ALLETE Reports 2013 Financial Results

  ALLETE Reports 2013 Financial Results

        Expects earnings of between $2.75 and $2.95 per share in 2014

Business Wire

DULUTH, Minn. -- February 14, 2014

ALLETE, Inc. (NYSE: ALE) today reported 2013 earnings of $2.63 per share
compared with $2.58 in 2012. Included in the 2013 results were acquisition
costs of $1.0 million after-tax, or three cents per share, related to ALLETE
Clean Energy’s acquisition of three wind energy facilities.

Net income for 2013 was $104.7 million, an increase of eight percent over
$97.1 million for 2012. Operating revenue grew by six percent year-over-year
at $1.02 billion compared to $961.2 million a year ago.

“We’re pleased to report continued financial progress at ALLETE, while at the
same time making significant capital investments relative to executing our
strategy,” said ALLETE President, Chairman and CEO Al Hodnik. “Electric sales
to Minnesota Power’s industrial customers remained consistent and strong in
2013, and all of our businesses performed generally within expectations for
the year. ALLETE’s year-end results are in line with our previous earnings
guidance.”

Net income from ALLETE’s Regulated Operations segment, which includes
Minnesota Power, Superior Water, Light & Power, and an investment in the
American Transmission Company, rose by nine percent year-over-year; to $104.9
million in 2013 from $96.1 million in 2012. Increases in total kilowatt-hour
sales, cost recovery revenue, federal production tax credits, transmission
revenue and municipal rates were partially offset by higher operating and
interest expenses, as well as increased costs under the Square Butte purchased
power contract.

The Investments and Other segment, consisting of BNI Coal, ALLETE Properties,
ALLETE Clean Energy and miscellaneous corporate expenditures recorded a slight
loss of $200,000 in 2013 compared to net income of $1 million in 2012.
Included in the results for 2013 were acquisition costs of $1 million
after-tax associated with the acquisition of three wind energy facilities by
ALLETE Clean Energy, mentioned above. Excluding those expenses, net income for
the segment was similar to last year.

Earnings per share for 2013 were diluted by fifteen cents due to the issuance
of common shares needed to fund strategic investments in renewable energy,
environmental upgrades and energy transmission infrastructure.

“ALLETE expects to earn between $2.75 and $2.95 per share on net income of
$120 million to $130 million in 2014,” Hodnik said. He added that the company
expects strong electricity usage from Minnesota Power’s industrial customers
and significant capital investments in environmental upgrades and renewable
energy in 2014. In addition, the company expects ALLETE Clean Energy’s wind
farm acquisition to be accretive to earnings, and results from Superior Water,
Light & Power, BNI Coal, and ALLETE Properties to be in line with those in
2013. Earning guidance for 2014 also includes 25 cents to 35 cents of
anticipated dilution from common share issuances in 2013 and 2014, and
excludes costs related to the ALLETE Clean Energy acquisition.

ALLETE's corporate headquarters are in Duluth, Minnesota. In addition to its
electric utilities, Minnesota Power in northeast Minnesota and Superior Water,
Light & Power Co. in northwest Wisconsin, ALLETE owns BNI Coal in Center, N.D.
and ALLETE Clean Energy, and has significant transmission investments in the
upper Midwest. 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'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, 2013 and 2012
Millions Except Per Share Amounts
                                                
                         Quarter Ended               Year to Date
                      2013        2012        2013          2012
Operating Revenue      $ 268.0    $ 256.0    $ 1,018.4    $ 961.2 
                                                                
Operating Expenses
Fuel and Purchased         89.1          80.0          334.8           308.7
Power
Operating and              101.7         102.3         412.9           397.1
Maintenance
Depreciation            30.3      25.8      116.6       100.2 
Total Operating            221.1         208.1         864.3           806.0
Expenses
                                                                     
Operating Income        46.9      47.9      154.1       155.2 
                                                                     
Other Income
(Expense)
Interest Expense           (12.5 )       (12.1 )       (50.3   )       (45.5 )
Equity Earnings in         5.2           5.1           20.3            19.4
ATC
Other                   1.8       2.6       9.3         6.0   
Total Other Expense     (5.5  )    (4.4  )    (20.7   )    (20.1 )
                                                                     
Income Before Income       41.4          43.5          133.4           135.1
Taxes
Income Tax Expense      8.4       14.6      28.7        38.0  
Net Income             $ 33.0     $ 28.9     $ 104.7      $ 97.1  
                                                                     
Average Shares of
Common Stock
Basic                      40.6          38.5          39.7            37.6
Diluted                 40.7      38.6      39.8        37.6  
                                                                     
Basic Earnings Per
Share of Common          $ 0.82        $ 0.76        $ 2.64          $ 2.59
Stock
Diluted Earnings Per
Share of Common          $ 0.82        $ 0.75        $ 2.63          $ 2.58
Stock
                                                                     
Dividends Per Share    $ 0.475    $ 0.46     $ 1.90       $ 1.84  
of Common Stock
                                                                     


Consolidated Balance Sheet
Millions

              Dec. 31,    Dec. 31,                     Dec. 31,    Dec. 31,
             2013        2012                        2013        2012
                                            Liabilities
Assets                                      and
                                            Shareholders’
                                            Equity
Cash and                                    Current
Cash            $ 97.3        $ 80.8        Liabilities        $ 230.2       $ 283.4
Equivalents
Other
Current           209.7         192.4       Long-Term Debt       1,083.0       933.6
Assets
Property,
Plant and         2,576.5       2,347.6     Deferred             479.1         423.8
Equipment -                                 Income Taxes
Net
Regulatory        263.8         340.3       Regulatory           81.0          60.1
Assets                                      Liabilities
                                            Defined
                                            Benefit
Investment        114.6         107.3       Pension &            133.4         228.2
in ATC                                      Other
                                            Postretirement
                                            Benefit Plans
Other                                       Other
Investments       146.3         143.5       Non-Current          127.3         123.3
                                            Liabilities
Other                                       Shareholders’
Non-Current    68.6       41.5      Equity            1,342.9    1,201.0
Assets
                                            Total
Total                                       Liabilities
Assets        $ 3,476.8   $ 3,253.4   and              $ 3,476.8   $ 3,253.4
                                            Shareholders’
                                            Equity
                                                                               

                             Quarter Ended         Year to Date
ALLETE, Inc.                   December 31,            December 31,
Income (Loss)                2013      2012      2013         2012
Millions                                                         
Regulated Operations           $ 31.9      $ 28.0      $ 104.9        $ 96.1
Investments and Other         1.1      0.9      (0.2   )    1.0
Net Income Attributable to   $ 33.0    $ 28.9    $ 104.7     $ 97.1
ALLETE
Diluted Earnings Per Share   $ 0.82    $ 0.75    $ 2.63      $ 2.58
                                                                      
Statistical Data                                           
Corporate
Common Stock
High                           $ 51.72     $ 42.09     $ 54.14        $ 42.66
Low                            $ 47.48     $ 37.73     $ 41.39        $ 37.73
Close                          $ 49.88     $ 40.98     $ 49.88        $ 40.98
Book Value                     $ 32.43     $ 30.50     $ 32.43        $ 30.50
                                                                      
Kilowatt-hours Sold                                        
Millions
Regulated Utility
Retail and Municipals
Residential                      313         303         1,177          1,132
Commercial                       364         352         1,455          1,436
Municipals                       258         262         999            1,020
Industrial                    1,830    1,877    7,338      7,502
Total Retail and Municipal       2,765       2,794       10,969         11,090
Other Power Suppliers         530      512      2,278      1,999
Total Regulated Utility          3,295       3,306       13,247         13,089
Non-regulated Energy          23       33       113        113
Operations
Total Kilowatt-hours Sold     3,318    3,339    13,360     13,202
                                                                      
Regulated Utility Revenue                                  
Millions
Regulated Utility Revenue
Retail and Municipals
Residential                    $ 29.2      $ 28.1      $ 110.0        $ 104.5
Commercial                       30.3        29.0        120.4          116.2
Municipals                       16.4        15.6        66.4           60.6
Industrial                    101.6    100.1    400.2      393.4
Total Retail and                 177.5       172.8       697.0          674.7
Municipals
Other Power Suppliers            23.7        18.6        89.5           73.1
Other                         40.7     41.0     139.0      126.6
Total Regulated Utility      $ 241.9   $ 232.4   $ 925.5     $ 874.4
Revenue
                                                                        

Contact:

ALLETE, Inc.
Investor Contact:
Tim Thorp, 218-723-3953
tthorp@allete.com
 
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