**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 40-F**

 

 [Check one]

 
| o | REGISTRATION STATEMENT   PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|---------------------------------------------------------------------------------------------|

 

OR

 
| x | ANNUAL REPORT PURSUANT   TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF   1934 |
|---|------------------------------------------------------------------------------------------------------------|

 
| For the fiscal year   ended | December 31, 2013 | Commission file number | 001-15214 |
|-----------------------------|------------------------|------------------------|-----------|

 

 

**TRANSALTA CORPORATION**

(Exact name of Registrant as specified in its charter)

 

 

**Not applicable**

(Translation of Registrant’s name into English (if applicable))

 

 

**Canada**

(Province or other jurisdiction of incorporation or organization)

 

 

**4911**

(Primary Standard Industrial Classification Code Number (if applicable))

 

 

**Not Applicable**

(I.R.S Employer Identification Number (if applicable))

 

 

 

**110-12****th**** Avenue S.W., Box 1900, Station “M”,**

**Calgary, Alberta, Canada, T2P 2M1,**

**(403) 267-7110**

(Address and telephone number of Registrant’s principal executive offices)

 

 

**CT Corporation System, 111 8****th**** Avenue, 13****th**** Floor,**

**New York, New York, 10011, (212) 894-8400**

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

 

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Securities registered or to be registered pursuant to Section 12(b) of the Act:

 
| Title of each class            |   | Name of each exchange   |
|--------------------------------|--------|-------------------------|
|                           |   | on which registered     |
|                           |   |                    |   |   |
|                           |   |                    |
| Common Shares, no par   value  |   | New York Stock Exchange |
|                           |   |                    |
| Common Share Purchase   Rights |   | New York Stock Exchange |
|                                |        |                         |  |  |

 

 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act:

 

**None**

(Title of Class)

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

 

**None**

(Title of Class)

 

For annual reports, indicate by check mark the information filed with this form:

 
| **x** | Annual information form | **x** | Audited annual   financial statements |
|-------|-------------------------|-------|---------------------------------------|

 

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Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

 

At December 31, 2013, 268,240,937 common shares were issued and outstanding.

 

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the file number assigned to the Registrant in connection with such Rule.

 
| Yes  o | 82-_______ | No  **T** |
|-------------|------------|----------------|

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

 
| Yes  **x** |   | No  o |
|-----------------|--------|------------|

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

 
| Yes  **x** |   | No  o |
|-----------------|--------|------------|

 

 

**INCORPORATION BY REFERENCE**

 

The documents, forming part of this Form 40-F, are incorporated by reference into the following registration statements under the Securities Act of 1933, as amended.

** **
| Form |   |   | Registration No. |   |
|------|--------|--------|------------------|--------|
| S-8  |   |   | 333-72454        |
| S-8  |   |   | 333-101470       |
| F-10 |   |   | 333-185157       |

 

 

**CONSOLIDATED AUDITED ANNUAL FINANCIAL STATEMENTS**

**AND MANAGEMENT’S DISCUSSION & ANALYSIS**

 

**A.****                    ****Consolidated Audited Annual Financial Statements**

 

For consolidated audited annual financial statements, including the report of independent chartered accountants with respect thereto, see Exhibit 13.3 incorporated by reference herein.

 

**B.****                     ****Management’s Discussion and Analysis**

 

For management’s discussion and analysis, see Exhibit 13.2 incorporated by reference herein.

 

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**DISCLOSURE CONTROLS AND PROCEDURES**

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934**(“Exchange Act”), management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act are accumulated and communicated to management, including our Chief Executive Officer and Chief Investment and Financial Officer, as appropriate, to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.

 

There has been no change in the internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2013, the end of the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level.

 

**MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL**

**OVER FINANCIAL REPORTING**

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting.

 

Internal control over financial reporting refers to a process designed by, or under the supervision of, our Chief Executive Officer and Chief Investment Officer and Financial Officer and effected by our board of directors, management and other personnel, 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 and includes those policies and procedures that:

 
| · | pertain to the   maintenance of records that in reasonable detail accurately and fairly   reflect the transactions and dispositions of our assets;                                                                                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                    |
| · | provide   reasonable assurance that transactions are recorded as necessary to permit   preparation of financial statements in accordance with generally accepted   accounting principles, and that our receipts and expenditures are being made   only in accordance with authorizations of our management and members of our   board of directors; and |
|   |                                                                                                                                                                                                                                                                                                                                                    |
| · | provide   reasonable assurance regarding prevention or timely detection of unauthorized   acquisition, use, or disposition of our assets that could have a material   effect on our financial statements.                                                                                                                                               |

 

Management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2013 using the framework set forth in the report of the Treadway Commission’s Committee of Sponsoring Organizations (COSO), “Internal Control — Integrated Framework.”

 

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Management has concluded that our internal control over financial reporting was effective as of December 31, 2013.  Certain matters relating to the scope of management’s evaluation and limitations of management’s conclusions are described below.  See “Limitations and Scope of Management’s Report on Internal Control over Financial Reporting.”

 

Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2013.  For Ernst & Young LLP’s report see page 73 of the Consolidated Audited Annual Financial Statements for the year ended December 31, 2013 filed as Exhibit 13.3 and incorporated by reference herein, under the heading “Independent Auditors’ Report of Registered Public Accounting Firm”.

 

There has been no change in the internal control over financial reporting during the year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

**LIMITATIONS AND SCOPE OF MANAGEMENT’S**

**REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.  Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.  Internal control over financial reporting also can be circumvented by collusion or improper overrides.  Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.  However, these inherent limitations are known features of the financial reporting process, and it is possible to design safeguards into the process to reduce, though not eliminate, this risk.

 

TransAlta Corporation (“TransAlta”) proportionately consolidates the accounts of the Sheerness and Genesee 3 joint operations and equity accounts CE Generation LLC (“CE Gen”) and Wailuku River Hydroelectric L.P. joint ventures (collectively, the “Excluded Entities”), in accordance with International Financial Reporting Standards (“IFRS”).  Management does not have the contractual ability to assess the internal controls of these Excluded Entities.  Management’s conclusion regarding the effectiveness of internal controls does not extend to the internal controls at the transactional level of these Excluded Entities.  Accordingly, management’s evaluation of the Company’s internal control over financial reporting did not include an evaluation of the internal controls of any of the Excluded Entities, and management’s conclusion regarding the effectiveness of the Company’s internal control over financial reporting does not extend to the internal controls of any of the Excluded Entities.

 

The 2013 consolidated financial statements of TransAlta, in accordance with EITF 00-1, included $886 million and $857 million of total and net assets, respectively, as of December 31, 2013, and $199 million and $38 million of revenues and net earnings, respectively, for the year then ended related to Excluded Entities.  Once the financial information is obtained from these Excluded Entities it falls within the scope of TransAlta’s internal control framework.

 

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**AUDIT COMMITTEE FINANCIAL EXPERT**

 

TransAlta’s board of directors has determined that it has two audit committee financial experts serving on its Audit and Risk Committee (the “ARC”).  Mrs. Karen Maidment and Mr. William D. Anderson have been determined to be audit committee financial experts, within the meaning of Section 407 of the United States Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), and are independent, as that term is defined by the New York Stock Exchange’s (“NYSE”) listing standards applicable to the Registrant.  Under Securities and Exchange Commission rules, the designation of persons as audit committee financial experts does not make them “experts” for any other purpose, impose any duties, obligations or liability on them that are greater than those imposed on members of their committee and the board of directors who do not carry this designation or affect the duties, obligations or liability of any other member of their committee.

 

**CODE OF ETHICS**

 

TransAlta has adopted a code of ethics as part of its “Corporate Code of Conduct” that applies to all employees and officers which has been filed with the Securities and Exchange Commission.  In addition, the Registrant has adopted a code of conduct applicable to all directors of the Company, a separate financial code of conduct which applies to all financial management employees and an Energy Trading code of conduct.  Our codes of conduct are available on our Internet website at www.transalta.com.  There has been no waiver of the codes granted during the 2013 fiscal year.

 

**PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

For the years ended December 31, 2013 and December 31, 2012, Ernst & Young LLP and its affiliates were paid $3,384,692 and $3,459,397 respectively, as detailed below:

 

**Ernst & Young LLP**
| Year Ended   Dec. 31 | **2013**   | ** **    | **2012**   | ** ** |
|---------------------------|------------|---------------|------------|------------|
| ** **                | ** ** | ** **    | ** ** | ** ** |
| Audit Fees                | $          | 2,931,297     |       | $          | 2,998,892 |   |
| Audit-related   fees      | 409,950    |          | 388,595    |       |
| Tax fees                  | 43,445     |          | 72,450     |       |
| All other fees            | 0          |          | 0          |       |
|                      |       |          |       |       |
| **Total**                 | **$**      | **3,384,692** | ** ** | **$**      | **3,459,937** | ** ** |

 

All amounts are in Canadian dollars unless otherwise stated.

 

No other audit firms provided audit services in 2013 or 2012.

 

The nature of each category of fees is described below:

 

*Audit Fees*

 

Audit fees were paid for professional services rendered by the auditors for the audit of our annual financial statements or services provided in connection with statutory and regulatory filings or engagements, including the translation from English to French of our financial statements and other

 

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documents. Total audit fees for 2013 include payments related to 2012 in the amount of $1,732,667.  Total audit fees for 2012 include payments related to 2011 in the amount of $1,397,001.

 

*Audit-Related Fees*

 

The audit-related fees in 2013 were primarily for work performed by Ernst & Young LLP in relation to compliance and regulatory reporting, common shares issuance, debt issuances and miscellaneous accounting advice provided to the Corporation.  The audit-related fees in 2012 were primarily in relation to public offerings, Canadian shelf work, the 2011 Sustainability Report review, and miscellaneous accounting advice provided to the Corporation.

 

*Tax Fees*

 

The tax fees for 2013 relate to various tax related matters in our domestic and foreign operations**.**

 

*All Other Fees*

 

Nil.

 

**Pre-Approval Policies and Procedures**

 

The ARC has considered whether the provision of services other than audit services is compatible with maintaining the auditors’ independence.  In May 2002, the ARC adopted a policy (the “Policy”) that prohibits TransAlta from engaging the auditors for “prohibited” categories of non-audit services and requires pre-approval of the ARC for other permissible categories of non-audit services, such categories being determined under the Sarbanes-Oxley.  The Policy also provides that the Chair of the ARC may approve permissible non-audit services during the quarter and report such approval to the ARC at its next regularly scheduled meeting.  In 2009, the ARC granted management the authority to approve *de minimus* permissible non-audit services (which are in the aggregate the lesser of 5 per cent of the total fees paid to the external auditors or $125,000), provided such services are reported to the ARC at its next scheduled meeting.

 

*Percentage of Services Approved by the ARC*

 

For the year ended December 31, 2013, none of the services described above were approved by the ARC pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

 

**OFF-BALANCE SHEET ARRANGEMENTS**

 

See page 45 of Exhibit 13.2, incorporated by reference herein under the heading “Unconsolidated Structured Entities or Arrangements”.

 

**TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS**

 

See page 44 of Exhibit 13.2, incorporated by reference herein, under the heading “Liquidity and Capital Resources” and page 99, under the heading “Leases”, page 115 under the heading “Risk Management Activities” and page 145 under the Heading “Commitments” of Exhibit 13.3, all incorporated by reference herein.

 

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**IDENTIFICATION OF THE AUDIT COMMITTEE**

 

We have a separately-designated standing ARC.  The members of the ARC are:

 

Karen E. Maidment (Chair)

William D. Anderson

Alan J. Fohrer

Yakout Mansour

 

 

**MINE SAFETY**

 

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 13.1, incorporated herein, under the heading “Business of TransAlta-Generation Business Segment-United States”.

 

**FORWARD****-****LOOKING INFORMATION**

 

This Form 40-F, the documents incorporated herein by reference, and other reports and filings made with the securities regulatory authorities, include forward-looking statements.  All forward-looking statements are based on TransAlta’s beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions and expected further developments and other factors deemed appropriate in the circumstances.  Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”, “will”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “foresee”, “potential”, “enable”, “continue” or other comparable terminology.  These statements are not guarantees of TransAlta’s future performance and are subject to risks, uncertainties and other important factors that could cause TransAlta’s actual performance to be materially different from that projected.

 

In particular, this Form 40-F and the documents incorporated herein by reference contain forward-looking statements pertaining to the following: our estimated spend on growth and sustaining capital and productivity projects; expectations in terms of the cost of operations, capital spend, and maintenance, and the variability of those costs; expectations relating to the timing of the completion and commissioning of projects under development, including uprates and major projects, and their attendant costs; the impact of certain hedges on future reported earnings and cash flows; expectations related to future earnings and cash flow from operating and contracting activities; estimates of fuel supply and demand conditions and the costs of procuring fuel; expectations for demand for electricity in both the short-term and long-term, and the resulting impact on electricity prices; expected impacts of load growth and natural gas costs on power prices; expectations in respect of generation availability, capacity and production; expected financing of our capital expenditures; expected governmental regulatory regimes and legislation and their expected impact on TransAlta, as well as the cost of complying with resulting regulations and laws; the expected settlement of regulatory investigations and disputes; TransAlta’s trading strategy and the risks involved in these strategies; estimates of future tax rates, future tax expense, and the adequacy of tax provisions; accounting estimates; expectations for the outcome of existing or potential legal and contractual claims; expectations for the ability to access capital markets at reasonable terms; the estimated impact of changes in interest rates and the value of the Canadian dollar relative to the U.S. dollar; the monitoring of TransAlta’s exposure to liquidity risk; expectations in respect to the global economic environment; our credit practices; and the estimated contribution of energy trading activities to gross margin.

 

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Factors that may adversely impact TransAlta’s forward-looking statements include risks relating to: fluctuations in market prices and availability of fuel supplies required to generate electricity; the ability to contract our generation for prices that will provide expected returns; the price of electricity; the regulatory and political environments in the jurisdictions in which TransAlta operates; environmental requirements and changes in, or liabilities under, these requirements; changes in general economic conditions including interest rates; operational risks involving TransAlta’s facilities, including unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather; disruptions in the source of fuels, water or wind required to operate TransAlta’s facilities; natural and man-made disasters; the threat of domestic terrorism and cyber-attacks; equipment failure; energy trading risks; the outcome of investigations and disputes; industry risk and competition; fluctuations in the value of foreign currencies and foreign political risks; the need for additional financing; structural subordination of securities; counterparty credit risk; insurance coverage; TransAlta’s provision for income taxes; legal and contractual proceedings involving TransAlta; reliance on key personnel, labour relations matters and development projects and acquisitions.   The foregoing risk factors, among others, are described in further detail in TransAlta’s 2013 Annual Information Form and in the Risk Management section of the Management’s Discussion and Analysis for the year ended December 31, 2013, each incorporated herein by reference.

 

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements.  The forward-looking statements included in this document are made only as of the date hereof and TransAlta does not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as required by applicable laws.  In light of these risks, uncertainties and assumptions, the forward-looking events might occur to a different extent or at a different time than TransAlta has described or might not occur.  TransAlta cannot assure you that projected results or events will be achieved.

 

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**DOCUMENTS FILED AS PART OF THIS REPORT AND EXHIBITS**

 

The following items are specifically incorporated by reference in, and form an integral part of, this filing on Form 40-F:

 
| 13.1   |   | TransAlta   Corporation Annual Information Form for the year ended December 31,   2013.                                                      |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                   |
| 13.2   |   | Management’s   Discussion and Analysis for the year ended December 31, 2013.                                                                 |
|   |   |                                                                                                                                                   |
| 13.3   |   | Consolidated Audited   Annual Financial Statements for the year ended December 31, 2013.                                                          |
|   |   |                                                                                                                                                   |
| 13.4   |   | Management’s   Annual Report on Internal Control over Financial Reporting, (included on   page 72 of Exhibit 13.3 filed herewith). |
|   |   |                                                                                                                                                   |
| 13.5   |   | Independent   Auditor’s Report of Registered Public Accounting Firm, (included on   page 73 of Exhibit 13.3 filed herewith).       |
|   |   |                                                                                                                                                   |
| 23.1   |   | Consent of   Ernst & Young LLP Chartered Accountants.                                                                                         |
|   |   |                                                                                                                                                   |
| 31.1   |   | Certification of   President and Chief Executive Officer pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002.                             |
|   |   |                                                                                                                                                   |
| 31.2   |   | Certification of   Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley   Act of 2002.                                           |
|   |   |                                                                                                                                                   |
| 32.1   |   | Certification of   President and Chief Executive Officer pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002.                             |
|   |   |                                                                                                                                                   |
| 32.2   |   | Certification of   Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley   Act of 2002.                                           |

 

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**UNDERTAKING**

 

TransAlta undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

 

**SIGNATURES**

 

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Calgary, Province of Alberta, Canada.

 

 
|                            | **TRANSALTA   CORPORATION**                            |
|---------------------------------|--------------------------------------------------------|
|                            |                                                   |
|                            |                                                   |
|                            |                                                   |
|                            | /s/ Brett   Gellner                                    |
|                            | Brett Gellner                                          |
|                            | Chief Investment   Officer and Chief Financial Officer |
|                            |                                                   |
| Dated: February 20,   2014 |                                                   |

 

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**EXHIBIT INDEX**

 

 
| 13.1   |   | TransAlta   Corporation Annual Information Form for the year ended December 31,   2013.                                                      |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                   |
| 13.2   |   | Management’s   Discussion and Analysis for the year ended December 31, 2013.                                                                 |
|   |   |                                                                                                                                                   |
| 13.3   |   | Consolidated   Audited Annual Financial Statements for the year ended December 31, 2013.                                                          |
|   |   |                                                                                                                                                   |
| 13.4   |   | Management’s   Annual Report on Internal Control over Financial Reporting, (included on   page 72 of Exhibit 13.3 filed herewith). |
|   |   |                                                                                                                                                   |
| 13.5   |   | Independent   Auditor’s Report of Registered Public Accounting Firm, (included on   page 73 of Exhibit 13.3 filed herewith).       |
|   |   |                                                                                                                                                   |
| 23.1   |   | Consent of Ernst   and Young LLP Chartered Accountants.                                                                                                |
|   |   |                                                                                                                                                   |
| 31.1   |   | Certification of   President and Chief Executive Officer pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002.                             |
|   |   |                                                                                                                                                   |
| 31.2   |   | Certification of   Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley   Act of 2002.                                           |
|   |   |                                                                                                                                                   |
| 32.1   |   | Certification of   President and Chief Executive Officer pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002.                             |
|   |   |                                                                                                                                                   |
| 32.2   |   | Certification of   Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley   Act of 2002.                                           |

 

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