SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
/X/ Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended DECEMBER 31, 2000
or
/ / Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
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Commission File No. 1-3548
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
(Full Title of the Plan)
-----------------------------
ALLETE, Inc.
30 West Superior Street
Duluth, Minnesota 55802-2093
(Name of issuer of securities
held pursuant to the Plan and
the address of its principal
executive office)
-----------------------------
INDEX
PAGE
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits -
December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Benefits -
Year Ended December 31, 2000 and 1999 3
Notes to Financial Statements 4
Supplemental Schedule
Schedule I: Schedule of Assets (Held at End of Year) 8
Signatures 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Minnesota Power and Affiliated
Companies Supplemental Retirement Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Minnesota Power and Affiliated Companies Supplemental Retirement Plan
(the "Plan") at December 31, 2000 and 1999, and the changes in net assets
available for benefits for the year ended in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 8, 2001
ALLETE 2000 SRP Form 11-K 1
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
Thousands
DECEMBER 31,
2000 1999
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ASSETS
Investments $113,960 $107,657
Participant Contributions Receivable 236 -
Cash 84 33
LIABILITIES
Accounts Payable 84 33
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NET ASSETS AVAILABLE FOR BENEFITS $114,196 $107,657
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The accompanying notes are an integral part of these statements.
2 ALLETE 2000 SRP Form 11-K
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Thousands
YEAR ENDED
DECEMBER 31,
2000 1999
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ADDITIONS
INVESTMENT INCOME
Interest Income $ 1,430 $ 1,328
Dividend Income 6,549 4,552
Net Appreciation (Depreciation) in
Fair Value of Investments (4,794) 7,386
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3,185 13,266
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CONTRIBUTIONS
Participant Contributions 7,303 6,239
Employer Contributions 186 148
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7,489 6,387
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Total Additions 10,674 19,653
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DEDUCTIONS
Transfers to Retirement Plans 478 1,107
Benefit Distributions 3,633 2,625
Administrative Expenses 24 9
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Total Deductions 4,135 3,741
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Net Increases 6,539 15,912
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of Year 107,657 91,745
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End of Year $114,196 $107,657
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The accompanying notes are an integral part of these statements.
ALLETE 2000 SRP Form 11-K 3
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN
The Minnesota Power and Affiliated Companies Supplemental Retirement
Plan (SRP) provides benefits for eligible employees of participating affiliated
companies: ALLETE, Inc. (ALLETE), Minnesota Power (a business unit of ALLETE),
Superior Water, Light and Power Company, Minnesota Power Telecom, Inc., Electric
Outlet, Inc. and MP Affiliated Resources, Inc. (collectively, the Companies).
The SRP is a contributory defined contribution plan that is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
CONTRIBUTIONS
- PARTICIPANT CONTRIBUTIONS to the SRP consist of the following:
- FLEXIBLE DOLLAR CONTRIBUTIONS. Non-union participants may make
flexible dollar contributions of up to 3 percent of their
compensation, subject to a maximum compensation of $170,000 in
2000. The contribution is included in the participant's
before-tax account.
- BEFORE-TAX CONTRIBUTIONS. Before-tax contributions consist of
salary reduction contributions and results sharing contributions.
Total before-tax contributions may not exceed $10,500 in 2000, as
permitted under Section 401(k) of the Internal Revenue Code of
1986 (Code).
- SALARY REDUCTION CONTRIBUTIONS. Salary reduction contributions
are equal to an amount the participant has elected to reduce
his or her compensation pursuant to a salary reduction
agreement.
- RESULTS SHARING CONTRIBUTIONS. Results sharing contributions
are equal to the portion (up to 100 percent) of the Results
Sharing Award the participant irrevocably agrees to forgo and
that, pursuant to the Minnesota Power Results Sharing Program,
would otherwise be paid to the participant.
- VOLUNTARY CONTRIBUTIONS (AFTER-TAX CONTRIBUTIONS). Each
participant is also allowed to make voluntary after-tax
contributions to the SRP through payroll deductions or lump-sum
contributions. Total voluntary contributions made by a
participant for all fiscal years since July 1, 1980 shall not
exceed 8.5 percent of the aggregate compensation received for all
years since becoming a participant less the amount of voluntary
contributions made to either the Minnesota Power and Affiliated
Companies Retirement Plan A or Plan B.
- ROLLOVERS. Contributions by participants may also be made
through rollovers from other qualified plans.
- EMPLOYER CONTRIBUTIONS to the SRP consist of non-elective contributions
equal to 0.75 percent of each union participant's compensation, up to a
maximum compensation of $170,000 in 2000. Employer contributions are
included in the participant's before-tax account.
VESTING
All contributions plus actual earnings thereon are fully vested and
nonforfeitable.
LOAN PROGRAM
The SRP allows participants to borrow money from their SRP accounts. A
participant may borrow up to $50,000 or 50 percent of their total before-tax
account balances, whichever is less, for terms up to 5 years for a general
purpose loan and 10 years for the acquisition of a primary residence. A fixed
interest rate of the prime rate plus 1 percent, but not less than the Minnesota
Power Employees Credit Union share secured rate, is charged until the loan is
repaid. As loans are repaid, generally through payroll deductions, principal and
interest amounts are redeposited into the participant's SRP accounts.
4 ALLETE 2000 SRP Form 11-K
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and their share of the Companies' contributions. Income from the
various SRP investment funds is allocated to each participant's account based
upon their ownership interest in each fund.
Every December participants are required to make an election as to the
level of contributions to the SRP for the subsequent year. Funds may be
transferred between investment options on a weekly basis with at least 10 days
written notice to Minnesota Power's Benefits Accounting and Administration. A
brief description of the Plan's investment options follows. For a detailed
description of the investment options and respective risk profiles refer to the
fund prospectus.
- ALLETE COMMON STOCK FUND seeks capital appreciation and current
income by investing in the common stock of ALLETE.
- THE MERIDIAN VALUE FUND seeks long-term growth of capital by
investing primarily in a diversified portfolio of publicly traded
common stocks of U.S. companies. This fund replaced Heartland Value
Fund in 2000.
- FIDELITY MAGELLAN FUND seeks capital appreciation by investing in
securities of domestic, foreign and multinational issuers.
- VANGUARD INSTITUTIONAL INDEX FUND seeks to match, as closely as
possible, the performance of the Standard & Poor's 500 Composite
Stock Price Index, which invests in stocks of large U.S. companies.
- VANGUARD MID-CAP INDEX FUND seeks to match the performance of the
Standard & Poor's MidCap 400 Index which is made up of a group of
medium-size U.S. companies. This fund replaced the Vanguard Short
Term Federal Portfolio in 2000 which was discontinued.
- THE ARTISAN INTERNATIONAL FUND seeks maximum long-term capital
growth by investing in a broadly diversified portfolio of
international growth stocks, concentrating on industries or
investment themes that present accelerating growth prospects and
companies that capitalize on that growth. This fund replaced
Templeton Institutional Funds, Inc. Foreign Equity Series in 2000.
- BLACKROCK FUNDS SMALL CAP GROWTH EQUITY PORTFOLIO seeks long-term
capital appreciation by investing in U.S. small capitalization
growth companies (market capitalization under $2 billion) which are
considered to have above-average earnings growth prospects versus
the fund's benchmark, the Russell 2000 Growth Index.
- THE NICHOLAS-APPLEGATE EMERGING COUNTRIES INSTITUTIONAL FUND seeks
maximum long-term capital appreciation by investing primarily in
stocks of companies located in countries with emerging securities
markets. This fund replaced Templeton Institutional Funds, Inc.
Emerging Market Series in 2000.
- JANUS BALANCED FUND seeks long-term capital growth consistent with
preservation of capital and balanced by current income. This fund
invests in securities selected primarily for their growth or income
potential.
- FIXED INCOME FUND consists of guaranteed investment contracts
(GICs) with insurance companies and pooled investment contracts
(PICs) managed by American Express Trust Company. Each
participant's account value is determined on a participation-unit
basis.
- GICs are guaranteed by the issuing insurance company and
supported by the insurance industry, and not guaranteed by the
federal government.
- AMERICAN EXPRESS TRUST INCOME FUND I is an actively managed,
diversified pool of stable value contracts of varying maturity,
size and yield. This fund seeks to preserve principal and income
while maximizing current income by investing in pooled insurance
investment contracts, bank investment contracts and stable value
contracts.
ALLETE 2000 SRP Form 11-K 5
While participants are active employees, they may withdraw money as a
loan from their before-tax account. After age 59 1/2, participants may withdraw
the full amount of their before-tax account. After-tax accounts may be withdrawn
at specified times during the year by participants of any age. When participants
terminate employment, become disabled or die, they or their beneficiaries may
elect to receive the vested amount of all their SRP accounts. Upon retirement
participants may elect to transfer the vested amount of their SRP account
balances to the Minnesota Power and Affiliated Companies Retirement Plan A or
Plan B. The amount of those transfers totaled $478,000 for 2000 ($1,107,000 for
1999).
Minnesota Power maintains the participants' records and issues a
quarterly report to each participant showing the status of individual accounts.
At December 31, 2000 there were 1,673 participants in the SRP.
ADMINISTRATION
The SRP is administered for the Companies by the Employee Benefit Plans
Committee (Committee). The address of the Committee is 30 West Superior Street,
Duluth, Minnesota 55802-2093. The responsibility of the Committee includes the
determination of compliance with the SRP's eligibility requirements as well as
the administration and payment of benefits all in a manner consistent with the
terms of the SRP and applicable law. The Committee has the authority to
designate persons to carry out fiduciary responsibilities (other than trustee
responsibilities) under the SRP. The Committee has the power to appoint an
investment manager or managers. Administration fees and expenses of agents,
outside experts, consultants, and investment managers are paid by the Companies
or the SRP. The Committee may from time to time establish, modify and repeal
rules for the administration of the SRP as may be necessary to carry out the
purpose of the SRP. Members of the Committee receive no compensation for their
services with respect to the SRP.
As of June 1, 2001 the members of the Committee, all employees of
ALLETE and/or Minnesota Power, and their respective titles are as follows:
Name Title
--------------------------------------------------------------------------------
Robert D. Edwards * Executive Vice President ALLETE and
President and Chief Executive Officer Minnesota
Power
David G. Gartzke Senior Vice President - Finance and
Chief Financial Officer ALLETE
Philip R. Halverson Vice President, General Counsel and Secretary
Brenda J. Flayton Vice President - Human Resources
Claudia R. Scott Welty Vice President - Information Technology
Mark A. Schober Vice President and Controller
Donald J. Shippar Chief Operating Officer - Minnesota Power
Roger P. Engle Vice President - Minnesota Power and
President and Chief Operating Officer - Superior
Water, Light and Power Company
Lori A. Collard President - Electric Outlet, Inc.
Alan R. Hodnik General Manager - Thermal Generation Operations
Jeweleon W. Tuominen Manager - Executive Compensation and Employee
Benefits
--------------------------------------------------------------------------------
* Committee Chairman
North Shore Bank of Commerce is retained as Trustee (Trustee) for the
SRP. The Trustee's main office is located at 131 West Superior Street, Duluth,
Minnesota 55802. The Trustee carries blanket bond insurance in the amount of $2
million.
6 ALLETE 2000 SRP Form 11-K
PLAN TERMINATION
The Companies reserve the right to reduce, suspend or discontinue their
contributions at any time or to terminate the SRP subject to the provisions of
ERISA and the Code. In the event of SRP termination, all of the account balances
of the participants will be fully vested and nonforfeitable, and distributions
will be made in accordance with the terms of the SRP.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
The SRP uses the accrual basis of accounting and, accordingly, reflects
income in the year earned and expenses when incurred.
Mutual funds, money market securities and ALLETE common stock are
reported at fair value based on quoted market prices. GIC and PIC amounts are
reported at contract value which represents the purchase price of the contract
plus accrued interest. Participants' loans are reported at estimated fair value
which represents outstanding principal and any related accrued interest.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to:
- make estimates and assumptions that affect the reported amounts of
assets and liabilities;
- disclose contingent liabilities at the date of the financial
statements; and
- report amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
The Plan presents in the statement of changes in assets available for
benefits the net appreciation (depreciation) in the fair value of its investment
which consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
NOTE 3 - INVESTMENTS
DECEMBER 31,
--------------------------------------------------------
2000 1999
INVESTMENTS REPRESENTING ---------------------- -----------------------
5 PERCENT OR MORE OF ASSETS SHARES FAIR VALUE SHARES FAIR VALUE
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Thousands
American Express Trust Income Fund I 245 $13,364 134 $6,865
ALLETE Common Stock * 943 $23,404 932 $15,795
Fidelity Magellan Fund 165 $19,647 154 $21,048
Vanguard Institutional Index Fund 135 $16,297 129 $17,277
BlackRock Small Cap Growth Equity Portfolio 453 $9,133 274 $8,980
Janus Balanced Fund 545 $11,571 457 $10,682
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* Party in Interest
The Plan's assets include guaranteed investment contracts with crediting
interest rates ranging from 5.88% to 6.67%. These contracts had an aggregate
contract value of $6,910,000 at December 31, 2000 ($12,362,000 at December 31,
1999) and an average yield of 6.66% in 2000 (6.38% in 1999). There are no
reserves against the contract value for credit risk of the contract issuer or
otherwise. The crediting interest rate is agreed upon with the issuer upon
initiation of the contract.
NOTE 4 - FEDERAL INCOME TAX STATUS
A favorable determination letter dated December 12, 1995 was obtained
from the Internal Revenue Service stating that the SRP, as amended and restated
effective January 1, 1992, qualifies as a profit sharing plan under Section
401(a) of the Code.
ALLETE 2000 SRP Form 11-K 7
SCHEDULE I
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2000
Thousands
(a) (b) (c) (d) (e)
FAIR/
DESCRIPTION OF CONTRACT
IDENTITY OF ISSUER INVESTMENT COST VALUE
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GUARANTEED INVESTMENT CONTRACTS
Monumental Life Insurance Company GIC - 6.67% due 2001 $ 2,285
Protective Life Insurance Company GIC - 6.17% due 2001 2,355
Continental Assurance Company GIC - 5.88% due 2002 2,270
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Total Guaranteed Investment Contracts 6,910
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POOLED INVESTMENT CONTRACT
American Express Trust Income Fund I PIC - 245 Shares 13,364
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* ALLETE, INC. Common Stock - 943 Shares 23,404
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MUTUAL FUND SECURITIES
Meridian Value Fund Mutual Fund - 173 Shares 5,041
Fidelity Magellan Fund Mutual Fund - 165 Shares 19,647
Vanguard Institutional Index Fund Mutual Fund - 135 Shares 16,297
Vanguard Mid-Cap Index Fund Mutual Fund - 113 Shares 1,381
BlackRock Small Cap Growth Equity Portfolio Mutual Fund - 453 Shares 9,133
Artisan International Fund Mutual Fund - 139 Shares 3,048
Janus Balanced Fund Mutual Fund - 545 Shares 11,571
Nicholas-Applegate Emerging Countries
Institutional Fund Mutual Fund - 152 Shares 1,961
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Total Mutual Funds 68,079
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MONEY MARKET SECURITIES
Dreyfus Institutional Government Securities Fund Money Market -
Floating Interest Rate with
No Maturity Date 9
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* ALLETE, INC. Loans Receivable from
Participants - 7% to 10.5% 2,194
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TOTAL INVESTMENTS $113,960
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* Party-in-interest
----------------------
Not required.
8 ALLETE 2000 SRP Form 11-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Employee Benefit Plans Committee has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
Minnesota Power and Affiliated Companies
Supplemental Retirement Plan
----------------------------------------------
(Name of Plan)
June 13, 2001 By R.D. Edwards
----------------------------------------------
R.D. Edwards
Chairman,
Employee Benefit Plans Committee
ALLETE 2000 SRP Form 11-K 9
INDEX TO EXHIBITS
EXHIBIT
-------
a - Consent of Independent Accountants
EXHIBIT a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-26755) of ALLETE, Inc. (formerly Minnesota Power
& Light Company) of our report dated June 8, 2001 relating to the financial
statements of the Minnesota Power and Affiliated Companies Supplemental
Retirement Plan, which appears in this Form 11-K.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 13, 2001