EX-99 6 rexhibit99.txt ALLETE SECOND QUARTER 2005 EARNINGS RELEASE EXHIBIT 99 [ALLETE LOGO] For Release: July 29, 2005 CONTACT: Margaret Hodnik 218-723-3966 mhodnik@allete.com INVESTOR Tim Thorp CONTACT: 218-723-3953 tthorp@allete.com NEWS ALLETE REPORTS SECOND QUARTER RESULTS; REAFFIRMS GUIDANCE FOR 2005 EARNINGS GROWTH KENDALL COUNTY CHARGE IMPACTS QUARTERLY EARNINGS For the second quarter 2005, ALLETE, Inc. (NYSE: ALE) today reported a loss of $1.45 per share from continuing operations that included a previously-announced charge of $1.84 per share related to the assignment of the Kendall County, Ill. power purchase agreement. Excluding the Kendall County charge, ALLETE's earnings from continuing operations were 39 cents per share 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 charge. "We're pleased that our core energy and real estate businesses continue to perform at a high level," said Donald J. Shippar, CEO of ALLETE. The company reaffirmed its guidance of 45 to 50 percent earnings growth in 2005 from continuing operations, excluding the Kendall 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 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 northeast Florida 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 incurred at the Kendall County facility was partially offset by increased expenses at the Taconite Harbor 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. In the second quarter of 2004, the company recorded a $3.2 million after-tax impairment in its emerging technology investment portfolio. -more- ALLETE NEWS RELEASE PAGE 2 -------------------------------------------------------------------------------- ALLETE, headquartered in Duluth, Minn., provides energy services in the upper Midwest 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. 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 - 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 JUNE 30, 2005 AND 2004 Millions Except Per Share Amounts
QUARTER ENDED YEAR TO DATE 2005 2004 2005 2004 ------------------------------------------------------------------------------------------------------------------------------------ OPERATING REVENUE $186.8 $186.2 $393.7 $ 395.2 ------------------------------------------------------------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------------------------------------------------------------ Total Operating Expenses 242.5 166.9 407.3 331.8 ------------------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS (55.7) 19.3 (13.6) 63.4 ------------------------------------------------------------------------------------------------------------------------------------ OTHER INCOME (EXPENSE) Interest Expense (6.7) (9.1) (13.5) (18.2) Other 1.5 (3.5) (2.7) (3.1) ------------------------------------------------------------------------------------------------------------------------------------ Total Other Expense (5.2) (12.6) (16.2) (21.3) ------------------------------------------------------------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------------------------------------------------------------ DIVIDENDS PER SHARE OF COMMON STOCK $0.3150 $0.8475 $0.6150 $1.6950 ------------------------------------------------------------------------------------------------------------------------------------
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 ----------------------------------------------------------------------- TOTAL ASSETS $ 1,353.4 $ 1,431.4 ----------------------------------------------------------------------- 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 -----------------------------------------------------------------------
ALLETE NEWS RELEASE PAGE 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 (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) ---------------------------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------------------------- 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.
QUARTER ENDED YEAR TO DATE JUNE 30, JUNE 30, ALLETE, INC. 2005 2004 2005 2004 ---------------------------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------------------------- 3,261.5 3,082.9 6,531.2 6,377.1 ---------------------------------------------------------------------------------------------------------------------------------- REAL ESTATE Acres Sold 96 159 579 1,427 Lots Sold - 12 7 211
[THIS EXHIBIT HAS BEEN FURNISHED AND SHALL NOT BE DEEMED "FILED" FOR PURPOSES OF SECTION 18 OF THE SECURITIES ACT OF 1934, NOR SHALL IT BE DEEMED INCORPORATED BY REFERENCE IN ANY FILING UNDER THE SECURITIES ACT OF 1933, EXCEPT AS SHALL BE EXPRESSLY SET FORTH BY SPECIFIC REFERENCE IN SUCH FILING.]