Invest Direct participants: Please hold on to
your statements
If you’re an Invest Direct participant, the statement enclosed
with this newsletter reports this year’s activity in your
account since the spin-off of ADESA on Sept. 20, 2004. You previously
received a statement detailing your account transactions from Jan.
1, 2004 through Sept. 20, 2004.
These statements are for your permanent records and we urge you
to save these statements and file them away for future reference.
You’ll need to refer to these statements in order to determine
your cost basis information if you sell these shares at some point
in the future.
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Dear
Shareholder |
 As we head into the final month of 2004, all of us at ALLETE
are energized by the events of the recent past and by our
prospects for the future. Through the end of the third quarter,
our financial results were strong enough that we increased
our earnings guidance for the year. We now project that
2004 income from continuing operations, excluding a one-time
charge for early debt repayment, will be 28 percent higher
than it was in 2003.
There are many reasons why our financial
performance has improved. We’re pleased to report
stronger electric sales to Minnesota Power’s industrial
customers, a strength that mirrors a more robust market
for taconite and wood products. This translates into a
healthier economy and a broadening employment base in
our region. ALLETE’s real estate operation in Florida
has also enjoyed a good year. Through Sept. 30, earnings
at ALLETE Properties are 31 percent ahead of where they
were a year ago.
Our balance sheet is looking better
to us now because our debt balance is lower than in 2003.
In July, we repaid a significant debt early (incurring
the one-time charge I mentioned earlier), and we’ve
also used some of the proceeds of our Florida Water sale
to pay down debt.
Minnesota Power is examining ways to
increase its base-load supply of energy to keep up with
customer demand, growing at a projected 1.7 percent per
year. We’ll need 200 more megawatts of power by
2009, and we’re examining ways to secure it.
We’ve celebrated other, more tangible
successes, too. On Oct. 5, west of Duluth, we set the
first in a long series of transmission structures that
will eventually carry a much-needed 345 kilovolt transmission
line linking Minnesota andWisconsin. Less than two weeks
later, we christened a mammoth new drag line in Center,
N.D. that will unearth lignite at our BNI Coal subsidiary
for decades to come.
Here’s hoping your holidays are
blessed with warmth and happiness.
Sincerely,
Don Shippar
Chief Executive Officer
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Cost basis information related to spin-off available at
allete.com.
ALLETE shareholders have asked many questions about cost
basis since the Sept. 20 spin-off and distribution of ADESA
stock. Answers to many of these questions can be found here.
Determining your cost basis is necessary for the accurate
calculation of any capital gain or loss you may be required
to file with the Internal Revenue Service.
The distribution of ADESA stock to ALLETE shareholders was
structured to qualify as a tax-free stock dividend. But income
tax law requires that when you sell your stock, the cost basis
in ALLETE before the spin-off must be allocated between your
ALLETE shares and the ADESA stock you received. This allocation
is based on the relative fair market values, immediately after
the spin-off, of your ALLETE and ADESA shares.
Federal tax regulations do not specify how you should determine
the relative fair market values of the stocks. But you, or
your tax advisor, may find the calculation posted here helpful in determining those values. In short, your aggregate
tax basis could be apportioned 40percent to your ALLETE stock
and 60 percent to the ADESA stock you received.
ALLETE shareholders are encouraged to consult their tax advisor
if they have any questions about calculating the fair market
value or cost basis of their stock holdings.
The first of an estimated
1,500 towers that will carry the Arrowhead-Weston 345 kV
transmission line was set in the ground in West Duluth Oct.
5. More than 40 of the towers had been installed by Thanksgiving.
A large gathering of Minnesota Power personnel and contractors
watched as the first 145-foot steel tower was raised in
two sections. |
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New BNI Coal dragline 'Liberty' christened
in Center, N.D. |
Executives
from ALLETE, BNI Coal, the Minnkota Power Cooperative and
dozens of onlookers cheered as a mammoth new dragline was
christened on a snowy hilltop near Center, N.D. Oct. 17.
The christening came complete with a bursting
champagne bottle, the hoisting of a flag up the machine’s
355-foot boom, a military honor guard and a speech by North
Dakota Gov. John Hoeven.
Prior to the ceremony, BNI Coal conducted
tours of its huge new dragline, called “Liberty.”
A dragline is an excavating machine that drags a large shovel
across soil covering a coal deposit so that other equipment
can mine the coal. Manufactured by Bucyrus International and
assembled by a subsidiary called Minserco, the dragline weighs
4,629 tons and has a drag force of 741,000 pounds
The new dragline, which will cost $38 million,
has a 30-year expected life. Liberty will enable BNI to dig
deeper and more effectively remove overburden |
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from
lignite coal seams at the Center mine, which supplies fuel
for Minnkota Power Cooperative’s Milton R. Young Generating
Station. The mine produces 4.5 million tons of coal annually,
and is North Dakota’s lowest-cost producer of lignite
coal.
The Bucyrus 82000 is built upon a mechanism
that allows it to “walk” up to ??? feet during
a ??-hour period. Virtually all of the mine’s production
is consumed by two electric generation cooperatives, Minnkota
Power and Square Butte.
Minnesota Power purchases from Square Butte
about 71 percent of the power generated by a 435-megawatt
unit at the Young Station.
Minnesota Power bought Baukol-Noonan Inc.
in 1988 and changed the name to BNI Coal Ltd. Operations at
the open-pit lignite mine began in 1970. |
| Pictured at the “Liberty”
christening in Center, N.D. are: ALLETE directors Peter Johnson
and Jack Rajala, General Counsel Deb Amberg, Chief Financial
Officer Jim Vizanko, Sr. VP of Utility Operations Warren Candy,
BNI President Mike Hummell, North Dakota Gov. John Hoeven and
ALLETE CEO Don Shippar |
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Three new directors, four officers join ALLETE management team
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Three new directors have been appointed to the ALLETE board,
and four experienced executives have been named corporate
officers of the Duluth, Minn.-based company
.Heidi Eddins, Madeleine Ludlow and Donald Shippar have
joined the ALLETE board of directors.
Eddins, 48, is executive vice president, secretary and
general counsel of Florida East Coast Industries, Inc.,
a transportation and real estate company based in St. Augustine,
Fla. Shippar, 55, president and CEO of ALLETE, has served
in a number of executive positions at ALLETE since he joined
the company in 1976. Ludlow, 50, of Cincinnati, Ohio, is
chairman of Cadence Network ,Inc., a
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web-based provider of utility expense management services.
Six ALLETE directors resigned to join the ADESA, Inc. board:
Deborah Weinstein, David Gartzke, Dennis Green, Thomas Cunningham,
Wynn Bussmann and Donald Wegmiller. Nick Smith will remain
on both the ALLETE and ADESA boards. Gartzke, former chairman,
president and CEO of ALLETE, is now board chairman and CEO
of ADESA.
ALLETE’s new corporate officers and their titles
are Claudia Scott Welty, 51, chief administrative officer;
David J. McMillan, 43, senior vice president for marketing
and public affairs; Warren L. Candy, 55, senior vice president,
utility operations; and Laura A. Holquist, 43, president
of ALLETE Properties.
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Heidi Eddins |
Madeleine Ludlow |
Claudia Scott Welty |
David J. McMillan |
Warren L. Candy |
Laura A. Holquist |
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