ALLETE 2003 Earnings from Continuing Operations Increase 18 Percent.Business Editors DULUTH Duluth (dəl  th`), city (1990 pop. 85,493), seat of St. Louis co., NE Minn., at the west end of Lake Superior, at the head of lake navigation and opposite Superior, Wis.; inc. 1870. , Minn.--(BUSINESS WIRE)--Jan. 30, 2004ALLETE, Inc. (NYSE NYSE See: New York Stock Exchange :ALE) today reported 2003 earnings of $2.84 per share, compared with $1.68 per share in 2002, an increase of 69 percent. Net income was $236 million in 2003 on revenue of $1.62 billion, compared with prior year net income of $137 million on revenue of $1.49 billion. Earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the rose 18 percent year over year to $1.72 per share, compared with $1.46. Earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. included a $71.6 million, or $0.86 per share, gain related to the sale of substantially all of our Water Services businesses. "ALLETE had a very successful year, exceeding our stated performance goals," said Dave Gartzke, ALLETE Chairman. "Our Automotive Services and Energy Services businesses both surpassed their earnings objectives, and we achieved a key strategic objective by substantially completing the sale of our Water Services holdings in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and , the proceeds from which were used to repay debt and strengthen our balance sheet." 2003 Year-End year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. Results Automotive Services reported 22 percent earnings growth for the year due mainly to increased sales, lower interest expense and improved margins. Net income was $115 million in 2003, compared with $94 million for the prior year. Automotive Services revenue was $922 million versus $836 million last year, a 10 percent increase. ADESA sold 69,000 more used vehicles than in 2002, an increase of 4 percent. The used vehicle conversion rate at ADESA was 61 percent in 2003, compared with 59 percent in 2002. Sales of salvage salvage, in maritime law, the compensation that the owner must pay for having his vessel or cargo saved from peril, such as shipwreck, fire, or capture by an enemy. Salvage is awarded only when the party making the rescue was under no legal obligation to do so. vehicles at ADESA Impact rose by 9 percent over last year. At AFC (1) (Application Foundation Classes) A class library from Microsoft that provides an application framework and graphics, graphical user interface (GUI) and multimedia routines for Java programmers. , units financed increased by about 4,000 and bad debt expense was down reflecting the improved credit quality of the portfolio. Net income at Energy Services was $42 million in 2003, a slight increase over the prior year due mainly to sales of nonregulated generation from the Taconite taconite, low-grade iron ore, a flintlike rock usually containing less than 30% iron. Resistant to drilling and to the extraction of its contained metal, the rock was long considered worthless. Experiments begun in 1912 by the American scientist Edward W. Harbor facility and improved power prices. Energy Services revenue grew by 5 percent in the year to $660 million. The performance at Taconite Harbor in 2003 was offset by increased pension and benefit costs, and the performance of the Kendall County Kendall County is the name of several counties in the United States:
The difference between the market price of electricity and its cost of production. Notes: This measure is important because it helps utility companies determine their bottom line (profit). (the differential between electric and natural gas prices) in the wholesale power market. This resulted in an inability to cover the fixed capacity charge on approximately 175 megawatts. Energy Services also incurred costs to exit the Split Rock Energy partnership. ALLETE's Florida real estate operations posted a 26 percent increase in net income over the prior year, earning $14.1 million compared to $11.2 million last year. Net income from discontinued operations increased by $75 million year over year primarily due to the gains recorded from the sale of the Water Services businesses. Using both the proceeds from the sale of Water Services and internally generated cash, ALLETE repaid $360 million in debt and $75 million in manditorily redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred securities during 2003. By year end, ALLETE significantly strengthened its balance sheet and reduced its debt to total capital percentage to 36 percent (down from 46 percent at December December: see month. 31, 2002), and improved its liquidity as illustrated by its current ratio of 1.3 (up from 0.9 at December 31, 2002). Fourth Quarter 2003 Results Fourth quarter earnings from continuing operations doubled those of the prior year, bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by a 66 percent increase at Automotive Services compared with the fourth quarter of 2002. ADESA sold 7 percent more vehicles and ADESA Impact sold 9 percent more salvage vehicles in the quarter compared with the quarter a year ago. ADESA used vehicle auctions benefited from a significantly higher conversion rate, while same-store salvage sales in the U.S. climbed 13 percent in the quarter. Earnings for the quarter grew by 47 percent at Energy Services compared with the quarter last year (including one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges incurred in the fourth quarter of 2002). While total electric sales for the quarter were about the same as last year, higher wholesale power prices helped improve 2003 earnings. Fourth quarter results were also impacted by two large real estate sales and reduced debt expense in 2003, and the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of the securities portfolio in 2002. 2003 Strategic Review Significant strategic goals were attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. during 2003 by ALLETE: -- Substantially completing the sale of our Water Services businesses -- Strengthening our balance sheet -- Adding three board members with automotive expertise: Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Cunningham, Dennis Green Dennis "Denny" Green (b. February 17, 1949 in Harrisburg, Pennsylvania) is a former American football head coach. During his professional career, Green coached the Minnesota Vikings and Arizona Cardinals. and Deborah Deborah (dĕb`ōrə), in the Bible, prophetess and judge of Israel, the only woman to hold that office. Under her guidance Barak conquered Sisera and delivered Israel from the oppression of the Canaanite King Jabin. Weinstein Weinstein is a German surname meaning wine stone and may refer to:
-- Adding new ADESA auction facilities in two key markets--Long Island and Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Strengthening management at Automotive Services In October October: see month. , 2003 ALLETE announced its intention to separate its Automotive Services business into a publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. to be named ADESA, with completion expected by mid- mid- pref. Middle: midbrain. 2004. A conference call will be scheduled for a later date as details are finalized See finalization. . "The changes at ALLETE should be viewed with an eye on the future as well as on the success of our past accomplishments," Gartzke said. "We've we've Contraction of we have. we've have been committed to long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value creation, and this will continue as ALLETE begins an exciting new chapter in its history." ALLETE's corporate headquarters are located in Duluth, Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces . ALLETE's holdings include ADESA, the second largest used vehicle auction network in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. ; AFC, the leading provider of independent auto dealer financing; Minnesota Power, a low-cost electric utility that serves some of the largest industrial customers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ; and significant real estate holdings in Florida. For more information about ALLETE, visit the company's Web site 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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.
ALLETE, Inc.
Consolidated Statement of Income
For the Periods Ended December 31, 2003 and 2002
Millions Except Per Share Amounts
Quarter Ended Year Ended
2003 2002 2003 2002
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Operating Revenue
Energy Services $ 158.0 $160.9 $ 659.6 $ 626.0
Automotive Services 222.3 200.1 922.3 835.8
Investments 8.6 3.3 36.9 32.5
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Total Operating Revenue 388.9 364.3 1,618.8 1,494.3
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Operating Expenses
Fuel and Purchased Power 55.3 63.2 252.5 234.8
Operations 271.9 264.4 1,064.7 997.9
Interest 16.5 16.4 66.6 70.5
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Total Operating Expenses 343.7 344.0 1,383.8 1,303.2
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Operating Income from Continuing
Operations 45.2 20.3 235.0 191.1
Income Tax Expense 16.6 6.6 91.9 72.2
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Income from Continuing Operations 28.6 13.7 143.1 118.9
Income from Discontinued
Operations - Net of Tax 71.5 4.4 93.3 18.3
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Net Income $ 100.1 $ 18.1 $ 236.4 $ 137.2
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Average Shares of Common Stock
Basic 83.6 81.8 82.8 81.1
Diluted 84.3 82.3 83.3 81.7
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Earnings Per Share of Common
Stock
Basic - Continuing
Operations $ 0.34 $ 0.17 $ 1.72 $ 1.47
Discontinued
Operations 0.86 0.05 1.13 0.22
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$ 1.20 $ 0.22 $ 2.85 $ 1.69
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Diluted - Continuing
Operations $ 0.34 $ 0.17 $ 1.72 $ 1.46
Discontinued
Operations 0.86 0.05 1.12 0.22
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$ 1.20 $ 0.22 $ 2.84 $ 1.68
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Dividends Per Share of Common
Stock $0.2825 $0.275 $ 1.13 $ 1.10
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ALLETE, Inc.
Consolidated Balance Sheet
For the Periods Ended December 31, 2003 and 2002
Millions
2003 2002
----------------------------------------------------------------------
Assets
Current Assets $ 695.4 $ 658.4
Property, Plant and Equipment 1,499.0 1,364.7
Investments 204.6 170.9
Goodwill 509.3 499.8
Discontinued Operations 87.9 346.1
Other 105.1 107.3
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Total Assets $ 3,101.3 $ 3,147.2
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2003 2002
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Notes Payable $ 53.0 $ 74.5
Long-Term Debt Due Within One Year 37.5 283.7
Other Current Liabilities 435.7 380.0
Long-Term Debt 747.7 696.4
Mandatorily Redeemable Preferred Securities - 75.0
Other Liabilities 322.2 277.4
Discontinued Operations 45.0 127.8
Shareholders' Equity 1,460.2 1,232.4
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Total Liabilities and Shareholders' Equity $3,101.3 $3,147.2
----------------------------------------------------------------------
----------------------------------------------------------------------
Quarter Ended Year Ended
December 31, December 31,
ALLETE, Inc. 2003 2002 2003 2002
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Net Income
Millions
Energy Services $ 8.1 $ 5.5 $ 42.4 $ 41.8
Automotive Services 24.8 14.9 114.8 94.2
Investments and
Corporate Charges (4.3) (6.7) (14.1) (17.1)
----------------------------------------------------------------------
Income from Continuing
Operations 28.6 13.7 143.1 118.9
Income from Discontinued
Operations 71.5 4.4 93.3 18.3
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Net Income $ 100.1 $ 18.1 $ 236.4 $ 137.2
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Diluted Earnings Per Share
Continuing Operations $ 0.34 $ 0.17 $ 1.72 $ 1.46
Discontinued Operations 0.86 0.05 1.12 0.22
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$ 1.20 $ 0.22 $ 2.84 $ 1.68
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Statistical Data
Corporate
Common Stock
High $ 31.00 $ 23.80 $ 31.00 $ 31.10
Low $ 27.05 $ 18.65 $ 18.75 $ 18.50
Close $ 30.60 $ 22.68 $ 30.60 $ 22.68
Book Value $ 16.73 $ 14.39 $ 16.73 $ 14.39
Energy Services
Millions of Kilowatthours Sold
Regulated Utility
Retail
Residential 278.4 285.7 1,065.4 1,044.4
Commercial 322.1 319.9 1,285.6 1,257.0
Industrial 1,649.0 1,795.4 6,558.2 6,946.2
Other 19.9 20.9 79.2 77.4
Resale 505.9 395.4 2,155.3 1,806.7
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2,775.3 2,817.3 11,143.7 11,131.7
Nonregulated 361.7 321.3 1,462.3 1,149.2
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3,137.0 3,138.6 12,606.0 12,280.9
Automotive Services
Vehicles Sold
Used 419,000 393,000 1,810,000 1,741,000
Salvage 48,000 44,000 191,000 175,000
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467,000 437,000 2,001,000 1,916,000
Conversion Rate -
Used Vehicles 59.5% 55.1% 61.0% 59.0%
Vehicles Financed 238,000 231,000 950,000 946,000
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