ALLETE Reports Second Quarter Earnings and Reaffirms 2008 Earnings Guidance

  
    
  
  
    
      ALLETE, Inc. (NYSE: ALE) today reported second quarter 2008 earnings of 
      37 cents per share, which were consistent with the company’s 
      expectations. CEO Don Shippar said the company reaffirms its previously 
      stated earnings guidance of a range from $2.70 to $2.90 per share for 
      2008.
    
    
      Second quarter 2008 net income was $10.7 million on operating revenue of 
      $189.8 million, compared to $22.6 million of net income and $223.3 of 
      operating revenue in the corresponding period a year ago. Last year’s 
      results included two major property sales, resulting in net income of 
      $11.5 million for the company’s real estate 
      segment. Real estate income in the second quarter this year was $2.5 
      million, or about 31 cents per share lower than in 2007.
    
    
      Earnings in the regulated utility segment were $5.2 million in the 
      second quarter of 2008, compared to $6.1 million a year ago. 
      Depreciation and interest expense were higher year-over-year as the 
      result of a major capital expenditure program underway at Minnesota 
      Power. Operation and maintenance expenses were also higher in 2008, and 
      margins on sales to other power suppliers were lower.
    
    
      Income from ALLETE’s “Other” 
      segment declined $2.7 million in the second quarter compared to 2007 
      partially due to lower earnings on cash and short-term investments. 
      Also, in the second quarter of 2007, the “Other” 
      segment included a positive tax audit settlement and the release from a 
      loan guarantee.
    
    
      “We expect to record positive earnings for our 
      real estate business despite a difficult market environment,” 
      said Shippar. “Our energy businesses are 
      performing as we expected they would, and increased interim rates at 
      Minnesota Power that go into effect today will begin to offset increased 
      expenses.”
    
    
      Shippar added that growth at Minnesota Power will continue as a result 
      of its significant capital expenditure program and the company will also 
      make additional investments in the American Transmission Company.
    
    
      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. 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, 2008 and 2007
          
        
      
      
        
          
            Millions Except Per Share Amounts-Unaudited
          
        
      
      
        
           
        
        
           
        
        
        
        
           
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
          Quarter Ended
        
        
          Year to Date
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
          2008
        
        
           
        
        
           
        
        
           
        
        
          2007
        
        
           
        
        
           
        
        
           
        
        
          2008
        
        
           
        
        
           
        
        
           
        
        
          2007
        
        
           
        
      
      
        
          Operating Revenue
        
        
           
        
        
          $
        
        
          189.8
        
        
           
        
        
           
        
        
          $
        
        
          223.3
        
        
           
        
        
           
        
        
          $
        
        
          403.2
        
        
           
        
        
           
        
        
          $
        
        
          428.6
        
        
           
        
      
      
        
          Operating Expenses
        
        
        
        
        
        
           
        
        
        
        
        
        
           
        
        
        
      
      
        
        
        
          Fuel and Purchased Power
        
        
        
        
        
        
          75.0
        
        
        
        
        
        
        
        
          92.9
        
        
        
        
        
        
        
        
          161.3
        
        
        
        
        
        
        
        
          170.6
        
        
        
      
      
        
        
        
          Operating and Maintenance
        
        
        
        
        
        
          83.8
        
        
        
        
        
        
        
        
          84.6
        
        
        
        
        
        
        
        
          166.2
        
        
        
        
        
        
        
        
          159.2
        
        
        
      
      
        
           
        
        
          Depreciation
        
        
           
        
        
           
        
        
          12.9
        
        
           
        
        
           
        
        
           
        
        
          11.9
        
        
           
        
        
           
        
        
           
        
        
          25.6
        
        
           
        
        
           
        
        
           
        
        
          23.6
        
        
           
        
      
      
        
           
        
        
           
        
        
          Total Operating Expenses
        
        
           
        
        
           
        
        
          171.7
        
        
           
        
        
           
        
        
           
        
        
          189.4
        
        
           
        
        
           
        
        
           
        
        
          353.1
        
        
           
        
        
           
        
        
           
        
        
          353.4
        
        
           
        
      
      
        
          Operating Income
        
        
           
        
        
           
        
        
          18.1
        
        
           
        
        
           
        
        
           
        
        
          33.9
        
        
           
        
        
           
        
        
           
        
        
          50.1
        
        
           
        
        
           
        
        
           
        
        
          75.2
        
        
           
        
      
      
        
          Other Income (Expense)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Interest Expense
        
        
        
        
        
        
          (7.2
        
        
          )
        
        
        
        
        
        
          (6.1
        
        
          
            )
          
        
        
          
             
          
        
        
        
        
          (13.9
        
        
          )
        
        
        
        
        
        
          (12.4
        
        
          )
        
      
      
        
        
        
          Equity Earnings in ATC
        
        
        
        
        
        
          3.6
        
        
        
        
        
        
        
        
          3.2
        
        
        
        
        
        
        
        
          7.0
        
        
        
        
        
        
        
        
          6.1
        
        
        
      
      
        
           
        
        
          Other
        
        
           
        
        
           
        
        
          2.5
        
        
           
        
        
           
        
        
           
        
        
          4.1
        
        
           
        
        
           
        
        
           
        
        
          11.1
        
        
           
        
        
           
        
        
           
        
        
          8.7
        
        
           
        
      
      
        
           
        
        
           
        
        
          Total Other Income (Expense)
        
        
           
        
        
           
        
        
          (1.1
        
        
          )
        
        
           
        
        
           
        
        
          1.2
        
        
           
        
        
           
        
        
           
        
        
          4.2
        
        
           
        
        
           
        
        
           
        
        
          2.4
        
        
           
        
      
      
        
          Income Before Minority Interest and Income Taxes
        
        
        
        
        
        
          17.0
        
        
        
        
        
        
        
        
          35.1
        
        
        
        
        
        
        
        
          54.3
        
        
        
        
        
        
        
        
          77.6
        
        
        
      
      
        
          Income Tax Expense
        
        
        
        
        
        
          6.2
        
        
        
        
        
        
        
        
          11.2
        
        
        
        
        
        
        
        
          19.9
        
        
        
        
        
        
        
        
          27.3
        
        
        
      
      
        
          Minority Interest
        
        
           
        
        
           
        
        
          0.1
        
        
           
        
        
           
        
        
           
        
        
          1.3
        
        
           
        
        
           
        
        
           
        
        
          0.1
        
        
           
        
        
           
        
        
           
        
        
          1.4
        
        
           
        
      
      
        
          Net Income
        
        
           
        
        
          $
        
        
          10.7
        
        
           
        
        
           
        
        
          $
        
        
          22.6
        
        
           
        
        
           
        
        
          $
        
        
          34.3
        
        
           
        
        
           
        
        
          $
        
        
          48.9
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Average Shares of Common Stock
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Basic
        
        
        
        
        
        
          28.8
        
        
        
        
        
        
        
        
          28.2
        
        
        
        
        
        
        
        
          28.7
        
        
        
        
        
        
        
        
          28.1
        
        
        
      
      
        
           
        
        
          Diluted
        
        
           
        
        
           
        
        
          28.9
        
        
           
        
        
           
        
        
           
        
        
          28.3
        
        
           
        
        
           
        
        
           
        
        
          28.8
        
        
           
        
        
           
        
        
           
        
        
          28.2
        
        
           
        
      
      
        
          Basic Earnings Per Share of Common Stock
        
        
        
        
          $
        
        
          0.37
        
        
        
        
        
        
          $
        
        
          0.80
        
        
        
        
        
        
          $
        
        
          1.19
        
        
        
        
        
        
          $
        
        
          1.74
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted Earnings Per Share of Common Stock
        
        
        
        
          $
        
        
          0.37
        
        
        
        
        
        
          $
        
        
          0.80
        
        
        
        
        
        
          $
        
        
          1.19
        
        
        
        
        
        
          $
        
        
          1.73
        
        
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Dividends Per Share of Common Stock
        
        
           
        
        
          $
        
        
          0.43
        
        
           
        
        
           
        
        
          $
        
        
          0.41
        
        
           
        
        
           
        
        
          $
        
        
          0.86
        
        
           
        
        
           
        
        
          $
        
        
          0.82
        
        
           
        
      
    
    
      
        
          
            Consolidated Balance Sheet
          
        
      
      
        
          
            Millions-Unaudited
          
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
          Jun. 30,
        
        
        
        
          Dec. 31,
        
        
        
        
        
        
        
        
          Jun. 30,
        
        
        
        
          Dec. 31,
        
      
      
        
           
        
        
           
        
        
          2008
        
        
           
        
        
          2007
        
        
           
        
        
           
        
        
           
        
        
          2008
        
        
           
        
        
          2007
        
      
      
        
          Assets
        
        
        
        
        
        
        
        
        
        
        
        
          Liabilities and Shareholders' Equity
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and Short-Term Investments
        
        
        
        
          $
        
        
          99.1
        
        
        
        
          $
        
        
          46.4
        
        
        
        
          Current Liabilities
        
        
        
        
          $
        
        
          142.0
        
        
        
        
          $
        
        
          137.1
        
      
      
        
          Other Current Assets
        
        
        
        
        
        
          140.1
        
        
        
        
        
        
          168.1
        
        
        
        
          Long-Term Debt
        
        
        
        
        
        
          538.5
        
        
        
        
        
        
          410.9
        
      
      
        
          Property, Plant and Equipment
        
        
        
        
        
        
          1,224.3
        
        
        
        
        
        
          1,104.5
        
        
        
        
          Other Liabilities
        
        
        
        
        
        
          349.1
        
        
        
        
        
        
          353.6
        
      
      
        
          Investments
        
        
        
        
        
        
          208.3
        
        
        
        
        
        
          213.8
        
        
        
        
          Shareholders' Equity
        
        
        
        
        
        
          759.2
        
        
        
        
        
        
          742.6
        
      
      
        
          Other
        
        
           
        
        
           
        
        
          117.0
        
        
           
        
        
           
        
        
          111.4
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Total Assets
        
        
           
        
        
          $
        
        
          1,788.8
        
        
           
        
        
          $
        
        
          1,644.2
        
        
           
        
        
          Total Liabilities and Shareholders' Equity
        
        
           
        
        
          $
        
        
          1,788.8
        
        
           
        
        
          $
        
        
          1,644.2
        
      
    
    
      
        
           
        
        
           
        
        
           
        
        
        
        
        
        
           
        
        
          Quarter Ended
        
        
           
        
        
          Year to Date
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
          June 30,
        
        
        
        
          June 30,
        
      
      
        
          ALLETE, Inc.
        
        
           
        
        
          2008
        
        
           
        
        
           
        
        
          2007
        
        
           
        
        
          2008
        
        
           
        
        
          2007
        
      
      
        
          Income (Loss)
        
        
        
        
        
        
           
        
        
        
        
        
        
        
        
           
        
        
        
      
      
        
          Millions
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Regulated Utility
        
        
        
        
          $
        
        
          5.2
        
        
        
        
        
        
          $
        
        
          6.1
        
        
        
        
          $
        
        
          23.3
        
        
        
        
          $
        
        
          24.9
        
      
      
        
        
        
          Nonregulated Energy Operations
        
        
        
        
        
        
          1.2
        
        
        
        
        
        
        
        
          0.6
        
        
        
        
        
        
          1.4
        
        
        
        
        
        
          2.8
        
      
      
        
        
        
          ATC
        
        
        
        
        
        
          2.0
        
        
        
        
        
        
        
        
          1.9
        
        
        
        
        
        
          4.0
        
        
        
        
        
        
          3.7
        
      
      
        
        
        
          Real Estate
        
        
        
        
        
        
          2.5
        
        
        
        
        
        
        
        
          11.5
        
        
        
        
        
        
          2.0
        
        
        
        
        
        
          14.6
        
      
      
        
           
        
        
          Other
        
        
           
        
        
           
        
        
          (0.2
        
        
          )
        
        
           
        
        
           
        
        
          2.5
        
        
           
        
        
           
        
        
          3.6
        
        
           
        
        
           
        
        
          2.9
        
      
      
        
           
        
        
          Net Income
        
        
           
        
        
          $
        
        
          10.7
        
        
           
        
        
           
        
        
          $
        
        
          22.6
        
        
           
        
        
          $
        
        
          34.3
        
        
           
        
        
          $
        
        
          48.9
        
      
      
        
          Diluted Earnings Per Share
        
        
        
        
          $
        
        
          0.37
        
        
        
        
        
        
          $
        
        
          0.80
        
        
        
        
          $
        
        
          1.19
        
        
        
        
          $
        
        
          1.73
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Statistical Data
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Corporate
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Common Stock
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          High
        
        
        
        
        
        
          $
        
        
          46.11
        
        
        
        
        
        
          $
        
        
          51.30
        
        
        
        
          $
        
        
          46.11
        
        
        
        
          $
        
        
          51.30
        
      
      
        
        
        
        
        
          Low
        
        
        
        
        
        
          $
        
        
          38.82
        
        
        
        
        
        
          $
        
        
          45.39
        
        
        
        
          $
        
        
          33.76
        
        
        
        
          $
        
        
          44.93
        
      
      
        
        
        
        
        
          Close
        
        
        
        
        
        
          $
        
        
          42.00
        
        
        
        
        
        
          $
        
        
          47.05
        
        
        
        
          $
        
        
          42.00
        
        
        
        
          $
        
        
          47.05
        
      
      
        
        
        
          Book Value
        
        
        
        
          $
        
        
          24.51
        
        
        
        
        
        
          $
        
        
          23.23
        
        
        
        
          $
        
        
          24.51
        
        
        
        
          $
        
        
          23.23
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Kilowatthours Sold
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Millions
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Regulated Utility
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Retail and Municipals
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
          Residential
        
        
        
        
        
        
          239.2
        
        
        
        
        
        
        
        
          231.7
        
        
        
        
        
        
          601.8
        
        
        
        
        
        
          573.3
        
      
      
        
        
        
        
        
        
        
          Commercial
        
        
        
        
        
        
          307.6
        
        
        
        
        
        
        
        
          320.9
        
        
        
        
        
        
          667.2
        
        
        
        
        
        
          673.1
        
      
      
        
        
        
        
        
        
        
          Municipals
        
        
        
        
        
        
          226.6
        
        
        
        
        
        
        
        
          229.2
        
        
        
        
        
        
          499.5
        
        
        
        
        
        
          495.6
        
      
      
        
        
        
        
        
        
        
          Industrial
        
        
        
        
        
        
          1,788.9
        
        
        
        
        
        
        
        
          1,734.0
        
        
        
        
        
        
          3,612.1
        
        
        
        
        
        
          3,439.4
        
      
      
        
           
        
        
           
        
        
           
        
        
          Other
        
        
           
        
        
           
        
        
          19.2
        
        
           
        
        
           
        
        
           
        
        
          19.0
        
        
           
        
        
           
        
        
          41.5
        
        
           
        
        
           
        
        
          41.3
        
      
      
        
        
        
        
        
        
        
        
        
          Total Retail and Municipal
        
        
        
        
        
        
          2,581.5
        
        
        
        
        
        
        
        
          2,534.8
        
        
        
        
        
        
          5,422.1
        
        
        
        
        
        
          5,222.7
        
      
      
        
           
        
        
           
        
        
          Other Power Suppliers
        
        
           
        
        
           
        
        
          375.1
        
        
           
        
        
           
        
        
           
        
        
          513.0
        
        
           
        
        
           
        
        
          779.2
        
        
           
        
        
           
        
        
          1,036.9
        
      
      
        
        
        
        
        
        
        
        
        
          Total Regulated Utility
        
        
        
        
        
        
          2,956.6
        
        
        
        
        
        
        
        
          3,047.8
        
        
        
        
        
        
          6,201.3
        
        
        
        
        
        
          6,259.6
        
      
      
        
           
        
        
          Nonregulated Energy Operations
        
        
           
        
        
           
        
        
          59.7
        
        
           
        
        
           
        
        
           
        
        
          59.8
        
        
           
        
        
           
        
        
          108.3
        
        
           
        
        
           
        
        
          123.5
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
          Total Kilowatthours Sold
        
        
           
        
        
           
        
        
          3,016.3
        
        
           
        
        
           
        
        
           
        
        
          3,107.6
        
        
           
        
        
           
        
        
          6,309.6
        
        
           
        
        
           
        
        
          6,383.1
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Real Estate
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Town Center Development Project
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Commercial Square Footage Sold
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          435,000
        
        
        
        
        
        
          -
        
        
        
        
        
        
          435,000
        
      
      
        
        
        
        
        
          Residential Units
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          130
        
        
        
        
        
        
          -
        
        
        
        
        
        
          130
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Palm Coast Park Development Project
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Commercial Square Footage Sold
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          40,000
        
        
        
        
        
        
          -
        
        
        
        
        
        
          40,000
        
      
      
        
        
        
        
        
          Residential Units
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          406
        
        
        
        
        
        
          -
        
        
        
        
        
        
          406
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Other Land
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Acres Sold
        
        
        
        
        
        
          49
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
          51
        
        
        
        
        
        
          367