Otter Tail Corporation Announces Second Quarter Earnings and Narrows 2013 Earnings Guidance; Board of Directors Declares

Otter Tail Corporation Announces Second Quarter Earnings and Narrows 2013
Earnings Guidance; Board of Directors Declares Quarterly Dividend

FERGUS FALLS, Minn., Aug. 5, 2013 (GLOBE NEWSWIRE) -- Otter Tail Corporation
(Nasdaq:OTTR) today announced financial results for the quarter ended June 30,


  *Consolidated net income and diluted earnings per share from continuing
    operations totaled $7.5 million and $0.21, respectively, compared with
    $6.9 million and $0.19 for the second quarter of 2012.
  *Consolidated net income and diluted earnings per share from continuing and
    discontinued operations totaled $7.7 million and $0.21, respectively,
    compared with a net loss of $17.4 million and a diluted loss of $0.48 per
    share for the second quarter of 2012.
  *Net income from discontinued operations was $0.2 million compared with a
    net loss of $24.3 million for the second quarter of 2012, which included a
    $27.5 million net-of-tax asset impairment charge at the corporation's
    former wind tower business.
  *Consolidated revenues from continuing operations were $212.4 million
    compared with $211.4 million for the second quarter of 2012.

CEO Overview

"Overall, our 2013 second quarter results met our expectation for improved
earnings over 2012," said Otter Tail Corporation President and CEO Jim
McIntyre. "The successful realignment of our portfolio has better positioned
us for stronger execution within our remaining companies. The year-to-date
results from continuing operations of $22.7 million in net income and $0.61 in
diluted earnings per share compared to $17.1 million and $0.46 for 2012, a 33%
improvement, further indicate progress toward a successful 2013.

"Our success in significantly reducing risk and stabilizing earnings has also
been reflected in a recent upgrade of our corporate credit ratings by Standard
and Poor's for both Otter Tail Corporation and Otter Tail Power Company.In
addition, Fitch Ratings recently announced a favorable outlook change from
negative to stable for both Otter Tail Corporation and Otter Tail Power

"Despite lower earnings in the Electric segment relative to the same quarter
in 2012, we remain confident in the Utility's ability to deliver earnings
within our guidance. Regarding Otter Tail Power Company's growth strategy, we
are half-way through our build-out of our three initial CapX2020 transmission
projects, and they are on pace to make their expected contribution to

"Our Plastics segment, which includes PVC pipe manufacturers Northern Pipe
Products and Vinyltech, remains a bright spot. Strong sales volume and margins
resulted in better-than-expected net income from our plastic pipe companies.
Sales volume from our Vinyltech plant in Arizona increased 36% over second
quarter 2012 sales as housing markets continue to show improvement in South
Central and Southwest regions of the United States.Northern Pipe Products
continues to capitalize on opportunities in the Bakken oil fields of western
North Dakota, and throughout its other markets.

"Within our Construction segment, Foley, our mechanical and prime contractor
on industrial projects, showed substantial improvement compared to the second
quarter of 2012, swinging from a sizable loss to profitability. Aevenia, our
electrical contractor, was hampered by adverse weather throughout the Midwest
resulting in delays, higher project costs and lower productivity. Overall, the
Construction segment provided a slight profit in the second quarter of 2013.

"Earnings from our Manufacturing segment were down 18% compared with second
quarter 2012 as a result of $3.2 million in lower sales, but were in line with
management's expectations. Tooling activity at BTD, our metal parts stamping
and fabrication company, has ramped up in preparation for increased sales in
the second half of 2013 and into 2014. BTD's focus on operational excellence
has further improved its quality and its cost effectiveness.

"Based on second quarter and year-to-date results and our expectations for the
rest of the year, we are narrowing our earnings guidance for 2013 diluted
earnings per share from continuing operations to $1.30 to $1.50."

Cash Flow from Operations, Liquidity and Financing

The corporation's consolidated cash flow from continuing operations for the
six months ended June 30, 2013 was $48.8million compared with $45.6million
for the six months ended June 30, 2012. The following table presents the
status of the corporation's lines of credit as of June 30, 2013:

                                                  Restricted due
(in thousands)           Line Limit In Use On     to             Available on
                                    June 30, 2013 Letters of     June 30, 2013
Otter Tail Corporation   $ 150,000  $--          $680          $ 149,320
Credit Agreement
Otter Tail Power Company 170,000    1,117         1,189          167,694
Credit Agreement
Total                    $ 320,000  $1,117       $1,869        $ 317,014

Otter Tail Power Company plans to close on a private placement of $150 million
of senior unsecured debt on August 14, 2013. On June 28, 2013 the issuance was
priced as follows:

Principal Amount Term     Rate
$60 million      15 years 4.68%
$90 million      30 years 5.47%

Proceeds from the issuance, scheduled to fund on February 27, 2014, will be
used for planned construction program expenditures and to retire Otter Tail
Power Company's $40.9 million unsecured term loan.

Board of Directors Declared Quarterly Dividend

On August 2, 2013 the corporation's Board of Directors declared a quarterly
common stock dividend of $0.2975 per share. This dividend is payable September
10, 2013 to shareholders of record on August15, 2013.

Segment Performance Summary


Electric revenues and net income were $82.9 million and $3.6 million,
respectively, compared with $79.0million and $5.2 million for the second
quarter of 2012. Electric retail revenues increased $3.5 million, as a result

  *a $1.7 million increase in Transmission Cost Recovery Rider revenues as a
    result of increased investment in transmission assets,
  *a $1.1 million increase in revenue related to a 6.0% increase in retail
    kilowatt-hour (kwh) sales resulting, in part, from colder spring weather
    in 2013 compared with 2012, as heating-degree days were up 70.3% between
    the quarters, and
  *a $0.9 million increase in revenue related to the recovery of increased
    fuel and purchased power costs driven by increased kwh generation to meet
    higher retail kwh sales demand and by higher purchased power prices,
    tempered by lower prices for fuel per kwh generated and a reduction in
    kwhs purchased,

offset by:

  *a $0.2 million decrease in Renewable Resource Cost Recovery Rider revenue
    in Minnesota.

Wholesale electric revenues from company-owned generation increased $1.4
million as a result of a 55.4% increase in wholesale kwh sales combined with
an 8.9% increase in wholesale electric prices driven by increased market
demand due, in part, to the colder spring in 2013. Otter Tail Power Company
also had more generation resources available to meet wholesale demand in the
second quarter of 2013.

Other electric operating revenues decreased $1.1 million as a result of:

  *a $0.9 million reduction in estimated revenue from shared use of
    transmission facilities with another regional transmission provider under
    an integrated transmission service agreement, and
  *a $0.3 million decrease in Midcontinent Independent System Operator, Inc.
    (MISO) transmission tariff revenues due to implementation of a revised and
    lower tariff in October 2012, offset by
  *a $0.2 million increase in revenue from steam sales to an ethanol producer
    adjacent to the Big Stone Plant site, due to the customer burning less
    natural gas to meet its steam requirements in 2013 in response to higher
    natural gas prices.

Fuel costs increased $3.1 million as a result of a 35.3% increase in kwhs
generated from Otter Tail Power Company's steam-powered and combustion turbine
generators, partially offset by a 7.4% decrease in the cost of fuel per kwh
generated. Generation levels increased as a result of greater plant
availability and in response to higher demand due to colder weather in the
second quarter of 2013 compared with the second quarter of 2012. The average
cost of fuel per kwh of generation decreased mainly as a result of a 17.8%
decrease in the cost of fuel per kwh generated at Otter Tail Power Company's
Big Stone Plant combined with a 14.0% increase in kwhs generated at that plant
and a 75.6% increase in kwhs generated at Coyote Station, Otter Tail Power
Company's lowest fuel-cost plant, which was shut down for seven weeks of
scheduled maintenance in the second quarter of 2012.

The cost of purchased power for retail sales decreased $1.1million as a
result of a 23.7% decrease in kwhs purchased, partially offset by a 19.5%
increase in the cost per kwh purchased. The decrease in kwhs purchased was
directly related to an increase in the availability of owned generation to
serve retail load.

Electric operating and maintenance expenses increased $3.7 million mainly due
to the following:

  *a $1.3 million increase in general and administrative expenses, mostly
    related to an increase in corporate costs allocated to the Electric
    segment due, in part, to changes in corporate cost allocation factors
    resulting from the corporation's recent divestitures,
  *a $1.2 million increase in labor and benefit expenses, mainly due to
    increases in pension and retirement health benefit costs resulting from
    reductions in discount rates related to projected benefit obligations,
  *a $1.0 million increase in MISO transmission tariff charges related to
    increasing investments in regional CapX2020 and MISO-designated
    Multi-Value transmission projects,
  *a $0.7 million discount recorded on the Minnesota jurisdictional share of
    abandoned Big Stone II project transmission assets that were transferred
    from construction work in progress to a regulatory asset account for
    future recovery as the initial investment was deemed prudent but potential
    future uses for the assets did not materialize, and
  *a $0.3 million increase in property tax expense related to higher property
    value assessments in Minnesota and South Dakota,

offset by:

  *a $0.8 million reduction in external service costs, which were higher in
    the second quarter of 2012 as a result of the seven-week scheduled
    maintenance outage at Coyote Station.

Interest charges decreased $0.5 million as a result of Otter Tail Power
Company's debt refinancing on March 1, 2013 when it borrowed $40.9 million
under an unsecured term loan due June 1, 2014, bearing interest at LIBOR plus
0.875% and, with the proceeds, redeemed its $25.1 million in outstanding 4.65%
Grant County, South Dakota Pollution Control Refunding Revenue Bonds and 4.85%
Mercer County, North Dakota Pollution Control Refunding Revenue Bonds, and
repaid its $15.5 million intercompany note to the corporation that represented
the corporation's cumulative preferred shares that were also redeemed on March
1, 2013.

A decrease in income tax expense of $0.7 million related to a $1.6 million
decrease in income before income taxes was offset by:

  *the reversal of $0.3 million in deferred tax assets related to a reduction
    in North Dakota corporate income tax rates in 2013,
  *the reversal of $0.2 million in deferred tax assets due to a valuation
    allowance related to charitable contributions carried forward from 2008,
  *$0.2 million in tax expense related to a reduction in deductible Medicare
    Part D benefit payments.


Manufacturing revenues and net income were $49.8 million and $2.0 million,
respectively, compared with $53.0million and $2.5 million for the second
quarter of 2012.

  *At BTD, revenues decreased $3.0 million and net income decreased $0.4
    million as a result of lower sales volume mainly due to reduced demand
    from customers in end markets serving the construction and energy
    industries. The decline in sales and its negative impact on net income was
    partially offset by a $2.6 million decrease in costs of goods sold.
  *At T.O. Plastics, revenues decreased by $0.2 million and net income
    decreased $0.1 million mainly as a result of a decrease in sales of
    packaging products.


Construction revenues and net income were $35.0 million and $24,000,
respectively, compared with revenues of $37.9million and a net loss of $1.8
million for the second quarter of 2012.

  oFoley revenues increased $0.6 million and Foley recorded $0.4 million in
    net income in the second quarter of 2013 compared to a net loss of $2.1
    million for the second quarter of 2012 resulting from cost overruns and
    losses incurred on certain major projects in progress in the second
    quarter of 2012.
  oAevenia's revenues decreased $3.5 million and it incurred a $0.4 million
    net loss in the second quarter of 2013 compared with $0.3 million in net
    income in the second quarter of 2012 due, in part, to a colder and wetter
    spring in 2013 delaying the start of many construction projects relative
    to the early start to construction that was facilitated by extremely mild
    weather in the second quarter of 2012. Aevenia's second quarter 2012
    results also included revenues of $2.1 million and net income of $0.1
    million from Moorhead Electric, Inc., an Aevenia subsidiary that was sold
    in October 2012.


Plastics revenues and net income were $44.8 million and $3.9million,
respectively, compared with $41.5million and $4.1 million for the second
quarter of 2012. The $3.3 million increase in revenue is the result of a 10.2%
increase in pounds of PVC pipe sold, partially offset by a 2.1% decrease in
the price per pound of pipe sold. Sales volume increased as construction and
housing markets continued to improve in the South Central and Southwest
regions of the United States. Sales volume increases in these regions were
partially offset by lower sales in the North Central United States due to a
colder and wetter spring in 2013. The revenue increase was more than offset by
a $3.6 million increase in the cost of PVC pipe sold due to the increased
sales volume in combination with a 1.3% increase in the cost per pound of PVC
pipe sold related to higher raw material costs.


Corporate expenses, net-of-tax, decreased $1.0 million between the quarters as
a result of lower interest expenses related to the July 2012 early redemption
of the corporation's $50 million, 8.89% senior unsecured note, lower insurance
costs, and increased allocation of costs to the Electric segment offset by
higher labor and employee benefit expenses.

Discontinued Operations

Disposals and settlements of remaining assets and liabilities of discontinued
operations resulted in $0.2 million in net income from discontinued operations
in the second quarter of 2013 compared to a net loss of $24.3 million in the
second quarter of 2012 mainly related to asset impairment charges taken at our
wind tower manufacturing business to reduce the value of the assets to their
net realizable values based on a sales price agreed to in a nonbinding letter
of interest in June 2012.

2013 Business Outlook

The corporation is narrowing its consolidated earnings per share from
continuing operations guidance for 2013 to be in the range of $1.30 to $1.50
from its previous guidance of $1.30 to $1.55. This guidance reflects the
current mix of businesses owned by the corporation and considers the cyclical
nature of some of the corporation's businesses.

Segment components of the corporation's 2013 earnings per share guidance range
are as follows:

                         Previous 2013 EPS Guidance Current 2013 EPS Guidance
                         Low           High         Low          High
Electric                  $1.02         $1.07        $1.02        $1.06
Manufacturing             $0.28         $0.33        $0.27        $0.31
Construction              $0.06         $0.11        $0.01        $0.05
Plastics                  $0.25         $0.30        $0.31        $0.35
Corporate                 ($0.31)       ($0.26)      ($0.31)      ($0.27)
Total – Continuing       $1.30         $1.55        $1.30        $1.50

Contributing to the earnings guidance for 2013 are the following items:

  *The corporation is narrowing its guidance for 2013 for its Electric
    segment based on increases in benefit and administrative costs.
  *The corporation is also narrowing its guidance and reducing the low end of
    the range for 2013 for its Manufacturing segment due to the following

    *Order volume across the end markets of the construction, energy and lawn
      and garden industries have softened for the remainder of 2013 affecting
      BTD's customers in these industries.
    *Lower earnings are now expected in 2013 at T.O. Plastics, primarily due
      to a key customer announcing plans to produce certain products in house
      rather than outsource the work to T.O. Plastics.
    *Backlog for the manufacturing companies is approximately $76million for
      2013 compared with $71million one year ago.

  *The corporation is reducing its 2013 guidance for its Construction segment
    due to disappointing results at Aevenia during the first six months of
    2013. Segment net income is still expected to be higher in 2013 than 2012
    due to improved cost control processes in construction management and
    selective bidding on projects with the potential for higher margins.
    Foley's performance on certain large projects negatively impacted 2012
    results. These projects were substantially completed in 2012 and Foley's
    internal bidding and estimating project review procedures have been
    improved such that the corporation expects Foley to be profitable in 2013.
    Backlog in place for the construction businesses is $74 million for 2013
    compared with $73 million one year ago.
  *The corporation is increasing its 2013 guidance for its Plastics segment
    based on the strength of its performance in the first half of 2013.
  *Corporate general and administrative costs are expected to be in line with
    previous 2013 guidance.


The corporation will host a live webcast on Tuesday, August 6, 2013, at 10:00
a.m. CDT to discuss the company's financial and operating performance.

The presentation will be posted on the corporation's website before the
webcast. To access the live webcast go to
and select "Webcast". Please allow extra time prior to the call to visit the
site and download any necessary software that may be needed to listen to the
webcast.An archived copy of the webcast will be available on our website
shortly following the call.

If you are interested in asking a question during the live webcast, the
Dial-In Number is:877-312-8789.

Risk Factors and Forward-Looking Statements that Could Affect Future Results

The information in this release includes certain forward-looking information,
including 2013 expectations, made under the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although the corporation
believes its expectations are based on reasonable assumptions, actual results
may differ materially from those expectations. The following factors, among
others, could cause actual results for the corporation to differ materially
from those discussed in the forward-looking statements:

  oFederal and state environmental regulation could require the corporation
    to incur substantial capital expenditures and increased operating costs.
  oVolatile financial markets and changes in the corporation's debt ratings
    could restrict its ability to access capital and could increase borrowing
    costs and pension plan and postretirement health care expenses.
  oThe corporation relies on access to both short- and long-term capital
    markets as a source of liquidity for capital requirements not satisfied by
    cash flows from operations. If the corporation is not able to access
    capital at competitive rates, its ability to implement its business plans
    may be adversely affected.
  oDisruptions, uncertainty or volatility in the financial markets can also
    adversely impact the corporation's results of operations, the ability of
    its customers to finance purchases of goods and services, and its
    financial condition, as well as exert downward pressure on stock prices
    and/or limit its ability to sustain its current common stock dividend
  oThe corporation made a $10.0 million discretionary contribution to its
    defined benefit pension plan in January 2013. The corporation could be
    required to contribute additional capital to the pension plan in the
    future if the market value of pension plan assets significantly declines,
    plan assets do not earn in line with the corporation's long-term rate of
    return assumptions or relief under the Pension Protection Act is no longer
  oAny significant impairment of the corporation's goodwill would cause a
    decrease in its asset values and a reduction in its net operating income.
  oA sustained decline in the corporation's common stock price below book
    value or declines in projected operating cash flows at any of its
    operating companies may result in goodwill impairments that could
    adversely affect its results of operations and financial position, as well
    as financing agreement covenants.
  oThe corporation currently has $7.3 million of goodwill and a $1.1 million
    indefinite-lived trade name recorded on its consolidated balance sheet
    related to the acquisition of Foley Company in 2003. Foley Company
    generated a large operating loss in 2012 due to significant cost overruns
    on certain construction projects. If operating margins do not meet the
    corporation's projections, the reductions in anticipated cash flows from
    Foley Company may indicate that its fair value is less than its book
    value, resulting in an impairment of some or all of the goodwill and
    indefinite-lived trade name associated with Foley along with a
    corresponding charge against earnings.
  oThe inability of the corporation's subsidiaries to provide sufficient
    earnings and cash flows to allow the corporation to meet its financial
    obligations and debt covenants and pay dividends to its shareholders could
    have an adverse effect on the corporation.
  oEconomic conditions could negatively impact the corporation's businesses.
  oIf the corporation is unable to achieve the organic growth it expects, its
    financial performance may be adversely affected.
  oThe corporation's plans to grow and realign its business mix through
    capital projects, acquisitions and dispositions may not be successful,
    which could result in poor financial performance.
  oThe corporation may, from time to time, sell assets to provide capital to
    fund investments in its electric utility business or for other corporate
    purposes, which could result in the recognition of a loss on the sale of
    any assets sold and other potential liabilities. The sale of any of the
    corporation's businesses could expose the corporation to additional risks
    associated with indemnification obligations under the applicable sales
    agreements and any related disputes.
  oThe corporation's plans to grow and operate its manufacturing and
    infrastructure businesses could be limited by state law.
  oSignificant warranty claims and remediation costs in excess of amounts
    normally reserved for such items could adversely affect the corporation's
    results of operations and financial condition.
  oThe corporation is subject to risks associated with energy markets.
  oThe corporation is subject to risks and uncertainties related to the
    timing and recovery of deferred tax assets which could have a negative
    impact on the corporation's net income in future periods.
  oThe corporation relies on its information systems to conduct its business,
    and failure to protect these systems against security breaches could
    adversely affect its business and results of operations. Additionally, if
    these systems fail or become unavailable for any significant period of
    time, the corporation's business could be harmed.
  oThe corporation may experience fluctuations in revenues and expenses
    related to its electric operations, which may cause its financial results
    to fluctuate and could impair its ability to make distributions to its
    shareholders or scheduled payments on its debt obligations, or to meet
    covenants under its borrowing agreements.
  oActions by the regulators of the corporation's electric operations could
    result in rate reductions, lower revenues and earnings or delays in
    recovering capital expenditures.
  oOtter Tail Power Company's electric generating facilities are subject to
    operational risks that could result in unscheduled plant outages,
    unanticipated operation and maintenance expenses and increased power
    purchase costs.
  oChanges to regulation of generating plant emissions, including but not
    limited to carbon dioxide (CO[2]) emissions, could affect Otter Tail Power
    Company's operating costs and the costs of supplying electricity to its
  oCompetition from foreign and domestic manufacturers, the price and
    availability of raw materials and general economic conditions could affect
    the revenues and earnings of our manufacturing businesses.
  oA significant failure or an inability to properly bid or perform on
    projects or contracts by the corporation's construction businesses could
    lead to adverse financial results and could lead to the possibility of
    delay or liquidated damages.
  oThe corporation's construction subsidiaries enter into contracts which
    could expose them to unforeseen costs and costs not within their control,
    which may not be recoverable and could adversely affect the corporation's
    results of operations and financial condition.
  oThe corporation's Plastics segment is highly dependent on a limited number
    of vendors for PVC resin, many of which are located in the Gulf Coast
    regions, and a limited supply of resin. The loss of a key vendor, or an
    interruption or delay in the supply of PVC resin, could result in reduced
    sales or increased costs for this segment.
  oThe corporation's plastic pipe companies compete against a large number of
    other manufacturers of PVC pipe and manufacturers of alternative products.
    Customers may not distinguish the pipe companies' products from those of
    its competitors.
  oReductions in PVC resin prices can negatively impact PVC pipe prices,
    profit margins on PVC pipe sales and the value of PVC pipe held in

For a further discussion of other risk factors and cautionary statements,
refer to reports the corporation files with the Securities and Exchange

About The Corporation: Otter Tail Corporation has interests in diversified
operations that include an electric utility, manufacturing, and infrastructure
businesses. Otter Tail Corporation stock trades on the NASDAQ Global Select
Market under the symbol OTTR. The latest investor and corporate information is
available at Corporate offices are located in Fergus Falls,
Minnesota, and Fargo, North Dakota.

See Otter Tail Corporation's results of operations for the three and six
months ended June 30, 2013 and 2012 in the following financial statements:
Consolidated Statements of Income, Consolidated Balance Sheets – Assets,
Consolidated Balance Sheets – Liabilities and Equity, and Consolidated
Statements of Cash Flows.

Otter Tail Corporation
Consolidated Statements of Income
In thousands, except share and per share amounts
(not audited)

                             Quarter Ended June 30,   Year-to-Date June 30,
                             2013        2012         2013        2012
Operating Revenues by Segment                                   
Electric                      $82,862   $78,963    $183,872  $168,966
Manufacturing                 49,793     53,039      102,959    112,473
Construction                  34,994     37,934      61,419     73,551
Plastics                      44,761     41,490      82,161     76,365
Corporate Revenue and         (21)        (25)         (68)        (64)
Intersegment Eliminations
Total Operating Revenues      212,389    211,401     430,343    431,291
Operating Expenses                                              
Fuel and Purchased Power      26,848     24,783      61,440     54,365
Nonelectric Cost of Goods
Sold (depreciation included   103,937    108,426     195,999    218,722
Electric Operating and        38,814     35,077      74,177     67,707
Maintenance Expense
Nonelectric Operating and     12,176     12,979      25,954     26,881
Maintenance Expense
Asset Impairment Charge -     --         --          --         432
Depreciation and Amortization 14,835     14,890      29,755     29,683
Total Operating Expenses      196,610    196,155     387,325    397,790
Operating Income (Loss) by                                      
Electric                      6,528      8,656       26,952     25,615
Manufacturing                 4,232      5,016       10,581     11,719
Construction                  149        (2,558)      (1,550)     (9,348)
Plastics                      6,808      7,120       13,525     12,872
Corporate                     (1,938)     (2,988)      (6,490)     (7,357)
Total Operating Income        15,779     15,246      43,018     33,501
Interest Charges              6,877      8,472       13,857     17,066
Other Income                  696        644         1,557      1,626
Income Tax Expense –          2,094      517         7,980      985
Continuing Operations
Net Income (Loss) by Segment                                    
– Continuing Operations
Electric                      3,583      5,191       15,514     16,207
Manufacturing                 2,045      2,501       5,363      5,966
Construction                  24         (1,756)      (1,068)     (5,927)
Plastics                      3,925      4,067       7,812      7,320
Corporate                     (2,073)     (3,102)      (4,883)     (6,490)
Net Income from Continuing    7,504      6,901       22,738     17,076
Discontinued Operations                                         
Income - net of Income Tax
Expense (Benefit) of
$131, $3,093, ($75) and       197        3,657       116        3,814
$3,506 for the respective
Impairment Loss - net of
Income Tax (Benefit) of
$0, ($18,114), $0 and         --         (27,459)     --         (27,459)
($18,114) for the respective
(Loss) Gain on Disposition -
net of Income Tax (Benefit)
Expense of $0, ($35), $6, and --         (455)        210        (3,544)
($169) for the respective
Net Income (Loss) from        197        (24,257)     326        (27,189)
Discontinued Operations
Net Income (Loss)             7,701      (17,356)     23,064     (10,113)
Preferred Dividend
Requirement and Other         --         184         513        368
Balance for Common            $7,701    $(17,540) $22,551   $(10,481)
Average Number of Common                                        
Shares Outstanding
Basic                         36,170,353 36,031,447  36,122,742 36,013,313
Diluted                       36,373,606 36,222,944  36,325,527 36,204,810
Basic Earnings Per Common                                       
Continuing Operations (net of
preferred dividend            $0.21     $0.19      $0.61     $0.46
requirement and other
Discontinued Operations       --         (0.68)       0.01       (0.75)
                             $0.21     $(0.49)   $0.62     $(0.29)
Diluted Earnings Per Common                                     
Continuing Operations (net of
preferred dividend            $0.21     $0.19      $0.61     $0.46
requirement and other
Discontinued Operations       --         (0.67)       0.01       (0.75)
                             $0.21     $(0.48)   $0.62     $(0.29)

Otter Tail Corporation
Consolidated Balance Sheets
in thousands
(not audited)

                                                  June 30,     December 31,
                                                  2013         2012
Current Assets                                                 
Cash and Cash Equivalents                          $42,275    $52,362
Accounts Receivable:                                           
Trade—Net                                          99,370      91,170
Other                                              9,189       7,684
Inventories                                        73,411      69,336
Deferred Income Taxes                              19,362      30,964
Unbilled Revenues                                  11,245      15,701
Costs and Estimated Earnings in Excess of Billings 5,122       3,663
Regulatory Assets                                  20,313      25,499
Other                                              12,009      8,161
Assets of Discontinued Operations                  1,132       19,092
Total Current Assets                               293,428     323,632
Investments                                        9,342       9,471
Other Assets                                       27,135      26,222
Goodwill                                           38,971      38,971
Other Intangibles—Net                              13,816      14,305
Deferred Debits                                                
Unamortized Debt Expense                           4,476       5,529
Regulatory Assets                                  131,545     134,755
Total Deferred Debits                              136,021     140,284
Electric Plant in Service                          1,434,511   1,423,303
Nonelectric Operations                             190,536     186,094
Construction Work in Progress                      107,248     77,890
Total Gross Plant                                  1,732,295   1,687,287
Less Accumulated Depreciation and Amortization     659,539     637,835
Net Plant                                          1,072,756   1,049,452
Total                                              $ 1,591,469 $ 1,602,337

Otter Tail Corporation
Consolidated Balance Sheets
in thousands
(not audited)
                                                  June 30,     December 31,
                                                  2013         2012
Current Liabilities                                            
Short-Term Debt                                    $1,117     $--
Current Maturities of Long-Term Debt               182         176
Accounts Payable                                   97,837      88,406
Accrued Salaries and Wages                         16,185      20,571
Billings In Excess Of Costs and Estimated Earnings 16,158      16,204
Accrued Taxes                                      8,690       12,047
Derivative Liabilities                             13,294      18,234
Other Accrued Liabilities                          5,985       6,334
Liabilities of Discontinued Operations             5,332       11,156
Total Current Liabilities                          164,780     173,128
Pensions Benefit Liability                         108,342     116,541
Other Postretirement Benefits Liability            60,082      58,883
Other Noncurrent Liabilities                       24,537      22,244
Deferred Credits                                               
Deferred Income Taxes                              171,320     171,787
Deferred Tax Credits                               29,258      31,299
Regulatory Liabilities                             70,048      68,835
Other                                              523         466
Total Deferred Credits                             271,149     272,387
Long-Term Debt, Net of Current Maturities          437,353     421,680
Cumulative Preferred Shares                        --          15,500
Cumulative Preference Shares                       --          --
Common Equity                                                  
Common Shares, Par Value $5 Per Share              181,340     180,842
Premium on Common Shares                           254,947     253,296
Retained Earnings                                  93,221      92,221
Accumulated Other Comprehensive Loss               (4,282)      (4,385)
Total Common Equity                                525,226     521,974
Total Capitalization                               962,579     959,154
Total                                              $ 1,591,469 $ 1,602,337

Otter Tail Corporation
Consolidated Statements of Cash Flows
In thousands
(not audited)
                                                     For the Six Months Ended
                                                      June 30,
In thousands                                          2013        2012
Cash Flows from Operating Activities                             
Net Income (Loss)                                     $23,064   $(10,113)
Adjustments to Reconcile Net Income to Net Cash                  
Provided by Operating Activities:
Net (Gain) Loss from Sale of Discontinued Operations  (210)       3,544
Net (Income) Loss from Discontinued Operations        (116)       23,645
Depreciation and Amortization                         29,755     29,683
Asset Impairment Charge                               --         432
Deferred Tax Credits                                  (955)       (1,045)
Deferred Income Taxes                                 9,882      3,180
Change in Deferred Debits and Other Assets            7,519      9,960
Discretionary Contribution to Pension Plan            (10,000)    (10,000)
Change in Noncurrent Liabilities and Deferred Credits 4,971      6,995
Allowance for Equity-Other Funds Used During          (567)       (378)
Change in Derivatives Net of Regulatory Deferral      486        748
Stock Compensation Expense – Equity Awards            786        612
Other—Net                                             867        3,133
Cash (Used for) Provided by Current Assets and                   
Current Liabilities:
Change in Receivables                                 (10,126)    (7,551)
Change in Inventories                                 (4,075)     (866)
Change in Other Current Assets                        (783)       (2,598)
Change in Payables and Other Current Liabilities      (1,362)     5,028
Change in Interest and Income Taxes                   (313)       (8,832)
Net Cash Provided by Continuing Operations            48,823     45,577
Net Cash Used in Discontinued Operations              (1,971)     (60)
Net Cash Provided by Operating Activities             46,852     45,517
Cash Flows from Investing Activities                             
Capital Expenditures                                  (51,153)    (64,989)
Proceeds from Disposal of Noncurrent Assets           1,603      2,223
Net Increase in Other Investments                     (25)        (268)
Net Cash Used in Investing Activities - Continuing    (49,575)    (63,034)
Net Proceeds from Sale of Discontinued Operations     12,842     24,278
Net Cash Provided by (Used in) Investing Activities - 193        (12,822)
Discontinued Operations
Net Cash Used in Investing Activities                 (36,540)    (51,578)
Cash Flows from Financing Activities                             
Change in Checks Written in Excess of Cash            --         6,419
Net Short-Term Borrowings                             1,117      11,274
Proceeds from Issuance of Common Stock                1,462      --
Common Stock Issuance Expenses                        --         (86)
Payments for Retirement of Capital Stock              (15,723)    (110)
Proceeds from Issuance of Long-Term Debt              40,900     --
Short-Term and Long-Term Debt Issuance Expenses       (52)        (10)
Payments for Retirement of Long-Term Debt             (25,222)    (81)
Dividends Paid and Other Distributions                (22,097)    (21,980)
Net Cash Used in Financing Activities - Continuing    (19,615)    (4,574)
Net Cash Used in Financing Activities - Discontinued  --         (3,344)
Net Cash Used in Financing Activities                 (19,615)    (7,918)
Net Change in Cash and Cash Equivalents –             (784)       (2,015)
Discontinued Operations
Net Change in Cash and Cash Equivalents               (10,087)    (15,994)
Cash and Cash Equivalents at Beginning of Period      52,362     15,994
Cash and Cash Equivalents at End of Period            $42,275   $--

CONTACT: Media contact:
         Michael J. Olsen, Sr. Vice President of
         Corporate Communications,
         (701) 451-3580 or (866) 410-8780
         Investor contact:
         Loren Hanson, Manager of Investor Relations
         (218) 739-8481 or (800) 664-1259

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