ALLETE Posts Solid 2001 Results

ALLETE Posts Solid 2001 Results (Duluth, Minn.)--ALLETE, Inc. (NYSE: ALE) today announced earnings, before one-time events, of 37 cents per share for the fourth quarter of 2001, compared with 27 cents for the same period last year. Excluding the one-time events, annual earnings per share were $1.87, compared with $1.67 in 2000, an increase of 12 percent. The aforementioned earnings figures exclude a 6 cents per share exit charge recorded by ALLETE's vehicle transport company in 2001 and a 44 cent gain in 2000 relating to the company's past investment in ACE Limited. Reported earnings per share in 2001, including the one-time events, were 31 cents for the quarter and $1.81 for the year, compared with 27 cents for the quarter and $2.11 in 2000.

"The strength of our core business units--energy and automotive services?became evident more than ever in 2001," said David Gartzke, chairman, president and chief executive officer of ALLETE. "Despite economic adversity both nationally and regionally, our people weathered the storms and helped us meet or exceed our growth targets for the year."

In the fourth quarter of 2001, Automotive Services posted an earnings increase of $8.6 million over the same period in 2000 due mainly to acquisitions and an increase in the number of vehicles sold at auction and financed by Automotive Finance Corporation (AFC). For the year, Automotive Services net income was $74.8 million, a 50 percent increase over 2000, exceeding the company's stated growth goal of 40 percent. Same-store earnings at ADESA wholesale auctions increased by 13 percent over 2000 levels as measured by earnings before interest, taxes, depreciation, amortization and lease expense. At AFC, the number of vehicles financed in 2001 rose to 904,000, an increase of 14 percent over 2000.

Energy Services reported fourth quarter earnings of $11.4 million, about the same as the fourth quarter of 2000. For the year, net income increased to $50 million, a 16 percent increase over 2000, due primarily to increased margins from wholesale power marketing and trading.

Investments and Corporate Charges include the investment portfolio, real estate, emerging technology investments and corporate charges. For the quarter, net income from this segment fell by $300,000 compared with 2000. Earnings in 2001 were $3.8 million.

ALLETE plans to exit its water business and is entertaining purchase offers from interested parties. This potential sale would provide additional funds for ALLETE to aggressively seek new growth initiatives.

Looking ahead to 2002, ALLETE anticipates earnings per share growth of between 8 and 10 percent over $1.87, and 20 percent net income growth in Automotive Services. These projections do not reflect newly mandated changes in accounting standards. Taking these changes into account, ALLETE's growth projections for 2002 are between 14 and 16 percent, and over 30 percent for Automotive Services.

ALLETE's corporate headquarters are located in Duluth, Minnesota. ALLETE's holdings include the second largest wholesale automobile auction network in North America, the leading provider of independent auto dealer inventory financing, significant real estate holdings in Florida and a low-cost electric utility that serves some of the largest industrial customers in the United States. For more information about ALLETE, visit the company'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.