ALLETE Reports Second Quarter Earnings
DULUTH, Minn.--July 21, 2004--ALLETE, Inc. today reported second quarter 2004 earnings of 40 cents per share, compared with 53 cents per share in the second quarter of 2003. Earnings from continuing operations were 38 cents per share for the quarter, compared with 45 cents per share in the second quarter of 2003. Net income from continuing operations was $32.9 million for the quarter, compared with $37.1 million in the second quarter of 2003. For the first six months of the year, earnings from continuing operations increased from $75.1 million to $86 million."In spite of an impairment loss in our emerging technology investment portfolio and charges related to our business separation plans, earnings from continuing operations are up 15 percent year-to-date over last year," said Don Shippar, ALLETE President and CEO. "Energy Services reported another strong quarter, and demand for Florida real estate remains high."
Second quarter earnings at Energy Services climbed 37 percent from a year ago, aided by higher energy demand from industrial customers.
Within Investments and Corporate Charges, ALLETE Properties performance remained strong, earning $2.2 million compared to an exceptional $5.2 million in the second quarter of 2003. For the six months ended June 30, 2004, net income from ALLETE Properties was $13.2 million compared with $9.4 million for the first six months of 2003. The second quarter of 2004 also reflected the $4.7 million after-tax impairment on the emerging technology investment portfolio and lower interest expense due to decreased debt balances.
ALLETE expects 2004 net income for those businesses that will comprise post-spin-off ALLETE to increase by 15 percent over their 2003 results, excluding separation-related costs.
Net income from continuing operations at Automotive Services was $32.3 million for the quarter compared with $34.1 million during the same period last year and includes incremental expenses related to its separation from ALLETE. ADESA issued a press release today that provides details regarding its second quarter results.
ALLETE's board of directors is expected to meet in late August to finalize details of the proposed spin-off of ADESA, Inc. Dave Gartzke, ADESA Chairman, President and CEO, said the spin-off is on track to be completed by the end of September.
"Relevant details will be disclosed by press release, communications with our shareholders and public filings with the Securities and Exchange Commission after ALLETE's August board meeting," Gartzke said. Gartzke will resign his position as ALLETE board chairman immediately after the ADESA spin-off and is expected to be succeeded by Bruce Stender, 62, a member of the ALLETE board since 1995.
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. ALLETE is the majority owner of ADESA, Inc., a leading vehicle remarketing company. More information about the company is available on ALLETE'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. 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, 2004 and 2003
Millions Except Per Share Amounts
Quarter Ended Six Months Ended
2004 2003 2004 2003
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Operating Revenue
Energy Services $183.9 $158.5 $366.2 $337.6
Automotive Services 232.1 240.7 479.8 473.6
Investments (0.7) 10.7 27.8 21.6
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Total Operating Revenue 415.3 409.9 873.8 832.8
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Operating Expenses
Fuel and Purchased Power 77.2 64.9 146.1 132.3
Operations 267.6 266.9 556.9 543.1
Interest 13.8 16.0 26.9 32.9
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Total Operating Expenses 358.6 347.8 729.9 708.3
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Operating Income from Continuing
Operations 56.7 62.1 143.9 124.5
Income Tax Expense 23.8 25.0 57.9 49.4
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Income from Continuing Operations 32.9 37.1 86.0 75.1
Income from Discontinued Operations
- Net of Tax 1.8 7.3 1.2 13.6
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Net Income $34.7 $44.4 $87.2 $88.7
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Average Shares of Common Stock
Basic 85.1 82.6 84.7 82.4
Diluted 85.6 82.9 85.2 82.6
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Basic Earnings Per Share of Common
Stock
Continuing Operations $0.39 $0.45 $1.02 $0.91
Discontinued Operations 0.02 0.09 0.01 0.17
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$0.41 $0.54 $1.03 $1.08
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Diluted Earnings Per Share of Common
Stock
Continuing Operations $0.38 $0.45 $1.01 $0.91
Discontinued Operations 0.02 0.08 0.01 0.16
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$0.40 $0.53 $1.02 $1.07
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Dividends Per Share of Common Stock $0.2825 $0.2825 $0.565 $0.565
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ALLETE, Inc.
Consolidated Balance Sheet
Millions
Jun. 30, Dec. 31,
2004 2003
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Assets
Current Assets $ 1,375.9 $ 695.4
Property, Plant and Equipment 1,484.7 1,499.0
Investments 184.6 204.6
Goodwill 509.5 511.0
Discontinued Operations 8.2 87.9
Other 118.7 103.4
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Total Assets $ 3,681.6 $ 3,101.3
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Jun. 30, Dec. 31,
2004 2003
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Liabilities and Shareholders' Equity
Notes Payable - $ 53.0
Long-Term Debt Due Within One Year $ 320.1 37.5
Other Current Liabilities 553.3 435.7
Long-Term Debt 790.9 747.7
Other Liabilities 414.0 322.2
Discontinued Operations 2.7 45.0
Shareholders' Equity 1,600.6 1,460.2
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Total Liabilities and Shareholders' Equity $3,681.6 $3,101.3
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Quarter Ended Six Months Ended
June 30, June 30,
ALLETE, Inc. 2004 2003 2004 2003
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Net Income
Millions
Energy Services $9.3 $6.8 $23.6 $19.0
Automotive Services 32.3 34.1 65.6 60.8
Investments and Corporate
Charges (8.7) (3.8) (3.2) (4.7)
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Income from Continuing
Operations 32.9 37.1 86.0 75.1
Income from Discontinued
Operations 1.8 7.3 1.2 13.6
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Net Income $34.7 $44.4 $87.2 $88.7
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Diluted Earnings Per Share
Continuing Operations $0.38 $0.45 $1.01 $0.91
Discontinued Operations 0.02 0.08 0.01 0.16
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$0.40 $0.53 $1.02 $1.07
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Statistical Data
Corporate
Common Stock
High $36.71 $26.70 $36.71 $26.70
Low $31.62 $20.50 $30.00 $18.75
Close $33.30 $26.55 $33.30 $26.55
Book Value $18.06 $15.39 $18.06 $15.39
Energy Services
Millions of Kilowatthours
Sold
Regulated Utility
Retail and
Municipals
Residential 228.8 223.9 539.1 536.8
Commercial 294.3 289.6 626.2 616.0
Industrial 1,770.0 1,655.1 3,536.8 3,373.6
Municipals 189.0 204.5 402.8 405.1
Other 17.8 18.3 38.0 38.8
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2,499.9 2,391.4 5,142.9 4,970.3
Other Power
Suppliers 168.4 300.8 385.6 508.1
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2,668.3 2,692.2 5,528.5 5,478.4
Nonregulated 414.6 281.1 848.6 700.2
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3,082.9 2,973.3 6,377.1 6,178.6
Automotive Services
Vehicles Sold
Used 445,000 471,000 926,000 933,000
Salvage 50,000 49,000 108,000 98,000
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495,000 520,000 1,034,000 1,031,000
Conversion Rate -
Used Vehicles 61.7% 61.1% 65.0% 61.8%
Loan Transactions 273,000 241,000 536,000 474,000