ALLETE Reports 2007 EPS of $3.08, 11% Higher Than in 2006

By: ALLETE via Business Wire News Releases

February 15, 2008 at 08:30 AM EST

ALLETE (NYSE:ALE) today reported 2007 net income of $87.6 million on revenue of $841.7 million, compared to $76.4 million in net income and $767.1 million in revenue in 2006. Diluted earnings per share from continuing operations rose 11% to $3.08 from $2.77 in 2006.

“We are pleased with our financial performance in 2007, especially when considering the difficult market conditions faced by our real estate business,” said Chairman, President, and CEO Donald J. Shippar.

Income from ALLETE’s Energy business segments were $65.9 million for 2007 compared to $52.4 million in the preceding year. Weather-related kilowatt-hour sales increases, a full year’s earnings contribution from the company’s investment in the American Transmission Company, higher rates at Superior, Water, Light & Power and the addition of two new municipal full requirements customers all contributed to the improvement. These increases were partially offset by higher operation and maintenance expenses during the year, compared to 2006. The Energy business also benefited from a lower effective tax rate in 2007.

Income from ALLETE’s Real Estate segment was $17.7 million on 2007 versus $22.8 million in 2006 due to decreased demand for property during the year.

ALLETE continues to expect 2008 earnings per share to be within a range of $2.70 to $2.90, with about 10 to 20 percent from the real estate segment. Shippar also noted that the company’s board of directors recently announced a 5% dividend increase.

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 December 31, 2007 and 2006
Millions Except Per Share Amounts

			Quarter Ended						Year to Date
			2007			2006			2007			2006
Operating Revenue			$	212.3		$	197.2		$	841.7		$	767.1
Operating Expenses
	Fuel and Purchased Power			85.2			69.8			347.6			281.7
	Operating and Maintenance			80.6			76.0			311.9			296.0
	Depreciation			12.7			12.1			48.5			48.7
		Total Operating Expenses		178.5			157.9			708.0			626.4
Operating Income from Continuing Operations				33.8			39.3			133.7			140.7
Other Income (Expense)
	Interest Expense			(5.9	)		(7.3	)		(24.6	)		(27.4	)
	Equity Earnings in ATC			3.3			2.0			12.6			3.0
	Other			3.6			4.1			15.5			11.9
		Total Other Income (Expense)		1.0			(1.2	)		3.5			(12.5	)
Income from Continuing Operations Before Minority
	Interest and Income Taxes			34.8			38.1			137.2			128.2
Income Tax Expense				12.3			13.7			47.7			46.3
Minority Interest				0.3			1.4			1.9			4.6
Income from Continuing Operations				22.2			23.0			87.6			77.3
Loss from Discontinued Operations - Net of Tax				–			(0.4	)		–			(0.9	)
Net Income			$	22.2		$	22.6		$	87.6		$	76.4

Average Shares of Common Stock
	Basic			28.6			27.9			28.3			27.8
	Diluted			28.7			28.0			28.4			27.9
Basic Earnings Per Share of Common Stock
	Continuing Operations		$	0.78		$	0.82		$	3.09		$	2.78
	Discontinued Operations			–			(0.01	)		–			(0.03	)
			$	0.78		$	0.81		$	3.09		$	2.75
Diluted Earnings Per Share of Common Stock
	Continuing Operations		$	0.77		$	0.82		$	3.08		$	2.77
	Discontinued Operations			–			(0.01	)		–			(0.03	)
			$	0.77		$	0.81		$	3.08		$	2.74
Dividends Per Share of Common Stock			$	0.4100		$	0.3625		$	1.6400		$	1.4500

Consolidated Balance Sheet
Millions

	Dec. 31,		Dec. 31,			Dec. 31,		Dec. 31,
	2007		2006			2007		2006
Assets					Liabilities and Shareholders' Equity
Cash and Short-Term Investments	$	46.4	$	149.3	Current Liabilities	$	137.1	$	143.5
Other Current Assets		168.1		138.4	Long-Term Debt		410.9		359.8
Property, Plant and Equipment		1,104.5		921.6	Other Liabilities		353.6		364.3
Investments		213.8		189.1	Shareholders' Equity		742.6		665.8
Other		111.4		135.0
Total Assets	$	1,644.2	$	1,533.4	Total Liabilities and Shareholders' Equity	$	1,644.2	$	1,533.4

					Quarter Ended					Year to Date
					December 31,					December 31,
ALLETE, Inc.					2007		2006			2007		2006
Income (Loss)
Millions
	Regulated Utility				$	17.0	$	13.3		$	54.9	$	46.8
	Nonregulated Energy Operations					0.1		0.8			3.5		3.7
	ATC					1.9		1.3			7.5		1.9
	Real Estate					2.5		7.1			17.7		22.8
	Other					0.7		0.5			4.0		2.1
	Income from Continuing Operations					22.2		23.0			87.6		77.3
	Loss from Discontinued Operations					–		(0.4	)		–		(0.9	)
	Net Income				$	22.2	$	22.6		$	87.6	$	76.4
Diluted Earnings Per Share
	Continuing Operations				$	0.77	$	0.82		$	3.08	$	2.77
	Discontinued Operations					–		(0.01	)		–		(0.03	)
					$	0.77	$	0.81		$	3.08	$	2.74

Statistical Data
Corporate
	Common Stock
		High			$	46.48	$	47.84		$	51.30	$	49.30
		Low			$	38.17	$	42.55		$	38.17	$	42.55
		Close			$	39.58	$	46.54		$	39.58	$	46.54
	Book Value				$	24.11	$	21.90		$	24.11	$	21.90

Kilowatthours Sold
Millions
	Regulated Utility
		Retail and Municipals
			Residential			309.0		300.3			1,141.1		1,100.4
			Commercial			339.5		329.3			1,373.1		1,335.2
			Municipals			256.2		226.5			1,007.5		910.5
			Industrial			1,838.3		1,776.5			7,053.5		7,205.6
			Other			22.0		19.3			84.8		78.7
				Total Retail and Municipal		2,756.0		2,651.9			10,660.0		10,630.4
		Other Power Suppliers				548.5		548.0			2,157.3		2,152.9
				Total Regulated Utility		3,313.5		3,199.9			12,817.3		12,783.3
	Nonregulated Energy Operations					64.2		59.1			248.4		240.4
				Total Kilowatthours Sold		3,377.7		3,259.0			13,065.7		13,023.7

Real Estate
	Town Center Development Project
		Non-residential Square Footage Sold				65,583		36,976			540,059		401,971
		Residential Units				–		231			130		773

	Palm Coast Park Development Project
		Non-residential Square Footage Sold				–		–			40,000		–
		Residential Units				200		–			606		200
	Other Land
		Acres Sold				33		24			483		732

Contacts:

ALLETE
Eric Olson, 218-723-3947
[email protected]
or
Investor Contact:
Tim Thorp, 218-723-3953
[email protected]