(Mark One)
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T
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended
December 31, 2011
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£
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the transition period from ______________ to ______________
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Minnesota
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41-0418150
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Name of Each Stock Exchange on Which Registered
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Common Stock, without par value
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New York Stock Exchange
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Abbreviation or Acronym
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Term
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AC
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Alternating Current
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AFUDC
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Allowance for Funds Used During Construction - the cost of both debt and equity funds used to finance utility plant additions during construction periods
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ALLETE
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ALLETE, Inc.
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ALLETE Clean Energy
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ALLETE Clean Energy, Inc.
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ALLETE Properties
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ALLETE Properties, LLC and its subsidiaries
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ARS
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Auction Rate Securities
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ATC
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American Transmission Company LLC
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Basin
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Basin Electric Power Cooperative
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Bison 1
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Bison 1 Wind Project
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Bison 2
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Bison 2 Wind Project
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Bison 3
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Bison 3 Wind Project
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BNI Coal
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BNI Coal, Ltd.
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Boswell
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Boswell Energy Center
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CAIR
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Clean Air Interstate Rule
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CO
2
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Carbon Dioxide
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Company
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ALLETE, Inc. and its subsidiaries
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CSAPR
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Cross-State Air Pollution Rule
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DC
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Direct Current
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EPA
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Environmental Protection Agency
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ESOP
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Employee Stock Ownership Plan
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FASB
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Financial Accounting Standards Board
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FERC
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Federal Energy Regulatory Commission
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Form 8-K
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ALLETE Current Report on Form 8-K
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Form 10-K
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ALLETE Annual Report on Form 10-K
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Form 10-Q
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ALLETE Quarterly Report on Form 10-Q
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GAAP
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Accounting Principles Generally Accepted in the United States
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GHG
|
Greenhouse Gases
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Hibbard
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Hibbard Renewable Energy Center
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IBEW Local 31
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International Brotherhood of Electrical Workers Local 31
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IBEW Local 1593
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International Brotherhood of Electrical Workers Local 1593
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Invest Direct
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ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
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Item___
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Item___of this Form 10-K
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kV
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Kilovolt(s)
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Laskin
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Laskin Energy Center
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LIBOR
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London Inter Bank Offered Rate
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MACT
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Maximum Achievable Control Technology
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Magnetation
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Magnetation, Inc.
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Manitoba Hydro
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Manitoba Hydro-Electric Board
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MATS
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Mercury and Air Toxics Standards
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MBtu
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Million British thermal units
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Medicare Part D
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Medicare Part D provision of the Patient Protection and Affordable Care Act of 2010
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Mesabi Nugget
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Mesabi Nugget Delaware, LLC
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Minnesota Power
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An operating division of ALLETE, Inc.
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Minnkota Power
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Minnkota Power Cooperative, Inc.
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MISO
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Midwest Independent Transmission System Operator, Inc.
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Moody’s
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Moody’s Investors Service, Inc.
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MPCA
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Minnesota Pollution Control Agency
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MPUC
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Minnesota Public Utilities Commission
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MW / MWh
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Megawatt(s) / Megawatt-hour(s)
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NAAQS
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National Ambient Air Quality Standards
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NDPSC
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North Dakota Public Service Commission
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NOL
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Net Operating Loss
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Non-residential
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Retail commercial, non-retail commercial, office, industrial, warehouse, storage and institutional
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NO
2
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Nitrogen Dioxide
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NO
X
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Nitrogen Oxides
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Note ___
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Note ___ to the consolidated financial statements in this Form 10-K
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NPDES
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National Pollutant Discharge Elimination System
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NYSE
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New York Stock Exchange
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Oliver Wind I
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Oliver Wind I Energy Center
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Oliver Wind II
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Oliver Wind II Energy Center
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Palm Coast Park
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Palm Coast Park development project in Florida
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Palm Coast Park District
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Palm Coast Park Community Development District
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PolyMet
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PolyMet Mining Corporation
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PPA
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Power Purchase Agreement
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PPACA
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The Patient Protection and Affordable Care Act of 2010
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PSCW
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Public Service Commission of Wisconsin
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Rainy River Energy
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Rainy River Energy Corporation - Wisconsin
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RSOP
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Retirement Savings and Stock Ownership Plan
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SEC
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Securities and Exchange Commission
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SO
2
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Sulfur Dioxide
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Square Butte
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Square Butte Electric Cooperative
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Standard & Poor’s
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Standard & Poor’s Ratings Services
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SWL&P
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Superior Water, Light and Power Company
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Taconite Harbor
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Taconite Harbor Energy Center
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Taconite Ridge
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Taconite Ridge Energy Center
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Town Center
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Town Center at Palm Coast development project in Florida
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Town Center District
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Town Center at Palm Coast Community Development District
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U.S.
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United States of America
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USS Corporation
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United States Steel Corporation
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WDNR
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Wisconsin Department of Natural Resources
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•
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our ability to successfully implement our strategic objectives;
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•
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regulatory or legislative actions, including changes in governmental policies of the United States Congress, state legislatures, the FERC, the MPUC, the PSCW, the NDPSC, the EPA and various state, local and county regulators, and city administrators, about allowed rates of return, capital structure, 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;
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•
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our ability to manage expansion and integrate acquisitions;
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•
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the potential impacts of climate change and future regulation to restrict the emissions of GHG on our Regulated Operations;
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•
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effects of restructuring initiatives in the electric industry;
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•
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economic and geographic factors, including political and economic risks;
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•
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changes in and compliance with laws and regulations;
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•
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weather conditions, natural disasters and pandemic diseases;
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•
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war, acts of terrorism and cyber attacks;
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•
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wholesale power market conditions;
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•
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population growth rates and demographic patterns;
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•
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effects of competition, including competition for retail and wholesale customers;
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•
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changes in the real estate market;
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•
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pricing and transportation of commodities;
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•
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changes in tax rates or policies or in rates of inflation;
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•
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project delays or changes in project costs;
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•
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availability and management
of construction materials and skilled construction labor for capital projects;
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•
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changes in operating expenses and capital expenditures;
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•
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global and domestic economic conditions affecting us or our customers;
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•
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our ability to access capital markets and bank financing;
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•
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changes in interest rates and the performance of the financial markets;
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•
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our ability to replace a mature workforce and retain qualified, skilled and experienced personnel; and
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•
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the outcome of legal and administrative proceedings (whether civil or criminal) and settlements.
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Item 1.
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Business
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Year Ended December 31
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2011
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2010
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2009
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||||||
Consolidated Operating Revenue – Millions
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$928.2
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$907.0
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$759.1
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||||||
Percentage of Consolidated Operating Revenue
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Regulated Operations
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92
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%
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92
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%
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90
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%
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Investments and Other
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8
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%
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8
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%
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10
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%
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100
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%
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100
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%
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100
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%
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Regulated Utility Electric Sales
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Year Ended December 31
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2011
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%
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2010
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%
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2009
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%
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Millions of Kilowatt-hours
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Retail and Municipals
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Residential
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1,159
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9
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1,150
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9
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1,164
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10
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Commercial
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1,433
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11
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1,433
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11
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1,420
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12
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Industrial
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7,365
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56
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6,804
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52
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4,475
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37
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Municipals (FERC rate regulated)
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1,013
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7
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1,006
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7
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992
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8
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Total Retail and Municipals
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10,970
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83
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10,393
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79
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8,051
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67
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Other Power Suppliers
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2,205
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17
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2,745
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21
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4,056
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33
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Total Regulated Utility Electric Sales
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13,175
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100
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13,138
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100
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12,107
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100
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Customer
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Industry
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Location
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Ownership
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Earliest
Termination Date
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ArcelorMittal USA – Minorca Mine
(a)
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Taconite
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Virginia, MN
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ArcelorMittal USA Inc.
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January 31, 2016
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Hibbing Taconite Co.
(a)
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Taconite
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Hibbing, MN
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62.3% ArcelorMittal USA Inc.
23.0% Cliffs Natural Resources Inc.
14.7% USS Corporation
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January 31, 2016
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United Taconite LLC
(a)
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Taconite
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Eveleth, MN
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Cliffs Natural Resources Inc.
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January 31, 2016
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USS Corporation
(USS – Minnesota Ore)
(a,b)
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Taconite
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Mt. Iron, MN and Keewatin, MN
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USS Corporation
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January 31, 2016
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Mesabi Nugget
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Iron Nugget
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Hoyt Lakes, MN
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80% Steel Dynamics, Inc.
20% Kobe Steel USA
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December 31, 2017
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Boise White Paper, LLC
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Paper
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International Falls, MN
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Boise Paper Holdings, LLC
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January 31, 2014
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UPM, Blandin Paper Mill
(a)
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Paper
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Grand Rapids, MN
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UPM-Kymmene Corporation
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January 31, 2016
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NewPage Corporation – Duluth Mill
(a,c)
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Paper and Pulp
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Duluth, MN
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NewPage Corporation
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January 31, 2016
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Sappi Cloquet LLC
(a)
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Paper and Pulp
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Cloquet, MN
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Sappi Limited
|
January 31, 2016
|
(a)
|
The contract will terminate four years from the date of written notice from either Minnesota Power or the customer. No notice of contract cancellation has been given by either party. Thus, the earliest date of cancellation is January 31, 2016.
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(b)
|
USS Corporation owns both the Minntac Plant in Mountain Iron, MN and the Keewatin Taconite Plant in Keewatin, MN.
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(c)
|
NewPage filed for Chapter 11 bankruptcy protection on September 7, 2011. The Duluth mill operations have continued without interruption and we continue to provide electric and steam service to this customer. (See Note 1. Operations and Significant Accounting Policies.)
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|
|
|
|
Year Ended
|
|||
|
Unit
|
Year
|
Net
|
December 31, 2011
|
|||
Regulated Utility Power Supply
|
No.
|
Installed
|
Capability
|
Generation and Purchases
|
|||
|
|
|
MW
|
MWh
|
%
|
||
Coal-Fired
|
|
|
|
|
|
||
Boswell Energy Center
|
1
|
1958
|
65
|
|
|
|
|
in Cohasset, MN
|
2
|
1960
|
67
|
|
|
|
|
|
3
|
1973
|
361
|
|
|
|
|
|
4
|
1980
|
468
|
|
|
|
|
|
|
|
961
|
|
6,487,352
|
|
48.0
|
Laskin Energy Center
|
1
|
1953
|
49
|
|
|
|
|
in Hoyt Lakes, MN
|
2
|
1953
|
46
|
|
|
|
|
|
|
|
95
|
|
460,574
|
|
3.4
|
Taconite Harbor Energy Center
|
1
|
1957
|
77
|
|
|
|
|
in Schroeder, MN
|
2
|
1957
|
75
|
|
|
|
|
|
3
|
1967
|
82
|
|
|
|
|
|
|
|
234
|
|
1,116,764
|
|
8.2
|
Total Coal
|
|
|
1,290
|
|
8,064,690
|
|
59.6
|
Biomass/Coal/Natural Gas
|
|
|
|
|
|
||
Hibbard Renewable Energy Center in Duluth, MN
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3 & 4
|
1949, 1951
|
51
|
|
36,012
|
|
0.3
|
Cloquet Energy Center in Cloquet, MN
|
5
|
2001
|
22
|
|
63,219
|
|
0.4
|
Total Biomass/Coal/Natural Gas
|
|
|
73
|
|
99,231
|
|
0.7
|
Hydro
|
|
|
|
|
|
||
Group consisting of ten stations in MN
|
Various
|
|
102
|
|
404,080
|
|
3.0
|
Wind
(a)
|
|
|
|
|
|
||
Taconite Ridge Energy Center in Mt. Iron, MN
|
Various
|
2008
|
4
|
|
65,052
|
|
0.5
|
Bison 1 in Oliver and Morton Counties, ND
|
Various
|
2010, 2012
|
11
|
|
128,163
|
|
0.9
|
Total Wind
|
|
|
15
|
|
193,215
|
|
1.4
|
Total Company Generation
|
|
|
1,480
|
|
8,761,216
|
|
64.7
|
Long-Term Purchased Power
|
|
|
|
|
|
||
Lignite Coal - Square Butte near Center, ND
|
|
|
|
1,718,751
|
|
12.7
|
|
Wind - Oliver County, ND
|
|
|
|
371,760
|
|
2.8
|
|
Hydro - Manitoba Hydro in Winnipeg, MB, Canada
|
|
|
|
511,402
|
|
3.8
|
|
Total Long-Term Purchased Power
|
|
|
|
2,601,913
|
|
19.3
|
|
|
|
|
|
|
|
||
Other Purchased Power
(b
)
|
|
|
|
2,160,982
|
|
16.0
|
|
Total Purchased Power
|
|
|
|
4,762,895
|
|
35.3
|
|
Total
|
|
|
1,480
|
|
13,524,111
|
|
100.0
|
(a)
|
Taconite Ridge Energy Center consists of 10 wind turbine generator units with a total nameplate capacity of 25 MW. Bison 1 consists of 31 wind turbine generator units with a total nameplate capacity of 82 MW. The capacity reflected in the table is actual accredited capacity of the facility, which is the amount of net generating capability associated with the facility for which capacity credit was obtained using limited historical data. As more data is collected, actual accredited capacity may increase.
|
(b)
|
Includes short-term market purchases in the MISO market and from Other Power Suppliers.
|
•
|
Increased system flexibility to adapt to volatile business cycles and varied future industrial load scenarios;
|
•
|
Reductions in the emission of GHGs (primarily CO
2
); and
|
•
|
Compliance with mandated renewable energy standards.
|
Non-Rate Base Power Supply
|
Unit No.
|
Year
Installed
|
Year
Acquired
|
Net
Capability (MW)
|
Rapids Energy Center
(a)
|
|
|
|
|
in Grand Rapids, MN
|
|
|
|
|
Steam – Biomass
(b)
|
6 & 7
|
1969, 1980
|
2000
|
30
|
Hydro – Conventional Run-of-River
|
4 & 5
|
1917, 1948
|
2000
|
1
|
(a)
|
The net generation is primarily dedicated to the needs of one customer.
|
(b)
|
Rapids Energy Center is supplemented by coal.
|
•
|
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; and
|
•
|
Support research of technologies to reduce carbon emissions from generation facilities and support carbon sequestration efforts.
|
Executive Officers
|
Initial Effective Date
|
|
|
Alan R. Hodnik
, Age 52
|
|
Chairman, President and Chief Executive Officer – ALLETE
|
May 10, 2011
|
President and Chief Executive Officer – ALLETE
|
May 1, 2010
|
President – ALLETE
|
May 1, 2009
|
Chief Operating Officer – Minnesota Power
|
May 8, 2007
|
Senior Vice President – Minnesota Power Operations
|
September 22, 2006
|
|
|
Robert J. Adams
, Age 49
|
|
Vice President – Business Development and Chief Risk Officer
|
May 13, 2008
|
Vice President – Utility Business Development
|
February 1, 2004
|
|
|
Deborah A. Amberg
, Age 46
|
|
Senior Vice President, General Counsel and Secretary
|
January 1, 2006
|
|
|
Steven Q. DeVinck
, Age 52
|
|
Controller and Vice President – Business Support
|
December 5, 2009
|
Controller
|
July 12, 2006
|
|
|
David J. McMillan
, Age 50
|
|
Senior Vice President – External Affairs – ALLETE
|
January 1, 2012
|
Senior Vice President – Marketing, Regulatory and Public Affairs – ALLETE
|
January 1, 2006
|
Executive Vice President – Minnesota Power
|
January 1, 2006
|
|
|
Mark A. Schober
, Age 56
|
|
Senior Vice President and Chief Financial Officer
|
July 1, 2006
|
|
|
Donald W. Stellmaker
, Age 54
|
|
Vice President, Corporate Treasurer
|
August 19, 2011
|
Item 1A.
|
Risk Factors
|
Item 1A.
|
Risk Factors (Continued)
|
Item 1A.
|
Risk Factors (Continued)
|
•
|
severe or unexpected weather conditions;
|
•
|
seasonality;
|
•
|
changes in electricity usage;
|
•
|
transmission or transportation constraints, inoperability or inefficiencies;
|
•
|
availability of competitively priced alternative energy sources;
|
•
|
changes in supply and demand for energy;
|
•
|
changes in power production capacity;
|
•
|
outages at Minnesota Power’s generating facilities or those of our competitors;
|
•
|
transportation of fuel;
|
•
|
changes in production and storage levels of natural gas, lignite, coal, crude oil and refined products;
|
•
|
natural disasters, wars, sabotage, terrorist acts or other catastrophic events; and
|
•
|
federal, state, local and foreign energy, environmental, or other regulation and legislation.
|
Item 1A.
|
Risk Factors (Continued)
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
2011
|
|
|
2010
|
|
||||||||||||
|
Price Range
|
Dividends
|
Price Range
|
Dividends
|
||||||||||||||
Quarter
|
High
|
Low
|
Declared
|
High
|
Low
|
Declared
|
||||||||||||
First
|
|
$39.36
|
|
|
$36.33
|
|
|
$0.445
|
|
|
$34.00
|
|
|
$29.99
|
|
|
$0.44
|
|
Second
|
41.43
|
|
37.87
|
|
0.445
|
|
37.87
|
|
32.90
|
|
0.44
|
|
||||||
Third
|
42.10
|
|
35.51
|
|
0.445
|
|
37.75
|
|
33.16
|
|
0.44
|
|
||||||
Fourth
|
42.54
|
|
35.14
|
|
0.445
|
|
37.95
|
|
34.81
|
|
0.44
|
|
||||||
Annual Total
|
|
|
|
$1.78
|
|
|
|
|
$1.76
|
|
Item 6.
|
Selected Financial Data
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
|||||
Millions
|
|
|
|
|
|
||||||||||
Operating Revenue
|
|
$928.2
|
|
|
$907.0
|
|
|
$759.1
|
|
|
$801.0
|
|
|
$841.7
|
|
Operating Expenses
|
778.2
|
|
771.2
|
|
653.1
|
|
679.2
|
|
710.0
|
|
|||||
Net Income
|
93.6
|
|
74.8
|
|
60.7
|
|
83.0
|
|
89.5
|
|
|||||
Less: Non-Controlling Interest in Subsidiaries
|
(0.2
|
)
|
(0.5
|
)
|
(0.3
|
)
|
0.5
|
|
1.9
|
|
|||||
Net Income Attributable to ALLETE
|
93.8
|
|
75.3
|
|
61.0
|
|
82.5
|
|
87.6
|
|
|||||
Common Stock Dividends
|
62.1
|
|
60.8
|
|
56.5
|
|
50.4
|
|
44.3
|
|
|||||
Earnings Retained in Business
|
|
$31.7
|
|
|
$14.5
|
|
|
$4.5
|
|
|
$32.1
|
|
|
$43.3
|
|
Shares Outstanding – Millions
|
|
|
|
|
|
||||||||||
Year-End
|
37.5
|
|
35.8
|
|
35.2
|
|
32.6
|
|
30.8
|
|
|||||
Average
(a)
|
|
|
|
|
|
||||||||||
Basic
|
35.3
|
|
34.2
|
|
32.2
|
|
29.2
|
|
28.3
|
|
|||||
Diluted
|
35.4
|
|
34.3
|
|
32.2
|
|
29.3
|
|
28.4
|
|
|||||
Diluted Earnings Per Share
|
|
$2.65
|
|
|
$2.19
|
|
|
$1.89
|
|
|
$2.82
|
|
|
$3.08
|
|
Total Assets
|
|
$2,876.0
|
|
|
$2,609.1
|
|
|
$2,393.1
|
|
|
$2,134.8
|
|
|
$1,644.2
|
|
Long-Term Debt
|
857.9
|
|
771.6
|
|
695.8
|
|
588.3
|
|
410.9
|
|
|||||
Return on Common Equity
|
9.1
|
%
|
7.8
|
%
|
6.9
|
%
|
10.7
|
%
|
12.4
|
%
|
|||||
Common Equity Ratio
|
56
|
%
|
56
|
%
|
57
|
%
|
58
|
%
|
64
|
%
|
|||||
Dividends Declared per Common Share
|
|
$1.78
|
|
|
$1.76
|
|
|
$1.76
|
|
|
$1.72
|
|
|
$1.64
|
|
Dividend Payout Ratio
|
67
|
%
|
80
|
%
|
93
|
%
|
61
|
%
|
53
|
%
|
|||||
Book Value Per Share at Year-End
|
|
$28.77
|
|
|
$27.25
|
|
|
$26.39
|
|
|
$25.37
|
|
|
$24.11
|
|
Capital Expenditures by Segment
|
|
|
|
|
|
||||||||||
Regulated Operations
|
|
$228.0
|
|
|
$256.4
|
|
|
$299.2
|
|
|
$317.0
|
|
|
$220.6
|
|
Investments and Other
|
18.8
|
|
3.6
|
|
4.5
|
|
5.9
|
|
3.3
|
|
|||||
Total Capital Expenditures
|
|
$246.8
|
|
|
$260.0
|
|
|
$303.7
|
|
|
$322.9
|
|
|
$223.9
|
|
(a)
|
Excludes unallocated ESOP shares.
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
ALLETE Properties
|
|
2011
|
|
2010
|
||||||
Revenue and Sales Activity
|
Quantity
|
|
Amount
|
|
Quantity
|
|
Amount
|
|
||
Dollars in Millions
|
|
|
|
|
||||||
Revenue from Land Sales
|
|
|
|
|
||||||
Acres
(a)
|
3
|
|
|
$0.4
|
|
—
|
|
—
|
|
|
Revenue from Land Sales
|
|
0.4
|
|
|
—
|
|
||||
Other Revenue
(b)
|
|
0.9
|
|
|
|
$2.2
|
|
|||
Total ALLETE Properties Revenue
|
|
|
$1.3
|
|
|
|
$2.2
|
|
(a)
|
Acreage amounts are shown on a gross basis, including wetlands.
|
(b)
|
For the year ended December 31, 2011, Other Revenue included mitigation bank credit sales, finance income, and a forfeited deposit on a land sale contract. For the year ended December 31, 2010, Other Revenue included a $0.7 million pretax gain due to the return of seller-financed property from an entity which filed for Chapter 11 bankruptcy in June 2009. Also included in 2010 were $0.3 million of forfeited deposits and $0.3 million related to a lawsuit settlement.
|
ALLETE Properties
|
|
2010
|
|
2009
|
||||||
Revenue and Sales Activity
|
Quantity
|
|
Amount
|
|
Quantity
|
|
Amount
|
|
||
Dollars in Millions
|
|
|
|
|
||||||
Revenue from Land Sales
|
|
|
|
|
||||||
Acres
(a)
|
—
|
|
—
|
|
35
|
|
|
$3.8
|
|
|
Revenue from Land Sales
(b)
|
|
—
|
|
|
3.8
|
|
||||
Other Revenue
(c)
|
|
|
$2.2
|
|
|
0.2
|
|
|||
Total ALLETE Properties Revenue
|
|
|
$2.2
|
|
|
|
$4.0
|
|
(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 included a $0.7 million pretax gain in 2010 due to the return of seller-financed property from an entity which filed for Chapter 11 bankruptcy in June 2009. Also included in 2010 were $0.3 million of forfeited deposits and $0.3 million related to a lawsuit settlement.
|
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
|
100%
|
(d)
|
965
|
|
2,485
|
|
2,246,200
|
|
Palm Coast Park
|
100%
|
|
3,888
|
|
3,554
|
|
3,096,800
|
|
Total Current Development Projects
|
|
|
4,853
|
|
6,039
|
|
5,343,000
|
|
Proposed Development Project
|
|
|
|
|
|
|||
Ormond Crossings
|
100%
|
|
2,914
|
|
2,950
|
|
3,215,000
|
|
Other
|
|
|
|
|
|
|||
Lake Swamp Wetland Mitigation Project
|
100%
|
|
3,044
|
|
(e)
|
|
(e)
|
|
Total of Development Projects
|
|
|
10,811
|
|
8,989
|
|
8,558,000
|
|
(a)
|
Acreage amounts are approximate and shown on a gross basis, including wetlands.
|
(b)
|
Units and square footage are estimated. 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)
|
In 2011, the remaining shares of the ALLETE Properties non-controlling interest were purchased for $8.8 million by issuing 0.2 million shares of ALLETE common stock.
|
(e)
|
The Lake Swamp wetland mitigation bank is a permitted, regionally significant wetlands mitigation bank. Wetland mitigation credits will be used at Ormond Crossings and are available-for-sale to developers of other projects that are located in the bank’s service area.
|
Year Ended December 31
|
2011
|
|
%
|
2010
|
|
%
|
2009
|
|
%
|
||||
Millions
|
|
|
|
|
|
|
|||||||
Common Equity
|
|
$1,079.3
|
|
56
|
|
$976.0
|
|
55
|
|
$929.5
|
|
57
|
|
Non-Controlling Interest
|
—
|
|
—
|
9.0
|
|
1
|
9.5
|
|
—
|
|
|||
Long-Term Debt (Including Current Maturities)
|
863.3
|
|
44
|
785.0
|
|
44
|
701.0
|
|
43
|
|
|||
Short-Term Debt
|
1.1
|
|
—
|
1.0
|
|
—
|
1.9
|
|
—
|
|
|||
|
|
$1,943.7
|
|
100
|
|
$1,771.0
|
|
100
|
|
$1,641.9
|
|
100
|
|
Year Ended December 31
|
2011
|
|
2010
|
|
2009
|
|
|||
Millions
|
|
|
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
|
$44.9
|
|
|
$25.7
|
|
|
$102.0
|
|
Cash Flows from (used for)
|
|
|
|
||||||
Operating Activities
|
241.7
|
|
228.7
|
|
137.4
|
|
|||
Investing Activities
|
(240.9
|
)
|
(250.9
|
)
|
(320.0
|
)
|
|||
Financing Activities
|
55.4
|
|
41.4
|
|
106.3
|
|
|||
Change in Cash and Cash Equivalents
|
56.2
|
|
19.2
|
|
(76.3
|
)
|
|||
Cash and Cash Equivalents at End of Period
|
|
$101.1
|
|
|
$44.9
|
|
|
$25.7
|
|
|
Payments Due by Period
|
||||||||||||||
Contractual Obligations
|
|
Less than
|
1 to 3
|
4 to 5
|
After
|
||||||||||
As of December 31, 2011
|
Total
|
1 Year
|
Years
|
Years
|
5 Years
|
||||||||||
Millions
|
|
|
|
|
|
||||||||||
Long-Term Debt
|
|
$1,372.2
|
|
|
$48.2
|
|
|
$307.6
|
|
|
$140.8
|
|
|
$875.6
|
|
Pension
|
132.9
|
|
1.0
|
|
96.5
|
|
35.4
|
|
—
|
|
|||||
Other Postretirement Benefit Plans
|
55.0
|
|
13.9
|
|
29.5
|
|
11.6
|
|
—
|
|
|||||
Operating Lease Obligations
|
96.8
|
|
10.9
|
|
33.7
|
|
17.7
|
|
34.5
|
|
|||||
Uncertain Tax Positions
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Unconditional Purchase Obligations
(b)
|
671.6
|
|
319.5
|
|
126.1
|
|
43.6
|
|
182.4
|
|
|||||
|
|
$2,328.5
|
|
|
$393.5
|
|
|
$593.4
|
|
|
$249.1
|
|
|
$1,092.5
|
|
(a)
|
Excludes $11.4 million of non-current unrecognized tax benefits due to uncertainty regarding the timing of future cash payments related to uncertain tax positions.
|
(b)
|
Excludes agreements with Manitoba Hydro expiring in 2022 and 2035 as our obligation under these contracts is conditional on surplus energy and the construction of additional transmission capacity.
|
Credit Ratings
|
Standard & Poor’s
|
Moody’s
|
Issuer Credit Rating
|
BBB+
|
Baa1
|
Commercial Paper
|
A-2
|
P-2
|
Senior Secured
|
|
|
First Mortgage Bonds
(a)
|
A–
|
A2
|
Unsecured Debt
|
|
|
Collier County Industrial Development Revenue Bonds – Fixed Rate
|
BBB
|
–
|
(a)
|
Includes collateralized pollution control bonds.
|
Capital Expenditures
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total
|
|
|||||||
Millions
|
|
|
|
|
|
|
|||||||||||||
Regulated Utility Operations
|
|
|
|
|
|
|
|||||||||||||
|
Base and Other
|
|
$112
|
|
|
$148
|
|
|
$143
|
|
|
$122
|
|
|
$116
|
|
|
$641
|
|
|
Current Cost Recovery
(a)
|
|
|
|
|
|
|
||||||||||||
|
Environmental
(b)
|
11
|
|
94
|
|
152
|
|
68
|
|
—
|
|
325
|
|
||||||
|
Renewable
|
274
|
|
3
|
|
7
|
|
—
|
|
—
|
|
284
|
|
||||||
|
Transmission
(c)
|
31
|
|
36
|
|
26
|
|
8
|
|
12
|
|
113
|
|
||||||
|
Total Current Cost Recovery
|
316
|
|
133
|
|
185
|
|
76
|
|
12
|
|
722
|
|
||||||
Regulated Utility Capital Expenditures
|
428
|
|
281
|
|
328
|
|
198
|
|
128
|
|
1,363
|
|
|||||||
Other
|
|
13
|
|
20
|
|
8
|
|
8
|
|
4
|
|
53
|
|
||||||
Total Capital Expenditures
|
|
$441
|
|
|
$301
|
|
|
$336
|
|
|
$206
|
|
|
$132
|
|
|
$1,416
|
|
(a)
|
Estimated current capital expenditures recoverable outside of a rate case.
|
(b)
|
Environmental capital expenditures relate to Boswell Unit 4 in order to address compliance with the MATS rule. Compliance costs for this project are estimated between $300 million and $400 million with the lower end of this range reflected in the table above.
|
(c)
|
Transmission capital expenditures related to CapX2020 are estimated at approximately $90 million over the 2012 to 2016 period.
|
|
Expected Maturity Date
|
|||||||||||||||||||||||
Interest Rate Sensitive
|
|
|
|
|
|
|
|
Fair
|
||||||||||||||||
Financial Instruments
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Thereafter
|
|
Total
|
|
Value
|
|||||||||
Dollars in Millions
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-Term Debt
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed Rate
|
|
$2.0
|
|
|
$71.5
|
|
|
$19.2
|
|
|
$1.0
|
|
|
$21.0
|
|
|
$600.9
|
|
|
$715.6
|
|
|
$818.7
|
|
Average Interest Rate – %
|
5.6
|
|
5.2
|
|
6.8
|
|
4.8
|
|
7.6
|
|
5.7
|
|
5.8
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Variable Rate
|
|
$3.4
|
|
|
$12.3
|
|
|
$75.0
|
|
|
$15.7
|
|
—
|
|
|
$41.3
|
|
|
$147.7
|
|
|
$147.7
|
|
|
Average Interest Rate – %
(a)
|
3.1
|
|
3.6
|
|
1.3
|
|
0.2
|
|
—
|
|
0.1
|
|
1.1
|
|
|
(a)
|
Assumes rates in effect at
December 31, 2011
remain constant through remaining term. The $75 million term loan maturing in 2014 has an effective fixed rate of 1.825% due to an interest rate swap.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
•
|
Directors.
The information regarding directors will be included in the “Election of Directors” section;
|
•
|
Audit Committee Financial Expert.
The information regarding the Audit Committee financial expert will be included in the “Audit Committee Report” section;
|
•
|
Audit Committee Members.
The identity of the Audit Committee members will be included in the “Audit Committee Report” section;
|
•
|
Executive Officers.
The information regarding executive officers is included in Part I of this Form 10-K; and
|
•
|
Section 16(a) Compliance.
The information regarding Section 16(a) compliance will be included in the “Ownership of ALLETE Common Stock – Section 16(a) Beneficial Ownership Reporting Compliance” section.
|
•
|
Corporate Governance Guidelines;
|
•
|
Audit Committee Charter;
|
•
|
Executive Compensation Committee Charter; and
|
•
|
Corporate Governance and Nominating Committee Charter.
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
|
+*10(j)1
|
—
|
|
Minnesota Power and Affiliated Companies Executive Investment Plan I, as amended and restated, effective November 1, 1988 (filed as Exhibit 10(c) to the 1988 Form 10-K, File No. 1-3548).
|
|
+*10(j)2
|
—
|
|
Amendments through December 2003 to the Minnesota Power and Affiliated Companies Executive Investment
Plan I (filed as Exhibit 10(v)2 to the 2003 Form 10-K, File No. 1-3548).
|
|
+*10(j)3
|
—
|
|
July 2004 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan I (filed as Exhibit 10(b) to the June 30, 2004, Form 10-Q, File No. 1-3548).
|
|
+*10(j)4
|
—
|
|
August 2006 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan I (filed as Exhibit 10(b) to the September 30, 2006, Form 10-Q, File No. 1-3548).
|
|
+*10(k)1
|
—
|
|
Minnesota Power and Affiliated Companies Executive Investment Plan II, as amended and restated, effective November 1, 1988 (filed as Exhibit 10(d) to the 1988 Form 10-K, File No. 1-3548).
|
|
+*10(k)2
|
—
|
|
Amendments through December 2003 to the Minnesota Power and Affiliated Companies Executive Investment
Plan II (filed as Exhibit 10(w)2 to the 2003 Form 10-K, File No. 1-3548).
|
|
+*10(k)3
|
—
|
|
July 2004 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan II (filed as Exhibit 10(c) to the June 30, 2004, Form 10-Q, File No. 1-3548).
|
|
+*10(k)4
|
—
|
|
August 2006 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan II (filed as Exhibit 10(c) to the September 30, 2006, Form 10-Q, File No. 1-3548).
|
|
+*10(l)
|
—
|
|
Deferred Compensation Trust Agreement, as amended and restated, effective January 1, 1989 (filed as Exhibit 10(f) to the 1988 Form 10-K, File No. 1-3548).
|
|
+*10(m)1
|
—
|
|
ALLETE Executive Long-Term Incentive Compensation Plan as amended and restated effective January 1, 2006 (filed as Exhibit 10 to the May 16, 2005, Form 8-K, File No. 1-3548).
|
|
+*10(m)2
|
—
|
|
Amendment to the ALLETE Executive Long-Term Incentive Compensation Plan, effective January 1, 2011 (filed as Exhibit 10(m)2 to the December 31, 2010, Form 10-K, File No. 1-3548).
|
|
+*10(m)3
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Nonqualified Stock Option Grant Effective 2007 (filed as Exhibit 10(m)6 to the 2006 Form 10-K, File No. 1-3548).
|
|
+*10(m)4
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2007 (filed as Exhibit 10(m)7 to the 2006 Form 10-K, File No. 1-3548).
|
|
+*10(m)5
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2008 (filed as Exhibit 10(m)10 to the 2007 Form 10-K, File No. 1-3548).
|
|
+*10(m)6
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2009 (filed as Exhibit 10(m)11 to the 2008 Form 10-K, File No. 1-3548).
|
|
+*10(m)7
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan – Restricted Stock Unit Grant Effective 2009 (filed as Exhibit 10(m)12 to the 2008 Form 10-K, File No. 1-3548).
|
|
+*10(m)8
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2010 (filed as Exhibit 10(m)8 to the 2009 Form 10-K, File No. 1-3548).
|
|
+*10(m)89
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan – Restricted Stock Unit Grant Effective 2010 (filed as Exhibit 10(m)9 to the 2009 Form 10-K, File No. 1-3548).
|
|
+*10(m)10
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2011 (filed as Exhibit 10(m)11 to the December 31, 2010, Form 10-K, File No. 1-3548).
|
|
+*10(m)11
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan – Restricted Stock Unit Grant Effective 2011 (filed as Exhibit 10(m)12 to the December 31, 2010, Form 10-K, File No. 1-3548).
|
|
+10(m)12
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2012.
|
|
+10(m)13
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan – Restricted Stock Unit Grant Effective 2012.
|
|
+*10(n)1
|
—
|
|
Minnesota Power (now ALLETE) Director Stock Plan, effective January 1, 1995 (filed as Exhibit 10 to the
March 31, 1995, Form 10-Q, File No. 1-3548).
|
|
+*10(n)2
|
—
|
|
Amendments through December 2003 to the Minnesota Power (now ALLETE) Director Stock Plan (filed as
Exhibit 10(z)2 to the 2003 Form 10-K, File No. 1-3548).
|
|
+*10(n)3
|
—
|
|
July 2004 Amendment to the ALLETE Director Stock Plan (filed as Exhibit 10(e) to the June 30, 2004, Form 10-Q, File No. 1-3548).
|
|
+*10(n)4
|
—
|
|
January 2007 Amendment to the ALLETE Director Stock Plan (filed as Exhibit 10(n)4 to the 2006 Form 10-K, File No. 1-3548).
|
|
+*10(n)5
|
—
|
|
May 2009 Amendment to the ALLETE Director Stock Plan (filed as Exhibit 10(b) to the June 30, 2009, Form 10-Q, File No. 1-3548).
|
|
+*10(n)6
|
—
|
|
May 2010 Amendment to the ALLETE Director Stock Plan (filed as Exhibit 10(a) to the June 30, 2010, Form 10-Q, File No. 1-3548).
|
|
+*10(n)7
|
—
|
|
October 2010 Amendment to the ALLETE Director Stock Plan (filed as Exhibit 10 to the September 30, 2010,
Form 10-Q, File No. 1-3548).
|
|
+*10(n)8
|
—
|
ALLETE Non-Management Director Compensation Summary Effective May 1, 2010 (filed as Exhibit 10(b) to the March 31, 2010, Form 10-Q, File No. 1-3548).
|
|
+*10(n)9
|
—
|
ALLETE Non-Management Director Compensation Summary effective January 19, 2011 (filed as Exhibit 10(n)9 to the December 31, 2010, Form 10-K, File No. 1-3548).
|
|
+10(n)10
|
—
|
ALLETE Non-Management Director Compensation Summary effective January 19, 2012.
|
|
+*10(o)1
|
—
|
Minnesota Power (now ALLETE) Director Compensation Deferral Plan Amended and Restated, effective
January 1, 1990 (filed as Exhibit 10(ac) to the 2002 Form 10-K, File No. 1-3548).
|
|
+*10(o)2
|
—
|
October 2003 Amendment to the Minnesota Power (now ALLETE) Director Compensation Deferral Plan (filed as Exhibit 10(aa)2 to the 2003 Form 10-K, File No. 1-3548).
|
|
+*10(o)3
|
—
|
January 2005 Amendment to the ALLETE Director Compensation Deferral Plan (filed as Exhibit 10(c) to the
March 31, 2005, Form 10-Q, File No. 1-3548).
|
|
+*10(o)4
|
—
|
August 2006 Amendment to the ALLETE Director Compensation Deferral Plan (filed as Exhibit 10(d) to the
September 30, 2006, Form 10-Q, File No. 1-3548).
|
|
+*10(o)5
|
—
|
ALLETE Non-Employee Director Compensation Deferral Plan II, effective May 1, 2009 (filed as Exhibit 10(a) to the June 30, 2009, Form 10-Q, File No. 1-3548).
|
|
+*10(p)
|
—
|
ALLETE Director Compensation Trust Agreement, effective October 11, 2004 (filed as Exhibit 10(a) to the
September 30, 2004, Form 10-Q, File No. 1-3548).
|
|
+*10(q)
|
—
|
ALLETE and Affiliated Companies Change in Control Severance Plan, as amended and restated, effective
January 19, 2011 (filed as Exhibit 10(q) to the December 31, 2010, Form 10-K, File No. 1-3548).
|
|
12
|
—
|
Computation of Ratios of Earnings to Fixed Charges.
|
|
21
|
—
|
Subsidiaries of the Registrant.
|
|
23(a)
|
—
|
Consent of Independent Registered Public Accounting Firm.
|
|
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 Annual Report by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
95
|
—
|
Mine Safety.
|
|
99
|
—
|
ALLETE News Release dated February 15, 2012, announcing earnings for the year ended December 31, 2011.
(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
|
|
101.SCH
|
—
|
XBRL Schema
|
|
101.CAL
|
—
|
XBRL Calculation
|
|
101.DEF
|
—
|
XBRL Definition
|
|
101.LAB
|
—
|
XBRL Label
|
|
101.PRE
|
—
|
XBRL Presentation
|
*
|
Incorporated herein by reference as indicated.
|
+
|
Management contract or compensatory plan or arrangement pursuant to Item 15(b).
|
|
|
ALLETE, Inc.
|
|
|
|
||
|
|
||
Dated:
|
February 15, 2012
|
By
|
/s/ Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Alan R. Hodnik
|
|
Chairman, President and Chief Executive Officer
|
|
February 15, 2012
|
Alan R. Hodnik
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Mark A. Schober
|
|
Senior Vice President and Chief Financial Officer
|
|
February 15, 2012
|
Mark A. Schober
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Steven Q. DeVinck
|
|
Controller and Vice President – Business Support
|
|
February 15, 2012
|
Steven Q. DeVinck
|
|
(Principal Accounting Officer)
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Kathleen A. Brekken
|
|
Director
|
|
February 15, 2012
|
Kathleen A. Brekken
|
|
|
|
|
|
|
|
|
|
/s/ Kathryn W. Dindo
|
|
Director
|
|
February 15, 2012
|
Kathryn W. Dindo
|
|
|
|
|
|
|
|
|
|
/s/ Heidi J. Eddins
|
|
Director
|
|
February 15, 2012
|
Heidi J. Eddins
|
|
|
|
|
|
|
|
|
|
/s/ Sidney W. Emery, Jr.
|
|
Director
|
|
February 15, 2012
|
Sidney W. Emery, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ James S. Haines, Jr
|
|
Director
|
|
February 15, 2012
|
James S. Haines, Jr
|
|
|
|
|
|
|
|
|
|
/s/ James J. Hoolihan
|
|
Director
|
|
February 15, 2012
|
James J. Hoolihan
|
|
|
|
|
|
|
|
|
|
/s/ Madeleine W. Ludlow
|
|
Director
|
|
February 15, 2012
|
Madeleine W. Ludlow
|
|
|
|
|
|
|
|
|
|
/s/ Douglas C. Neve
|
|
Director
|
|
February 15, 2012
|
Douglas C. Neve
|
|
|
|
|
|
|
|
|
|
/s/ Leonard C. Rodman
|
|
Director
|
|
February 15, 2012
|
Leonard C. Rodman
|
|
|
|
|
|
|
|
|
|
/s/ Donald J. Shippar
|
|
Director
|
|
February 15, 2012
|
Donald J. Shippar
|
|
|
|
|
|
|
|
|
|
/s/ Bruce W. Stender
|
|
Director
|
|
February 15, 2012
|
Bruce W. Stender
|
|
|
|
|
As of December 31
|
2011
|
|
2010
|
|
||
Millions
|
|
|
||||
Assets
|
|
|
||||
Current Assets
|
|
|
||||
Cash and Cash Equivalents
|
|
$101.1
|
|
|
$44.9
|
|
Short-Term Investments
|
—
|
|
6.7
|
|
||
Accounts Receivable (Less Allowance of $0.9 and $0.9)
|
79.7
|
|
99.5
|
|
||
Inventories
|
69.1
|
|
60.0
|
|
||
Prepayments and Other
|
27.1
|
|
28.6
|
|
||
Total Current Assets
|
277.0
|
|
239.7
|
|
||
Property, Plant and Equipment – Net
|
1,982.7
|
|
1,805.6
|
|
||
Regulatory Assets
|
345.9
|
|
310.2
|
|
||
Investment in ATC
|
98.9
|
|
93.3
|
|
||
Other Investments
|
132.3
|
|
126.0
|
|
||
Other Non-Current Assets
|
39.2
|
|
34.3
|
|
||
Total Assets
|
|
$2,876.0
|
|
|
$2,609.1
|
|
Liabilities and Equity
|
|
|
||||
Liabilities
|
|
|
||||
Current Liabilities
|
|
|
||||
Accounts Payable
|
|
$71.8
|
|
|
$75.4
|
|
Accrued Taxes
|
26.4
|
|
22.0
|
|
||
Accrued Interest
|
12.8
|
|
13.4
|
|
||
Long-Term Debt Due Within One Year
|
5.4
|
|
13.4
|
|
||
Notes Payable
|
1.1
|
|
1.0
|
|
||
Other
|
45.6
|
|
33.7
|
|
||
Total Current Liabilities
|
163.1
|
|
158.9
|
|
||
Long-Term Debt
|
857.9
|
|
771.6
|
|
||
Deferred Income Taxes
|
373.6
|
|
325.2
|
|
||
Regulatory Liabilities
|
43.5
|
|
43.6
|
|
||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
253.5
|
|
231.4
|
|
||
Other Non-Current Liabilities
|
105.1
|
|
93.4
|
|
||
Total Liabilities
|
1,796.7
|
|
1,624.1
|
|
||
Commitments and Contingencies (Note 11)
|
|
|
||||
Equity
|
|
|
||||
ALLETE’s Equity
|
|
|
||||
Common Stock Without Par Value, 80.0 Shares Authorized, 37.5 and 35.8
|
|
|
||||
Shares Outstanding
|
705.6
|
|
636.1
|
|
||
Unearned ESOP Shares
|
(29.0
|
)
|
(36.8
|
)
|
||
Accumulated Other Comprehensive Loss
|
(28.9
|
)
|
(23.2
|
)
|
||
Retained Earnings
|
431.6
|
|
399.9
|
|
||
Total ALLETE Equity
|
1,079.3
|
|
976.0
|
|
||
Non-Controlling Interest in Subsidiaries
|
—
|
|
9.0
|
|
||
Total Equity
|
1,079.3
|
|
985.0
|
|
||
Total Liabilities and Equity
|
|
$2,876.0
|
|
|
$2,609.1
|
|
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions Except Per Share Amounts
|
|
|
|
||||||
Operating Revenue
|
|
|
|
||||||
Operating Revenue
|
|
$928.2
|
|
|
$907.0
|
|
|
$766.7
|
|
Prior Year Rate Refunds
|
—
|
|
—
|
|
(7.6
|
)
|
|||
Total Operating Revenue
|
928.2
|
|
907.0
|
|
759.1
|
|
|||
Operating Expenses
|
|
|
|
||||||
Fuel and Purchased Power
|
306.6
|
|
325.1
|
|
279.5
|
|
|||
Operating and Maintenance
|
381.2
|
|
365.6
|
|
308.9
|
|
|||
Depreciation
|
90.4
|
|
80.5
|
|
64.7
|
|
|||
Total Operating Expenses
|
778.2
|
|
771.2
|
|
653.1
|
|
|||
Operating Income
|
150.0
|
|
135.8
|
|
106.0
|
|
|||
Other Income (Expense)
|
|
|
|
||||||
Interest Expense
|
(43.6
|
)
|
(39.2
|
)
|
(33.8
|
)
|
|||
Equity Earnings in ATC
|
18.4
|
|
17.9
|
|
17.5
|
|
|||
Other
|
4.4
|
|
4.6
|
|
1.8
|
|
|||
Total Other Expense
|
(20.8
|
)
|
(16.7
|
)
|
(14.5
|
)
|
|||
Income Before Non-Controlling Interest and Income Taxes
|
129.2
|
|
119.1
|
|
91.5
|
|
|||
Income Tax Expense
|
35.6
|
|
44.3
|
|
30.8
|
|
|||
Net Income
|
93.6
|
|
74.8
|
|
60.7
|
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
(0.2
|
)
|
(0.5
|
)
|
(0.3
|
)
|
|||
Net Income Attributable to ALLETE
|
|
$93.8
|
|
|
$75.3
|
|
|
$61.0
|
|
Average Shares of Common Stock
|
|
|
|
||||||
Basic
|
35.3
|
|
34.2
|
|
32.2
|
|
|||
Diluted
|
35.4
|
|
34.3
|
|
32.2
|
|
|||
Basic Earnings Per Share of Common Stock
|
|
$2.66
|
|
|
$2.20
|
|
|
$1.89
|
|
Diluted Earnings Per Share of Common Stock
|
|
$2.65
|
|
|
$2.19
|
|
|
$1.89
|
|
Dividends Per Share of Common Stock
|
|
$1.78
|
|
|
$1.76
|
|
|
$1.76
|
|
Year Ended December 31
|
2011
|
|
2010
|
|
2009
|
|
|||
Millions
|
|
|
|
||||||
Operating Activities
|
|
|
|
||||||
Net Income
|
|
$93.6
|
|
|
$74.8
|
|
|
$60.7
|
|
Allowance for Funds Used During Construction
|
(2.5
|
)
|
(4.2
|
)
|
(5.8
|
)
|
|||
Loss (Income) from Equity Investments, Net of Dividends
|
(3.2
|
)
|
(3.1
|
)
|
0.1
|
|
|||
Gain on Real Estate Foreclosure
|
(0.5
|
)
|
(0.7
|
)
|
—
|
|
|||
Gain on Sale of Assets
|
(0.9
|
)
|
—
|
|
(0.2
|
)
|
|||
Loss on Impairment of Assets
|
1.7
|
|
—
|
|
3.1
|
|
|||
Depreciation Expense
|
90.4
|
|
80.5
|
|
64.7
|
|
|||
Amortization of Debt Issuance Costs
|
0.9
|
|
0.9
|
|
0.9
|
|
|||
Deferred Income Tax Expense
|
35.8
|
|
66.0
|
|
75.2
|
|
|||
Share-Based Compensation Expense
|
1.6
|
|
2.2
|
|
2.1
|
|
|||
ESOP Compensation Expense
|
7.4
|
|
7.1
|
|
6.5
|
|
|||
Defined Benefit Pension and Postretirement Benefit Expense
|
23.6
|
|
18.0
|
|
11.7
|
|
|||
Bad Debt Expense
|
1.2
|
|
1.1
|
|
1.3
|
|
|||
Changes in Operating Assets and Liabilities
|
|
|
|
||||||
Accounts Receivable
|
18.6
|
|
17.9
|
|
(43.5
|
)
|
|||
Inventories
|
(9.1
|
)
|
(3.0
|
)
|
(7.3
|
)
|
|||
Prepayments and Other
|
1.5
|
|
(4.3
|
)
|
—
|
|
|||
Accounts Payable
|
(9.5
|
)
|
5.8
|
|
10.5
|
|
|||
Other Current Liabilities
|
15.4
|
|
5.2
|
|
5.3
|
|
|||
Cash Contributions to Defined Benefit Pension and Postretirement Plans
|
(24.7
|
)
|
(39.3
|
)
|
(30.2
|
)
|
|||
Changes in Regulatory and Other Non-Current Assets
|
(7.5
|
)
|
4.2
|
|
(25.6
|
)
|
|||
Changes in Regulatory and Other Non-Current Liabilities
|
7.9
|
|
(0.4
|
)
|
7.9
|
|
|||
Cash from Operating Activities
|
241.7
|
|
228.7
|
|
137.4
|
|
|||
Investing Activities
|
|
|
|
||||||
Proceeds from Sale of Available-for-sale Securities
|
7.8
|
|
0.6
|
|
8.9
|
|
|||
Payments for Purchase of Available-for-sale Securities
|
(2.3
|
)
|
(2.3
|
)
|
(2.2
|
)
|
|||
Investment in ATC
|
(2.0
|
)
|
(1.6
|
)
|
(7.8
|
)
|
|||
Changes to Other Investments
|
(7.4
|
)
|
1.3
|
|
(0.7
|
)
|
|||
Additions to Property, Plant and Equipment
|
(239.2
|
)
|
(248.9
|
)
|
(318.5
|
)
|
|||
Proceeds from Sale of Assets
|
2.2
|
|
—
|
|
0.3
|
|
|||
Cash for Investing Activities
|
(240.9
|
)
|
(250.9
|
)
|
(320.0
|
)
|
|||
Financing Activities
|
|
|
|
||||||
Proceeds from Issuance of Common Stock
|
39.1
|
|
20.5
|
|
65.2
|
|
|||
Proceeds from Issuance of Long-Term Debt
|
81.4
|
|
155.0
|
|
111.4
|
|
|||
Changes in Notes Payable
|
0.1
|
|
(0.9
|
)
|
(4.1
|
)
|
|||
Reductions of Long-Term Debt
|
(3.1
|
)
|
(71.0
|
)
|
(9.1
|
)
|
|||
Debt Issuance Costs
|
—
|
|
(1.4
|
)
|
(0.6
|
)
|
|||
Dividends on Common Stock
|
(62.1
|
)
|
(60.8
|
)
|
(56.5
|
)
|
|||
Cash from Financing Activities
|
55.4
|
|
41.4
|
|
106.3
|
|
|||
Change in Cash and Cash Equivalents
|
56.2
|
|
19.2
|
|
(76.3
|
)
|
|||
Cash and Cash Equivalents at Beginning of Period
|
44.9
|
|
25.7
|
|
102.0
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$101.1
|
|
|
$44.9
|
|
|
$25.7
|
|
|
Total
Shareholders’
Equity
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Unearned
ESOP
Shares
|
Common
Stock
|
||||||||
Millions
|
|
|
|
|
|
||||||||
Balance as of December 31, 2008
|
|
$827.1
|
|
|
$380.9
|
|
$(33.0)
|
$(54.9)
|
|
$534.1
|
|
||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
60.7
|
|
60.7
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Gain on Securities – Net
|
2.8
|
|
|
2.8
|
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans
|
6.2
|
|
|
6.2
|
|
|
|
||||||
Total Comprehensive Income
|
69.7
|
|
|
|
|
|
|||||||
Non-Controlling Interest in Subsidiaries
|
0.3
|
|
0.3
|
|
|
|
|
||||||
Comprehensive Income Attributable to ALLETE
|
70.0
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
79.3
|
|
|
|
|
79.3
|
|
||||||
Dividends Declared
|
(56.5
|
)
|
(56.5
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
9.6
|
|
|
|
9.6
|
|
|
||||||
Balance as of December 31, 2009
|
929.5
|
|
385.4
|
|
(24.0
|
)
|
(45.3
|
)
|
613.4
|
|
|||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
74.8
|
|
74.8
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Gain on Securities – Net
|
0.8
|
|
|
0.8
|
|
|
|
||||||
Total Comprehensive Income
|
75.6
|
|
|
|
|
|
|||||||
Non-Controlling Interest in Subsidiaries
|
0.5
|
|
0.5
|
|
|
|
|
||||||
Comprehensive Income Attributable to ALLETE
|
76.1
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
22.7
|
|
|
|
|
22.7
|
|
||||||
Dividends Declared
|
(60.8
|
)
|
(60.8
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
8.5
|
|
|
|
8.5
|
|
|
||||||
Balance as of December 31, 2010
|
976.0
|
|
399.9
|
|
(23.2
|
)
|
(36.8
|
)
|
636.1
|
|
|||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
93.6
|
|
93.6
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Loss on Securities – Net
|
(0.3
|
)
|
|
(0.3
|
)
|
|
|
||||||
Unrealized Loss on Derivatives – Net
|
(0.3
|
)
|
|
(0.3
|
)
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans – Net
|
(5.1
|
)
|
|
(5.1
|
)
|
|
|
||||||
Total Comprehensive Income
|
87.9
|
|
|
|
|
|
|||||||
Non-Controlling Interest in Subsidiaries
|
0.2
|
|
0.2
|
|
|
|
|
||||||
Comprehensive Income Attributable to ALLETE
|
88.1
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
69.5
|
|
|
|
|
69.5
|
|
||||||
Dividends Declared
|
(62.1
|
)
|
(62.1
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
7.8
|
|
|
|
7.8
|
|
|
||||||
Balance as of December 31, 2011
|
|
$1,079.3
|
|
|
$431.6
|
|
$(28.9)
|
$(29.0)
|
|
$705.6
|
|
Note 1.
|
Operations and Significant Accounting Policies
|
Note 1.
|
Operations and Significant Accounting Policies (Continued)
|
Consolidated Statement of Cash Flows
|
|
|
|
||||||
Supplemental Disclosure
|
|
|
|
||||||
Year Ended December 31
|
2011
|
|
2010
|
|
2009
|
|
|||
Millions
|
|
|
|
||||||
Cash Paid During the Period for Interest – Net of Amounts Capitalized
|
|
$43.2
|
|
|
$35.7
|
|
|
$29.8
|
|
Cash Received During the Period for Income Taxes
(a)
|
$(11.4)
|
$(54.2)
|
$(5.6)
|
||||||
Noncash Investing and Financing Activities
|
|
|
|
||||||
Increase (Decrease) in Accounts Payable for Capital Additions to Property, Plant and Equipment
|
|
$5.9
|
|
|
$7.5
|
|
$(24.1)
|
||
AFUDC – Equity
|
|
$2.5
|
|
|
$4.2
|
|
|
$5.8
|
|
ALLETE Common Stock Contributed to the Pension Plan
|
$(20.0)
|
—
|
|
$(12.0)
|
(a)
|
Due to bonus depreciation provisions in 2009 and 2010 federal legislation, NOLs were generated which resulted in little to no estimated tax payments, and refunds were received from NOL carrybacks against prior years' taxable income.
|
Note 1.
|
Operations and Significant Accounting Policies (Continued)
|
Accounts Receivable
|
|
|
|
||||
As of December 31
|
2011
|
|
|
2010
|
|
||
Millions
|
|
|
|
||||
Trade Accounts Receivable
|
|
|
|
||||
Billed
|
|
$63.7
|
|
|
|
$67.6
|
|
Unbilled
|
15.6
|
|
|
18.9
|
|
||
Less: Allowance for Doubtful Accounts
|
0.9
|
|
|
0.9
|
|
||
Total Trade Accounts Receivable
|
78.4
|
|
|
85.6
|
|
||
Income Taxes Receivable
(a)
|
1.3
|
|
|
13.9
|
|
||
Total Accounts Receivable - Net
|
|
$79.7
|
|
|
|
$99.5
|
|
(a)
|
Income Taxes Receivable decreased from 2010 due to the collection of a 2010 NOL carryback claim. (See Note 14. Income Tax Expense.)
|
Inventories
|
|
|
|
||||
As of December 31
|
2011
|
|
|
2010
|
|
||
Millions
|
|
|
|
||||
Fuel
|
|
$28.6
|
|
|
|
$22.9
|
|
Materials and Supplies
|
40.5
|
|
|
37.1
|
|
||
Total Inventories
|
|
$69.1
|
|
|
|
$60.0
|
|
Note 1.
|
Operations and Significant Accounting Policies (Continued)
|
Note 1.
|
Operations and Significant Accounting Policies (Continued)
|
Prepayments and Other Current Assets
|
|
|
|
||||
As of December 31
|
2011
|
|
|
2010
|
|
||
Millions
|
|
|
|
||||
Deferred Fuel Adjustment Clause
|
|
$17.5
|
|
|
|
$20.6
|
|
Other
|
9.6
|
|
|
8.0
|
|
||
Total Prepayments and Other Current Assets
|
|
$27.1
|
|
|
|
$28.6
|
|
Other Current Liabilities
|
|
|
|
||||
As of December 31
|
2011
|
|
|
2010
|
|
||
Millions
|
|
|
|
||||
Customer Deposits
(a)
|
|
$16.3
|
|
|
|
$2.9
|
|
Other
|
29.3
|
|
|
30.8
|
|
||
Total Other Current Liabilities
|
|
$45.6
|
|
|
|
$33.7
|
|
(a)
|
Higher customer deposits in 2011 were primarily due to a customer security deposit for capital expenditures relating to a transmission project.
|
Other Non-Current Liabilities
|
|
|
|
||||
As of December 31
|
2011
|
|
|
2010
|
|
||
Millions
|
|
|
|
||||
Asset Retirement Obligation
|
|
$57.0
|
|
|
|
$50.3
|
|
Other
|
48.1
|
|
|
43.1
|
|
||
Total Other Non-Current Liabilities
|
|
$105.1
|
|
|
|
$93.4
|
|
Note 1.
|
Operations and Significant Accounting Policies (Continued)
|
Note 2.
|
Business Segments
|
|
Consolidated
|
Regulated Operations
|
Investments and Other
|
||||||
Millions
|
|
|
|
||||||
2011
|
|
|
|
||||||
Operating Revenue
|
|
$928.2
|
|
|
$851.9
|
|
|
$76.3
|
|
Fuel and Purchased Power Expense
|
306.6
|
|
306.6
|
|
—
|
|
|||
Operating and Maintenance Expense
|
381.2
|
|
301.5
|
|
79.7
|
|
|||
Depreciation Expense
|
90.4
|
|
85.4
|
|
5.0
|
|
|||
Operating Income (Loss)
|
150.0
|
|
158.4
|
|
(8.4
|
)
|
|||
Interest Expense
|
(43.6
|
)
|
(35.8
|
)
|
(7.8
|
)
|
|||
Equity Earnings in ATC
|
18.4
|
|
18.4
|
|
—
|
|
|||
Other Income
|
4.4
|
|
2.6
|
|
1.8
|
|
|||
Income (Loss) Before Non-Controlling Interest and Income Taxes
|
129.2
|
|
143.6
|
|
(14.4
|
)
|
|||
Income Tax Expense (Benefit)
|
35.6
|
|
43.2
|
|
(7.6
|
)
|
|||
Net Income (Loss)
|
93.6
|
|
100.4
|
|
(6.8
|
)
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
(0.2
|
)
|
—
|
|
(0.2
|
)
|
|||
Net Income (Loss) Attributable to ALLETE
|
|
$93.8
|
|
|
$100.4
|
|
$(6.6)
|
||
Total Assets
|
|
$2,876.0
|
|
|
$2,579.8
|
|
|
$296.2
|
|
Capital Additions
|
|
$246.8
|
|
|
$228.0
|
|
|
$18.8
|
|
|
Consolidated
|
Regulated Operations
|
Investments and Other
|
||||||
Millions
|
|
|
|
||||||
2010
|
|
|
|
||||||
Operating Revenue
|
|
$907.0
|
|
|
$835.5
|
|
|
$71.5
|
|
Fuel and Purchased Power Expense
|
325.1
|
|
325.1
|
|
—
|
|
|||
Operating and Maintenance Expense
|
365.6
|
|
292.3
|
|
73.3
|
|
|||
Depreciation Expense
|
80.5
|
|
76.1
|
|
4.4
|
|
|||
Operating Income (Loss)
|
135.8
|
|
142.0
|
|
(6.2
|
)
|
|||
Interest Expense
|
(39.2
|
)
|
(32.3
|
)
|
(6.9
|
)
|
|||
Equity Earnings in ATC
|
17.9
|
|
17.9
|
|
—
|
|
|||
Other Income
|
4.6
|
|
3.8
|
|
0.8
|
|
|||
Income (Loss) Before Non-Controlling Interest and Income Taxes
|
119.1
|
|
131.4
|
|
(12.3
|
)
|
|||
Income Tax Expense (Benefit)
|
44.3
|
|
51.6
|
|
(7.3
|
)
|
|||
Net Income (Loss)
|
74.8
|
|
79.8
|
|
(5.0
|
)
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
(0.5
|
)
|
—
|
|
(0.5
|
)
|
|||
Net Income (Loss) Attributable to ALLETE
|
|
$75.3
|
|
|
$79.8
|
|
$(4.5)
|
||
Total Assets
|
|
$2,609.1
|
|
|
$2,375.4
|
|
|
$233.7
|
|
Capital Additions
|
|
$260.0
|
|
|
$256.4
|
|
|
$3.6
|
|
|
Consolidated
|
Regulated Operations
|
Investments and Other
|
||||||
Millions
|
|
|
|
||||||
2009
|
|
|
|
||||||
Operating Revenue
|
|
$766.7
|
|
|
$689.4
|
|
|
$77.3
|
|
Prior Year Rate Refunds
|
(7.6
|
)
|
(7.6
|
)
|
—
|
|
|||
Total Operating Revenue
|
759.1
|
|
681.8
|
|
77.3
|
|
|||
Fuel and Purchased Power Expense
|
279.5
|
|
279.5
|
|
—
|
|
|||
Operating and Maintenance Expense
|
308.9
|
|
235.8
|
|
73.1
|
|
|||
Depreciation Expense
|
64.7
|
|
60.2
|
|
4.5
|
|
|||
Operating Income (Loss)
|
106.0
|
|
106.3
|
|
(0.3
|
)
|
|||
Interest Expense
|
(33.8
|
)
|
(28.3
|
)
|
(5.5
|
)
|
|||
Equity Earnings in ATC
|
17.5
|
|
17.5
|
|
—
|
|
|||
Other Income (Expense)
|
1.8
|
|
5.8
|
|
(4.0
|
)
|
|||
Income (Loss) Before Non-Controlling Interest and Income Taxes
|
91.5
|
|
101.3
|
|
(9.8
|
)
|
|||
Income Tax Expense (Benefit)
|
30.8
|
|
35.4
|
|
(4.6
|
)
|
|||
Net Income (Loss)
|
60.7
|
|
65.9
|
|
(5.2
|
)
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
(0.3
|
)
|
—
|
|
(0.3
|
)
|
|||
Net Income (Loss) Attributable to ALLETE
|
|
$61.0
|
|
|
$65.9
|
|
$(4.9)
|
||
Total Assets
|
|
$2,393.1
|
|
|
$2,184.0
|
|
|
$209.1
|
|
Capital Additions
|
|
$303.7
|
|
|
$299.2
|
|
|
$4.5
|
|
Note 3.
|
Property, Plant and Equipment
|
Property, Plant and Equipment
|
|
|
|
||||
As of December 31
|
2011
|
|
2010
|
||||
Millions
|
|
|
|
||||
Regulated Utility
|
|
$2,794.8
|
|
|
|
$2,649.2
|
|
Construction Work in Progress
|
155.0
|
|
|
86.6
|
|
||
Accumulated Depreciation
|
(1,024.6
|
)
|
|
(975.8
|
)
|
||
Regulated Utility Plant - Net
|
1,925.2
|
|
|
1,760.0
|
|
||
Non-Rate Base Energy Operations
|
106.4
|
|
|
88.4
|
|
||
Construction Work-in-Progress
|
2.3
|
|
|
4.5
|
|
||
Accumulated Depreciation
|
(51.4
|
)
|
|
(48.0
|
)
|
||
Non-Rate Base Energy Operations Plant - Net
|
57.3
|
|
|
44.9
|
|
||
Other Plant - Net
|
0.2
|
|
|
0.7
|
|
||
Property, Plant and Equipment - Net
|
|
$1,982.7
|
|
|
|
$1,805.6
|
|
Estimated Useful Lives of Property, Plant and Equipment
|
||||
|
|
|
|
|
Regulated Utility –
|
Generation
|
4 to 35 years
|
Non-Rate Base Operations
|
3 to 61 years
|
|
Transmission
|
42 to 61 years
|
Other Plant
|
5 to 25 years
|
|
Distribution
|
14 to 65 years
|
|
|
Asset Retirement Obligation
|
|
|
||
Millions
|
|
|
||
Obligation as of December 31, 2009
|
|
|
$44.6
|
|
Accretion Expense
|
|
2.9
|
|
|
Additional Liabilities Incurred in 2010
|
|
2.8
|
|
|
Obligation as of December 31, 2010
|
|
50.3
|
|
|
Accretion Expense
|
|
6.4
|
|
|
Additional Liabilities Incurred in 2011
|
|
0.3
|
|
|
Obligation as of December 31, 2011
|
|
|
$57.0
|
|
Note 4.
|
Jointly-Owned Electric Facilities
|
|
Plant in Service
|
Accumulated Depreciation
|
Construction Work in Progress
|
% Ownership
|
||||||
Millions
|
|
|
|
|
||||||
Boswell Unit 4
|
|
$406.9
|
|
|
$177.4
|
|
|
$8.8
|
|
80
|
CapX2020
|
11.9
|
|
—
|
|
15.9
|
|
9.3 - 14.7
|
|||
Total
|
|
$418.8
|
|
|
$177.4
|
|
|
$24.7
|
|
|
Note 5.
|
Regulatory Matters
|
Note 5.
|
Regulatory Matters (Continued)
|
Note 5.
|
Regulatory Matters (Continued)
|
Regulatory Assets and Liabilities
|
|
|
|
||||
As of December 31
|
2011
|
|
2010
|
||||
Millions
|
|
|
|
||||
Current Regulatory Assets
(a)
|
|
|
|
||||
Deferred Fuel
|
|
$17.5
|
|
|
|
$20.6
|
|
Total Current Regulatory Assets
|
17.5
|
|
|
20.6
|
|
||
Non-Current Regulatory Assets
|
|
|
|
||||
Future Benefit Obligations Under
|
|
|
|
||||
Defined Benefit Pension and Other Postretirement Plans
|
292.8
|
|
|
257.9
|
|
||
Boswell Unit 3 Environmental Rider
|
—
|
|
|
20.5
|
|
||
Income Taxes
|
28.6
|
|
|
17.3
|
|
||
Asset Retirement Obligation
|
9.8
|
|
|
7.8
|
|
||
PPACA Income Tax Deferral
|
5.0
|
|
|
—
|
|
||
Conservation Improvement Program
|
4.6
|
|
|
0.7
|
|
||
Other
|
5.1
|
|
|
6.0
|
|
||
Total Non-Current Regulatory Assets
|
345.9
|
|
|
310.2
|
|
||
|
|
|
|
||||
Total Regulatory Assets
|
|
$363.4
|
|
|
|
$330.8
|
|
|
|
|
|
||||
Non-Current Regulatory Liabilities
|
|
|
|
||||
Income Taxes
|
|
$21.9
|
|
|
|
$23.4
|
|
Plant Removal Obligations
|
15.0
|
|
|
16.9
|
|
||
Other
|
6.6
|
|
|
3.3
|
|
||
Total Non-Current Regulatory Liabilities
|
|
$43.5
|
|
|
|
$43.6
|
|
(a)
|
Current regulatory assets are included in prepayments and other on the consolidated balance sheet.
|
Note 6.
|
Investment in ATC
|
ALLETE’s Interest in ATC
|
|
|
||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Equity Investment Beginning Balance
|
|
$93.3
|
|
|
$88.4
|
|
Cash Investments
|
2.0
|
|
1.6
|
|
||
Equity in ATC Earnings
|
18.4
|
|
17.9
|
|
||
Distributed ATC Earnings
|
(14.8
|
)
|
(14.6
|
)
|
||
Equity Investment Ending Balance
|
|
$98.9
|
|
|
$93.3
|
|
Note 6.
|
Investment in ATC (Continued)
|
ATC Summarized Financial Data
|
|
|
||||
Balance Sheet Data
|
|
|
||||
As of December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Current Assets
|
|
$58.7
|
|
|
$59.9
|
|
Non-Current Assets
|
3,053.7
|
|
2,888.4
|
|
||
Total Assets
|
|
$3,112.4
|
|
|
$2,948.3
|
|
Current Liabilities
|
|
$298.5
|
|
|
$428.4
|
|
Long-Term Debt
|
1,400.0
|
|
1,175.0
|
|
||
Other Non-Current Liabilities
|
82.6
|
|
84.9
|
|
||
Members’ Equity
|
1,331.3
|
|
1,260.0
|
|
||
Total Liabilities and Members’ Equity
|
|
$3,112.4
|
|
|
$2,948.3
|
|
Income Statement Data
|
|
|
|
||||||
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
Revenue
|
|
$567.2
|
|
|
$556.7
|
|
|
$521.5
|
|
Operating Expense
|
261.6
|
|
251.1
|
|
230.3
|
|
|||
Other Expense
|
81.7
|
|
85.9
|
|
77.8
|
|
|||
Net Income
|
|
$223.9
|
|
|
$219.7
|
|
|
$213.4
|
|
ALLETE’s Equity in Net Income |
|
$18.4
|
|
|
$17.9
|
|
|
$17.5
|
|
Note 7.
|
Investments
|
Investments
|
|
|
|
||||
As of December 31
|
2011
|
|
2010
|
||||
Millions
|
|
|
|
||||
ALLETE Properties
|
|
$91.3
|
|
|
|
$94.0
|
|
Available-for-sale Securities
|
24.7
|
|
|
25.2
|
|
||
Other
|
16.3
|
|
|
6.8
|
|
||
Total Investments
|
|
$132.3
|
|
|
|
$126.0
|
|
Note 7.
|
Investments (Continued)
|
ALLETE Properties
|
|
|
|
||||
As of December 31
|
2011
|
|
2010
|
||||
Millions
|
|
|
|
||||
Land Inventory Beginning Balance
|
|
$86.0
|
|
|
|
$74.9
|
|
Deeds to Collateralized Property
(a)
|
1.8
|
|
|
9.9
|
|
||
Land Impairment
(b)
|
(1.7
|
)
|
|
—
|
|
||
Cost of Real Estate Sold
|
(0.3
|
)
|
|
—
|
|
||
Capitalized Improvements and Other
|
0.2
|
|
|
1.2
|
|
||
Land Inventory Ending Balance
|
86.0
|
|
|
86.0
|
|
||
Long-Term Finance Receivables (net of allowances of $0.6 and $0.8)
(a)
|
2.0
|
|
|
3.7
|
|
||
Other
|
3.3
|
|
|
4.3
|
|
||
Total Real Estate Assets
|
|
$91.3
|
|
|
|
$94.0
|
|
(a)
|
In 2010, the deeds to collateralized property resulted primarily from an entity which filed for Chapter 11 bankruptcy and were recorded at fair value net of estimated selling costs.
|
(b)
|
The land impairment charge was a result of an impairment analysis conducted in the fourth quarter of 2011 where the cost basis was reduced to the estimated fair value.
|
Note 7.
|
Investments (Continued)
|
|
Net
|
Gross Realized
|
Net Unrealized
Gain (Loss) in Other
|
|||||||
Year Ended December 31
|
Proceeds
|
Gain
|
(Loss)
|
Comprehensive Income
|
||||||
2011
|
|
$5.5
|
|
—
|
|
—
|
|
$(0.4)
|
||
2010
|
$(1.7)
|
—
|
|
—
|
|
|
$1.4
|
|
||
2009
|
|
$6.7
|
|
—
|
|
—
|
|
|
$4.5
|
|
Note 8.
|
Derivatives
|
Note 9.
|
Fair Value
|
Note 9.
|
Fair Value (Continued)
|
|
At Fair Value as of December 31, 2011
|
|||||||||||||
Recurring Fair Value Measures
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||
Millions
|
|
|
|
|
|
|
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|||||||
Equity Securities
|
|
$17.6
|
|
|
—
|
|
|
—
|
|
|
|
$17.6
|
|
|
Available-for-sale Securities – Corporate Debt Securities
|
—
|
|
|
|
$8.2
|
|
|
—
|
|
|
8.2
|
|
||
Money Market Funds
|
11.4
|
|
|
—
|
|
|
—
|
|
|
11.4
|
|
|||
Total Fair Value of Assets
|
|
$29.0
|
|
|
|
$8.2
|
|
|
—
|
|
|
|
$37.2
|
|
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|||||||
Deferred Compensation
|
—
|
|
|
|
$12.8
|
|
|
—
|
|
|
|
$12.8
|
|
|
Derivatives - Interest Rate Swap
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|||
Total Fair Value of Liabilities
|
—
|
|
|
|
$13.2
|
|
|
—
|
|
|
|
$13.2
|
|
|
Total Net Fair Value of Assets (Liabilities)
|
|
$29.0
|
|
|
$(5.0)
|
|
—
|
|
|
|
$24.0
|
|
Recurring Fair Value Measures
Activity in Level 3 |
Debt Securities
Issued by States of the United States (ARS) |
||
Millions
|
|
||
Balance as of December 31, 2010
|
|
$6.7
|
|
Settled During the Period
|
—
|
|
|
Redeemed During the Period
(a)
|
(6.7
|
)
|
|
Balance as of December 31, 2011
|
—
|
|
(a)
|
The ARS were redeemed at carrying value on January 5, 2011.
|
Note 9.
|
Fair Value (Continued)
|
|
At Fair Value as of December 31, 2010
|
||||||||||||||
Recurring Fair Value Measures
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Millions
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Equity Securities
|
|
$19.4
|
|
|
—
|
|
|
—
|
|
|
|
$19.4
|
|
||
Available-for-sale Securities
|
|
|
|
|
|
|
|
||||||||
Corporate Debt Securities
|
—
|
|
|
|
$7.5
|
|
|
—
|
|
|
7.5
|
|
|||
Debt Securities Issued by States of the United States (ARS)
|
—
|
|
|
—
|
|
|
|
$6.7
|
|
|
6.7
|
|
|||
Total Available-for-sale Securities
|
—
|
|
|
7.5
|
|
|
6.7
|
|
|
14.2
|
|
||||
Money Market Funds
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||
Total Fair Value of Assets
|
|
$20.2
|
|
|
|
$7.5
|
|
|
|
$6.7
|
|
|
|
$34.4
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation
|
—
|
|
|
|
$13.3
|
|
|
—
|
|
|
|
$13.3
|
|
||
Total Fair Value of Liabilities
|
—
|
|
|
|
$13.3
|
|
|
—
|
|
|
|
$13.3
|
|
||
|
|
|
|
|
|
|
|
||||||||
Total Net Fair Value of Assets (Liabilities)
|
|
$20.2
|
|
|
$(5.8)
|
|
|
$6.7
|
|
|
|
$21.1
|
|
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
|
|
$0.7
|
|
|
|
$6.7
|
|
Settled During the Period
(a)
|
(0.7
|
)
|
|
—
|
|
||
Redeemed During the Period
|
—
|
|
|
—
|
|
||
Balance as of December 31, 2010
|
—
|
|
|
|
$6.7
|
|
(a)
|
During the second quarter of 2010, the
$0.7 million
of financial transmission rights derivatives were settled.
|
Financial Instruments
|
Carrying Amount
|
Fair Value
|
||||
Millions
|
|
|
||||
Long-Term Debt, Including Current Portion
|
|
|
||||
December 31, 2011
|
|
$863.3
|
|
|
$966.4
|
|
December 31, 2010
|
|
$785.0
|
|
|
$796.7
|
|
Note 10.
|
Short-Term and Long-Term Debt
|
Long-Term Debt
|
|
|
||||
As of December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
First Mortgage Bonds
|
|
|
||||
4.86% Series Due 2013
|
|
$60.0
|
|
|
$60.0
|
|
6.94% Series Due 2014
|
18.0
|
|
18.0
|
|
||
7.70% Series Due 2016
|
20.0
|
|
20.0
|
|
||
8.17% Series Due 2019
|
42.0
|
|
42.0
|
|
||
5.28% Series Due 2020
|
35.0
|
|
35.0
|
|
||
4.85% Series Due 2021
|
15.0
|
|
15.0
|
|
||
4.95% Pollution Control Series F Due 2022
|
111.0
|
|
111.0
|
|
||
6.02% Series Due 2023
|
75.0
|
|
75.0
|
|
||
4.90% Series Due 2025
|
30.0
|
|
30.0
|
|
||
5.10% Series Due 2025
|
30.0
|
|
30.0
|
|
||
5.99% Series Due 2027
|
60.0
|
|
60.0
|
|
||
5.69% Series Due 2036
|
50.0
|
|
50.0
|
|
||
6.00% Series Due 2040
|
35.0
|
|
35.0
|
|
||
5.82% Series Due 2040
|
45.0
|
|
45.0
|
|
||
SWLP& First Mortgage Bonds 7.25% Series Due 2013
|
10.0
|
|
10.0
|
|
||
Senior Unsecured Notes 5.99% Due 2017
|
50.0
|
|
50.0
|
|
||
Variable Demand Revenue Refunding Bonds Series 1997 A, B, and C Due 2013 – 2020
|
28.2
|
|
28.3
|
|
||
Industrial Development Revenue Bonds 6.5% Due 2025
|
6.0
|
|
6.0
|
|
||
Industrial Development Variable Rate Demand Refunding Revenue Bonds Series 2006 Due 2025
|
27.8
|
|
27.8
|
|
||
Unsecured Term Loan Variable Rate Due 2014
|
75.0
|
|
—
|
|
||
Other Long-Term Debt, 1.0% – 8.0% Due 2012 – 2037
|
40.3
|
|
36.9
|
|
||
Total Long-Term Debt
|
863.3
|
|
785.0
|
|
||
Less: Due Within One Year
|
5.4
|
|
13.4
|
|
||
Net Long-Term Debt
|
|
$857.9
|
|
|
$771.6
|
|
Note 11.
|
Commitments, Guarantees and Contingencies
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
•
|
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; and
|
•
|
Support research of technologies to reduce carbon emissions from generation facilities and support carbon sequestration efforts.
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
Note 11.
|
Commitments, Guarantees and Contingencies (Continued)
|
Note 12.
|
Common Stock and Earnings Per Share
|
Summary of Common Stock
|
Shares
|
Equity
|
|||
|
Thousands
|
Millions
|
|||
Balance as of December 31, 2008
|
32,585
|
|
|
$534.1
|
|
Employee Stock Purchase Program
|
24
|
|
0.7
|
|
|
Invest Direct
|
456
|
|
13.6
|
|
|
Options and Stock Awards
|
8
|
|
1.1
|
|
|
Equity Issuance Program
|
1,685
|
|
51.9
|
|
|
Contributions to Pension
|
463
|
|
12.0
|
|
|
Balance as of December 31, 2009
|
35,221
|
|
|
$613.4
|
|
Employee Stock Purchase Program
|
19
|
|
0.6
|
|
|
Invest Direct
|
346
|
|
11.7
|
|
|
Options and Stock Awards
|
51
|
|
4.4
|
|
|
Equity Issuance Program
|
180
|
|
6.0
|
|
|
Balance as of December 31, 2010
|
35,817
|
|
|
$636.1
|
|
Employee Stock Purchase Program
|
20
|
|
0.8
|
|
|
Invest Direct
|
437
|
|
17.2
|
|
|
Options and Stock Awards
|
109
|
|
6.7
|
|
|
Equity Issuance Program
|
400
|
|
16.0
|
|
|
Purchase of Non-Controlling Interest
|
222
|
|
8.8
|
|
|
Contributions to Pension
|
508
|
|
20.0
|
|
|
Balance as of December 31, 2011
|
37,513
|
|
|
$705.6
|
|
Note 12.
|
Common Stock and Earnings Per Share (Continued)
|
Reconciliation of Basic and Diluted
|
|
|
|
|||||
Earnings Per Share
|
|
Dilutive
|
|
|
||||
Year Ended December 31
|
Basic
|
Securities
|
|
Diluted
|
||||
Millions Except Per Share Amounts
|
|
|
|
|||||
2011
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$93.8
|
|
|
|
|
$93.8
|
|
Common Shares
|
35.3
|
|
0.1
|
|
35.4
|
|
||
Per Share of Common Stock
|
|
$2.66
|
|
|
|
|
$2.65
|
|
2010
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$75.3
|
|
|
|
|
$75.3
|
|
Common Shares
|
34.2
|
|
0.1
|
|
34.3
|
|
||
Per Share of Common Stock
|
|
$2.20
|
|
|
|
|
$2.19
|
|
2009
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$61.0
|
|
|
|
|
$61.0
|
|
Common Shares
|
32.2
|
|
—
|
|
32.2
|
|
||
Per Share of Common Stock
|
|
$1.89
|
|
|
|
|
$1.89
|
|
Note 13.
|
Other Income (Expense)
|
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
AFUDC - Equity
|
|
$2.5
|
|
|
$4.2
|
|
|
$5.8
|
|
Investment and Other Income (Expense)
|
1.9
|
|
0.4
|
|
(4.0
|
)
|
|||
Total Other Income
|
|
$4.4
|
|
|
$4.6
|
|
|
$1.8
|
|
Note 14.
|
Income Tax Expense
|
Income Tax Expense
|
|
|
|
||||||
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
Current Tax Expense (Benefit)
|
|
|
|
||||||
Federal
(a)
|
|
$1.4
|
|
$(23.0)
|
$(42.6)
|
||||
State
(a)
|
(1.6
|
)
|
1.3
|
|
(1.8
|
)
|
|||
Total Current Tax Expense (Benefit)
|
(0.2
|
)
|
(21.7
|
)
|
(44.4
|
)
|
|||
Deferred Tax Expense
|
|
|
|
||||||
Federal
(b)
|
27.3
|
|
61.4
|
|
66.0
|
|
|||
State
(b)
|
9.5
|
|
5.3
|
|
10.3
|
|
|||
Change in Valuation Allowance
|
(0.1
|
)
|
0.2
|
|
(0.1
|
)
|
|||
Investment Tax Credit Amortization
|
(0.9
|
)
|
(0.9
|
)
|
(1.0
|
)
|
|||
Total Deferred Tax Expense
|
35.8
|
|
66.0
|
|
75.2
|
|
|||
Total Income Tax Expense
|
|
$35.6
|
|
|
$44.3
|
|
|
$30.8
|
|
(a)
|
For the year ended December 31, 2011, the federal and state current tax expense (benefit) of
$1.4 million
and
$(1.6) million
, respectively, was due to an NOL which resulted primarily from the bonus depreciation provision of the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010. The 2011 federal and state NOLs will be carried forward to offset future taxable income. For the year ended December 31, 2010, we recorded a federal current tax benefit as a result of tax planning initiatives and the bonus depreciation provision in the Small Business Jobs Act of 2010. The 2010 federal NOL was partially utilized by carrying it back against prior years' income with the remainder carried forward to offset future years' income. The 2009 federal current tax benefit was primarily due to the bonus depreciation provision of the American Recovery and Reinvestment Act of 2009.
|
(b)
|
The year ended December 31, 2011, included an income tax benefit of
$2.9 million
related to the MPUC approval of our request to defer the retail portion of the tax charge taken in 2010 as a result of PPACA and a benefit for the reversal of a
$6.2 million
deferred tax liability related to a revenue receivable that Minnesota Power agreed to forgo as part of a stipulation and settlement agreement in its 2010 rate case. Included in the year ended December 31, 2010, was a charge of
$4.0 million
as a result of PPACA. (See Note 5. Regulatory Matters.)
|
Reconciliation of Taxes from Federal Statutory
|
|
|
|
||||||
Rate to Total Income Tax Expense
|
|
|
|
||||||
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
Income Before Non-Controlling Interest and Income Taxes
|
|
$129.2
|
|
|
$119.1
|
|
|
$91.5
|
|
Statutory Federal Income Tax Rate
|
35
|
%
|
35
|
%
|
35
|
%
|
|||
Income Taxes Computed at 35 percent Statutory Federal Rate
|
|
$45.2
|
|
|
$41.7
|
|
|
$32.0
|
|
Increase (Decrease) in Tax Due to:
|
|
|
|
||||||
State Income Taxes – Net of Federal Income Tax Benefit
|
6.0
|
|
4.5
|
|
5.4
|
|
|||
Impact of PPACA
|
—
|
|
4.0
|
|
—
|
|
|||
Deferred Accounting for Retail Portion of PPACA
|
(2.9
|
)
|
—
|
|
—
|
|
|||
2010 Rate Case Stipulation Agreement - Deferred Tax Reversal
|
(6.2
|
)
|
—
|
|
—
|
|
|||
Regulatory Differences for Utility Plant
|
(1.2
|
)
|
(2.0
|
)
|
(2.5
|
)
|
|||
Production Tax Credits
|
(4.3
|
)
|
(1.6
|
)
|
(1.2
|
)
|
|||
Other
|
(1.0
|
)
|
(2.3
|
)
|
(2.9
|
)
|
|||
Total Income Tax Expense
|
|
$35.6
|
|
|
$44.3
|
|
|
$30.8
|
|
Note 14.
|
Income Tax Expense (Continued)
|
Deferred Tax Assets and Liabilities
|
|
|
||||
As of December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Deferred Tax Assets
|
|
|
||||
Employee Benefits and Compensation
|
|
$132.7
|
|
|
$121.8
|
|
Property Related
|
56.4
|
|
51.1
|
|
||
NOL and Tax Credit Carryforward
|
78.1
|
|
28.2
|
|
||
Investment Tax Credits
|
9.0
|
|
9.7
|
|
||
Other
|
7.2
|
|
12.7
|
|
||
Gross Deferred Tax Assets
|
283.4
|
|
223.5
|
|
||
Deferred Tax Asset Valuation Allowance
|
(0.4
|
)
|
(0.5
|
)
|
||
Total Deferred Tax Assets
|
|
$283.0
|
|
|
$223.0
|
|
Deferred Tax Liabilities
|
|
|
||||
Property Related
|
|
$482.7
|
|
|
$387.2
|
|
Regulatory Asset for Benefit Obligations
|
117.9
|
|
105.8
|
|
||
Unamortized Investment Tax Credits
|
12.8
|
|
13.7
|
|
||
Partnership Basis Differences
|
24.4
|
|
19.4
|
|
||
Other
|
24.0
|
|
27.3
|
|
||
Total Deferred Tax Liabilities
|
|
$661.8
|
|
|
$553.4
|
|
Net Deferred Income Taxes
|
|
$378.8
|
|
|
$330.4
|
|
Recorded as:
|
|
|
||||
Net Current Deferred Tax Liabilities
(a)
|
|
$5.2
|
|
|
$5.2
|
|
Net Long-Term Deferred Tax Liabilities
|
373.6
|
|
325.2
|
|
||
Net Deferred Income Taxes
|
|
$378.8
|
|
|
$330.4
|
|
(a)
|
Included in Other Current Liabilities.
|
NOL and Tax Credit Carryforwards
|
|
|
||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Federal NOL carryforward
(a)
|
|
$162.0
|
|
|
$62.0
|
|
Federal tax credit carryforwards
|
8.4
|
|
3.7
|
|
||
State NOL carryforwards
(a, b)
|
73.1
|
|
71.7
|
|
||
State tax credit carryforwards, net of federal offset
|
3.8
|
|
1.7
|
|
(a)
|
Pretax amounts
|
(b)
|
State NOL carryforwards include Minnesota, North Dakota and Florida.
|
Note 14.
|
Income Tax Expense (Continued)
|
Gross Unrecognized Income Tax Benefits
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
Balance at January 1
|
|
$12.3
|
|
|
$9.5
|
|
|
$8.0
|
|
Additions for Tax Positions Related to the Current Year
|
—
|
|
—
|
|
0.5
|
|
|||
Reductions for Tax Positions Related to the Current Year
|
—
|
|
(0.2
|
)
|
—
|
|
|||
Additions for Tax Positions Related to Prior Years
|
—
|
|
4.4
|
|
1.0
|
|
|||
Reductions for Tax Positions Related to Prior Years
|
(0.9
|
)
|
—
|
|
—
|
|
|||
Settlements
|
—
|
|
(0.3
|
)
|
—
|
|
|||
Lapse of Statute
|
—
|
|
(1.1
|
)
|
—
|
|
|||
Balance as of December 31
|
|
$11.4
|
|
|
$12.3
|
|
|
$9.5
|
|
Note 15.
|
Comprehensive Income (Loss)
|
Comprehensive Income (Loss)
|
|
|
|
||||||
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
Net Income
|
|
$93.6
|
|
|
$74.8
|
|
|
$60.7
|
|
Other Comprehensive Income
|
|
|
|
||||||
Unrealized Gain (Loss) on Securities
Net of income taxes of $(0.1), $0.6, and $1.7
|
(0.3
|
)
|
0.8
|
|
2.8
|
|
|||
Unrealized Loss on Derivatives
Net of income taxes of $(0.2), $-, and $-
|
(0.3
|
)
|
—
|
|
—
|
|
|||
Defined Benefit Pension and Other Postretirement Plans
Net of income taxes of $(3.6), $-, and $4.1
|
(5.1
|
)
|
—
|
|
6.2
|
|
|||
Total Other Comprehensive Income (Loss)
|
(5.7
|
)
|
0.8
|
|
9.0
|
|
|||
Total Comprehensive Income
|
|
$87.9
|
|
|
$75.6
|
|
|
$69.7
|
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.2
|
)
|
(0.5
|
)
|
(0.3
|
)
|
|||
Comprehensive Income Attributable to ALLETE
|
|
$88.1
|
|
|
$76.1
|
|
|
$70.0
|
|
Note 15.
|
Comprehensive Income (Loss) (Continued)
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
||
As of December 31
|
2011
|
2010
|
||
Millions
|
|
|
||
Unrealized Loss on Securities
|
$(1.3)
|
$(1.0)
|
||
Unrealized Loss on Derivatives
|
(0.3
|
)
|
—
|
|
Defined Benefit Pension and Other Postretirement Plans
|
(27.3
|
)
|
(22.2
|
)
|
Total Accumulated Other Comprehensive Loss
|
$(28.9)
|
$(23.2)
|
Note 16.
|
Pension and Other Postretirement Benefit Plans
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
Pension Obligation and Funded Status
|
||||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Accumulated Benefit Obligation
|
|
$550.6
|
|
|
$485.6
|
|
Change in Benefit Obligation
|
|
|
|
|
||
Obligation, Beginning of Year
|
|
$525.6
|
|
|
$465.2
|
|
Service Cost
|
7.6
|
|
6.2
|
|
||
Interest Cost
|
27.4
|
|
26.2
|
|
||
Actuarial Loss
|
54.6
|
|
47.1
|
|
||
Benefits Paid
|
(28.6
|
)
|
(27.2
|
)
|
||
Participant Contributions
|
10.9
|
|
8.1
|
|
||
Obligation, End of Year
|
|
$597.5
|
|
|
$525.6
|
|
Change in Plan Assets
|
|
|
|
|
||
Fair Value, Beginning of Year
|
|
$382.0
|
|
|
$327.6
|
|
Actual Return on Plan Assets
|
33.1
|
|
45.6
|
|
||
Employer Contribution
|
45.8
|
|
36.0
|
|
||
Benefits Paid
|
(28.5
|
)
|
(27.2
|
)
|
||
Fair Value, End of Year
|
|
$432.4
|
|
|
$382.0
|
|
Funded Status, End of Year
|
$(165.1)
|
$(143.6)
|
||||
|
|
|
||||
Net Pension Amounts Recognized in Consolidated Balance Sheet Consist of:
|
|
|
|
|
||
Current Liabilities
|
$(1.1)
|
$(0.8)
|
||||
Non-Current Liabilities
|
$(164.0)
|
$(142.8)
|
Unrecognized Pension Costs
|
||||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Net Loss
|
|
$269.0
|
|
|
$225.1
|
|
Prior Service Cost
|
1.1
|
|
1.4
|
|
||
Total Unrecognized Pension Costs
|
|
$270.1
|
|
|
$226.5
|
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
Other Changes in Pension Plan Assets and Benefit Obligations Recognized in
Other Comprehensive Income and Regulatory Assets
|
||||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Net Loss
|
|
$56.1
|
|
|
$35.2
|
|
Amortization of Prior Service Cost
|
(0.3
|
)
|
(0.5
|
)
|
||
Amortization of Gain
|
(12.2
|
)
|
(6.6
|
)
|
||
Total Recognized in Other Comprehensive Income and Regulatory Assets
|
|
$43.6
|
|
|
$28.1
|
|
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets
|
||||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Projected Benefit Obligation
|
|
$597.5
|
|
|
$525.6
|
|
Accumulated Benefit Obligation
|
|
$550.6
|
|
|
$485.6
|
|
Fair Value of Plan Assets
|
|
$432.4
|
|
|
$382.0
|
|
Postretirement Health and Life Obligation and Funded Status
|
||||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Change in Benefit Obligation
|
|
|
||||
Obligation, Beginning of Year
|
|
$204.1
|
|
|
$192.1
|
|
Service Cost
|
3.8
|
|
4.8
|
|
||
Interest Cost
|
10.8
|
|
10.9
|
|
||
Actuarial Loss (Gain)
|
(2.9
|
)
|
17.6
|
|
||
Participant Contributions
|
2.5
|
|
2.1
|
|
||
Plan Amendments
|
—
|
|
(14.2
|
)
|
||
Benefits Paid
|
(7.7
|
)
|
(9.2
|
)
|
||
Obligation, End of Year
|
|
$210.6
|
|
|
$204.1
|
|
Change in Plan Assets
|
|
|
||||
Fair Value, Beginning of Year
|
|
$114.7
|
|
|
$96.4
|
|
Actual Return on Plan Assets
|
—
|
|
12.0
|
|
||
Employer Contribution
|
11.4
|
|
13.4
|
|
||
Participant Contributions
|
2.5
|
|
2.0
|
|
||
Benefits Paid
|
(7.6
|
)
|
(9.1
|
)
|
||
Fair Value, End of Year
|
|
$121.0
|
|
|
$114.7
|
|
Funded Status, End of Year
|
$(89.6)
|
$(89.4)
|
||||
|
|
|
||||
Net Postretirement Health and Life Amounts Recognized in Consolidated Balance Sheet Consist of:
|
|
|
||||
Current Liabilities
|
$(0.9)
|
$(0.8)
|
||||
Non-Current Liabilities
|
$(88.7)
|
$(88.6)
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
Unrecognized Postretirement Health and Life Costs
|
||||||
Year Ended December 31
|
2011
|
2010
|
||||
Millions
|
|
|
||||
Net Loss
|
|
$78.5
|
|
|
$80.1
|
|
Prior Service Cost
|
(9.5
|
)
|
(11.2
|
)
|
||
Transition Obligation
|
0.1
|
|
0.2
|
|
||
Total Unrecognized Postretirement Health and Life Costs
|
|
$69.1
|
|
|
$69.1
|
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
|
Pension
|
Postretirement
Health and Life
|
||||
Millions
|
|
|
||||
Net Loss
|
|
$17.5
|
|
|
$7.5
|
|
Prior Service Costs
|
|
$0.3
|
|
|
($1.7
|
)
|
Transition Obligations
|
—
|
|
|
$0.1
|
|
|
Total Pension and Postretirement Health and Life Costs
|
|
$17.8
|
|
|
$5.9
|
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
Actual Plan Asset Allocations
|
||||||||
|
Pension
|
Postretirement
Health and Life
(a)
|
||||||
|
2011
|
2010
|
2011
|
2010
|
||||
Equity Securities
|
52
|
%
|
52
|
%
|
51
|
%
|
58
|
%
|
Debt Securities
|
27
|
%
|
29
|
%
|
39
|
%
|
33
|
%
|
Real Estate
|
5
|
%
|
5
|
%
|
—
|
|
—
|
|
Private Equity
|
16
|
%
|
14
|
%
|
10
|
%
|
9
|
%
|
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(a)
|
Includes VEBAs and irrevocable grantor trusts.
|
(a)
|
Includes VEBAs and irrevocable grantor trusts.
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
|
At Fair Value as of December 31, 2011
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$32.1
|
|
|
$37.3
|
|
—
|
|
|
$69.4
|
|
|
U.S. Mid-cap Growth
(a)
|
13.5
|
|
15.8
|
|
—
|
|
29.3
|
|
||||
U.S. Small-cap
(a)
|
13.1
|
|
15.2
|
|
—
|
|
28.3
|
|
||||
International
|
—
|
|
75.1
|
|
—
|
|
75.1
|
|
||||
ALLETE
|
21.3
|
|
—
|
|
—
|
|
21.3
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
72.8
|
|
—
|
|
—
|
|
72.8
|
|
||||
Fixed Income
|
—
|
|
45.5
|
|
—
|
|
45.5
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$69.0
|
|
69.0
|
|
|||
Real Estate
|
—
|
|
—
|
|
21.7
|
|
21.7
|
|
||||
Total Fair Value of Assets
|
|
$152.8
|
|
|
$188.9
|
|
|
$90.7
|
|
|
$432.4
|
|
(a)
|
The underlying investments classified under U.S. Equity Securities consist of Money Market Funds and U.S. Government Bonds (Level 1), and Funds (Level 2), which are combined with futures, which settle daily, in a portable alpha program to achieve the returns of the U.S. Equity Securities Large-cap, Mid-cap Growth, and Small-cap funds. Our exposure with respect to these investments includes both the futures and the underlying investments.
|
Recurring Fair Value Measures
|
Equity Securities
|
|
|
||||||
Activity in Level 3
|
(Auction Rate Securities)
|
Private Equity Funds
|
Real Estate
|
||||||
Millions
|
|
|
|
||||||
Balance as of December 31, 2010
|
|
$6.7
|
|
|
$50.7
|
|
|
$20.1
|
|
Actual Return on Plan Assets
|
—
|
|
30.9
|
|
3.5
|
|
|||
Purchases, sales, and settlements, net
|
(6.7
|
)
|
(12.6
|
)
|
(1.9
|
)
|
|||
Balance as of December 31, 2011
|
—
|
|
|
$69.0
|
|
|
$21.7
|
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
|
At Fair Value as of December 31, 2010
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$30.4
|
|
|
$29.9
|
|
|
$3.5
|
|
|
$63.8
|
|
U.S. Mid-cap Growth
(a)
|
14.0
|
|
13.7
|
|
1.6
|
|
29.3
|
|
||||
U.S. Small-cap
(a)
|
13.7
|
|
13.5
|
|
1.6
|
|
28.8
|
|
||||
International
|
—
|
|
77.1
|
|
—
|
|
77.1
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
46.5
|
|
—
|
|
—
|
|
46.5
|
|
||||
Fixed Income
|
—
|
|
65.7
|
|
—
|
|
65.7
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
50.7
|
|
50.7
|
|
||||
Real Estate
|
—
|
|
—
|
|
20.1
|
|
20.1
|
|
||||
Total Fair Value of Assets
|
|
$104.6
|
|
|
$199.9
|
|
|
$77.5
|
|
|
$382.0
|
|
(a)
|
The underlying investments classified under U.S. Equity Securities consist of Money Market Funds and U.S. Government Bonds (Level 1), Funds (Level 2), and Auction Rate Securities (Level 3), which are combined with futures, which settle daily, in a portable alpha program to achieve the returns of the U.S. Equity Securities Large-cap, Mid-cap Growth, and Small-cap funds. Our exposure with respect to these investments includes both the futures and the underlying investments.
|
Recurring Fair Value Measures
|
Equity Securities
|
|
|
||||||
Activity in Level 3
|
(Auction Rate Securities)
|
Private Equity Funds
|
Real Estate
|
||||||
Millions
|
|
|
|
||||||
Balance as of December 31, 2009
|
|
$9.1
|
|
|
$44.7
|
|
|
$17.3
|
|
Actual Return on Plan Assets
|
—
|
|
(4.1
|
)
|
(6.1
|
)
|
|||
Purchases, sales, and settlements, net
|
(2.4
|
)
|
10.1
|
|
8.9
|
|
|||
Balance as of December 31, 2010
|
|
$6.7
|
|
|
$50.7
|
|
|
$20.1
|
|
|
At Fair Value as of December 31, 2011
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
|
|
$15.9
|
|
—
|
|
—
|
|
|
$15.9
|
|
||
U.S. Mid-cap Growth
|
11.5
|
|
—
|
|
—
|
|
11.5
|
|
||||
U.S. Small-cap
|
11.2
|
|
—
|
|
—
|
|
11.2
|
|
||||
International
|
25.1
|
|
—
|
|
—
|
|
25.1
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
24.1
|
|
—
|
|
—
|
|
24.1
|
|
||||
Fixed Income
|
0.3
|
|
|
$18.9
|
|
—
|
|
19.2
|
|
|||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$14.0
|
|
14.0
|
|
|||
Total Fair Value of Assets
|
|
$88.1
|
|
|
$18.9
|
|
|
$14.0
|
|
|
$121.0
|
|
Note 16.
|
Pension and Other Postretirement Benefit Plans (Continued)
|
Recurring Fair Value Measures
|
|
||
Activity in Level 3
|
Private Equity Funds
|
||
Millions
|
|
||
Balance as of December 31, 2010
|
|
$12.4
|
|
Actual Return on Plan Assets
|
1.1
|
|
|
Purchases, sales, and settlements, net
|
0.5
|
|
|
Balance as of December 31, 2011
|
|
$14.0
|
|
|
At Fair Value as of December 31, 2010
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
|
|
$15.7
|
|
—
|
|
—
|
|
|
$15.7
|
|
||
U.S. Mid-cap Growth
|
11.4
|
|
—
|
|
—
|
|
11.4
|
|
||||
U.S. Small-cap
|
11.5
|
|
—
|
|
—
|
|
11.5
|
|
||||
International
|
26.8
|
|
—
|
|
—
|
|
26.8
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
9.0
|
|
—
|
|
—
|
|
9.0
|
|
||||
Fixed Income
|
—
|
|
|
$27.9
|
|
—
|
|
27.9
|
|
|||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$12.4
|
|
12.4
|
|
|||
Total Fair Value of Assets
|
|
$74.4
|
|
|
$27.9
|
|
|
$12.4
|
|
|
$114.7
|
|
Recurring Fair Value Measures
|
|
||
Activity in Level 3
|
Private Equity Funds
|
||
Millions
|
|
||
Balance as of December 31, 2009
|
|
$9.4
|
|
Actual Return on Plan Assets
|
1.4
|
|
|
Purchases, sales, and settlements, net
|
1.6
|
|
|
Balance as of December 31, 2010
|
|
$12.4
|
|
Note 17.
|
Employee Stock and Incentive Plans
|
Year Ended December 31
|
2011
|
2010
|
2009
|
||||||
Millions
|
|
|
|
||||||
ESOP Shares
|
|
|
|
||||||
Allocated
|
2.2
|
|
2.2
|
|
2.2
|
|
|||
Unallocated
|
1.0
|
|
1.3
|
|
1.5
|
|
|||
Total
|
3.2
|
|
3.5
|
|
3.7
|
|
|||
Fair Value of Unallocated Shares
|
|
$42.0
|
|
|
$48.4
|
|
|
$49.0
|
|
Note 17.
|
Employee Stock and Incentive Plans (Continued)
|
Note 17.
|
Employee Stock and Incentive Plans (Continued)
|
|
2011
|
2010
|
2009
|
||||||||||||
|
Number of
Options
|
Weighted-Average
Exercise
Price
|
Number of
Options
|
Weighted-Average
Exercise
Price
|
Number of
Options
|
Weighted-Average
Exercise
Price
|
|||||||||
Outstanding as of January 1,
|
560,887
|
|
|
$40.69
|
|
646,235
|
|
|
$40.05
|
|
672,419
|
|
|
$39.99
|
|
Granted
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Exercised
|
80,798
|
|
|
$34.25
|
|
40,769
|
|
|
$27.76
|
|
4,508
|
|
|
$18.85
|
|
Forfeited
|
19,855
|
|
|
$43.96
|
|
44,579
|
|
|
$43.16
|
|
21,676
|
|
|
$42.62
|
|
Outstanding as of December 31,
|
460,234
|
|
|
$41.68
|
|
560,887
|
|
|
$40.69
|
|
646,235
|
|
|
$40.05
|
|
Exercisable as of December 31,
|
460,234
|
|
|
$41.59
|
|
523,491
|
|
|
$39.76
|
|
512,743
|
|
|
$37.34
|
|
(a)
|
Stock options have not been granted since 2008. The weighted-average grant-date intrinsic value of options granted in 2008 was
$6.18
.
|
|
Range of Exercise Price
|
||||||||
As of December 31, 2011
|
$18.85 to $29.79
|
$37.76 to $41.35
|
$44.15 to $48.65
|
||||||
Options Outstanding and Exercisable:
|
|
|
|
||||||
Number Outstanding and Exercisable
|
11,672
|
|
279,133
|
|
169,429
|
|
|||
Weighted Average Remaining Contractual Life (Years)
|
1.1
|
|
4.5
|
|
4.5
|
|
|||
Weighted Average Exercise Price
|
|
$24.14
|
|
|
$39.57
|
|
|
$46.37
|
|
|
2011
|
2010
|
2009
|
||||||||||||
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||
Non-vested as of January 1,
|
122,489
|
|
|
$38.15
|
|
121,825
|
|
|
$41.96
|
|
79,238
|
|
|
$47.94
|
|
Granted
(a)
|
39,312
|
|
|
$41.00
|
|
49,302
|
|
|
$35.44
|
|
69,800
|
|
|
$35.06
|
|
Awarded
|
(32,368
|
)
|
|
$48.10
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||
Unearned Grant Award
|
—
|
|
—
|
|
(22,909
|
)
|
|
$54.50
|
|
(24,615
|
)
|
|
$41.97
|
|
|
Forfeited
|
(1,100
|
)
|
|
$34.35
|
|
(25,729
|
)
|
|
$36.45
|
|
(2,598
|
)
|
|
$38.78
|
|
Non-vested as of December 31,
|
128,333
|
|
|
$28.00
|
|
122,489
|
|
|
$38.15
|
|
121,825
|
|
|
$41.96
|
|
Note 17.
|
Employee Stock and Incentive Plans (Continued)
|
|
2011
|
2010
|
2009
|
||||||||||||
|
Number of
Shares
|
Weighted- Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted- Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted- Average
Grant Date
Fair Value
|
|||||||||
Available as of January 1,
|
43,803
|
|
|
$30.61
|
|
28,983
|
|
|
$29.41
|
|
—
|
|
—
|
|
|
Granted
(a)
|
20,136
|
|
|
$36.74
|
|
26,589
|
|
|
$31.83
|
|
30,465
|
|
|
$29.41
|
|
Awarded
|
(215
|
)
|
|
$30.30
|
|
(3,091
|
)
|
|
$29.75
|
|
—
|
|
—
|
|
|
Forfeited
|
(260
|
)
|
|
$29.41
|
|
(8,678
|
)
|
|
$30.62
|
|
(1,482
|
)
|
|
$29.41
|
|
Available as of December 31,
|
63,464
|
|
|
$22.88
|
|
43,803
|
|
|
$30.61
|
|
28,983
|
|
|
$29.41
|
|
Note 18.
|
Quarterly Financial Data (Unaudited)
|
Quarter Ended
|
Mar. 31
|
Jun. 30
|
Sept. 30
|
Dec. 31
|
||||||||
Millions Except Earnings Per Share
|
|
|
|
|
||||||||
2011
|
|
|
|
|
||||||||
Operating Revenue
|
|
$242.2
|
|
|
$219.9
|
|
|
$226.9
|
|
|
$239.2
|
|
Operating Income
|
|
$50.8
|
|
|
$26.1
|
|
|
$38.9
|
|
|
$34.2
|
|
Net Income Attributable to ALLETE
|
|
$37.2
|
|
|
$17.0
|
|
|
$20.5
|
|
|
$19.1
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
||||||||
Basic
|
|
$1.07
|
|
|
$0.49
|
|
|
$0.57
|
|
|
$0.53
|
|
Diluted
|
|
$1.07
|
|
|
$0.48
|
|
|
$0.57
|
|
|
$0.53
|
|
2010
|
|
|
|
|
||||||||
Operating Revenue
|
|
$233.6
|
|
|
$211.2
|
|
|
$224.1
|
|
|
$238.1
|
|
Operating Income
|
|
$46.1
|
|
|
$31.7
|
|
|
$35.3
|
|
|
$22.7
|
|
Net Income Attributable to ALLETE
|
|
$23.0
|
|
|
$19.4
|
|
|
$19.6
|
|
|
$13.3
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
||||||||
Basic
|
|
$0.68
|
|
|
$0.57
|
|
|
$0.57
|
|
|
$0.38
|
|
Diluted
|
|
$0.68
|
|
|
$0.57
|
|
|
$0.56
|
|
|
$0.38
|
|
|
Balance at Beginning of Period
|
|
Additions Charged Other to Income Charges
|
Deductions from
Reserves (a) |
Balance at End of
Period |
||||||||||
|
|||||||||||||||
Millions
|
|
|
|
|
|
|
|||||||||
Reserve Deducted from Related Assets
|
|
|
|
|
|
|
|||||||||
Reserve For Uncollectible Accounts
|
|
|
|
|
|
|
|||||||||
2009 Trade Accounts Receivable
|
|
$0.7
|
|
|
|
$1.3
|
|
—
|
|
|
$1.1
|
|
|
$0.9
|
|
Finance Receivables – Long-Term
|
|
$0.1
|
|
|
|
$0.3
|
|
—
|
|
—
|
|
|
$0.4
|
|
|
2010 Trade Accounts Receivable
|
|
$0.9
|
|
|
|
$1.1
|
|
—
|
|
|
$1.1
|
|
|
$0.9
|
|
Finance Receivables – Long-Term
|
|
$0.4
|
|
|
|
$0.8
|
|
—
|
|
|
$0.4
|
|
|
$0.8
|
|
2011 Trade Accounts Receivable
|
|
$0.9
|
|
|
|
$1.3
|
|
—
|
|
|
$1.3
|
|
|
$0.9
|
|
Finance Receivables – Long-Term
|
|
$0.8
|
|
|
|
$0.1
|
|
—
|
|
|
$0.3
|
|
|
$0.6
|
|
Deferred Asset Valuation Allowance
|
|
|
|
|
|
|
|||||||||
2009 Deferred Tax Assets
|
|
$0.4
|
|
|
$(0.1)
|
—
|
|
—
|
|
|
$0.3
|
|
|||
2010 Deferred Tax Assets
|
|
$0.3
|
|
|
|
$0.2
|
|
—
|
|
—
|
|
|
$0.5
|
|
|
2011 Deferred Tax Assets
|
|
$0.5
|
|
|
$(0.1)
|
—
|
|
—
|
|
|
$0.4
|
|
(a)
|
Includes uncollectible accounts written off.
|
Base Salary
|
$
|
|
|
Times
|
|
|
|
Award Opportunity (percent of base salary)
|
%
|
|
|
Equals
|
|
|
|
Target Award
|
$
|
Goal Performance Level
|
Payout as Percent of
Target Award
|
Award Amount
|
Superior
|
200%
|
$
|
Target
|
100%
|
$
|
Threshold
|
37.5%
|
$
|
Below Threshold
|
—%
|
$
|
|
|
|
|
|
|
|
Goal
|
|
|
|
|
|
|
|
|
Weighting
|
|
|
Financial Goals
|
|
|
|
|
|
||
|
|
Net Income Attributable to ALLETE
|
50%
|
|||||
|
|
Cash from Operating Activities
|
|
25%
|
||||
|
|
|
|
|
|
|
|
|
|
Strategic & Operational Positioning Goals
|
|
|
|
25%
|
|||
|
|
|
|
|
|
|
100%
|
Number of Performance Shares Granted:
|
|
Date of Grant:
|
|
Performance Period:
|
|
Performance Goals:
|
See Annex B
|
(a)
|
unable to engage in any substantial gainful activity by reason of any medically
|
(b)
|
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Employer's accident and health plan;
|
(c)
|
determined to be totally disabled by the Social Security Administration; or
|
(d)
|
disabled pursuant to an Employer-sponsored disability insurance arrangement provided that the definition of disability applied under such disability insurance program complies with the foregoing definition of Disability.
|
TSR Rank
|
Perf. Level
|
Payout %
|
1
|
|
200%
|
2
|
|
200%
|
3
|
|
200%
|
4
|
Superior
|
200%
|
5
|
|
190%
|
6
|
|
180%
|
7
|
|
170%
|
8
|
|
160%
|
9
|
|
150%
|
10
|
|
140%
|
11
|
|
130%
|
12
|
|
120%
|
13
|
|
110%
|
14
|
Target
|
100%
|
15
|
|
90%
|
16
|
|
80%
|
17
|
|
70%
|
18
|
|
60%
|
19
|
Threshold
|
50%
|
20
|
|
0%
|
21
|
|
0%
|
22
|
|
0%
|
23
|
|
0%
|
24
|
|
0%
|
25
|
|
0%
|
26
|
|
0%
|
27
|
|
0%
|
28
|
|
0%
|
(i)
|
the date any one Person, or more than one Person acting as a group (as the term “group” is used in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company that, together with stock previously held by the acquirer, constitutes more than fifty (50%) percent of the total fair market value or total voting power of Company stock. If any one Person, or more than one Person acting as a group, is considered to own more than fifty (50%) percent of the total fair market value or total voting power of Company stock, the acquisition of additional stock by the same Person or Persons acting as a group does not cause a Change in Control. An increase in the percentage of stock owned by any one Person, or Persons acting as a group, as a result of a transaction in which Company acquires its stock in exchange for property, is treated as an acquisition of stock;
|
(ii)
|
the date any one Person, or more than one Person acting as a group (as the term “group” is used in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by that Person or Persons) ownership of Company stock possessing at least thirty (30%) percent of the total voting power of Company stock;
|
(iii)
|
the date a majority of the members of the Company's board of directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors prior to the date of appointment or election; or
|
(iv)
|
the date any one Person, or more than one Person acting as a group (as the term “group” is used in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12) month period ending on the date of the most
|
(i)
|
unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months;
|
(ii)
|
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Employer's accident and health plan;
|
(iii)
|
determined to be totally disabled by the Social Security Administration; or
|
(iv)
|
disabled pursuant to an Employer-sponsored disability insurance arrangement provided that the definition of disability applied under such disability insurance program complies with the foregoing definition of Disability.
|
Board Retainers
(1) (2)
Stock
Cash
|
$60,000
$45,000
|
Committee Cash Retainers
(1) (2)
Audit
Executive Compensation
Corporate Governance & Nominating
|
$9,000
$7,500
$7,500
|
Chair Cash Retainers
(1) (2)
Audit
Executive Compensation
Corporate Governance & Nominating
|
$8,500
$5,500
$4,500
|
Lead Director
(1) (2) (3)
Board Stock Retainer
Board Cash Retainer
Lead Director Cash Retainer
|
$60,000
$45,000
$25,000
|
Board Chairman
(1) (2) (3)
Board Stock Retainer
Board Cash Retainer
|
$90,000
$85,000
|
ALLETE
|
Exhibit 12
|
Year Ended December 31, 2011
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||
Millions
|
|
|
|
|
|
|||||||||||
Earnings are defined:
|
|
|
|
|
|
|||||||||||
|
Pretax Income Before Non-Controlling Interest
|
|
$129.2
|
|
|
$119.1
|
|
|
$91.5
|
|
|
$126.4
|
|
|
$137.2
|
|
|
Add: Fixed Charges
|
47.6
|
|
43.4
|
|
38.3
|
|
30.3
|
|
26.6
|
|
|||||
|
Less: Non-Controlling Interest
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
|
Undistributed Income from Less than 50 percent Owned Equity Investment
|
3.8
|
|
3.4
|
|
3.7
|
|
3.8
|
|
3.3
|
|
|||||
|
Earnings as defined:
|
|
$173.0
|
|
|
$159.1
|
|
|
$126.1
|
|
|
$152.9
|
|
|
$160.5
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|||||||||||
|
Interest on Long-Term Debt
|
|
$43.1
|
|
|
$39.7
|
|
|
$34.2
|
|
|
$27.4
|
|
|
$23.2
|
|
|
Other Interest Charges
|
1.6
|
|
1.0
|
|
1.6
|
|
0.4
|
|
1.5
|
|
|||||
|
Interest Component of All Rentals
(b)
|
2.9
|
|
2.7
|
|
2.5
|
|
2.5
|
|
1.9
|
|
|||||
|
Total Fixed Charges
|
|
$47.6
|
|
|
$43.4
|
|
|
$38.3
|
|
|
$30.3
|
|
|
$26.6
|
|
Ratio of Earnings to Fixed Charges
|
3.63
|
|
3.67
|
|
3.29
|
|
5.05
|
|
6.03
|
|
(a)
|
Pretax income of subsidiaries that have not incurred fixed charges.
|
(b)
|
Represents interest portion of rents estimated at 33 1/3 percent.
|
Name of Organization
|
State or Country
|
ALLETE, Inc.
(d.b.a. ALLETE; Minnesota Power; Minnesota Power, Inc.;
|
Minnesota
|
Minnesota Power & Light Company; MPEX; MPEX A Division of Minnesota Power)
|
|
ALLETE Automotive Services, LLC
|
Minnesota
|
ALLETE Capital II
|
Delaware
|
ALLETE Capital III
|
Delaware
|
ALLETE Properties, LLC
(d.b.a. ALLETE Properties)
|
Minnesota
|
ALLETE Commercial, LLC
|
Florida
|
Cape Coral Holdings, Inc.
|
Florida
|
Lake Swamp, LLC
|
Florida
|
Lehigh Acquisition Corporation
|
Delaware
|
Florida Landmark Communities, LLC
|
Florida
|
Lehigh Corporation
|
Florida
|
Mardem, LLC
|
Florida
|
Palm Coast Holdings, Inc.
|
Florida
|
Port Orange Holdings, LLC
|
Florida
|
Interlachen Lakes Estates, LLC
|
Florida
|
Palm Coast Land, LLC
|
Florida
|
Tomoka Holdings, LLC
|
Florida
|
ALLETE Water Services, Inc.
|
Minnesota
|
Florida Water Services Corporation
|
Florida
|
Energy Replacement Property, LLC
|
Minnesota
|
Energy Land, Incorporated
|
Wisconsin
|
Lakeview Financial Corporation I
|
Minnesota
|
Lakeview Financial Corporation II
|
Minnesota
|
Logistics Coal, LLC
|
Minnesota
|
Minnesota Power Enterprises, Inc.
|
Minnesota
|
ALLETE Renewable Resources, Inc.
|
North Dakota
|
ALLETE Clean Energy, Inc.
|
Minnesota
|
BNI Coal, Ltd.
|
North Dakota
|
MP Affiliate Resources, Inc.
|
Minnesota
|
Rainy River Energy Corporation
|
Minnesota
|
Rainy River Energy Corporation - Wisconsin
|
Wisconsin
|
Synertec, Incorporated
|
Minnesota
|
Upper Minnesota Properties, Inc.
|
Minnesota
|
Upper Minnesota Properties - Development, Inc.
|
Minnesota
|
Upper Minnesota Properties - Irving, Inc.
|
Minnesota
|
Upper Minnesota Properties - Meadowlands, Inc.
|
Minnesota
|
MP Investments, Inc.
|
Delaware
|
RendField Land Company, Inc.
|
Minnesota
|
Superior Water, Light and Power Company
|
Wisconsin
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2011
, of ALLETE, Inc.;
|
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:
|
February 15, 2012
|
Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2011
, of ALLETE, Inc.;
|
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:
|
February 15, 2012
|
Mark A. Schober
|
|
|
Mark A. Schober
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Annual Report on Form 10-K of ALLETE for the fiscal year ended
December 31, 2011
, (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:
|
February 15, 2012
|
Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
President and Chief Executive Officer
|
Date:
|
February 15, 2012
|
Mark A. Schober
|
|
|
Mark A. Schober
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
Exhibit 99
|
For Release:
|
February 15, 2012
|
|
Investor Contact:
|
Tim Thorp
|
|
|
218-723-3953
|
|
|
tthorp@allete.com
|
|
|
|
|
NEWS
|
|
|
|
Quarter Ended
|
Year to Date
|
|||
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
|
|
Operating Revenue
|
$239.2
|
$238.1
|
$928.2
|
$907.0
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
Fuel and Purchased Power
|
76.8
|
92.0
|
306.6
|
325.1
|
|
Operating and Maintenance
|
104.9
|
102.7
|
381.2
|
365.6
|
|
Depreciation
|
23.3
|
20.7
|
90.4
|
80.5
|
|
Total Operating Expenses
|
205.0
|
215.4
|
778.2
|
771.2
|
|
|
|
|
|
|
|
Operating Income
|
34.2
|
22.7
|
150.0
|
135.8
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
Interest Expense
|
(11.0)
|
(11.1)
|
(43.6)
|
(39.2)
|
|
Equity Earnings in ATC
|
4.7
|
4.5
|
18.4
|
17.9
|
|
Other
|
2.1
|
0.8
|
4.4
|
4.6
|
|
Total Other Expense
|
(4.2)
|
(5.8)
|
(20.8)
|
(16.7)
|
|
|
|
|
|
|
|
Income Before Non-Controlling Interest and Income Taxes
|
30.0
|
16.9
|
129.2
|
119.1
|
|
Income Tax Expense
|
10.9
|
3.8
|
35.6
|
44.3
|
|
Net Income
|
19.1
|
13.1
|
93.6
|
74.8
|
|
Less: Non-Controlling Interest in Subsidiaries
|
—
|
|
(0.2)
|
(0.2)
|
(0.5)
|
Net Income Attributable to ALLETE
|
19.1
|
|
$13.3
|
$93.8
|
$75.3
|
|
|
|
|
|
|
Average Shares of Common Stock
|
|
|
|
|
|
Basic
|
36.0
|
|
34.5
|
35.3
|
34.2
|
Diluted
|
36.1
|
|
34.7
|
35.4
|
34.3
|
|
|
|
|
|
|
Basic Earnings Per Share of Common Stock
|
$0.53
|
$0.38
|
$2.66
|
$2.20
|
|
Diluted Earnings Per Share of Common Stock
|
$0.53
|
$0.38
|
$2.65
|
$2.19
|
|
|
|
|
|
|
|
Dividends Per Share of Common Stock
|
$0.445
|
$0.44
|
$1.78
|
$1.76
|
|
Dec. 31,
|
Dec. 31,
|
|
|
Dec. 31,
|
Dec. 31,
|
|
2011
|
2010
|
|
|
2011
|
2010
|
Assets
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
Cash and Short-Term Investments
|
$101.1
|
$51.6
|
|
Current Liabilities
|
$163.1
|
$158.9
|
Other Current Assets
|
175.9
|
188.1
|
|
Long-Term Debt
|
857.9
|
771.6
|
Property, Plant and Equipment
|
1,982.7
|
1,805.6
|
|
Deferred Income Taxes
|
373.6
|
325.2
|
Regulatory Assets
|
345.9
|
310.2
|
|
Regulatory Liabilities
|
43.5
|
43.6
|
Investment in ATC
|
98.9
|
93.3
|
|
Defined Benefit Pension & Other Postretirement Benefit Plans
|
253.5
|
231.4
|
Investments
|
132.3
|
126.0
|
|
Other Liabilities
|
105.1
|
93.4
|
Other
|
39.2
|
34.3
|
|
Shareholders' Equity
|
1,079.3
|
985.0
|
Total Assets
|
$2,876.0
|
$2,609.1
|
|
Total Liabilities and Shareholders' Equity
|
$2,876.0
|
$2,609.1
|
|
Quarter Ended
|
Year to Date
|
||
ALLETE, Inc.
|
December 31,
|
December 31,
|
||
Income (Loss)
|
2011
|
2010
|
2011
|
2010
|
Millions
|
|
|
|
|
Regulated Operations
|
$19.9
|
$14.6
|
$100.4
|
$79.8
|
Investments and Other
|
(0.8)
|
(1.3)
|
(6.6)
|
(4.5)
|
Net Income Attributable to ALLETE
|
$19.1
|
$13.3
|
$93.8
|
$75.3
|
Diluted Earnings Per Share
|
$0.53
|
$0.38
|
$2.65
|
$2.19
|
Kilowatt-hours Sold
|
|
|
|
|
Millions
|
|
|
|
|
Regulated Utility
|
|
|
|
|
Retail and Municipals
|
|
|
|
|
Residential
|
294
|
303
|
1,159
|
1,150
|
Commercial
|
360
|
359
|
1,433
|
1,433
|
Municipals
|
256
|
260
|
1,013
|
1,006
|
Industrial
|
1,895
|
1,848
|
7,365
|
6,804
|
Total Retail and Municipal
|
2,805
|
2,770
|
10,970
|
10,393
|
Other Power Suppliers
|
514
|
577
|
2,205
|
2,745
|
Total Regulated Utility
|
3,319
|
3,347
|
13,175
|
13,138
|
Non-regulated Energy Operations
|
30
|
31
|
105
|
118
|
Total Kilowatt-hours Sold
|
3,349
|
3,378
|
13,280
|
13,256
|