ALLETE Reports Second Quarter Results; Reaffirms Guidance for 2005 Earnings Growth; Kendall County Charge Impacts Quarterly Earnings.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. -- For the second quarter 2005, ALLETE, Inc.
(NYSE NYSESee: New York Stock Exchange :ALE) today reported a loss of $1.45 per share 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 that included a previously-announced charge of $1.84 per share related to the assignment of the Kendall County Kendall County is the name of several counties in the United States:
Excluding the Kendall County charge, ALLETE's earnings from continuing operations were 39 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. compared with eight cents per share in the second quarter of 2004. The company's earnings in the second quarter of 2004 were adversely affected by an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge. "We're we're Contraction of we are. we're we are pleased that our core energy and real estate businesses continue to perform at a high level," said Donald Donald (Domnall, Domhnall, Dumhnuil, Dónall) is an anglicized version of a Scottish or Irish Gaelic personal name, containing the elements dumno "world" and val "rule", viz. "ruler of the world". Compare Dumnorix. J. Shippar, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of ALLETE. The company reaffirmed its guidance of 45 to 50 percent earnings growth in 2005 from continuing operations, excluding the Kendall Ken·dall , Edward Calvin 1886-1972. American biochemist. He shared a 1950 Nobel Prize for discoveries concerning the hormones of the adrenal cortex. transaction and any earnings from investments it may make in growth initiatives. "Two significant events occurred during the quarter," Shippar said. "First, the Kendall County transaction was a key strategic accomplishment for our company. Second, site preparation began at our Town Center at Palm Coast project, which we expect will contribute substantial earnings over the next few years." Quarterly net income from continuing operations at the company's Regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. Utility segment climbed five percent to $7.8 million compared to the second quarter of 2004, due to continued strong electricity sales to retail customers and other power suppliers. Real Estate income from continuing operations was $2.8 million in the second quarter of 2005, compared with $2.1 million in the same period a year ago. During the quarter, ALLETE Properties recorded its first sales from Town Center at Palm Coast, a major development project now taking shape in the fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. 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 community. Results from Nonregulated Energy Operations reflected the Kendall County charge, which was announced by ALLETE in April of this year. The elimination of operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. incurred at the Kendall County facility was partially offset by increased expenses at 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 harbor: see port. generating facility and less income at other Nonregulated Energy Operations businesses. In ALLETE's Other business segment, the second quarter produced income from continuing operations of $300,000 compared to a loss of $7.2 million a year ago. This quarter the company benefited from lower interest expense due to reduced debt balances and debt refinancing Refinancing An extension and/or increase in amount of existing debt. . In the second quarter of 2004, the company recorded a $3.2 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. impairment in its emerging technology investment portfolio. ALLETE, headquartered in Duluth, Minn., provides energy services in the upper Midwest The Upper Midwest is a region of the United States with no universally agreed-upon boundary, but it almost always lies within the US Census Bureau's definition of the Midwest and includes the states of Minnesota and Wisconsin, as well as at least the Upper Peninsula of Michigan. and has significant real estate holdings in Florida. More information about the company is available 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 June 30, 2005 and 2004
Millions Except Per Share Amounts
Quarter Ended Year to Date
2005 2004 2005 2004
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Operating Revenue $186.8 $186.2 $393.7 $395.2
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Operating Expenses
Fuel and Purchased Power 70.3 77.2 139.4 146.1
Operating and Maintenance 81.6 77.2 164.7 160.8
Kendall County Charge 77.9 - 77.9 -
Depreciation 12.7 12.5 25.3 24.9
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Total Operating Expenses 242.5 166.9 407.3 331.8
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Operating Income (Loss) from
Continuing Operations (55.7) 19.3 (13.6) 63.4
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Other Income (Expense)
Interest Expense (6.7) (9.1) (13.5) (18.2)
Other 1.5 (3.5) (2.7) (3.1)
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Total Other Expense (5.2) (12.6) (16.2) (21.3)
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Income (Loss) from Continuing
Operations
Before Minority Interest and
Income Taxes (60.9) 6.7 (29.8) 42.1
Minority Interest 0.2 0.5 1.4 1.9
----------------------------------------------------------------------
Income (Loss) from Continuing
Operations Before Income Taxes (61.1) 6.2 (31.2) 40.2
Income Tax Expense (Benefit) (21.5) 3.8 (9.6) 16.4
----------------------------------------------------------------------
Income (Loss) from Continuing
Operations
Before Change in Accounting
Principle (39.6) 2.4 (21.6) 23.8
Income (Loss) from Discontinued
Operations - Net of Tax (0.7) 34.3 (1.3) 65.6
Change in Accounting Principle -
Net of Tax - - - (7.8)
----------------------------------------------------------------------
Net Income (Loss) $(40.3) $36.7 $(22.9) $81.6
----------------------------------------------------------------------
Average Shares of Common Stock
Basic 27.2 28.4 27.2 28.2
Diluted 27.2 28.5 27.2 28.4
----------------------------------------------------------------------
Basic Earnings (Loss) Per Share of
Common Stock
Continuing Operations $(1.45) $0.08 $(0.79) $0.85
Discontinued Operations (0.03) 1.21 (0.05) 2.32
Change in Accounting Principle - - - (0.28)
----------------------------------------------------------------------
$(1.48) $1.29 $(0.84) $2.89
----------------------------------------------------------------------
Diluted Earnings (Loss) Per Share
of Common Stock
Continuing Operations $(1.45) $0.08 $(0.79) $0.84
Discontinued Operations (0.03) 1.21 (0.05) 2.31
Change in Accounting Principle - - - (0.27)
----------------------------------------------------------------------
$(1.48) $1.29 $(0.84) $2.88
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Dividends Per Share of Common
Stock $0.3150 $0.8475 $0.6150 $1.6950
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Consolidated Balance Sheet
Millions
Jun. 30, Dec. 31,
2005 2004
----------------------------------------------------------------------
Assets
Cash and Cash Equivalents $79.1 $44.9
Restricted Cash - 30.3
Short-Term Investments 63.0 149.2
Other Current Assets 152.9 141.7
Property, Plant and Equipment 883.0 883.1
Investments 123.3 124.5
Discontinued Operations 4.0 4.9
Other 48.1 52.8
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Total Assets $1,353.4 $1,431.4
----------------------------------------------------------------------
Jun. 30, Dec. 31,
2005 2004
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities $85.7 $97.8
Long-Term Debt 389.3 390.2
Other Liabilities 295.5 300.9
Discontinued Operations 6.5 12.0
Shareholders' Equity 576.4 630.5
----------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $1,353.4 $1,431.4
----------------------------------------------------------------------
Quarter Ended Year to Date
June 30, June 30,
ALLETE, Inc. 2005 2004 2005 2004
----------------------------------------------------------------------
Net Income (Loss)
Millions
Regulated Utility $7.8 $7.4 $20.7 $19.9
Nonregulated Energy
Operations (a) (50.5) 0.1 (48.9) (0.1)
Real Estate 2.8 2.1 9.7 13.0
Other 0.3 (7.2) (3.1) (9.0)
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Income (Loss) from
Continuing Operations (39.6) 2.4 (21.6) 23.8
Income (Loss) from
Discontinued Operations (0.7) 34.3 (1.3) 65.6
Change in Accounting
Principle - - - (7.8)
----------------------------------------------------------------------
Net Income $(40.3) $36.7 $(22.9) $81.6
----------------------------------------------------------------------
Diluted Earnings (Loss) Per
Share
Continuing Operations $(1.45) $0.08 $(0.79) $0.84
Discontinued Operations (0.03) 1.21 (0.05) 2.31
Change in Accounting
Principle - - - (0.27)
----------------------------------------------------------------------
$(1.48) $1.29 $(0.84) $2.88
----------------------------------------------------------------------
(a) In April 2005, ALLETE recorded a $50.4 million, or $1.84 per
diluted share, charge related to the assignment of the Kendall
County power purchase agreement.
Note: In 2005, we began allocating corporate charges and interest
expense to our business segments. For comparative purposes,
segment information for 2004 has been restated to reflect the
new allocation method used in 2005 for corporate charges and
interest expense. This restatement had no impact on
consolidated net income or earnings per share.
Kilowatthours Sold
Millions
Regulated Utility
Retail and Municipals
Residential 229.9 228.8 549.7 539.1
Commercial 300.5 294.3 640.3 626.2
Industrial 1,746.9 1,770.0 3,524.0 3,536.8
Municipals 199.3 189.0 421.3 402.8
Other 18.1 17.8 38.5 38.0
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2,494.7 2,499.9 5,173.8 5,142.9
Other Power Suppliers 366.9 168.4 603.6 385.6
----------------------------------------------------------------------
2,861.6 2,668.3 5,777.4 5,528.5
Nonregulated Energy
Operations 399.9 414.6 753.8 848.6
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3,261.5 3,082.9 6,531.2 6,377.1
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Real Estate
Acres Sold 96 159 579 1,427
Lots Sold - 12 7 211
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