<PAGE>
[ALLETE LOGO] For Release: October 18, 2000
Contact: Terry Johnson
NEWS (218) 723-3934
[email protected]
Investor contact: Tim Thorp
(218) 723-3953
[email protected]
ALLETE THIRD QUARTER EARNINGS ON TARGET; ANNUAL EARNINGS
--------------------------------------------------------
GROWTH TARGET HIKED TO 12 PERCENT FOR 2001
------------------------------------------
ALLETE (NYSE: ALE) today reported third quarter earnings of 50 cents per share,
meeting analysts' expectations and matching last year's strong third quarter
results.
Third quarter net income was $35 million on quarterly revenue of $323.5 million
compared to net income of $34.5 million on revenue of $308 million a year ago.
"We are on track to achieve our target of 10 percent annual earnings growth for
2000," said Edwin L. Russell, chief executive officer of ALLETE. "Equally
important, our automotive acquisitions have positioned us to grow earnings by 12
percent in 2001." Russell noted that ADESA recently acquired 24 auto auctions in
three different transactions. Based on twelve-month-ended historical data, the
newly acquired auctions sold about 600,000 vehicles, generating revenue of
approximately $200 million.
AUTOMOTIVE SERVICES continued its double-digit growth in net income. The number
of vehicles sold at ADESA auctions increased 23 percent. Same store growth
increased 13 percent as measured by earnings before interest, taxes,
depreciation, amortization and lease expense. Vehicles financed by Automotive
Finance Corporation were up 6.5 percent over the same period last year. In
addition, AFC's loan portfolio is up 15 percent over 1999 to $395 million.
Third quarter net income from INVESTMENTS was lower than 1999 because of two
large real estate transactions that occurred last year. Overall, year-to-date
results for real estate are ahead of last year, although they typically vary
from quarter to quarter, depending on the timing of major transactions. Net
income from the company's securities portfolio and emerging technology
investments posted strong increases over last year.
In ENERGY SERVICES, sales to industrial, commercial and residential customers
were up 13 percent and exceeded record levels that were achieved in 1999. Net
income, however, declined by $7.2 million due in large part to a lack of demand
in the region's power market as a result of more moderate summer weather.
Transmission constraints were also a factor.
Net income from WATER SERVICES was steady.
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ALLETE News Release Page 2
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ALLETE is a multi-services company with corporate headquarters in Duluth,
Minnesota. Holdings include the second largest wholesale automobile auction
network in North America; the leading provider of independent auto dealer
inventory financing; the largest investor-owned water utilities in Florida and
North Carolina; significant real estate holdings in Florida and a low-cost
electric utility that serves some of the largest industrial customers in the
United States.
The statements contained in this release and statements that the company 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 the company with the Securities and Exchange
Commission.
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<TABLE>
<CAPTION>
ALLETE
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
Millions Except Per Share Amounts
Quarter Ended Year to Date
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUE
Energy Services $146.1 $154.8 $426.6 $422.3
Automotive Services 137.4 105.5 386.6 306.3
Water Services 30.2 31.1 89.9 85.4
Investments 9.8 16.6 70.0 30.9
------ ------ ------ ------
Total Operating Revenue 323.5 308.0 973.1 844.9
------ ------ ------ ------
OPERATING EXPENSES
Fuel and Purchased Power 61.7 54.9 171.6 154.8
Operations 196.7 180.4 595.8 515.3
Interest Expense 15.7 15.1 47.2 43.7
------ ------ ------ ------
Total Operating Expenses 274.1 250.4 814.6 713.8
------ ------ ------ ------
OPERATING INCOME BEFORE CAPITAL RE AND ACE 49.4 57.6 158.5 131.1
INCOME (LOSS) FROM INVESTMENT IN CAPITAL RE AND
RELATED DISPOSITION OF ACE - 0.3 48.0 (15.5)
------ ------ ------ ------
OPERATING INCOME 49.4 57.9 206.5 115.6
DISTRIBUTIONS ON REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY 1.5 1.5 4.5 4.5
INCOME TAX EXPENSE 12.9 21.9 72.4 53.8
------ ------ ------ ------
NET INCOME $ 35.0 $ 34.5 $129.6 $ 57.3
====== ====== ====== ======
AVERAGE SHARES OF COMMON STOCK
Basic 70.0 68.6 69.6 68.2
Diluted 70.4 68.9 69.8 68.4
EARNINGS PER SHARE OF COMMON STOCK
Basic $0.50 $0.50 $1.85 $0.82
Diluted $0.50 $0.50 $1.84 $0.82
</TABLE>
<TABLE>
<CAPTION>
ALLETE
CONSOLIDATED BALANCE SHEET
Millions
Sept. 30, Dec. 31,
2000 1999
---------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets $ 716.7 $ 564.5
Property, Plant and Equipment 1,327.3 1,258.8
Investments 115.3 197.2
Goodwill 326.4 181.0
Other 110.7 111.1
--------- ---------
TOTAL ASSETS $ 2,596.4 $ 2,312.6
========= =========
Sept. 30, Dec. 31,
2000 1999
---------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 643.9 $ 398.3
Long-Term Debt 709.2 712.8
Other Liabilities 272.9 289.2
Mandatorily Redeemable Preferred
Securities of ALLETE Capital I 75.0 75.0
Redeemable Serial Preferred Stock - 20.0
Stockholders' Equity 895.4 817.3
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,596.4 $ 2,312.6
========= =========
</TABLE>
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<TABLE>
<CAPTION>
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
ALLETE 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
NET INCOME
Millions
Energy Services $ 11.4 $ 18.6 $ 31.4 $ 38.2
Automotive Services 15.4 9.7 42.0 31.3
Water Services 3.8 3.9 10.3 9.6
Investments 5.0 6.2 26.7 15.5
Corporate Charges (0.6) (3.9) (11.2) (13.2)
------ ------ ------ ------
Net Income Before Capital Re and ACE 35.0 34.5 99.2 81.4
Capital Re and ACE Transactions * - - 30.4 (24.1)
------ ------ ------ ------
Net Income $ 35.0 $ 34.5 $129.6 $ 57.3
DILUTED EARNINGS PER SHARE
Before Capital Re and ACE Transactions $ 0.50 $ 0.50 $ 1.40 $ 1.17
Capital Re and ACE Transactions * - - 0.44 (0.35)
------ ------ ------ ------
$ 0.50 $ 0.50 $ 1.84 $ 0.82
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* In May 2000 ALLETE sold its investment in ACE Limited (ACE) common stock, which resulted in an after-tax
gain of $30.4 million, or $.44 per share. The ACE shares were received in December 1999 upon completion
of ACE's merger with Capital Re Corporation (Capital Re). During 1999 ALLETE recorded an aggregate
$36.2 million, or $0.52 per share after-tax non-cash charge in connection with the valuation and exchange
of its investment in Capital Re stock for the ACE shares, including a $24.1 million, or $0.35 per share
charge in the second quarter.
<CAPTION>
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
ALLETE 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
STATISTICAL DATA
CORPORATE
Common Stock
High $24.25 $19.88 $24.25 $22.09
Low $17.31 $16.56 $14.75 $16.56
Close $22.13 $17.56 $22.13 $17.56
Book Value $12.02 $10.61 $12.02 $10.61
ENERGY SERVICES
Millions of Kilowatthours Sold
Retail
Residential 202.2 202.4 652.0 648.2
Commercial 286.3 273.2 808.1 777.5
Industrial 1,714.0 1,465.7 5,152.3 4,726.8
Other 19.2 20.0 54.8 54.9
Resale 644.6 834.9 2,178.6 2,294.6
------- ------- ------- -------
2,866.3 2,796.2 8,845.8 8,502.0
AUTOMOTIVE SERVICES
Vehicles Sold 337,000 274,000 940,000 804,000
Vehicles Financed 198,000 186,000 595,000 509,000
EBITDAL (Millions) ** $43.1 $29.2 $117.1 $89.1
WATER SERVICES
Millions of Gallons Billed
Florida Water Services
Water 4,704.3 4,309.0 14,656.2 13,328.9
Wastewater 1,246.7 1,179.8 4,007.3 3,688.9
Heater Utilities
Water 950.0 1,064.8 2,606.8 2,327.8
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** Earnings Before Interest, Taxes, Depreciation, Amortization and Lease Expense
</TABLE>
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