INVESTMENTS

Investments. At December 31, 2012, our long-term investment portfolio included the real estate assets of ALLETE Properties, debt and equity securities consisting primarily of securities held to fund employee benefits, and other assets consisting primarily of cash equivalents and land in Minnesota.



Investments
As of December 31	2012		2011
Millions
ALLETE Properties		$91.1		$91.3
Available-for-sale Securities	26.8		24.7
Other	25.6		16.3
Total Investments		$143.5		$132.3

NOTE 7. INVESTMENTS (Continued)



ALLETE Properties
As of December 31	2012			2011
Millions
Land Inventory Beginning Balance		$86.0			$86.0
Deeds to Collateralized Property	0.5			1.8
Land Impairment	—			(1.7		)
Cost of Sales	(0.2		)	(0.3		)
Capitalized Improvements and Other	0.2			0.2
Land Inventory Ending Balance	86.5			86.0
Long-Term Finance Receivables (net of allowances of $0.6 and $0.6)	1.4			2.0
Other	3.2			3.3
Total Real Estate Assets		$91.1			$91.3

Land Inventory. Land inventory is accounted for as held for use and is recorded at cost, unless the carrying value is determined not to be recoverable in accordance with the accounting standards for property, plant and equipment, in which case the land inventory is written down to fair value. Land values are reviewed for impairment on a quarterly basis. In 2012, impairment analysis’ of estimated future undiscounted cash flows was conducted and indicated that the cash flows were adequate to recover the carrying basis of our land inventory. Consequently, there was no impairment recorded for the year ended December 31, 2012. For the year ended December 31, 2011, a 1.7 million impairment charge was recorded.

Long-Term Finance Receivables. As of December 31, 2012, long-term finance receivables were $1.4 million net of allowance ($2.0 million net of allowance as of December 31, 2011). The decrease is primarily the result of the transfer of properties back to ALLETE Properties by deed-in-lieu of foreclosure, in satisfaction of amounts previously owed under long-term finance receivables. Long-term finance receivables are collateralized by property sold, accrue interest at market-based rates and are net of an allowance for doubtful accounts. As of December 31, 2012, we had allowance for doubtful accounts of $0.6 million ($0.6 million as of December 31, 2011).

If a purchaser defaults on a sales contract, the legal remedy is usually limited to terminating the contract and retaining the purchaser’s deposit. The property is then available for resale. Contract purchasers may incur significant costs during due diligence, planning, designing and marketing the property before the contract closes, therefore they may have substantially more at risk than the deposit.

Available-for-Sale Investments. We account for our available-for-sale portfolio in accordance with the guidance for certain investments in debt and equity securities. Our available-for-sale securities portfolio consisted of securities established to fund certain employee benefits and auction rate securities. Our auction rate securities of $6.7 million were redeemed at carrying value on January 5, 2011.



Available-For-Sale Securities
Millions		Gross Unrealized
As of December 31	Cost	Gain	(Loss)	Fair Value
2012	$27.4	$0.5	$(1.1)	$26.8
2011	$27.3	$0.1	$(2.7)	$24.7
2010	$27.4	$0.2	$(2.4)	$25.2



	Net	Gross Realized		Net Unrealized Gain (Loss) in Other
Year Ended December 31	Proceeds	Gain	(Loss)	Comprehensive Income
2012	$1.5	—	—	$1.2
2011	$7.8	—	—	$(0.3)
2010	$0.6	—	—	$0.8