ALLETE FORM 10-K 2002
- --------------------------------------------------------------------------------
EXHIBIT 12
ALLETE
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND
SUPPLEMENTAL RATIOS OF EARNINGS TO FIXED CHARGES (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31 2002 2001 2000 1999 1998
==============================================================================================================================
MILLIONS EXCEPT RATIOS
Income from Continuing Operations Before Income Taxes $191.6 $204.5 $215.3 $108.1 $130.1
Add (Deduct)
Undistributed Income from Less than 50%
Owned Equity Investments - - - (0.6) (14.1)
Minority Interest - 0.1 - 1.8 2.0
- ------------------------------------------------------------------------------------------------------------------------------
191.6 204.6 215.3 109.3 118.0
- ------------------------------------------------------------------------------------------------------------------------------
Fixed Charges
Interest on Long-Term Debt 67.9 74.0 54.5 48.4 48.5
Capitalized Interest 0.8 1.0 0.9 0.7 1.0
Other Interest Charges - Net 5.3 12.9 15.9 12.0 17.1
Interest Component of All Rentals 9.9 10.4 8.5 4.8 5.7
Distributions on Redeemable Preferred Securities of Subsidiary 6.0 6.0 6.0 6.0 6.0
- ------------------------------------------------------------------------------------------------------------------------------
Total Fixed Charges 89.9 104.3 85.8 71.9 78.3
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes and Fixed Charges
(Excluding Capitalized Interest) $280.7 $307.9 $300.2 $180.5 $195.3
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed Charges 3.12 2.95 3.50 2.51 2.49
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes and Fixed Charges
(Excluding Capitalized Interest) $280.7 $307.9 $300.2 $180.5 $195.3
Supplemental Charges 13.6 14.2 14.8 15.4 14.5
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes and Fixed
and Supplemental Charges (Excluding Capitalized Interest) $294.3 $322.1 $315.0 $195.9 $209.8
- ------------------------------------------------------------------------------------------------------------------------------
Total Fixed Charges $ 89.9 $104.3 $ 85.8 $71.9 $78.3
Supplemental Charges 13.6 14.2 14.8 15.4 14.5
- ------------------------------------------------------------------------------------------------------------------------------
Fixed and Supplemental Charges $103.5 $118.5 $100.6 $87.3 $92.8
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental Ratio of Earnings to Fixed Charges <F1> 2.84 2.72 3.13 2.24 2.26
==============================================================================================================================
<FN>
<F1> THE SUPPLEMENTAL RATIO OF EARNINGS TO FIXED CHARGES INCLUDES MINNESOTA POWER'S OBLIGATION UNDER A CONTRACT WITH SQUARE
BUTTE WHICH EXTENDS THROUGH 2026, PURSUANT TO WHICH MINNESOTA POWER IS ENTITLED TO APPROXIMATELY 71% OF THE OUTPUT OF A
455-MEGAWATT COAL-FIRED GENERATING UNIT (UNIT). MINNESOTA POWER IS OBLIGATED TO PAY ITS PRO RATA SHARE OF SQUARE BUTTE'S
COSTS BASED ON UNIT OUTPUT ENTITLEMENT. MINNESOTA POWER'S PAYMENT OBLIGATION IS SUSPENDED IF SQUARE BUTTE FAILS TO
DELIVER ANY POWER, WHETHER PRODUCED OR PURCHASED, FOR A PERIOD OF ONE YEAR. SQUARE BUTTE'S FIXED COSTS CONSIST PRIMARILY
OF DEBT SERVICE. VARIABLE OPERATING COSTS INCLUDE THE PRICE OF COAL PURCHASED FROM BNI COAL UNDER A LONG-TERM CONTRACT.
(SEE NOTE 13.)
</FN>
- --------------------------------------------------------------------------------
79