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, 1999
or
/ / Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
------------- -------------
Commission File No. 1-3548
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
(Full Title of the Plan)
---------------------------
Minnesota Power, 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)
---------------------------
<PAGE>
INDEX
Page
Report of Independent Accountants 1
Statement of Net Assets Available for Plan Benefits -
December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available for Plan Benefits -
Year Ended December 31, 1999 and 1998 3
Notes to Financial Statements 4
Supplemental Schedules
Schedule I: Schedule of Investments Held 12
Schedule II: Schedule of Reportable Transactions in
Excess of 5% of Fair Value of Plan Assets 13
Signatures 14
<PAGE>
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 plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the Minnesota Power and Affiliated Companies Supplemental
Retirement Plan at December 31, 1999 and 1998, and the changes in net assets
available for plan benefits for the years then ended, in conformity with
accounting principles generally accepted in the United States. 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 generally accepted
auditing standards 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 the opinion expressed above.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in Schedules I
and II is presented for purposes of additional analysis and is not a required
part of the basic financial statements but is additional information required by
the Employee Retirement Income Security Act of 1974. Such information has been
subjected to the auditing procedures applied in the audit 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 9, 2000
1
<PAGE>
<TABLE>
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
Thousands
<CAPTION>
DECEMBER 31,
1999 1998
---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
INVESTMENTS, AT FAIR/CONTRACT VALUE
Guaranteed Investment Contracts $ 12,362 $ 16,465
Pooled Investment Contracts 6,865 2,464
Minnesota Power, Inc. Common Stock 15,762 18,584
Mutual Fund Securities 70,609 52,050
Money Market Securities 5 16
Loans Receivable from Participants 2,021 2,068
---------- --------
Total Investments 107,624 91,647
CASH 33 98
---------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 107,657 $ 91,745
========== ========
---------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
2
<PAGE>
<TABLE>
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Thousands
<CAPTION>
YEAR ENDED
DECEMBER 31,
1999 1998
------------------------------------------------------------------------------------------------
<S> <C> <C>
SOURCES OF NET ASSETS
Participant Contributions $ 6,239 $ 6,137
Employer Contributions 148 117
Interest Income 1,140 1,146
Dividend Income 4,552 2,376
Net Unrealized Appreciation in
Fair Value of Investments 7,386 6,692
Participants' Loan Interest Income 188 182
---------- --------
19,653 16,650
APPLICATION OF NET ASSETS
Transfers to Retirement Plans (1,107) (479)
Benefit Distributions (2,625) (2,287)
Administrative Expenses (9) (10)
---------- --------
INCREASE IN NET ASSETS 15,912 13,874
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of Year 91,745 77,871
---------- --------
End of Year $ 107,657 $ 91,745
========== ========
------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
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 Minnesota Power, Inc.
(Minnesota Power) and two of its subsidiaries, Superior Water, Light and Power
Company 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. Flexible dollar contributions for
the non-union participants are up to 3 percent of each
participant's compensation, up to a maximum compensation of
$160,000 in 1999. The contribution is equal to an amount the
participant has elected to contribute to the SRP and 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 $10,000 in 1999, 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 0.625 percent of each union participant's
compensation, up to a maximum compensation of $160,000 in 1999.
Employer contributions are included in the participant's before-tax
account.
VESTING
All contributions plus actual earnings 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 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, principal and interest amounts are redeposited into the
participant's SRP accounts.
4
<PAGE>
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.
- MINNESOTA POWER COMMON STOCK FUND seeks capital appreciation and
current income by investing in the common stock of Minnesota Power.
- HEARTLAND VALUE FUND seeks long-term capital appreciation by
investing primarily in common stocks of companies with market
capitalizations of less than $750 million selected on a value
basis.
- 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 SHORT TERM FEDERAL PORTFOLIO invests primarily in U.S.
Government agency securities, which are debt obligations issued or
guaranteed by agencies or instrumentalities of the U.S. Government.
This fund may also invest in U.S. Treasury securities, as well as
in repurchase agreements collateralized by the United States.
- 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.
- TEMPLETON INSTITUTIONAL FUNDS, INC. FOREIGN EQUITY SERIES seeks
long-term capital growth by investing in equity securities of
companies located outside the United States and debt obligations of
companies and governments located anywhere in the world.
- TEMPLETON INSTITUTIONAL FUNDS, INC. EMERGING MARKET SERIES seeks
long-term capital growth by investing primarily in equity
securities of issuers in countries having developing or emerging
markets.
- 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. The price per participation-unit was established on April
15, 1999 at $10. The participation-unit value is adjusted each
business day to reflect investment results. At December 31, 1999
the Fixed Income Fund consisted of 1,842,970 units with a net value
of $19,227,000.
- GICs are guaranteed by the issuing insurance company an
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 regulated by the Securities and Exchange Commission
and federal and state bank regulators.
5
<PAGE>
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.
Minnesota Power maintains the participants' records and issues a
quarterly report to each participant showing the status of individual accounts.
At December 31, 1999 there were 1,673 participants in the SRP.
ADMINISTRATION
The SRP is administered 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, 2000 the members of the Committee, all employees of
Minnesota Power, and their respective titles are as follows:
Name Title
---------------------- ------------------------------------
Robert D. Edwards Executive Vice President and
President - Minnesota Power Electric (1)
David G. Gartzke Senior Vice President - Finance and
Chief Financial Officer
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 Controller
Donald J. Shippar Chief Operating Officer - Minnesota Power
Electric
Roger P. Engle Vice President - Minnesota Power Electric
and President and Chief Operating Officer
- Superior Water, Light and Power Company
Lori A. Collard President - Electric Outlet, Inc.
Alan R. Hodnik Manager - Laskin Energy Center
Jeweleon W. Tuominen Manager - Executive Compensation and
Employee Benefits
Deborah Amberg Senior Attorney
----------------------
(1) 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
<PAGE>
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 Minnesota Power common stock
are reported at fair value based on quoted market prices. GIC and PIC amounts
are reported at contract value which approximates fair value and 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 requires management to (i)
make estimates and assumptions that affect the reported amounts of assets and
liabilities, (ii) disclose contingent liabilities at the date of the financial
statements and (iii) 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 net assets available
for plan 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 - 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.
NOTE 4 - GUARANTEED INVESTMENT CONTRACTS
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.
<TABLE>
<CAPTION>
Contract Value
Crediting December 31,
Due Interest Rate 1999 1998
-----------------------------------------------------------------------------------------------------------
Thousands
<S> <C> <C> <C> <C>
Aetna Life Insurance Company 1999 6.06% $ 2,695
Provident Mutual Insurance Company 1999 5.80% 2,130
SunAmerica Life Insurance Company 2000 6.00% $ 2,279 2,150
Jackson National Life Insurance Company 2000 6.30% 3,580 3,368
Monumental Life Insurance Company 2001 6.67% 2,142 2,008
Protective Life Insurance Company 2001 6.17% 2,217 2,089
Continental Assurance Company 2002 5.88% 2,144 2,025
-------- --------
$ 12,362 $ 16,465
======== ========
Average Yield 6.38% 6.51%
</TABLE>
7
<PAGE>
NOTE 5 - CHANGES IN SRP ASSETS FOR PARTICIPANT DIRECTED ACCOUNTS
Thousands
The table below summarizes the changes in SRP assets for each
investment fund for the year ended December 31, 1999.
<TABLE>
<CAPTION>
Fixed
Income
Fund Mutual Fund Securities
--------- ---------------------------------------------------
Vanguard Vanguard
Heartland Fidelity Institutional Short Term
GICs and Value Magellan Index Federal
PICs Fund Fund Fund Portfolio
<S> <C> <C> <C> <C> <C>
Sources of Net Assets
Participant Contributions $ 826 $ 359 $ 846 $ 1,443 $ 295
Employer Contributions 33 8 20 28 5
Interest Income 1,139
Dividend Income 13 1,729 307 101
Net Unrealized Appreciation
(Depreciation) in Fair Value
of Investments 952 2,313 2,621 (61)
Participants' Loan Repayments,
Including Interest 146 65 155 175 61
--------- -------- --------- -------- -------
2,144 1,397 5,063 4,574 401
Application of Net Assets
Transfers to Retirement Plans (1,107)
Benefit Distributions (847) (54) (446) (345) (44)
Loans to Participants (271) (39) (108) (69) (12)
Administrative Expenses (9)
--------- -------- --------- -------- -------
Increase (Decrease) in Net Assets (90) 1,304 4,509 4,160 345
Net Transfers 376 (938) (73) 4 (255)
Net Assets Available for Plan Benefits
Beginning of Year <F1> 18,942 4,542 16,613 13,113 1,549
--------- -------- --------- -------- -------
End of Year <F2> $ 19,228 $ 4,908 $ 21,049 $ 17,277 $ 1,639
========= ======== ========= ======== =======
8
<PAGE>
<CAPTION>
Mutual Fund Securities (Continued)
-------------------------------------------------------------------
BlackRock Templeton Templeton
Funds Small Institutional Institutional
Cap Growth Funds, Inc. Janus Funds, Inc.
Equity Foreign Balanced Emerging
Portfolio Equity Series Fund Market Series
<S> <C> <C> <C> <C>
Sources of Net Assets
Participant Contributions $ 352 $ 183 $ 1,395 $ 134
Employer Contributions 9 3 25 3
Interest Income
Dividend Income 987 134 334 24
Net Unrealized Appreciation
(Depreciation) in Fair Value
of Investments 2,809 496 1,551 1,037
Participants' Loan Repayments,
Including Interest 61 23 168 25
------- ------- -------- -------
4,218 839 3,473 1,223
Application of Net Assets
Transfers to Retirement Plans
Benefit Distributions (77) (46) (202) (34)
Loans to Participants (47) (24) (124) (9)
Administrative Expenses
------- ------- -------- -------
Increase (Decrease) in Net Assets 4,094 769 3,147 1,180
Net Transfers (431) 4 735 4
Net Assets Available for Plan Benefits
Beginning of Year <F1> 5,317 2,232 6,800 1,886
------- ------- -------- -------
End of Year <F2> $ 8,980 $ 3,005 $ 10,682 $ 3,070
======= ======= ======== =======
<PAGE>
<CAPTION>
Minnesota Loans
Power Receivable
Common from
Stock Participants Total
<S> <C> <C> <C>
Sources of Net Assets
Participant Contributions $ 406 $ 6,239
Employer Contributions 14 148
Interest Income 1 1,140
Dividend Income 923 4,552
Net Unrealized Appreciation
(Depreciation) in Fair Value
of Investments (4,332) 7,386
Participants' Loan Repayments,
Including Interest 97 $ (788) 188
-------- -------- ---------
(2,891) (788) 19,653
Application of Net Assets
Transfers to Retirement Plans (1,107)
Benefit Distributions (469) (61) (2,625)
Loans to Participants (99) 802 0
Administrative Expenses (9)
-------- -------- ---------
Increase (Decrease) in Net Assets (3,459) (47) 15,912
Net Transfers 574 0
Net Assets Available for Plan Benefits
Beginning of Year <F1> 18,683 2,068 91,745
-------- -------- ---------
End of Year <F2> $ 15,798 $ 2,021 $ 107,657
======== ======== =========
------------
<FN>
<F1> Balances include $16 of short-term money market securities which were being held for participant distributions
and $98 in cash which was being held to be invested in Minnesota Power Common Stock.
<F2> Balances include $5 of short-term money market securities which were being held for participant distributions
and $33 in cash which was being held to be invested in Minnesota Power Common Stock.
</FN>
</TABLE>
9
<PAGE>
NOTE 5 - CHANGES IN SRP ASSETS FOR PARTICIPANT DIRECTED ACCOUNTS
Thousands
The table below summarizes the changes in SRP assets for each
investment fund for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Fixed
Income
Fund Mutual Fund Securities
------ ---------------------------------------------------------
Vanguard Vanguard
Heartland Fidelity Institutional Short Term
GICs and Value Magellan Index Federal
PICs Fund Fund Fund Portfolio
<S> <C> <C> <C> <C> <C>
Sources of Net Assets
Participant Contributions $ 700 $ 860 $ 655 $ 1,294 $ 147
Employer Contributions 55 9 8 13 1
Interest Income 1,146
Dividend Income 102 761 250 73
Net Unrealized Appreciation
(Depreciation) in Fair Value
of Investments (661) 3,378 2,471 17
Participants' Loan Repayments,
Including Interest 311 50 124 104 10
--------- -------- --------- -------- -------
2,212 360 4,926 4,132 248
Application of Net Assets
Transfers to Retirement Plans (479)
Benefit Distributions (1,435) (80) (211) (116) (14)
Loans to Participants (1,066)
Administrative Expenses (10)
--------- -------- --------- -------- -------
Increase (Decrease) in Net Assets (778) 280 4,715 4,016 234
Net Transfers 1,304 (344) (368) 448 260
Net Assets Available for Plan Benefits
Beginning of Year <F1> 18,416 4,606 12,266 8,649 1,055
--------- -------- --------- -------- -------
End of Year <F2> $ 18,942 $ 4,542 $ 16,613 $ 13,113 $ 1,549
========= ======== ========= ======== =======
10
<PAGE>
<CAPTION>
Mutual Fund Securities (Continued)
---------------------------------------------------------------------
BlackRock Templeton Templeton
Funds Small Institutional Institutional
Cap Growth Funds, Inc. Janus Funds, Inc.
Equity Foreign Balanced Emerging
Portfolio Equity Series Fund Market Series
<S> <C> <C> <C> <C>
Sources of Net Assets
Participant Contributions $ 782 $ 246 $ 849 $ 297
Employer Contributions 8 2 7 3
Interest Income
Dividend Income 150 147 43
Net Unrealized Appreciation
(Depreciation) in Fair Value
of Investments 356 30 1,337 (448)
Participants' Loan Repayments,
Including Interest 60 26 40 26
------- ------- -------- -------
1,206 454 2,380 (79)
Application of Net Assets
Transfers to Retirement Plans
Benefit Distributions (35) (10) (31) (23)
Loans to Participants
Administrative Expenses
------- ------- -------- -------
Increase (Decrease) in Net Assets 1,171 444 2,349 (102)
Net Transfers (584) 12 171 (240)
Net Assets Available for Plan Benefits
Beginning of Year <F1> 4,730 1,776 4,280 2,228
------- ------- -------- -------
End of Year <F2> $ 5,317 $ 2,232 $ 6,800 $ 1,886
======= ======= ======== =======
<PAGE>
<CAPTION>
Minnesota Loans
Power Receivable
Common from
Stock Participants Total
<S> <C> <C> <C>
Sources of Net Assets
Participant Contributions $ 307 $ 6,137
Employer Contributions 11 117
Interest Income 1,146
Dividend Income 850 2,376
Net Unrealized Appreciation
(Depreciation) in Fair Value
of Investments 212 6,692
Participants' Loan Repayments,
Including Interest 275 $ (844) 182
-------- -------- ---------
1,655 (844) 16,650
Application of Net Assets
Transfers to Retirement Plans (479)
Benefit Distributions (296) (36) (2,287)
Loans to Participants 1,066 0
Administrative Expenses (10)
-------- -------- ---------
Increase (Decrease) in Net Assets 1,359 186 13,874
Net Transfers (659) 0
Net Assets Available for Plan Benefits
Beginning of Year <F1> 17,983 1,882 77,871
-------- -------- ---------
End of Year <F2> $ 18,683 $ 2,068 $ 91,745
======== ======== =========
------------
<FN>
<F1> Balances include $54 of short-term money market securities of which $43 was being held to be invested
in Minnesota Power Common Stock and the balance for participant distributions. Balances also include
$11 in cash.
<F2> Balances include $16 of short-term money market securities which were being held for participant
distributions and $98 in cash which was being held to be invested in Minnesota Power Common Stock.
</FN>
</TABLE>
11
<TABLE>
Schedule I
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
SCHEDULE OF INVESTMENTS HELD
AS OF DECEMBER 31, 1999
Thousands
<CAPTION>
(a) (b) (c) (d) (e)
Fair/
Description of Contract
Identity of Issuer Investment Cost Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Guaranteed Investment Contracts
SunAmerica Life Insurance Company GIC - 6.00% due 2000 $ 2,279 $ 2,279
Jackson National Life Insurance Company GIC - 6.30% due 2000 3,580 3,580
Monumental Life Insurance Company GIC - 6.67% due 2001 2,142 2,142
Protective Life Insurance Company GIC - 6.17% due 2001 2,217 2,217
Continental Assurance Company GIC - 5.88% due 2002 2,144 2,144
-------- ----------
Total Guaranteed Investment Contracts 12,362 12,362
-------- ----------
Pooled Investment Contract
American Express Trust Income Fund I PIC - 134 Shares 6,865 6,865
-------- ----------
* Minnesota Power, Inc. Common Stock - 932 Shares 13,277 15,762
-------- ----------
Mutual Fund Securities
Heartland Value Fund Mutual Fund - 134 Shares 4,045 4,908
Fidelity Magellan Fund Mutual Fund - 154 Shares 13,137 21,048
Vanguard Institutional Index Fund Mutual Fund - 129 Shares 10,185 17,277
Vanguard Short Term Federal Portfolio Mutual Fund - 166 Shares 1,639 1,639
BlackRock Small Cap Growth Equity Portfolio Mutual Fund - 274 Shares 5,937 8,980
Templeton Institutional Fund Foreign Equity Series Mutual Fund - 140 Shares 2,605 3,005
Janus Balanced Fund Mutual Fund - 457 Shares 7,850 10,682
Templeton Institutional Fund Emerging Market Series Mutual Fund - 238 Shares 2,656 3,070
-------- ----------
Total Mutual Funds 48,054 70,609
-------- ----------
Money Market Securities
Dreyfus Institutional Government Securities Fund Money Market -
Floating Interest Rate with
No Maturity Date 5 5
-------- ----------
* Minnesota Power, Inc. Loans Receivable from
Participants - 7% to 10% - 2,021
-------- ----------
Total Investments $ 80,563 $107,624
======== ========
----------------------
* Party-in-interest
</TABLE>
12
<PAGE>
<TABLE>
Schedule II
MINNESOTA POWER AND AFFILIATED COMPANIES
SUPPLEMENTAL RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
IN EXCESS OF 5% OF FAIR VALUE OF PLAN ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
Dollars in Thousands
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Current Net
Identity of Description Purchase Selling Lease Expense Cost of Value Gain or
Party Involved of Asset Price Price Rental Incurred Asset of Asset (Loss)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dreyfus Institutional Money
Government Market
Securities Fund Securities $9,684 - - - - $9,684 -
Dreyfus Institutional Money
Government Series Market
Securities Fund Securities - $9,696 - - $9,696 $9,696 -
American Express Pooled
Trust Income Investment
Fund I Contract $8,086 - - - - $8,086 -
American Express Pooled
Trust Income Investment
Fund I Contract - $3,901 - - $3,901 $3,901 -
Minnesota Power Common
Stock $3,114 - - - - $3,114 -
Minnesota Power Common
Stock - $1,604 - - $1,619 $1,619 $(15)
</TABLE>
13
<PAGE>
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, 2000 By R.D. Edwards
----------------------------------------
R.D. Edwards
Chairman,
Employee Benefit Plans Committee
14
<PAGE>
INDEX TO EXHIBITS
Exhibit
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a - Consent of Independent Accountants
<PAGE>
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 the Minnesota Power and Affiliated
Companies Supplemental Retirement Plan of our report dated June 9, 2000
appearing on page 1 of this Annual Report of the Minnesota Power and Affiliated
Companies Supplemental Retirement Plan on Form 11-K for the year ended December
31, 1999.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 13, 2000
