ALLETE Reports 2012 Earnings of $2.58 Per Share

ALLETE Reports 2012 Earnings of $2.58 Per Share

Results in upper end of guidance range

DULUTH, Minn.--(BUSINESS WIRE)-- ALLETE, Inc. (NYS: ALE) today reported 2012 earnings of $2.58 per share compared with $2.65 per share in 2011. Excluding two non-recurring items, ALLETE's pro-forma earnings in 2011 were $2.39 per share.


The company recorded net income of $97.1 million in 2012 compared with $93.8 million a year ago, an increase of 3.5 percent. Operating revenue was $961.2 million this year versus $928.2 million in 2011.

Income from ALLETE's Regulated Operations segment decreased by $4.3 million in 2012 compared to 2011, however, last year's results included the benefit of two non-recurring items: the reversal of a $6.2 million, or 18 cents per share, deferred tax liability and a $2.9 million, or 8 cents per share, income tax benefit. Excluding these items, Regulated Operations increased by $4.8 million.

Continued strong retail and municipal sales, higher cost recovery revenue and renewable energy tax credits all contributed to the year-over-year increase. Minnesota Power electric sales to industrial customers increased by nearly two percent over 2011 to more than 7.5 million kilowatt-hours. These increases were partially offset by increased operating and maintenance, depreciation and interest expenses, as well as higher costs under the Square Butte power purchase agreement.

The Investments and Other segment recorded net income of $1 million in 2012 compared to a net loss of $6.6 million in 2011, due primarily to lower state income tax and interest expense.

Earnings for 2012 were diluted by 16 cents per share due to issuances of common shares needed to fund major capital investments.

"I'm pleased with our 2012 financial and operational performance as we executed our multi-faceted growth strategies," said ALLETE President, Chairman and CEO Al Hodnik. "Our year-end results were in the upper end of our $2.50 to $2.60 guidance range."

Hodnik said he was confident in ALLETE's ability to deliver continued earnings growth in 2013. "We expect another strong year of energy sales as our regional economy grows and we will continue to make needed capital investments to ensure reliability and meet state renewable and environmental mandates."

ALLETE will host a conference call and webcast at 10:00 a.m. Eastern time today to discuss details of its financial performance for 2012, and its outlook for 2013. Interested parties may listen live by calling (877) 303-5852, or by accessing the webcast at www.allete.com. A replay of the call will be available through February 18, 2013 by calling (855) 859-2056, pass code 89501500.

ALLETE is an energy company headquartered in Duluth, Minn. ALLETE's energy businesses include Minnesota Power, Superior Water, Light & Power Co., BNI Coal and ALLETE Clean Energy. 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's press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements.

Non-GAAP financial measures utilized by the Company include presentations of earnings (loss) per share. ALLETE's management believes that these non-GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of changes in the fundamental earnings power of the Company's operations. Management believes that the presentation of the non-GAAP financial measures is appropriate and enables investors and analysts to more accurately compare the company's ongoing financial performance over the periods presented.

ALLETE, Inc.

Consolidated Statement of Income

For the Periods Ended December 31, 2012 and 2011

Millions Except Per Share Amounts

Quarter Ended

Year Ended

2012

2011

2012

2011

Operating Revenue

$

256.0

$

239.2

$

961.2

$

928.2

Operating Expenses

Fuel and Purchased Power

80.0

76.8

308.7

306.6

Operating and Maintenance

102.3

104.9

397.1

381.2

Depreciation

25.8

23.3

100.2

90.4

Total Operating Expenses

208.1

205

806

778.2

Operating Income

47.9

34.2

155.2

150.0

Other Income (Expense)

Interest Expense

(12.1

)

(11.0

)

(45.5

)

(43.6

)

Equity Earnings in ATC

5.1

4.7

19.4

18.4

Other

2.6

2.1

6.0

4.4

Total Other Expense

(4.4

)

(4.2

)

(20.1

)

(20.8

)

Income Before Non-Controlling Interest and Income Taxes

43.5

30.0

135.1

129.2

Income Tax Expense

14.6

10.9

38.0

35.6

Net Income

28.9

19.1

97.1

93.6

Less: Non-Controlling Interest in Subsidiaries

(0.2

)

Net Income Attributable to ALLETE

$

28.9

$

19.1

$

97.1

$

93.8

Average Shares of Common Stock

Basic

38.5

36.0

37.6

35.3

Diluted

38.6

36.1

37.6

35.4

Basic Earnings Per Share of Common Stock

$

0.76

$

0.53

$

2.59

$

2.66

Diluted Earnings Per Share of Common Stock

$

0.75

$

0.53

$

2.58

$

2.65

Dividends Per Share of Common Stock

$

0.46

$

0.445

$

1.84

$

1.78

Consolidated Balance Sheet

Millions

Dec. 31,

Dec. 31,

Dec. 31,

Dec. 31,

2012

2011

2012

2011

Assets

Liabilities and Shareholders' Equity

Cash and Short-Term Investments

$

80.8

$

101.1

Current Liabilities

$

283.4

$

163.1

Other Current Assets

192.4

175.9

Long-Term Debt

933.6

857.9

Property, Plant and Equipment

2,347.6

1,982.7

Deferred Income Taxes

423.8

373.6

Regulatory Assets

340.3

345.9

Regulatory Liabilities

60.1

43.5

Investment in ATC

107.3

98.9

Defined Benefit Pension & Other
Postretirement Benefit Plans

228.2

253.5

Investments

143.5

132.3

Other Liabilities

123.3

105.1

Other

41.5

39.2

Shareholders' Equity

1,201.0

1,079.3

Total Assets

$

3,253.4

$

2,876.0

Total Liabilities and Shareholders' Equity

$

3,253.4

$

2,876.0

Quarter Ended

Year Ended

ALLETE, Inc.

December 31,

December 31,

Income (Loss)

2012

2011

2012

2011

Millions

Regulated Operations

$

28.0

$

19.9

$

96.1

$

100.4

Investments and Other

0.9

(0.8

)

1.0

(6.6

)

Net Income Attributable to ALLETE

$

28.9

$

19.1

$

97.1

$

93.8

Diluted Earnings Per Share

$

0.75

$

0.53

$

2.58

$

2.65

Statistical Data

Corporate

Common Stock

High

$

42.09

$

42.54

$

42.66

$

42.54

Low

$

37.73

$

35.14

$

37.73

$

35.14

Close

$

40.98

$

41.98

$

40.98

$

41.98

Book Value

$

30.50

$

28.77

$

30.50

$

28.77

Kilowatt-hours Sold

Millions

Regulated Utility

Retail and Municipals