Otter Tail Corporation Announces Strong First Quarter Earnings

Otter Tail Corporation Announces Strong First Quarter Earnings

Increases 2014 Earnings Guidance to $1.60 to $1.80 per Share

Board of Directors Declares Quarterly Dividend

FERGUS FALLS, Minn., May 5, 2014 (GLOBE NEWSWIRE) -- Otter Tail Corporation
(Nasdaq:OTTR) today announced financial results for the quarter ended March
31, 2014.


  *Consolidated revenues were $240.5 million compared with $218.0 million for
    the first quarter of 2013.
  *Consolidated net income and diluted earnings from continuing operations
    totaled $21.4 million and $0.59 per share, respectively, compared with
    $15.2 million and $0.41 per share for the first quarter of 2013.
  *The corporation is increasing its 2014 earnings guidance range to $1.60 to
    $1.80 per diluted share from its previously announced range of $1.55 to
    $1.75, based on its strong first quarter performance.

CEO Overview

"With consolidated revenues up more than 10% and consolidated net income from
continuing operations up over 40% compared with first quarter last year, we
are more than pleased with our 2014 first quarter results," said Otter Tail
Corporation CEO Jim McIntyre.

"Late last year and again this quarter investors saw an earnings uplift from
our utility rate base growth strategy. The regulatory mechanisms we discussed
in investor communications throughout last year have taken effect, allowing
for a return on the funds we have invested in three CapX2020 transmission
projects, two 345-kv transmission projects deemed 'multi-value projects,' or
MVPs, by the Midcontinent Independent System Operator (MISO), and the
environmental upgrade at Big Stone Plant.

"In addition, Otter Tail Power Company's electricity sales through a
prolonged, colder-than-normal winter boosted our electric segment net income.

"Earnings from our manufacturing and infrastructure companies under Varistar,
although down in some cases compared with first quarter last year, were
generally in line with our expectations for first quarter this year—the result
of our initiatives to drive operational excellence. Foley, in particular,
continues to improve its profitability through better project management and
bid estimating. And corporate costs were down significantly.

"On the strength of our discipline, strategy, and first quarter results, we
are increasing our overall guidance for 2014 diluted earnings per share to
$1.60 to $1.80 from our previously announced range of $1.55 to $1.75."

Cash Flow from Operations, Liquidity and Financing

The corporation's consolidated cash used in continuing operations for the
quarter ended March 31, 2014 was $18.9 million compared with $10.2 million in
cash provided by continuing operations for the quarter ended March 31, 2013.
Contributing to the $29.1 million change between the quarters was a $21.2
million increase in cash used for working capital items associated with
quarter over quarter revenue growth and a $10.0 million increase in
discretionary contributions to the corporation's pension plan. The following
table presents the status of the corporation's lines of credit as of March 31,

                                      In Use On Restricted due to Available on
(in thousands)             Line Limit March 31, Outstanding       March 31,
                                      2014      Letters of Credit 2014
Otter Tail Corporation     $ 150,000  $ 11,899  $ 659             $ 137,442
Credit Agreement
Otter Tail Power Company   170,000    --        3,830             166,170
Credit Agreement
Total                     $ 320,000  $ 11,899  $4,489           $ 303,612

On February 27, 2014 Otter Tail Power Company issued $150 million in senior
unsecured notes under a Note Purchase Agreement entered into on August 14,
2013. A portion of the proceeds of the notes were used to retire Otter Tail
Power Company's $40.9 million unsecured term loan and to repay $82.5million
of short-term debt then outstanding under the Otter Tail Power Company Credit
Agreement. Remaining proceeds of the notes will be used to fund planned
construction program expenditures.

Board of Directors Declared Quarterly Dividend

On May 2, 2014 the corporation's Board of Directors declared a quarterly
common stock dividend of $0.3025 per share. This dividend is payable June 10,
2014 to shareholders of record on May15, 2014.

Segment Performance Summary


Electric revenues and net income were $119.1 million and $16.7 million,
respectively, compared with $101.0million and $11.9 million for the first
quarter of 2013.

The following table shows Heating Degree Days as a percent of normal:

Three Months ended March 31,
2014           2013
117.3%         105.3%

Retail electric revenues increased $13.2 million as a result of:

  oa $5.7 million increase in fuel clause adjustment revenues and fuel and
    purchased power costs recovered in base rates, driven by an 8.2% increase
    in fuel costs per kilowatt-hour (kwh) generated at Otter Tail Power
    Company's fuel fired generating units and a 43.2% increase in prices for
    power purchased to serve retail customers as a result of higher demand due
    to colder weather in the first quarter of 2014 compared to the first
    quarter of 2013,
  oa $3.4 million increase in revenues related to a 6.7% increase in retail
    kwh sales, of which: $1.8 million is attributed to colder weather in 2014,
    $0.8 million is related to increased sales to a pipeline customer and
    approximately $0.8 million is from increased sales to residential and
    commercial customers due, in part, to improved economic conditions and
    customer growth in Otter Tail Power Company's service territory,
  oa $2.6 million increase in Environmental Cost Recovery rider revenues
    related to earning a return in Minnesota and North Dakota on increasing
    amounts invested in the AQCS under construction at Big Stone Plant, and
  oa $2.3 million increase in Transmission Cost Recovery rider revenues
    resulting from increased investment in transmission lines,

offset by:

  oa $0.9 million decrease in Renewable Resource Adjustment rider (RRA)
    revenues in North Dakota as a result of: (1) declining book values of
    renewable assets due to depreciation and (2) reduced RRA revenue
    requirements related to earning more federal Production Tax Credits (PTCs)
    as a result of a 33.0% increase in kwhs generated by Otter Tail Power
    Company's wind turbines eligible for PTCs.

Wholesale electric revenues from company-owned generation increased $3.3
million as a result of a 163% increase in revenue per wholesale kwh sold and a
13.9% increase in wholesale kwhs sold. The increase in wholesale kwh sales and
prices was driven by increased wholesale market demand resulting from colder
weather in the first quarter of 2014. Otter Tail Power Company was able to
serve the higher demand from both wholesale and retail customers as a result
of improved availability of Coyote Station, which was shut down for generator
repairs during the first seven weeks of 2013, and as a result of a 30.9%
increase in kwhs generated from company-owned wind turbines.

Net revenue from energy trading activities, including net mark-to-market gains
and losses on forward energy contracts, decreased $0.6 million mainly as a
result of decreased trading activity and the incurrence of losses on contracts
entered into and settled in the first quarter of 2014.

Other electric operating revenues increased $2.2 million, reflecting:

  *a $1.4 million increase in MISO tariff revenues resulting from increased
    investment in regional transmission lines and returns on and recovery of
    CapX2020 and MISO-designated MVP investment costs and operating expenses,
  *a $0.8 million increase in revenue from various other sources including a
    $0.3 million increase in transmission related revenue under an integrated
    transmission agreement and a $0.2 million increase in revenue from steam
    sales at Big Stone Plant.

Production fuel costs increased $4.1 million as a result of a 13.4% increase
in kwhs generated from Otter Tail Power Company's steam-powered and combustion
turbine generators in combination with an 8.2% increase in the cost of fuel
per kwh generated. The increase in kwh generation was facilitated by improved
availability of Coyote Station. The cost of purchased power to serve retail
customers increased $5.1 million due to a 43.2% increase in costs per kwh
purchased, partially offset by an 8.5% decrease in kwhs purchased. The
increase in costs per kwh purchased was driven by increased wholesale market
demand resulting from colder weather.

Electric operating and maintenance expenses increased $2.2 million as a result

  *a $1.2 million increase in MISO transmission tariff charges related to
    increasing investments in regional CapX2020 and MISO-designated MVPs,
  *a $1.2 million increase in labor costs due to increased wages and hours
    worked and accrued incentives related to Otter Tail Power Company's
    improved performance quarter over quarter, and
  *increases of $0.1 million to $0.2 million in each of the following
    categories of expense: generating plant material and supplies, electric
    grid software maintenance, travel expenses, regulatory assessment charges
    and insurance premiums,

offset by:

  *a $1.3 million decrease in labor loading charges as a result of a
    reduction in pension and postretirement benefit costs related to an
    increase in discount rates and pension fund contributions.


Manufacturing revenues and net income were $55.4 million and $2.9 million,
respectively, compared with $53.2million and $3.3 million for the first
quarter of 2013.

  *At BTD, revenues increased $4.9 million mainly as a result of increased
    sales to manufacturers of recreational equipment. BTD's revenue increase
    was offset by increased material costs and increases in support salaries,
    wages and product handling costs to support anticipated sales growth in
    2014. A $0.7million increase in BTD's administrative and general expenses
    related to increased labor and benefit costs was mostly offset by
    decreases of $0.3 million in depreciation expense and $0.3 million in
    income taxes, resulting in a $0.1 million decrease in quarter over quarter
    net income at BTD.
  *At T.O. Plastics, revenues decreased $2.6 million and net income decreased
    $0.4 million, mainly due to a significant reduction in sales of a high
    volume product that a customer began producing on its own in 2014.


Plastics revenues and net income were $40.5 million and $3.5million,
respectively, compared with $37.4million and $3.9million for the first
quarter of 2013. The increase in revenues is the result of a 10.3% increase in
pounds of polyvinyl chloride (PVC) pipe sold, partially offset by a 1.8%
decrease in the price per pound of pipe sold. States with significant
increases in sales were Colorado, California, Arizona, Nevada, Texas and
Minnesota. Cost of products sold increased by $3.3 million, mostly due to the
increase in sales volume, but also due to a 1.1% increase in the cost per
pound of pipe sold related to higher PVC resin costs. A $0.7 million increase
in operating expenses, mainly related to increased wage and benefit costs, in
combination with the $0.2million reduction in gross margins was partially
offset by a $0.5 million decrease in income tax expense, resulting in the
$0.4million decline in Plastics segment net income between the quarters.


Construction revenues and net loss were $25.5 million and $0.6 million,
respectively, compared with $26.4million and $1.1 million for the first
quarter of 2013.

  oFoley broke even in the first quarter of 2014 compared with losing $0.3
    million in the first quarter of 2013, despite a $1.8 million decrease in
    revenues. Foley's improved results are reflective of more selective
    bidding on projects and improved cost control processes in construction
    management, resulting in a $1.0 million improvement in gross margins
    between quarters. The increase in gross margins was partially offset by a
    $0.5 million increase in labor and benefit expenses and a $0.2 million
    increase in income taxes.
  oAevenia's revenues increased $0.9 million and its net loss decreased $0.2
    million between the quarters. Aevenia's revenue increase was offset by a
    commensurate increase in costs and their operating expenses were flat
    between quarters. The $0.2 million increase in Aevenia's net income is
    attributable to an after-tax gain on the sale of its data communication
    installation and services business in the first quarter of 2014.


  oCorporate costs, net-of-tax, decreased $1.2 million as a result of a gain
    on the sale of a low income housing investment and reductions in stock
    based performance incentive and health care benefit costs. Corporate costs
    also decreased $0.6 million due to a decrease in interest expense related
    to the early retirement, in November 2013, of $47.7 million of the
    corporation's outstanding 9.0% notes due December 15, 2016.

2014 Business Outlook

The corporation is increasing its consolidated diluted earnings per share
guidance for 2014 to be in the range of $1.60 to $1.80 from its previously
announced range of $1.55 to $1.75. This updated guidance reflects the current
mix of businesses owned by the corporation. It considers the cyclical nature
of some of the corporation's businesses and reflects challenges, as well as
the corporation's plans and strategies for improving future operating results.

Segment components of the corporation's 2014 earnings per share guidance range
are as follows:

                             Previous 2014 EPS Current 2014 EPS
                              Guidance          Guidance
                             Low      High     Low      High
Electric                      $1.19    $1.23    $1.21    $1.25
Manufacturing                 $0.29    $0.33    $0.29    $0.33
Plastics                      $0.25    $0.29    $0.27    $0.31
Construction                  $0.07    $0.11    $0.07    $0.11
Corporate                     ($0.25)  ($0.21)  ($0.24)  ($0.20)
Total – Continuing Operations $1.55    $1.75    $1.60    $1.80

Contributing to our updated earnings guidance for 2014 are the following

  *The corporation expects 2014 net income for its Electric segment to
    increase from its previously issued guidance primarily as a result of the
    strong first quarter results driven in part by colder than normal weather.
    Items affecting the corporation's 2014 Electric segment earnings guidance
    compared with 2013 earnings include:

       *Rider recovery increases, including environmental riders in Minnesota
         and North Dakota related to the Big Stone AQCS environmental upgrades
         while under construction, and
       *A decrease in pension costs of approximately $2.0 million as a result
         of an increase in the discount rate from 4.5% to 5.3%, offset by
       *An increase in interest costs as a result of $150 million of fixed
         rate long term debt put in place in the first quarter of 2014 to
         finance the Big Stone Plant AQCS and transmission projects, and
       *An increase in operating and maintenance costs primarily for
         increased labor and a planned outage for maintenance at Hoot Lake

  *The corporation is maintaining its original 2014 earnings expectations for
    its Manufacturing segment, which are expected to be unchanged from 2013
    results due to the following factors:

       *An increase at BTD due to increased order volume as a result of
         expanded relationships with customers in recreational vehicle, lawn
         and garden, industrial and commercial end markets BTD serves, offset
       *A decrease in earnings from T.O. Plastics due to a reduction in sales
         of a product the customer will be producing on its own in 2014.
       *Backlog for the manufacturing companies of approximately $115 million
         for 2014 compared with $97million one year ago.

  *The corporation is raising its expectations for 2014 net income for its
    Plastics segment from its original guidance due to a stronger than
    expected first quarter.
  *The corporation is maintaining its original 2014 net income guidance for
    its Construction segment. Net income is expected to be higher in 2014 than
    in 2013 as a result of improved cost control processes in construction
    management and more selective bidding on projects with the potential for
    higher margins. Backlog in place for the construction businesses is $85
    million for 2014 compared with $100million one year ago.
  *Corporate costs for 2014 are expected to be slightly lower than original
    guidance as a result of a sale of an investment in tax-credit-qualified
    low income housing rental property, which was not expected when the
    corporation's original guidance was given, and improved performance in the
    corporation's self-insured health plan.

The corporation reviews its portfolio of companies at least annually to see
where additional opportunities exist to improve its risk profile, improve
credit metrics and generate additional sources of cash to support the future
capital expenditure plans of its Electric segment.

The following table shows our 2013 capital expenditures and 2014 through 2018
anticipated capital expenditures and electric utility average rate base:

(in millions)                           2013  2014  2015  2016   2017   2018
Capital Expenditures:                                              
Electric Segment:                                                  
Transmission                                 $53  $46  $97   $52   $56
Environmental                                82    61    --     --     --
Other                                        37    38    44     45     46
Total Electric Segment                  $ 149 $ 172 $ 145 $141  $97   $102
Manufacturing and Infrastructure        15    23    19    26     20     24
Total Capital Expenditures              $ 164 $ 195 $ 164 $167  $117  $126
Total Electric Utility Average Rate          $ 885 $ 991 $1,062 $1,120 $1,152

Execution on the currently anticipated electric utility capital expenditure
plan is expected to grow rate base and be a key driver in increasing utility
earnings over the 2014 through 2018 timeframe.


The corporation will host a live webcast on Tuesday, May 6, 2014, 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 2014 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 $20.0 million in discretionary contributions to its
    defined benefit pension plan in January 2014. 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.
  oDeclines in projected operating cash flows at any of the corporation's
    reporting units 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 in 2003. Foley net earnings improved
    $10.4million between 2012 and 2013. If future expected operating profits
    do not meet the corporation's projections, the reductions in anticipated
    cash flows from Foley may indicate its fair value is less than its book
    value, resulting in an impairment of some or all of the goodwill and
    indefinite-lived intangible assets 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 or
    cyber-attacks 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
  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.
  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
  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.

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 and manufacturing and
infrastructure businesses consisting of its Manufacturing, Plastics and
Construction segments. 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 months ended
March 31, 2014 and 2013 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. For a further discussion of other risk factors and cautionary
statements, refer to reports the corporation files with the Securities and
Exchange Commission.

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

                                                      Quarter Ended
                                                       March 31,
                                                      2014        2013
Operating Revenues by Segment                                     
Electric                                               $119,088  $101,010
Manufacturing                                          55,435     53,166
Plastics                                               40,483     37,400
Construction                                           25,506     26,425
Corporate Revenue and Intersegment Eliminations        (40)        (47)
Total Operating Revenues                               240,472    217,954
Operating Expenses                                                
Fuel and Purchased Power                               43,815     34,592
Nonelectric Cost of Goods Sold (depreciation included  96,301     92,062
Electric Operating and Maintenance Expense             37,593     35,363
Nonelectric Operating and Maintenance Expense          13,561     13,778
Depreciation and Amortization                          14,780     14,920
Total Operating Expenses                               206,050    190,715
Operating Income (Loss) by Segment                                
Electric                                               26,917     20,424
Manufacturing                                          5,391      6,349
Plastics                                               5,771      6,717
Construction                                           (1,218)     (1,699)
Corporate                                              (2,439)     (4,552)
Total Operating Income                                 34,422     27,239
Interest Charges                                       6,595      6,980
Other Income                                           1,823      861
Income Tax Expense – Continuing Operations             8,288      5,886
Net Income (Loss) by Segment – Continuing Operations              
Electric                                               16,653     11,931
Manufacturing                                          2,896      3,318
Plastics                                               3,460      3,887
Construction                                           (620)       (1,092)
Corporate                                              (1,027)     (2,810)
Net Income from Continuing Operations                  21,362     15,234
Discontinued Operations                                           
Income (Loss) - net of Income Tax Expense (Benefit) of 68         (81)
$49 in 2014 and ($205) in 2013
Gain on Disposition - net of Income Tax Expense of $6  --         210
in 2013
Net Income from Discontinued Operations                68         129
Net Income                                             21,430     15,363
Preferred Dividend Requirement and Other Adjustments   --         513
Balance for Common                                     $21,430   $14,850
Average Number of Common Shares Outstanding                       
Basic                                                  36,240,350 36,075,131
Diluted                                                36,431,915 36,259,115
Basic Earnings Per Common Share:                                  
Continuing Operations (net of preferred dividend       $0.59     $0.41
requirement and other adjustments)
Discontinued Operations                                --        --
                                                      $0.59     $0.41
Diluted Earnings Per Common Share:                                
Continuing Operations (net of preferred dividend       $0.59    $0.41
requirement and other adjustments)
Discontinued Operations                                --        --
                                                      $0.59     $0.41

Otter Tail Corporation
Consolidated Balance Sheets
in thousands
(not audited)
                                                  March 31,   December 31,
                                                  2014        2013
Current Assets                                                
Cash and Cash Equivalents                          $6,613   $1,150
Accounts Receivable:                                          
Trade—Net                                          99,892     83,572
Other                                              11,523     9,790
Inventories                                        81,875     72,681
Deferred Income Taxes                              39,352     35,452
Unbilled Revenues                                  16,902     18,157
Costs and Estimated Earnings in Excess of Billings 3,719      4,063
Regulatory Assets                                  20,199     17,940
Other                                              11,336     7,747
Assets of Discontinued Operations                  38         38
Total Current Assets                               291,449    250,590
Investments                                        8,753      9,362
Other Assets                                       29,605     28,834
Goodwill                                           38,808     38,971
Other Intangibles—Net                              13,084     13,328
Deferred Debits                                               
Unamortized Debt Expense                           4,498      4,188
Regulatory Assets                                  78,839     83,730
Total Deferred Debits                              83,337     87,918
Electric Plant in Service                          1,473,685  1,460,884
Nonelectric Operations                             196,500    194,872
Construction Work in Progress                      207,442    187,461
Total Gross Plant                                  1,877,627  1,843,217
Less Accumulated Depreciation and Amortization     686,460    676,201
Net Plant                                          1,191,167  1,167,016
Total                                              $1,656,203 $ 1,596,019

Otter Tail Corporation
Consolidated Balance Sheets
in thousands
(not audited)
                                                  March 31,    December 31,
                                                  2014         2013
Current Liabilities                                            
Short-Term Debt                                    $11,899   $51,195
Current Maturities of Long-Term Debt               191         188
Accounts Payable                                   104,486     113,457
Accrued Salaries and Wages                         13,556      19,903
Billings In Excess Of Costs and Estimated Earnings 10,077      13,707
Accrued Taxes                                      14,057      12,491
Derivative Liabilities                             8,252       11,782
Other Accrued Liabilities                          8,272       6,532
Liabilities of Discontinued Operations             3,442       3,637
Total Current Liabilities                          174,232     232,892
Pensions Benefit Liability                         50,129      69,743
Other Postretirement Benefits Liability            45,547      45,221
Other Noncurrent Liabilities                       21,367      25,209
Deferred Credits                                               
Deferred Income Taxes                              212,682     195,603
Deferred Tax Credits                               27,834      28,288
Regulatory Liabilities                             75,365      73,926
Other                                              733         718
Total Deferred Credits                             316,614     298,535
Long-Term Debt, Net of Current Maturities          498,640     389,589
Cumulative Preferred Shares                        --          --
Cumulative Preference Shares                       --          --
Common Equity                                                  
Common Shares, Par Value $5 Per Share              182,062     181,358
Premium on Common Shares                           259,454     255,759
Retained Earnings                                  109,878     99,441
Accumulated Other Comprehensive Loss               (1,720)      (1,728)
Total Common Equity                                549,674     534,830
Total Capitalization                               1,048,314   924,419
Total                                              $ 1,656,203 $ 1,596,019

Otter Tail Corporation
Consolidated Statements of Cash Flows
In thousands
(not audited)

                                                   For the Three Months Ended
                                                    March 31,
In thousands                                        2014          2013
Cash Flows from Operating Activities                             
Net Income                                          $21,430    $15,363
Adjustments to Reconcile Net Income to Net Cash                  
(Used in) Provided by Operating Activities:
Net Gain from Sale of Discontinued Operations       --           (210)
Net (Income) Loss from Discontinued Operations      (68)          81
Depreciation and Amortization                       14,780       14,920
Deferred Tax Credits                                (454)         (483)
Deferred Income Taxes                               12,872       6,139
Change in Deferred Debits and Other Assets          (888)         4,800
Discretionary Contribution to Pension Plan          (20,000)      (10,000)
Change in Noncurrent Liabilities and Deferred       (2,408)       1,975
Allowance for Equity/Other Funds Used During        (340)         (293)
Change in Derivatives Net of Regulatory Deferral    118          378
Stock Compensation Expense – Equity Awards          358          392
Other—Net                                           (255)         25
Cash (Used for) Provided by Current Assets and                   
Current Liabilities:
Change in Receivables                               (17,884)      (13,423)
Change in Inventories                               (9,234)       (4,062)
Change in Other Current Assets                      (1,599)       (3,025)
Change in Payables and Other Current Liabilities    (16,363)      (3,440)
Change in Interest and Income Taxes                 1,013        1,076
Net Cash (Used in) Provided by Continuing           (18,922)      10,213
Net Cash Used in Discontinued Operations            (135)         (2,400)
Net Cash (Used in) Provided by Operating Activities (19,057)      7,813
Cash Flows from Investing Activities                             
Capital Expenditures                                (37,690)      (23,327)
Proceeds from Disposal of Noncurrent Assets         1,505        729
Net Increase in Other Investments                   (989)         (923)
Net Cash Used in Investing Activities - Continuing  (37,174)      (23,521)
Net Proceeds from Sale of Discontinued Operations   --           10,465
Net Cash Provided by (Used in) Investing Activities 7            (208)
- Discontinued Operations
Net Cash Used in Investing Activities               (37,167)      (13,264)
Cash Flows from Financing Activities                             
Net Short-Term (Repayments) Borrowings              (39,296)      1,335
Proceeds from Issuance of Common Stock              3,666        1,156
Payments for Retirement of Capital Stock            (242)         (15,500)
Proceeds from Issuance of Long-Term Debt            150,000      40,900
Short-Term and Long-Term Debt Issuance Expenses     (502)         (7)
Payments for Retirement of Long-Term Debt           (40,946)      (25,178)
Dividends Paid and Other Distributions              (10,993)      (11,307)
Net Cash Provided by (Used in) Financing Activities 61,687       (8,601)
Net Change in Cash and Cash Equivalents –           --           (778)
Discontinued Operations
Net Change in Cash and Cash Equivalents             5,463        (14,830)
Cash and Cash Equivalents at Beginning of Period    1,150        52,362
Cash and Cash Equivalents at End of Period          $6,613      $37,532

CONTACT: Media contact:
         Cris Oehler, Vice President of Corporate Communications
         (218) 531-0099 or (866) 410-8780
         Investor contact:
         Loren Hanson, Manager of Investor Relations
         (218) 739-8481 or (800) 664-1259

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