EXHIBIT 99
[ALLETE LOGO]
For Release: February 10, 2005
CONTACT: Eric Olson
218-723-3947
eolson@allete.com
INVESTOR Tim Thorp
CONTACT: 218-723-3953
tthorp@allete.com
NEWS
ALLETE ANNOUNCES STRONG 2004 earnings RESULTS;
----------------------------------------------
EXPECTS EARNINGS PER SHARE GROWTH OF 45 TO 50 PERCENT in 2005
-------------------------------------------------------------
DULUTH, Minn.--ALLETE, Inc. (NYSE: ALE) today reported 2004 income from
continuing operations of $39.1 million. Excluding a one-time charge for the
early repayment of debt and a one-time gain realized by an employee stock
ownership fund, income from continuing operations was $38.5 million, an increase
of 29 percent over 2003.
"Our company went through a significant transformation in 2004 and at the same
time performed exceptionally well," said ALLETE President and CEO Don Shippar.
"We are stronger as a result, and from what we've accomplished are poised for
substantial earnings growth in 2005."
Net income from ALLETE's REGULATED UTILITY business grew by 13 percent in 2004
and kilowatthour sales to Minnesota Power's industrial customers were 8 percent
higher than last year. Higher benefit and maintenance expenses were more than
offset by other lower expenses during 2004.
NONREGULATED ENERGY OPERATIONS posted a slight loss in 2004. The net income
contributions of the Taconite Harbor energy facility and BNI Coal were offset by
losses incurred at the Kendall County facility. ALLETE recently announced that
it has reached an agreement to transfer its Kendall County purchased power
agreement to a subsidiary of Constellation Energy. The transfer is expected to
close in April 2005.
Net income from ALLETE's REAL ESTATE business increased by 4 percent in 2004.
Demand for Florida property remained strong through the year. "We are excited
about our future earnings prospects in this business," said Shippar.
Year-end results for ALLETE's OTHER business segment improved by $7.8 million in
2004 over 2003, mainly due to reduced interest expense resulting from lower debt
balances. The aforementioned fourth quarter gain of $11.5 million related to the
fourth quarter sale of securities held by an employee stock ownership plan
offset a third quarter charge of $10.9 million for the early repayment of debt.
During 2004, ALLETE spun off its Automotive Services business and substantially
completed the sale of its Water Services business. Net income from these
DISCONTINUED OPERATIONS was $73.1 million in 2004. On February 4, 2005, ALLETE
closed on the sale of its last wastewater system.
For the quarter, income from continuing operations was 5 percent higher than the
fourth quarter of 2003, excluding the previously mentioned one-time gain.
Increased electric sales and lower interest and other expenses offset outage
expenses at the Square Butte and the Taconite Harbor energy facilities.
"We expect ALLETE's earnings per share from continuing operations to grow by 45
to 50 percent in 2005," said Shippar. The company expects the increase to come
from continued strong real estate sales, lower interest expense, and the
transfer of the Kendall County purchased power agreement. The earnings
expectation excludes an anticipated one-time charge related to the Kendall
County agreement.
(more)
ALLETE NEWS RELEASE PAGE 2
- --------------------------------------------------------------------------------
ALLETE's corporate headquarters are located in Duluth, Minnesota. ALLETE
provides energy services in the upper Midwest and has significant real estate
holdings in Florida. More information about the company is available on ALLETE's
Web site located at www.allete.com.
--------------
THE STATEMENTS CONTAINED IN THIS RELEASE AND STATEMENTS THAT ALLETE MAY MAKE
ORALLY IN CONNECTION WITH THIS RELEASE THAT ARE NOT HISTORICAL FACTS, ARE
FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS
INVOLVE RISKS AND UNCERTAINTIES AND INVESTORS ARE DIRECTED TO THE RISKS
DISCUSSED IN DOCUMENTS FILED BY ALLETE WITH THE SECURITIES AND EXCHANGE
COMMISSION.
###
[RECYCLE LOGO] RECYCLED PAPER
ALLETE - 30 WEST SUPERIOR STREET, DULUTH, MINNESOTA 55802
WWW.ALLETE.COM
ALLETE NEWS RELEASE Page 3
- --------------------------------------------------------------------------------
ALLETE, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIODS ENDED DECEMBER 31, 2004 AND 2003
Millions Except Per Share Amounts
QUARTER ENDED YEAR ENDED
2004 2003 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUE $178.6 $165.9 $751.4 $692.3
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Fuel and Purchased Power 69.9 55.3 287.9 252.5
Operating and Maintenance 73.7 72.5 285.1 263.1
Depreciation 12.5 12.8 49.7 51.2
Taxes Other than Income 7.4 6.7 28.9 29.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 163.5 147.3 651.6 596.2
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME FROM CONTINUING OPERATIONS 15.1 18.6 99.8 96.1
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest Expense (6.1) (12.6) (31.8) (50.6)
Other 9.3 0.3 (12.1) 2.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total Other Income (Expense) 3.2 (12.3) (43.9) (48.1)
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 18.3 6.3 55.9 48.0
INCOME TAX EXPENSE 2.4 2.1 16.8 18.2
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
CHANGE IN ACCOUNTING PRINCIPLE 15.9 4.2 39.1 29.8
INCOME (LOSS) FROM DISCONTINUED OPERATIONS - NET OF TAX (6.2) 95.9 73.1 206.6
CHANGE IN ACCOUNTING PRINCIPLE - NET OF TAX - - (7.8) -
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 9.7 $100.1 $104.4 $236.4
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE SHARES OF COMMON STOCK
Basic 28.2 27.9 28.3 27.6
Diluted 28.4 28.1 28.4 27.8
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing Operations $0.57 $0.15 $1.39 $1.08
Discontinued Operations (0.22) 3.46 2.58 7.48
Change in Accounting Principle - - (0.28) -
- ------------------------------------------------------------------------------------------------------------------------------------
$0.35 $3.61 $3.69 $8.56
- ------------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing Operations $0.55 $0.15 $1.37 $1.08
Discontinued Operations (0.21) 3.44 2.57 7.44
Change in Accounting Principle - - (0.27) -
- ------------------------------------------------------------------------------------------------------------------------------------
$0.34 $3.59 $3.67 $8.52
- ------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS PER SHARE OF COMMON STOCK $0.30 $0.8475 $2.8425 $3.39
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
FOR THE PERIODS ENDED DECEMBER 31, 2004 AND 2003
Millions
2004 2003
- --------------------------------------------------------------------------------
ASSETS
Cash and Cash Equivalents $ 194.1 $ 110.2
Restricted Cash 30.3 -
Other Current Assets 141.7 113.1
Property, Plant and Equipment 883.1 919.3
Investments 124.5 175.7
Discontinued Operations 4.9 1,724.0
Other 52.8 59.0
- --------------------------------------------------------------------------------
TOTAL ASSETS $1,431.4 $3,101.3
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 96.7 $ 185.5
Long-Term Debt 390.2 514.7
Other Liabilities 302.0 305.4
Discontinued Operations 12.0 635.5
Shareholders' Equity 630.5 1,460.2
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,431.4 $3,101.3
- --------------------------------------------------------------------------------
ALLETE NEWS RELEASE Page 4
- --------------------------------------------------------------------------------
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
ALLETE, INC. 2004 2003 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)
Millions
Regulated Utility $10.7 $ 7.4 $ 42.8 $ 37.9
Nonregulated Energy Operations (2.9) 0.5 (0.3) 3.7
Real Estate (0.1) 2.8 14.7 14.1
Other 8.2 (6.5) (18.1) (25.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations 15.9 4.2 39.1 29.8
Income (Loss) from Discontinued Operations (6.2) 95.9 73.1 206.6
Change in Accounting Principle - - (7.8) -
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 9.7 $100.1 $104.4 $236.4
- ------------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS (LOSS) PER SHARE
Continuing Operations $0.55 $0.15 $1.37 $1.08
Discontinued Operations (0.21) 3.44 2.57 7.44
Change in Accounting Principle - - (0.27) -
- ------------------------------------------------------------------------------------------------------------------------------------
$0.34 $3.59 $3.67 $8.52
- ------------------------------------------------------------------------------------------------------------------------------------
STATISTICAL DATA
KILOWATTHOURS SOLD
Millions
Regulated Utility
Retail and Municipals
Residential 280.5 278.4 1,053.3 1,065.4
Commercial 320.9 322.1 1,281.8 1,285.6
Industrial 1,797.1 1,649.0 7,070.8 6,558.2
Municipals 209.1 204.9 823.0 841.8
Other 21.1 19.9 79.0 79.2
- ------------------------------------------------------------------------------------------------------------------------------------
2,628.7 2,474.3 10,307.9 9,830.2
Other Power Suppliers 271.7 301.0 917.5 1,313.5
- ------------------------------------------------------------------------------------------------------------------------------------
2,900.4 2,775.3 11,225.4 11,143.7
Nonregulated Energy Operations 298.1 361.7 1,496.1 1,462.3
- ------------------------------------------------------------------------------------------------------------------------------------
3,198.5 3,137.0 12,721.5 12,606.0
- ------------------------------------------------------------------------------------------------------------------------------------
NOTES
On September 20, 2004 ALLETE's common stock was split one-for-three. All common
share and per share amounts have been adjusted for all periods to reflect the
one-for-three reverse stock split.