Automotive Earnings Growth Highlights ALLETE's Third-Quarter Results
DULUTH, Minn.--Oct. 2, 20034, 2003--Bolstered by a strong showing from its Automotive Services businesses, ALLETE, Inc. today reported third quarter 2003 earnings of 57 cents per share, compared with 55 cents per share in the third quarter of 2002. Net income for the quarter rose six percent to $47.6 million on revenue of $397 million, compared with $45.1 million on revenue of $389 million during the same time period last year."Our third quarter results were on target with our expectations," said Dave Gartzke, ALLETE Chairman, President and CEO. "And I remain confident that we'll achieve our earnings projections for the year."
Net income at Automotive Services was $29.2 million in the third quarter of 2003, an increase of 20 percent over last year. This was due primarily to an increase in the number of vehicles sold at ADESA auctions and improved conversion rates compared with the third quarter of 2002 when difficult market conditions were present.
Separately today, ALLETE announced that its Board of Directors has approved a plan to spin-off its Automotive Services business which will become a publicly traded company to be named ADESA Corporation.
Energy Services net income was $15.3 million for the quarter compared with $17.5 million during the same time period in 2002. Higher employee benefit costs in 2003 and a positive one-time adjustment in 2002 related to the utility fuel adjustment clause impacted the third quarter comparison.
Florida Water Services Sale Update
ALLETE continues to divest of its water businesses. Significant progress was made during the third quarter with to-date sales or sales agreements totaling $442 million, which represents approximately 90 percent of Florida Water's assets.
"Nearly all of the Florida Water systems are now sold or contracted to be sold," said Gartzke. "We expect most of the transactions to close by the end of the year." Proceeds from these sales will be used to strengthen ALLETE's balance sheet. Earlier this month ALLETE issued a redemption notice on its $50 million, 7 3/4 percent First Mortgage Bonds.
ALLETE's corporate headquarters are located in Duluth, Minnesota. ALLETE's holdings include ADESA, the second largest wholesale vehicle auction network in North America; 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; and significant real estate holdings in Florida.
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.
ALLETE, Inc.
Consolidated Statement of Income
For the Periods Ended September 30, 2003 and 2002
Millions Except Per Share Amounts
Quarter Ended Nine Months Ended
2003 2002 2003 2002
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Operating Revenue
Energy Services $ 164.0 $171.2 $ 501.6 $ 468.2
Automotive Services 226.4 210.1 700.0 635.7
Investments 6.7 7.6 28.3 29.2
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Total Operating Revenue 397.1 388.9 1,229.9 1,133.1
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Operating Expenses
Fuel and Purchased Power 64.9 66.1 197.2 174.7
Operations 249.7 244.5 792.8 733.5
Interest 16.7 17.3 48.4 52.4
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Total Operating Expenses 331.3 327.9 1,038.4 960.6
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Operating Income from Continuing
Operations 65.8 61.0 191.5 172.5
Income Tax Expense 26.1 22.4 76.0 66.3
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Income from Continuing Operations 39.7 38.6 115.5 106.2
Income from Discontinued
Operations - Net of Tax 7.9 6.5 20.8 12.9
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Net Income $ 47.6 $ 45.1 $ 136.3 $ 119.1
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Average Shares of Common Stock
Basic 83.0 81.5 82.6 80.9
Diluted 83.4 81.9 82.9 81.5
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Earnings Per Share of Common
Stock
Basic - Continuing
Operations $ 0.48 $ 0.47 $ 1.40 $ 1.31
Discontinued
Operations 0.09 0.08 0.25 0.16
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$ 0.57 $ 0.55 $ 1.65 $ 1.47
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Diluted - Continuing
Operations $ 0.48 $ 0.47 $ 1.40 $ 1.30
Discontinued
Operations 0.09 0.08 0.24 0.16
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$ 0.57 $ 0.55 $ 1.64 $ 1.46
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Dividends Per Share of Common
Stock $0.2825 $0.275 $ 0.8475 $ 0.825
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ALLETE, Inc.
Consolidated Balance Sheet
Millions
Sept. 30, Dec. 31,
2003 2002
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Assets
Current Assets $ 884.3 $ 658.4
Property, Plant and Equipment 1,486.4 1,364.7
Investments 166.9 170.9
Goodwill 508.1 499.8
Discontinued Operations 322.6 346.1
Other 110.4 107.3
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Total Assets $3,478.7 $3,147.2
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Sept. 30, Dec. 31,
2003 2002
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Liabilities and Shareholders' Equity
Current Liabilities $ 815.5 $ 738.2
Long-Term Debt 753.0 661.3
Mandatorily Redeemable Preferred Securities 75.0 75.0
Other Liabilities 300.2 277.4
Discontinued Operations 169.2 162.9
Shareholders' Equity 1,365.8 1,232.4
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Total Liabilities and Shareholders' Equity $3,478.7 $3,147.2
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Quarter Ended Nine Months Ended
September 30, September 30,
ALLETE, Inc. 2003 2002 2003 2002
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Net Income
Millions
Energy Services $ 15.3 $ 17.5 $ 34.3 $ 36.3
Automotive Services 29.2 24.4 90.0 79.3
Investments and
Corporate Charges (4.8) (3.3) (8.8) (9.4)
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Income from Continuing
Operations 39.7 38.6 115.5 106.2
Income from Discontinued
Operations 7.9 6.5 20.8 12.9
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Net Income $ 47.6 $ 45.1 $ 136.3 $ 119.1
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Diluted Earnings Per Share
Continuing Operations $ 0.48 $ 0.47 $ 1.40 $ 1.30
Discontinued Operations 0.09 0.08 0.24 0.16
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$ 0.57 $ 0.55 $ 1.64 $ 1.46
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Statistical Data
Corporate
Common Stock
High $ 27.86 $ 27.62 $ 27.86 $ 31.10
Low $ 25.45 $ 18.50 $ 18.75 $ 18.50
Close $ 27.38 $ 21.60 $ 27.38 $ 21.60
Book Value $ 15.73 $ 14.38 $ 15.73 $ 14.38
Energy Services
Millions of
Kilowatthours Sold
Utility
Retail
Residential 250.2 240.1 787.0 758.7
Commercial 347.5 327.5 963.5 937.1
Industrial 1,535.6 1,745.8 4,909.2 5,150.8
Other 20.5 18.9 59.3 56.5
Resale 736.2 567.6 1,649.4 1,411.3
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2,890.0 2,899.9 8,368.4 8,314.4
Nonregulated 400.4 517.6 1,100.6 827.9
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3,290.4 3,417.5 9,469.0 9,142.3
Automotive Services
Vehicles Sold
Wholesale 458,000 433,000 1,391,000 1,348,000
Total Loss 45,000 41,000 143,000 131,000
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503,000 474,000 1,534,000 1,479,000
Conversion Rate -
Wholesale
Vehicles 61.1% 56.0% 61.5% 60.3%
Vehicles Financed 238,000 237,000 712,000 715,000