taxes
|
30.7
|
22.3
|
102.2
|
63.5
|
Income Tax Expense
|
11.2
|
6.5
|
40.5
|
21.5
|
Net Income
|
19.5
|
15.8
|
61.7
|
42.0
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
(0.2)
|
(0.3)
|
(0.3)
|
Net Income Attributable to ALLETE
|
$19.6
|
$16.0
|
$62.0
|
$42.3
|
Average Shares of Common Stock
|
||||
Basic
|
34.4
|
32.8
|
34.1
|
31.8
|
Diluted
|
34.5
|
32.9
|
34.2
|
31.9
|
Basic Earnings Per Share of Common Stock
|
$0.57
|
$0.49
|
$1.82
|
$1.33
|
Diluted Earnings Per Share of Common Stock
|
$0.56
|
$0.49
|
$1.81
|
$1.33
|
Dividends Per Share of Common Stock
|
$0.44
|
$0.44
|
$1.32
|
$1.32
|
Nine Months Ended
|
||
September 30,
|
||
2010
|
2009
|
|
Operating Activities
|
||
Net Income
|
$61.7
|
$42.0
|
Allowance for Funds Used During Construction
|
(3.4)
|
(4.5)
|
Income from Equity Investments, Net of Dividends
|
(2.2)
|
(0.2)
|
Gain on Real Estate Foreclosure
|
(0.7)
|
–
|
Gain on Sale of Assets
|
–
|
(0.1)
|
Depreciation Expense
|
59.8
|
46.8
|
Amortization of Debt Issuance Costs
|
0.7
|
0.7
|
Deferred Income Tax Expense
|
65.0
|
38.9
|
Stock Compensation Expense
|
1.6
|
1.6
|
Bad Debt Expense
|
0.8
|
1.2
|
Changes in Operating Assets and Liabilities
|
||
Accounts Receivable
|
5.6
|
(4.1)
|
Inventories
|
(5.8)
|
(4.7)
|
Prepayments and Other
|
(2.4)
|
(0.3)
|
Accounts Payable
|
3.7
|
(4.4)
|
Other Current Liabilities
|
(2.0)
|
11.4
|
Changes in Regulatory and Other Non-Current Assets
|
10.6
|
(7.0)
|
Changes in Regulatory and Other Non-Current Liabilities
|
(5.0)
|
(11.0)
|
Cash from Operating Activities
|
188.0
|
106.3
|
Investing Activities
|
||
Proceeds from Sale of Available-for-sale Securities
|
0.6
|
1.0
|
Payments for Purchase of Available-for-sale Securities
|
(1.8)
|
(1.8)
|
Investment in ATC
|
(1.2)
|
(5.4)
|
Changes to Other Investments
|
(2.6)
|
(0.5)
|
Additions to Property, Plant and Equipment
|
(172.7)
|
(200.1)
|
Proceeds from Sale of Assets
|
–
|
0.3
|
Cash for Investing Activities
|
(177.7)
|
(206.5)
|
Financing Activities
|
||
Proceeds from Issuance of Common Stock
|
19.0
|
53.7
|
Proceeds from Issuance of Long-Term Debt
|
155.0
|
44.7
|
Reductions of Long-Term Debt
|
(70.2)
|
(3.0)
|
Debt Issuance Costs
|
(1.4)
|
(0.5)
|
Dividends on Common Stock
|
(45.2)
|
(41.7)
|
Changes in Notes Payable
|
(0.9)
|
(0.7)
|
Cash from Financing Activities
|
56.3
|
52.5
|
Change in Cash and Cash Equivalents
|
66.6
|
(47.7)
|
Cash and Cash Equivalents at Beginning of Period
|
25.7
|
102.0
|
Cash and Cash Equivalents at End of Period
|
$92.3
|
$54.3
|
September 30,
|
December 31,
|
|
Inventories
|
2010
|
2009
|
Millions
|
||
Fuel
|
$24.5
|
$23.0
|
Materials and Supplies
|
38.4
|
34.0
|
Total Inventories
|
$62.9
|
$57.0
|
September 30,
|
December 31,
|
|
Prepayments and Other Current Assets
|
2010
|
2009
|
Millions
|
||
Deferred Fuel Adjustment Clause
|
$19.5
|
$15.5
|
Other
|
7.2
|
8.8
|
Total Prepayments and Other Current Assets
|
$26.7
|
$24.3
|
September 30,
|
December 31,
|
|
Other Non-Current Liabilities
|
2010
|
2009
|
Millions
|
||
Future Benefit Obligation Under Defined Benefit Pension and
Other Postretirement Benefit Plans
|
$220.2
|
$231.2
|
Asset Retirement Obligation
|
49.4
|
44.6
|
Other
|
43.2
|
49.2
|
Total Other Non-Current Liabilities
|
$312.8
|
$325.0
|
For the Nine Months Ended September 30,
|
2010
|
2009
|
Millions
|
||
Cash Paid (Received) During the Period for
|
||
Interest – Net of Amounts Capitalized
|
$26.1
|
$23.7
|
Income Taxes (Net of refunds received of $32.1 and $5.3)
(a)
|
$(29.4)
|
$(4.2)
|
Noncash Investing and Financing Activities
|
||
Increase (Decrease) in Accounts Payable for Capital Additions to Property, Plant and Equipment
|
$0.7
|
$(16.5)
|
AFUDC – Equity
|
$3.4
|
$4.5
|
ALLETE Common Stock contributed to the Defined Benefit Pension Plan
|
–
|
$(12.0)
|
(a)
|
Due to bonus depreciation provisions in the Small Business Jobs Act of 2010 and the American Recovery and Reinvestment Act of 2009, lower estimated tax payments were made in 2010 and 2009. Refunds received in 2010 resulted from a 2009 net operating loss which was utilized by carrying it back against prior years’ taxable income and the completion of a state income tax audit.
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Quarter Ended September 30, 2010
|
|||
Operating Revenue
|
$224.1
|
$204.8
|
$19.3
|
Fuel and Purchased Power
|
79.0
|
79.0
|
–
|
Operating and Maintenance
|
89.8
|
70.2
|
19.6
|
Depreciation Expense
|
20.0
|
18.9
|
1.1
|
Operating Income (Loss)
|
35.3
|
36.7
|
(1.4)
|
Interest Expense
|
(9.7)
|
(8.0)
|
(1.7)
|
Equity Earnings in ATC
|
4.5
|
4.5
|
–
|
Other Income (Expense)
|
0.6
|
1.3
|
(0.7)
|
Income (Loss) Before Non-Controlling Interest and Income
Taxes
|
30.7
|
34.5
|
(3.8)
|
Income Tax Expense (Benefit)
|
11.2
|
12.4
|
(1.2)
|
Net Income (Loss)
|
19.5
|
22.1
|
(2.6)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
–
|
(0.1)
|
Net Income (Loss) Attributable to ALLETE
|
$19.6
|
$22.1
|
$(2.5)
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Quarter Ended September 30, 2009
|
|||
Operating Revenue
|
$178.8
|
$160.1
|
$18.7
|
Fuel and Purchased Power
|
69.8
|
69.8
|
–
|
Operating and Maintenance
|
67.5
|
50.1
|
17.4
|
Depreciation Expense
|
16.1
|
15.0
|
1.1
|
Operating Income
|
25.4
|
25.2
|
0.2
|
Interest Expense
|
(8.3)
|
(7.0)
|
(1.3)
|
Equity Earnings in ATC
|
4.4
|
4.4
|
–
|
Other Income (Expense)
|
0.8
|
1.6
|
(0.8)
|
Income (Loss) Before Non-Controlling Interest and Income Taxes
|
22.3
|
24.2
|
(1.9)
|
Income Tax Expense (Benefit)
|
6.5
|
7.6
|
(1.1)
|
Net Income (Loss)
|
15.8
|
16.6
|
(0.8)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.2)
|
–
|
(0.2)
|
Net Income (Loss) Attributable to ALLETE
|
$16.0
|
$16.6
|
$(0.6)
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Nine Months Ended September 30, 2010
|
|||
Operating Revenue
|
$668.9
|
$615.0
|
$53.9
|
Fuel and Purchased Power
|
233.1
|
233.1
|
–
|
Operating and Maintenance
|
262.9
|
209.3
|
53.6
|
Depreciation Expense
|
59.8
|
56.6
|
3.2
|
Operating Income (Loss)
|
113.1
|
116.0
|
(2.9)
|
Interest Expense
|
(28.1)
|
(23.3)
|
(4.8)
|
Equity Earnings in ATC
|
13.4
|
13.4
|
–
|
Other Income
|
3.8
|
3.6
|
0.2
|
Income (Loss) Before Non-Controlling Interest and Income
Taxes
|
102.2
|
109.7
|
(7.5)
|
Income Tax Expense (Benefit)
|
40.5
|
44.5
|
(4.0)
|
Net Income (Loss)
|
61.7
|
65.2
|
(3.5)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.3)
|
–
|
(0.3)
|
Net Income (Loss) Attributable to ALLETE
|
$62.0
|
$65.2
|
$(3.2)
|
As of September 30, 2010
|
|||
Total Assets
|
$2,579.1
|
$2,299.7
|
$279.4
|
Property, Plant and Equipment – Net
|
$1,742.6
|
$1,698.1
|
$44.5
|
Accumulated Depreciation
|
$1,022.2
|
$973.2
|
$49.0
|
Capital Additions
|
$175.5
|
$174.3
|
$1.2
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Nine Months Ended September 30, 2009
|
|||
Operating Revenue
|
$550.7
|
$493.9
|
$56.8
|
Prior Year Rate Refunds
|
(7.6)
|
(7.6)
|
–
|
Total Operating Revenue
|
543.1
|
486.3
|
56.8
|
Fuel and Purchased Power
|
199.4
|
199.4
|
–
|
Operating and Maintenance
|
224.7
|
169.8
|
54.9
|
Depreciation Expense
|
46.8
|
43.4
|
3.4
|
Operating Income (Loss)
|
72.2
|
73.7
|
(1.5)
|
Interest Expense
|
(25.4)
|
(20.9)
|
(4.5)
|
Equity Earnings in ATC
|
12.9
|
12.9
|
–
|
Other Income (Expense)
|
3.8
|
4.5
|
(0.7)
|
Income (Loss) Before Non-Controlling Interest and Income Taxes
|
63.5
|
70.2
|
(6.7)
|
Income Tax Expense (Benefit)
|
21.5
|
25.2
|
(3.7)
|
Net Income (Loss)
|
42.0
|
45.0
|
(3.0)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.3)
|
–
|
(0.3)
|
Net Income (Loss) Attributable to ALLETE
|
$42.3
|
$45.0
|
$(2.7)
|
As of September 30, 2009
|
|||
Total Assets
|
$2,255.1
|
$2,005.3
|
$249.8
|
Property, Plant and Equipment – Net
|
$1,530.5
|
$1,478.9
|
$51.6
|
Accumulated Depreciation
|
$937.0
|
$885.4
|
$51.6
|
Capital Additions
|
$186.7
|
$185.0
|
$1.7
|
September 30,
|
December 31,
|
|
Other Investments
|
2010
|
2009
|
Millions
|
||
ALLETE Properties
|
$94.5
|
$93.1
|
Available-for-sale Securities
|
30.0
|
29.5
|
Other
|
9.9
|
7.9
|
Total Other Investments
|
$134.4
|
$130.5
|
September 30,
|
December 31,
|
|
ALLETE Properties
|
2010
|
2009
|
Millions
|
||
Land Held-for-sale Beginning Balance
|
$74.9
|
$71.2
|
Additions during period:
|
||
Collateralized Property Reacquired
(a)
|
9.9
|
–
|
Capitalized Improvements and Other
|
0.8
|
5.6
|
Deductions during period: Cost of Real Estate Sold
|
–
|
(1.9)
|
Land Held-for-sale Ending Balance
|
85.6
|
74.9
|
Long-Term Finance Receivables
|
4.5
|
12.9
|
Other
|
4.4
|
5.3
|
Total Real Estate Assets
|
$94.5
|
$93.1
|
(a)
|
Collateralized property reacquired resulted primarily from a purchaser which filed for voluntary Chapter 11 bankruptcy and is recorded net of estimated selling costs.
|
Fair Value as of September 30, 2010
|
||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Millions
|
||||
Assets:
|
||||
Equity Securities – Mutual Funds
|
$17.5
|
–
|
–
|
$17.5
|
Available-for-sale Securities
|
||||
Corporate Debt Securities
|
–
|
$7.4
|
–
|
7.4
|
Debt Securities Issued by States of the United States (ARS)
|
–
|
–
|
$6.7
|
6.7
|
Total Available-for-sale Securities
|
–
|
7.4
|
6.7
|
14.1
|
Money Market Funds
|
2.8
|
–
|
–
|
2.8
|
Total Fair Value of Assets
|
$20.3
|
$7.4
|
$6.7
|
$34.4
|
Liabilities:
|
||||
Deferred Compensation
|
–
|
$13.1
|
–
|
$13.1
|
Total Fair Value of Liabilities
|
–
|
$13.1
|
–
|
$13.1
|
Total Net Fair Value of Assets (Liabilities)
|
$20.3
|
$(5.7)
|
$6.7
|
$21.3
|
Fair Value as of December 31, 2009
|
||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Millions
|
||||
Assets:
|
||||
Equity Securities – Mutual Funds
|
$17.8
|
–
|
–
|
$17.8
|
Available-for-sale Securities
|
||||
Corporate Debt Securities
|
–
|
$6.4
|
–
|
6.4
|
Debt Securities Issued by States of the United States (ARS)
|
–
|
–
|
$6.7
|
6.7
|
Total Available-for-sale Securities
|
–
|
6.4
|
6.7
|
13.1
|
Derivatives - Financial Transmission Rights
|
–
|
–
|
0.7
|
0.7
|
Money Market Funds
|
1.4
|
–
|
–
|
1.4
|
Total Fair Value of Assets
|
$19.2
|
$6.4
|
$7.4
|
$33.0
|
Liabilities:
|
||||
Deferred Compensation
|
–
|
$14.6
|
–
|
$14.6
|
Total Fair Value of Liabilities
|
–
|
$14.6
|
–
|
$14.6
|
Total Net Fair Value of Assets (Liabilities)
|
$19.2
|
$(8.2)
|
$7.4
|
$18.4
|
Recurring Fair Value Measures
Activity in Level 3
|
Derivatives
|
Debt Securities Issued by States of the United States (ARS)
|
||
Millions
|
||||
Balance as of December 31, 2009 and December 31, 2008, respectively
|
$0.7
|
–
|
$6.7
|
$15.2
|
Purchases, Sales, Issuances and Settlements, Net
|
(0.7)
|
$1.1
|
–
|
(0.9)
|
Balance as of September 30, 2010 and September 30, 2009, respectively
|
–
|
$1.1
|
$6.7
|
$14.3
|
Financial Instruments
|
Carrying Amount
|
Fair Value
|
Millions
|
||
Long-Term Debt, Including Current Portion
|
||
September 30, 2010
|
$785.8
|
$828.8
|
December 31, 2009
|
$701.0
|
$734.8
|
September 30,
|
December 31,
|
|
Regulatory Assets and Liabilities
|
2010
|
2009
|
Millions
|
||
Regulatory Assets
|
||
Future Benefit Obligations Under
|
||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
$226.7
|
$235.8
|
Boswell Unit 3 Environmental Rider
(a)
|
20.5
|
20.9
|
Deferred Fuel
(b)
|
24.9
|
20.8
|
Income Taxes
|
15.5
|
15.7
|
Asset Retirement Obligation
|
7.4
|
6.3
|
Deferred MISO Costs
|
1.3
|
2.4
|
Premium on Reacquired Debt
|
1.9
|
2.0
|
Rate Case Expenses
|
1.4
|
1.4
|
Other
|
2.4
|
3.4
|
Total Regulatory Assets
|
$302.0
|
$308.7
|
Regulatory Liabilities
|
||
Income Taxes
|
$24.0
|
$25.9
|
Plant Removal Obligations
|
17.9
|
16.9
|
Other
|
4.1
|
4.3
|
Total Regulatory Liabilities
|
$46.0
|
$47.1
|
(a)
|
MPUC-approved current cost recovery rider related to environmental improvements that were placed in service in November 2009. As part of our 2010 rate case, on September 29, 2010, the MPUC approved a proposal to move the rider balance to plant to recover in rate base, which will be effective upon a final rate order.
|
(b)
|
As of September 30, 2010 and December 31, 2009, approximately $5 million of this balance relates to deferred fuel costs incurred under the former base cost of fuel calculation. Any revenue impact associated with this transition will be identified in a future filing related to the Company’s fuel clause operation.
|
Current and Non-Current
|
September 30,
|
December 31,
|
Regulatory Assets and Liabilities
|
2010
|
2009
|
Millions
|
||
Total Current Regulatory Assets
(a)
|
$19.5
|
$15.5
|
Total Non-Current Regulatory Assets
|
282.5
|
293.2
|
Total Regulatory Assets
|
$302.0
|
$308.7
|
Total Non-Current Regulatory Liabilities
|
$46.0
|
$47.1
|
Total Regulatory Liabilities
|
$46.0
|
$47.1
|
(a)
|
Current regulatory assets consist of deferred fuel and are included in prepayments and other on the consolidated balance sheet.
|
ALLETE’s Investment in ATC
|
|
Millions
|
|
Equity Investment Balance as of December 31, 2009
|
$88.4
|
Cash Investments
|
1.2
|
Equity in ATC Earnings
|
13.4
|
Distributed ATC Earnings
|
(11.0)
|
Equity Investment Balance as of September 30, 2010
|
$92.0
|
Quarter Ended
|
Nine Months Ended
|
|||
ATC Summarized Financial Data
|
September 30,
|
September 30,
|
||
Income Statement Data
|
2010
|
2009
|
2010
|
2009
|
Millions
|
||||
Revenue
|
$136.9
|
$132.3
|
$414.1
|
$387.5
|
Operating Expense
|
59.8
|
58.7
|
185.1
|
172.3
|
Other Expense
|
22.1
|
19.8
|
64.8
|
57.8
|
Net Income
|
$55.0
|
$53.8
|
$164.2
|
$157.4
|
ALLETE’s Equity in Net Income
|
$4.5
|
$4.4
|
$13.4
|
$12.9
|
Issue Date
|
Maturity
|
Principal Amount
|
Interest Rate
|
February 17, 2010
|
April 15, 2021
|
$15 Million
|
4.85%
|
February 17, 2010
|
April 15, 2025
|
$30 Million
|
5.10%
|
February 17, 2010
|
April 15, 2040
|
$35 Million
|
6.00%
|
Issue Date
|
Maturity
|
Principal Amount
|
Interest Rate
|
August 17, 2010
|
October 15, 2025
|
$30 Million
|
4.90%
|
August 17, 2010
|
April 15, 2040
|
$45 Million
|
5.82%
|
Quarter Ended
|
Nine Months Ended
|
|||
September 30,
|
September 30,
|
|||
2010
|
2009
|
2010
|
2009
|
|
Millions
|
||||
AFUDC
–
Equity
|
$1.4
|
$1.6
|
$3.4
|
$4.5
|
Investment and Other Income (Expense)
|
(0.8)
|
(0.8)
|
0.4
|
(0.7)
|
Total Other Income
|
$0.6
|
$0.8
|
$3.8
|
$3.8
|
Quarter Ended
|
Nine Months Ended
|
|||
September 30,
|
September 30,
|
|||
2010
|
2009
|
2010
|
2009
|
|
Millions
|
||||
Current Tax Expense (Benefit)
|
||||
Federal
(a)
|
$(31.7)
|
$(7.9)
|
$(24.5)
|
$(16.7)
|
State
|
1.0
|
(0.5)
|
–
|
(0.7)
|
Total Current Tax Expense (Benefit)
|
(30.7)
|
(8.4)
|
(24.5)
|
(17.4)
|
Deferred Tax Expense
|
||||
Federal
(b)
|
41.0
|
12.6
|
59.0
|
33.5
|
State
|
1.2
|
2.5
|
6.7
|
6.1
|
Deferred Tax Credits
|
(0.3)
|
(0.2)
|
(0.7)
|
(0.7)
|
Total Deferred Tax Expense
|
41.9
|
14.9
|
65.0
|
38.9
|
Total Income Tax Expense
|
$11.2
|
$6.5
|
$40.5
|
$21.5
|
(a)
|
The
federal current tax benefit in 2010 primarily resulted from the implementation of tax planning initiatives and bonus depreciation provisions in the Small Business Jobs Act of 2010, resulting in a projected net operating loss for 2010. The 2010 projected net operating loss will be partially utilized by carrying it back against prior years’ income with the remainder carried forward to offset future years’ income. The federal current tax benefit in 2009 primarily resulted from the bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009. The 2009 net operating loss has been utilized by carrying it back against prior years’ taxable income.
|
(b)
|
Federal deferred tax expense for 2010 is higher due to tax planning initiatives and bonus depreciation provisions of the Small Business Jobs Act of 2010. Due to the bonus depreciation provisions, we expect to be in a net operating loss position for 2010. We expect to fully utilize the projected net operating loss carryforward; therefore a deferred tax asset has been recorded to recognize the resulting tax benefit. Included in the nine month period ending September 30, 2010, is a one-time charge of $4.0 million as a result of the Patient Protection and Affordable Care Act eliminating the tax deduction for expenses that are reimbursed under Medicare Part D beginning January 1, 2013. The federal deferred tax expense for 2009 primarily resulted from the bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009.
|
Quarter Ended
|
Nine Months Ended
|
|||
September 30,
|
September 30,
|
|||
Other Comprehensive Income (Loss)
|
2010
|
2009
|
2010
|
2009
|
Millions
|
||||
Net Income
|
$19.5
|
$15.8
|
$61.7
|
$42.0
|
Other Comprehensive Income
|
||||
Unrealized Gain (Loss) on Securities
Net of income taxes of $0.3, $0.7, $(0.1), and $1.3
|
0.4
|
1.0
|
(0.1)
|
1.9
|
Unrealized Loss on Derivatives
Net of income taxes of $–, $–, $–, and $–
|
–
|
0.1
|
–
|
–
|
Defined Benefit Pension and Other Postretirement Plans
Net of income taxes of $0.2, $0.1, $0.7, and $0.5
|
0.3
|
0.1
|
0.9
|
0.7
|
Total Other Comprehensive Income
|
0.7
|
1.2
|
0.8
|
2.6
|
Total Comprehensive Income
|
$20.2
|
$17.0
|
$62.5
|
$44.6
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
(0.2)
|
(0.3)
|
(0.3)
|
Comprehensive Income Attributable to ALLETE
|
$20.3
|
$17.2
|
$62.8
|
$44.9
|
For the Nine Months Ended September 30,
|
|||||||
Net Income Attributable to ALLETE
|
$62.0
|
$62.0
|
$42.3
|
$42.3
|
|||
Common Shares
|
34.1
|
0.1
|
34.2
|
31.8
|
0.1
|
31.9
|
|
Earnings Per Share
|
$1.82
|
$1.81
|
$1.33
|
$1.33
|
Pension
|
Other
Postretirement
|
|||
Components of Net Periodic Benefit Expense
|
2010
|
2009
|
2010
|
2009
|
Millions
|
||||
For the Quarter Ended September 30,
|
||||
Service Cost
|
$1.5
|
$1.4
|
$1.2
|
$1.0
|
Interest Cost
|
6.6
|
6.5
|
2.7
|
2.5
|
Expected Return on Plan Assets
|
(8.4)
|
(8.4)
|
(2.4)
|
(2.0)
|
Amortization of Prior Service Costs
|
0.1
|
0.1
|
–
|
–
|
Amortization of Net Loss
|
1.6
|
0.9
|
1.2
|
0.6
|
Amortization of Transition Obligation
|
–
|
–
|
0.6
|
0.6
|
Net Periodic Benefit Expense
|
$1.4
|
$0.5
|
$3.3
|
$2.7
|
Pension
|
Other
Postretirement
|
|||
Components of Net Periodic Benefit Expense
|
2010
|
2009
|
2010
|
2009
|
Millions
|
||||
For the Nine Months Ended September 30,
|
||||
Service Cost
|
$4.6
|
$4.3
|
$3.6
|
$3.1
|
Interest Cost
|
19.7
|
19.6
|
8.2
|
7.5
|
Expected Return on Plan Assets
|
(25.2)
|
(25.3)
|
(7.2)
|
(6.2)
|
Amortization of Prior Service Costs
|
0.3
|
0.4
|
–
|
–
|
Amortization of Net Loss
|
4.9
|
2.6
|
3.6
|
1.8
|
Amortization of Transition Obligation
|
–
|
–
|
1.8
|
1.9
|
Net Periodic Benefit Expense
|
$4.3
|
$1.6
|
$10.0
|
$8.1
|
·
|
Expand our renewable energy supply.
|
·
|
Improve the efficiency of our coal-based generation facilities, as well as other process efficiencies.
|
·
|
Provide energy conservation initiatives for our customers and engage in other demand side efforts.
|
·
|
Support research of technologies to reduce carbon emissions from generation facilities and support carbon sequestration efforts.
|
·
|
Achieve overall carbon emission reductions.
|
Kilowatt-hours Sold
|
Quantity
|
%
|
|||||
Quarter Ended September 30,
|
2010
|
2009
|
Variance
|
Variance
|
|||
Millions
|
|||||||
Regulated Utility
|
|||||||
Retail and Municipals
|
|||||||
Residential
|
262
|
240
|
22
|
9.2 %
|
|||
Commercial
|
374
|
352
|
22
|
6.3 %
|
|||
Industrial
|
1,799
|
984
|
815
|
82.8 %
|
|||
Municipals
|
253
|
243
|
10
|
4.1 %
|
|||
Total Retail and Municipals
|
2,688
|
1,819
|
869
|
47.8 %
|
|||
Other Power Suppliers
|
629
|
1,051
|
(422)
|
(40.2) %
|
|||
Total Regulated Utility Kilowatt-hours Sold
|
3,317
|
2,870
|
447
|
15.6 %
|
Kilowatt-hours Sold
|
Quantity
|
%
|
|||||
Nine Months Ended September 30,
|
2010
|
2009
|
Variance
|
Variance
|
|||
Millions
|
|||||||
Regulated Utility
|
|||||||
Retail and Municipals
|
|||||||
Residential
|
847
|
857
|
(10)
|
(1.2) %
|
|||
Commercial
|
1,074
|
1,061
|
13
|
1.2 %
|
|||
Industrial
|
4,956
|
3,182
|
1,774
|
55.8 %
|
|||
Municipals
|
746
|
729
|
17
|
2.3 %
|
|||
Total Retail and Municipals
|
7,623
|
5,829
|
1,794
|
30.8 %
|
|||
Other Power Suppliers
|
2,168
|
3,075
|
(907)
|
(29.5) %
|
|||
Total Regulated Utility Kilowatt-hours Sold
|
9,791
|
8,904
|
887
|
10.0 %
|
ALLETE Properties
|
2010
|
2009
|
||
Revenue and Sales Activity
|
Quantity
|
Amount
|
Quantity
|
Amount
|
Dollars in Millions
|
||||
Revenue from Land Sales
|
||||
Acres
(a)
|
–
|
–
|
19
|
$2.2
|
Contract Sales Price
(b)
|
–
|
2.2
|
||
Deferred Revenue
|
–
|
(0.6)
|
||
Revenue from Land Sales
|
–
|
1.6
|
||
Other Revenue
(c)
|
$1.7
|
0.3
|
||
Total ALLETE Properties Revenue
|
$1.7
|
$1.9
|
(a)
|
Acreage amounts are shown on a gross basis, including wetlands and non-controlling interest.
|
|
(b)
|
Reflects total contract sales price on closed land transactions. Land sales are recorded using a percentage-of-completion method.
|
|
(c)
|
Other Revenue primarily includes a $0.7 million pretax gain for the nine months ended September 30, 2010, due to the receipt of property from an entity which filed for voluntary Chapter 11 bankruptcy in June 2009
.
|
·
|
Increased system flexibility to adapt to volatile business cycles and varied future industrial load scenarios;
|
·
|
Reductions in the emission of GHGs (primarily carbon dioxide); and
|
·
|
Compliance with mandated renewable energy standards.
|
Summary of Development Projects
|
Residential
|
Non-residential
|
||
Land Available-for-Sale
|
Ownership
|
Acres (a)
|
Units (b)
|
Sq. Ft. (b, c)
|
Current Development Projects
|
||||
Town Center
|
80%
|
862
|
2,089
|
2,215,200
|
Palm Coast Park
|
100%
|
3,842
|
3,554
|
3,056,800
|
Total Current Development Projects
|
4,704
|
5,643
|
5,272,000
|
|
Planned Development Project
|
||||
Ormond Crossings
|
100%
|
2,924
|
2,950
|
3,215,000
|
Other
|
||||
Lake Swamp Wetland Mitigation Project
|
100%
|
3,049
|
(d)
|
(d)
|
Total of Development Projects
|
10,677
|
8,593
|
8,487,000
|
(a)
|
Acreage amounts are approximate and shown on a gross basis, including wetlands and non-controlling interest.
|
(b)
|
Estimated and includes non-controlling interest. Density at build out may differ from these estimates.
|
(c)
|
Depending on the project, non-residential includes retail commercial, non-retail commercial, office, industrial, warehouse, storage and institutional.
|
(d)
|
The Lake Swamp wetland mitigation bank is a regionally significant wetlands mitigation bank that was permitted by the St. Johns River Water Management District in 2008 and by the U.S. Army Corps of Engineers in December 2009. Wetland mitigation credits will be used at Ormond Crossings, and will also be available-for-sale to developers of other projects that are located in the bank’s service area.
|
September 30,
|
December 31,
|
|||
2010
|
%
|
2009
|
%
|
|
Millions
|
||||
ALLETE Equity
|
$974.9
|
55
|
$929.5
|
57
|
Non-Controlling Interest
|
9.2
|
1
|
9.5
|
–
|
Long-Term Debt (Including Long-Term Debt Due within One Year)
|
785.8
|
44
|
701.0
|
43
|
Short-Term Debt (Notes Payable)
|
1.0
|
–
|
1.9
|
–
|
Total Capital Structure
|
$1,770.9
|
100
|
$1,641.9
|
100
|
For the Nine Months Ended September 30,
|
2010
|
2009
|
Millions
|
||
Cash and Cash Equivalents at Beginning of Period
|
$25.7
|
$102.0
|
Cash Flows from (used for)
|
||
Operating Activities
|
188.0
|
106.3
|
Investing Activities
|
(177.7)
|
(206.5)
|
Financing Activities
|
56.3
|
52.5
|
Change in Cash and Cash Equivalents
|
66.6
|
(47.7)
|
Cash and Cash Equivalents at End of Period
|
$92.3
|
$54.3
|
Issue Date
|
Maturity
|
Principal Amount
|
Interest Rate
|
August 17, 2010
|
October 15, 2025
|
$30 Million
|
4.90%
|
August 17, 2010
|
April 15, 2040
|
$45 Million
|
5.82%
|
|
4
|
Thirty-second Supplemental Indenture, dated as of August 1, 2010, between ALLETE and The Bank of New York Mellon, as corporate trustee, Ming Ryan as succeeding co-trustee and Douglas J. MacInnes as resigning co-trustee.
|
|
10
|
Amendment to the ALLETE Director Stock Plan, effective October 1, 2010.
|
|
31(a)
|
Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31(b)
|
Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32
|
Section 1350 Certification of Periodic Report by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
99
|
ALLETE News Release dated October 29, 2010, announcing 2010 third quarter earnings. (This exhibit has been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.)
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
SIGNATURES
|
ALLETE, INC.
|
||
October 29, 2010
|
/s/ Mark A. Schober
|
|
Mark A. Schober
|
||
Senior Vice President and Chief Financial Officer
|
||
October 29, 2010
|
/s/ Steven Q. DeVinck
|
|
Steven Q. DeVinck
|
||
Controller and Vice President – Business Support
|
|
As Trustees under ALLETE, Inc.’s Mortgage and
|
|
Deed of Trust dated as of September 1, 1945
|
Designation
|
Dated as of
|
First Supplemental Indenture
|
March 1, 1949
|
Second Supplemental Indenture
|
July 1, 1951
|
Third Supplemental Indenture
|
March 1, 1957
|
Fourth Supplemental Indenture
|
January 1, 1968
|
Fifth Supplemental Indenture
|
April 1, 1971
|
Sixth Supplemental Indenture
|
August 1, 1975
|
Seventh Supplemental Indenture
|
September 1, 1976
|
Eighth Supplemental Indenture
|
September 1, 1977
|
Ninth Supplemental Indenture
|
April 1, 1978
|
Tenth Supplemental Indenture
|
August 1, 1978
|
Eleventh Supplemental Indenture
|
December 1, 1982
|
Twelfth Supplemental Indenture
|
April 1, 1987
|
Thirteenth Supplemental Indenture
|
March 1, 1992
|
Fourteenth Supplemental Indenture
|
June 1, 1992
|
Fifteenth Supplemental Indenture
|
July 1, 1992
|
Sixteenth Supplemental Indenture
|
July 1, 1992
|
Seventeenth Supplemental Indenture
|
February 1, 1993
|
Eighteenth Supplemental Indenture
|
July 1, 1993
|
Nineteenth Supplemental Indenture
|
February 1, 1997
|
Twentieth Supplemental Indenture
|
November 1, 1997
|
Twenty-first Supplemental Indenture
|
October 1, 2000
|
Twenty-second Supplemental Indenture
|
July 1, 2003
|
Twenty-third Supplemental Indenture
|
August 1, 2004
|
Twenty-fourth Supplemental Indenture
|
March 1, 2005
|
Twenty-fifth Supplemental Indenture
|
December 1, 2005
|
Twenty-sixth Supplemental Indenture
|
October 1, 2006
|
Twenty-seventh Supplemental Indenture | February 1, 2008 |
Designation | Dated as of |
Twenty-eighth Supplemental Indenture
|
May 1, 2008
|
Twenty-ninth Supplemental Indenture
|
November 1, 2008
|
Thirtieth Supplemental Indenture
|
January 1, 2009
|
Thirty-first Supplemental Indenture
|
February 1, 2010
|
Series
|
Principal
Amount
Issued
|
Principal
Amount
Outstanding
|
3-1/8% Series due 1975
|
$26,000,000
|
None
|
3-1/8% Series due 1979
|
4,000,000
|
None
|
3-5/8% Series due 1981
|
10,000,000
|
None
|
4-3/4% Series due 1987
|
12,000,000
|
None
|
6-1/2% Series due 1998
|
18,000,000
|
None
|
8-1/8% Series due 2001
|
23,000,000
|
None
|
10-1/2% Series due 2005
|
35,000,000
|
None
|
8.70% Series due 2006
|
35,000,000
|
None
|
8.35% Series due 2007
|
50,000,000
|
None
|
9-1/4% Series due 2008
|
50,000,000
|
None
|
Pollution Control Series A
|
111,000,000
|
None
|
Industrial Development Series A
|
2,500,000
|
None
|
Industrial Development Series B
|
1,800,000
|
None
|
Industrial Development Series C
|
1,150,000
|
None
|
Pollution Control Series B
|
13,500,000
|
None
|
Pollution Control Series C
|
2,000,000
|
None
|
Pollution Control Series D
|
3,600,000
|
None
|
7-3/4% Series due 1994
|
55,000,000
|
None
|
7-3/8% Series due March 1, 1997
|
60,000,000
|
None
|
7-3/4% Series due June 1, 2007
|
55,000,000
|
None
|
7-1/2% Series due August 1, 2007
|
35,000,000
|
None
|
Pollution Control Series E
|
111,000,000
|
None
|
7% Series due March 1, 2008
|
50,000,000
|
None
|
6-1/4% Series due July 1, 2003
|
25,000,000
|
None
|
7% Series due February 15, 2007
|
60,000,000
|
None
|
6.68% Series due November 15, 2007
|
20,000,000
|
None
|
Floating Rate Series due October 20, 2003
|
250,000,000
|
None
|
Collateral Series A
|
255,000,000
|
None
|
Pollution Control Series F
|
111,000,000
|
111,000,000
|
5.28% Series due August 1, 2020
|
35,000,000
|
35,000,000
|
Series |
Principal
Amount Issued |
Principal
Amount Outstanding |
5.69% Series due March 1, 2036
|
50,000,000
|
50,000,000
|
5.99% Series due February 1, 2027
|
60,000,000
|
60,000,000
|
4.86% Series due April 1, 2013
|
60,000,000
|
60,000,000
|
6.02% Series due May 1, 2023
|
75,000,000
|
75,000,000
|
6.94% Series due January 15, 2014
|
18,000,000
|
18,000,000
|
7.70% Series due January 15, 2016
|
20,000,000
|
20,000,000
|
8.17% Series due January 15, 2019
|
42,000,000
|
42,000,000
|
4.85% Series due April 15, 2021
|
15,000,000
|
15,000,000
|
5.10% Series due April 15, 2025
|
30,000,000
|
30,000,000
|
6.00% Series due April 15, 2040
|
35,000,000
|
35,000,000
|
ALLETE, Inc.
|
|
By:
|
/s/ Alan R. Hodnik
|
Alan R. Hodnik
|
|
President and Chief Executive Officer
|
ATTEST:
|
|
By:
|
/s/ Deborah A. Amberg
|
Deborah A. Amberg
|
|
Senior Vice President, General Counsel & Secretary
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2010, of ALLETE;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 29, 2010
|
Alan R. Hodnik
|
|
Alan R. Hodnik
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2010, of ALLETE;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 29, 2010
|
Mark A. Schober
|
|
Mark A. Schober
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Quarterly Report on Form 10-Q of ALLETE for the quarterly period ended September 30, 2010, (Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ALLETE.
|
Date: October 29, 2010
|
Alan R. Hodnik
|
|
Alan R. Hodnik
|
|
President and Chief Executive Officer
|
Date: October 29, 2010
|
Mark A. Schober
|
|
Mark A. Schober
|
|
Senior Vice President and Chief Financial Officer
|
NEWS
|
Exhibit 99
|
|
For Release:
|
October 29, 2010
|
|
Investor Contact:
|
Tim Thorp
|
|
218-723-3953
|
||
tthorp@allete.com
|
||
Quarter Ended
|
Year to Date
|
|||||
|
2010
|
2009
|
2010
|
2009
|
||
Operating Revenue
|
||||||
Operating Revenue
|
$224.1
|
$178.8
|
$668.9
|
$550.7
|
||
Prior Year Rate Refunds
|
–
|
–
|
–
|
(7.6)
|
||
Total Operating Revenue
|
224.1
|
178.8
|
668.9
|
543.1
|
||
Operating Expenses
|
||||||
Fuel and Purchased Power
|
79.0
|
69.8
|
233.1
|
199.4
|
||
Operating and Maintenance
|
89.8
|
67.5
|
262.9
|
224.7
|
||
Depreciation
|
20.0
|
16.1
|
59.8
|
46.8
|
||
Total Operating Expenses
|
188.8
|
153.4
|
555.8
|
470.9
|
||
Operating Income
|
35.3
|
25.4
|
113.1
|
72.2
|
||
Other Income (Expense)
|
||||||
Interest Expense
|
(9.7)
|
(8.3)
|
(28.1)
|
(25.4)
|
||
Equity Earnings in ATC
|
4.5
|
4.4
|
13.4
|
12.9
|
||
Other
|
0.6
|
0.8
|
3.8
|
3.8
|
||
Total Other Income (Expense)
|
(4.6)
|
(3.1)
|
(10.9)
|
(8.7)
|
||
Income Before Non-Controlling Interest and Income Taxes
|
30.7
|
22.3
|
102.2
|
63.5
|
||
Income Tax Expense
|
11.2
|
6.5
|
40.5
|
21.5
|
||
Net Income
|
19.5
|
15.8
|
61.7
|
42.0
|
||
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
(0.2)
|
(0.3)
|
(0.3)
|
||
Net Income Attributable to ALLETE
|
$19.6
|
$16.0
|
$62.0
|
$42.3
|
||
Average Shares of Common Stock
|
||||||
Basic
|
34.4
|
32.8
|
34.1
|
31.8
|
||
Diluted
|
34.5
|
32.9
|
34.2
|
31.9
|
||
Basic Earnings Per Share of Common Stock
|
$0.57
|
$0.49
|
$1.82
|
$1.33
|
||
Diluted Earnings Per Share of Common Stock
|
$0.56
|
$0.49
|
$1.81
|
$1.33
|
||
Dividends Per Share of Common Stock
|
$0.44
|
$0.44
|
$1.32
|
$1.32
|
Sep. 30,
|
Dec. 31,
|
Sep. 30,
|
Dec. 31,
|
|||
|
2010
|
2009
|
|
2010
|
2009
|
|
Assets
|
Liabilities and Equity
|
|||||
Cash and Short-Term Investments
|
$92.3
|
$25.7
|
Current Liabilities
|
$131.0
|
$133.1
|
|
Other Current Assets
|
201.7
|
199.8
|
Long-Term Debt
|
784.2
|
695.8
|
|
Property, Plant and Equipment
|
1,742.6
|
1,622.7
|
Other Liabilities
|
312.8
|
325.0
|
|
Regulatory Assets
|
282.5
|
293.2
|
Regulatory Liabilities
|
46.0
|
47.1
|
|
Investment in ATC
|
92.0
|
88.4
|
Deferred Income Taxes
|
321.0
|
253.1
|
|
Investments
|
134.4
|
130.5
|
Equity
|
984.1
|
939.0
|
|
Other
|
33.6
|
32.8
|
|
|||
Total Assets
|
$2,579.1
|
$2,393.1
|
Total Liabilities and Equity
|
$2,579.1
|
$2,393.1
|
Quarter Ended
|
Year to Date
|
|||||||
September 30,
|
September 30,
|
|||||||
ALLETE, Inc.
|
2010
|
2009
|
2010
|
2009
|
||||
Income (Loss)
|
||||||||
Millions
|
||||||||
Regulated Operations
|
$22.1
|
$16.6
|
$65.2
|
$45.0
|
||||
Investments and Other
|
(2.5)
|
(0.6)
|
(3.2)
|
(2.7)
|
||||
Net Income Attributable to ALLETE
|
$19.6
|
$16.0
|
$62.0
|
$42.3
|
||||
Diluted Earnings Per Share
|
$0.56
|
$0.49
|
$1.81
|
$1.33
|
Statistical Data
|
||||||||
Corporate
|
||||||||
Common Stock
|
||||||||
High
|
$37.75
|
$34.57
|
$37.87
|
$34.57
|
||||
Low
|
$33.16
|
$27.75
|
$29.99
|
$23.35
|
||||
Close
|
$36.43
|
$33.57
|
$36.43
|
$33.57
|
||||
Book Value
|
$27.23
|
$25.95
|
$27.23
|
$25.95
|
Kilowatt-hours Sold
|
||||||||
Millions
|
||||||||
Regulated Utility
|
||||||||
Retail and Municipals
|
||||||||
Residential
|
262
|
240
|
847
|
857
|
||||
Commercial
|
374
|
352
|
1,074
|
1,061
|
||||
Municipals
|
253
|
243
|
746
|
729
|
||||
Industrial
|
1,799
|
984
|
4,956
|
3,182
|
||||
Total Retail and Municipal
|
2,688
|
1,819
|
7,623
|
5,829
|
||||
Other Power Suppliers
|
629
|
1,051
|
2,168
|
3,075
|
||||
Total Regulated Utility
|
3,317
|
2,870
|
9,791
|
8,904
|
||||
Non-regulated Energy Operations
|
27
|
56
|
87
|
162
|
||||
Total Kilowatt-hours Sold
|
3,344
|
2,926
|
9,878
|
9,066
|
||||