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Otter Tail Corporation Reports 2009 Financial Results and
Issues 2010 Earnings Guidance; Board Declares Quarterly
Dividend
GlobeNewswire
2010-02-08
FERGUS FALLS, Minn., Feb. 8, 2010 (GLOBE NEWSWIRE) -- Otter Tail
Corporation (Nasdaq:OTTR) today announced financial results for the
fourth quarter and year ended December 31, 2009.
2009 Summary:
-- Diluted earnings per share were $0.71 compared with $1.09 in 2008.
-- Consolidated revenues decreased to $1.0 billion from a record $1.3
billion in 2008.
-- Consolidated net income was $26.0 million compared with $35.1 million in
2008.
-- Operating cash flow increased 46.2% to a record $162.7 million compared
with $111.3 million in 2008.
-- Electric segment net income increased 2.5% to $34.1 million.
-- Food Ingredient Processing segment net income reached a record $7.4
million.
-- The corporation maintains a strong balance sheet, capital structure and
liquidity position.
CEO Overview
"2009 proved to be a difficult year and our financial results reflect
that reality," said John Erickson, president and chief executive
officer of Otter Tail Corporation. "We are pleased, however, with how
our company adapted to the realities of the economy. We preserved our
core strengths and continued to be disciplined in investing for the
opportunities that lie ahead. While the impact of the recession was
widespread, affecting nearly all of our operating companies, we are
encouraged that our food ingredient processing segment posted record
net income in 2009 and that net income from Otter Tail Power Company,
our core electric business, also increased in 2009. In addition, Otter
Tail Power Company invested $100 million in another major wind energy
project with the construction of 49.5 megawatts of generating capacity
at the Luverne Wind Farm in eastern North Dakota."
Erickson continued, "Signs of economic recovery are mixed and we expect
2010 will be another challenging year, requiring continued discipline
on managing costs and capital expenditures. Despite this economic
uncertainty, our current estimate of 2010 earnings is in the range of
$1.00 to $1.40 per diluted share, considerably better than our 2009
results. We emerge from a difficult year as a more efficient
organization with a healthy balance sheet and a strong capital
structure and liquidity position."
Liquidity and Cash Flow from Operations
In 2009, the corporation's cash flow from operations increased 46.2% to
a record $162.7 million compared with $111.3 million in 2008. The $51.4
million increase in cash from operating activities reflects a $45.2
million increase in cash from working capital items between the years.
As of December 31, 2009, Otter Tail Corporation and Otter Tail Power
Company (OTP) had $347.5 million available under existing credit
facilities to provide for working capital requirements and help fuel
future growth initiatives. In December 2009, the corporation issued
$100 million of its 9.000% Notes due 2016 and used the net proceeds to
repay borrowings under the Otter Tail Corporation credit facility. In
January 2010, OTP paid off the remaining $58 million balance
outstanding on its two-year, $75 million term loan, originally due on
May 20, 2011, using lower cost funds available under the OTP credit
facility.
2010 Dividend Declared
On February 8, 2010 the Board of Directors declared a quarterly common
stock dividend of $0.2975 per share. This dividend is payable March 10,
2010 to shareholders of record on February 15, 2010. The Board's
dividend decision reflects the corporation's financial strength,
commitment to the dividend and confidence in the future, while
exhibiting prudence given the difficult economic times. Our
expectation, based on our strategic plan, is that our ratio of
dividends to earnings will decline over time as our operating results
improve. The corporation has paid dividends without interruption since
1938.
The Board also declared quarterly dividends on the corporation's four
series of preferred stock, payable March 1, 2010 to shareholders of
record on February 15, 2010.
Segment Performance Summary
Electric
Electric segment revenues and net income were $314.6 million and $34.1
million, respectively, in 2009 compared with $340.0 million and $33.2
million in 2008. The decrease in electric revenues was due to decreases
in wholesale electricity sales and prices, less contract work performed
for other entities in 2009 and lower fuel and purchased power prices
resulting in a reduction in revenues related to the recovery of fuel
and purchased power costs.
Wholesale electric revenues from company-owned generation were $12.6
million in 2009 compared with $23.7 million in 2008. The decrease in
wholesale electric revenues resulted from a 14.8% decrease in wholesale
kilowatt-hour (kwh) sales due to lower wholesale demand and reduced
plant availability, combined with a 37.7% decrease in revenue per kwh
sold due to lower wholesale prices. Other electric operating revenues
decreased $8.4 million, mainly as a result of a decrease in revenues
from construction and permitting work completed for other entities on
regional energy projects. Net gains from energy trading activities,
including net mark-to-market gains on forward energy contracts, were
$3.2 million in 2009 compared with $3.5 million in 2008.
While retail kwh sales grew by 0.1%, retail electric revenues decreased
$5.5 million due to:
-- a $15.5 million decrease in revenues related to a reduction in costs of
fuel and purchased power to serve retail customers,
-- a $1.5 million increase in 2008 revenue related to the cost of
replacement power purchased in November and December 2007 when Big Stone
Plant was down for maintenance, and
-- a $0.5 million increase in a refund paid to Minnesota customers for
amounts collected under interim rates, partially offset by
-- a $6.6 million increase in Minnesota and North Dakota renewable resource
recovery rider revenues,
-- $3.8 million from a 3.0% general rate increase in North Dakota, approved
in November 2009, and
-- $1.5 million from an 11.7% general rate increase in South Dakota,
approved in June 2009.
Fuel costs related to retail use were down $8.9 million due to a 9.4%
reduction in kwh generation for retail use combined with a 5.8%
reduction in fuel cost per kwh generated. A major factor contributing
to the decrease in fuel costs was a 32.6% decrease in kwhs generated
from OTP's fuel-oil and natural gas-fired combustion turbines, in
combination with lower fuel and natural gas prices. A contributing
factor to the reduction in fuel cost per kwh of generation was a 238%
increase in generation from OTP's zero-fuel-cost wind turbines, which
provided 12.0% of the electricity generated by OTP to serve retail
customers in 2009. Despite a 35.8% increase in kwh purchases to serve
retail customers, purchased power costs decreased by $3.4 million as a
result of a 30.8% decrease in the cost per kwh purchased. Decreases in
natural gas prices, increased output from regional hydroelectric
plants, increased efficiency in wholesale electric markets and a
decline in industrial demand for electricity are factors that
contributed to a significant decline in wholesale electric prices in
2009.
A $9.5 million decrease in electric operating and maintenance expenses
includes:
-- a $7.5 million decrease in costs associated with construction work
completed for other entities on regional energy projects, commensurate
with an $8.0 million decrease in related revenue,
-- a $1.1 million reduction in external services expenses, for tree
trimming and power-plant maintenance, and
-- a $0.9 million reduction in vehicle and travel expenses related to a 37%
reduction in fuel prices and an increase in vehicle costs capitalized
for transportation equipment used on construction projects in 2009.
Depreciation expense increased $5.2 million, mainly due to the
additions of 32 wind turbines at the Ashtabula Wind Energy Center in
2008 and 33 wind turbines at the Luverne Wind Farm placed in service in
September 2009. OTP's interest costs increased by $6.5 million as a
result of debt incurred to finance a portion of OTP's recent
investments in wind-powered generation. OTP received a U.S. Treasury
grant of $30.2 million in October under the American Recovery and
Reinvestment Act of 2009 related to its Luverne Wind Farm assets. The
proceeds offset a portion of the $100.6 million in costs incurred by
OTP to construct the 33 wind turbines at the Luverne Wind Farm. OTP
chose to receive the grant instead of receiving Production Tax Credits
on its future federal income tax filings.
Plastics
Plastics revenues and net loss were $80.2 million and $0.1 million,
respectively, in 2009 compared with revenues of $116.5 million and net
income of $1.9 million in 2008. The decrease in revenues and net income
was due to a 9.5% decrease in pounds of pipe sold combined with a 24.0%
decrease in the price per pound of pipe sold. Costs per pound of pipe
sold decreased 23.8% between the years. Beginning in 2008, significant
reductions in new home construction in markets served by the plastic
pipe companies have resulted in reduced demand and lower prices for PVC
pipe products.
Manufacturing
Manufacturing revenues and net loss were $323.9 million and $2.0
million, respectively, in 2009 compared with revenues of $470.5 million
and net income of $5.3 million in 2008.
-- At DMI, revenues decreased $88.3 million mainly as a result of lower
volumes of wind towers being sold in 2009, but DMI's net income
increased by $0.4 million as a result of improved productivity and cost
control measures implemented in 2009. Also, in 2008, DMI's costs of
goods sold included $4.3 million related to the start-up of its Oklahoma
plant and $3.5 million in additional labor and material costs on a
production contract in Ft. Erie.
-- At BTD, revenues decreased $30.4 million, which led to a decrease of
$7.4 million from net income in 2008 to a net loss in 2009. These
decreases were the result of a significant decline in sales volume and
margins on sales, reductions in capacity utilization and decreased
revenues from the sale of scrap metal due to less scrap and lower steel
prices in 2009. BTD's depreciation expenses increased $1.2 million in
2009, mainly related to the acquisition of Miller Welding & Iron Works,
Inc. in May 2008.
-- At T.O. Plastics, revenues decreased $7.0 million and net income was
down $0.5 million as a result of lower sales volume related to the
economic recession.
-- At ShoreMaster, revenues decreased $20.8 million while net losses
decreased by $0.2 million. The decrease in revenues reflects a lower
volume of commercial construction projects and lower sales of
residential products between the years. ShoreMaster's 2009 results were
also impacted by $1.6 million in product recall and testing costs.
ShoreMaster's results in 2008 included $2.3 million in expenses from the
operation and closure of a production facility in California.
Health Services
Health services revenues and net loss were $110.0 million and $2.1
million, respectively, in 2009 compared with revenues of $122.5 million
and net income of $0.1 million in 2008. Decreases in revenues of $9.5
million from scanning and other related services and $3.0 million from
equipment sales and servicing were partially offset by decreases in
costs of goods sold of $7.0 million between the years. Also, results in
2008 included after-tax gains from the sale of certain imaging assets
of $0.7 million. The imaging side of the business continues to be
affected by less-than-optimal utilization of certain imaging assets.
Food Ingredient Processing
Food ingredient processing revenues and net income were $79.1 million
and $7.4 million, respectively, in 2009 compared with revenues of $65.4
million and $1.7 million in 2008. The $13.7 million increase in
revenues is due to a 6.6% increase in pounds of product sold, combined
with a 13.5% increase in the price per pound of product sold. A $3.3
million increase in cost of goods sold was due to increased product
sales, slightly mitigated by a 0.6% decrease in the cost per pound of
product sold.
Other Business Operations
Other business operations revenues and net loss were $136.1 million and
$1.9 million, respectively, in 2009 compared with revenues of $199.5
million and net income of $5.3 million in 2008. At the construction
companies, revenues and net income decreased $53.2 million and $4.3
million, respectively, as a result of a reduction in work volume due to
the economic recession and increased competition for available work. In
the corporation's trucking operations, revenues decreased $10.2 million
due to a reduction in miles driven directly related to the economic
recession, which led to a $2.9 million reduction from net income in
2008 to a net loss in 2009. Lower asset utilization rates and an
increase in equipment maintenance costs also contributed to the net
loss from trucking operations in 2009.
Corporate
Corporate expenses, net-of-tax, were $9.4 million in 2009 compared with
$12.3 million in 2008, mainly due to net-of-tax reductions in insurance
and employee benefit costs of $1.6 million, a $0.6 million net-of-tax
increase in the cash surrender value of corporate-held life insurance
and a $0.4 million net-of-tax decrease in interest costs related to a
reduction in corporate-held debt.
Income Taxes
The corporation's effective income tax rate for 2009 is significantly
lower than its effective income tax rate for 2008. The reduction from
the federal statutory rate mainly reflects the benefit of production
tax credits and North Dakota wind energy credits--approximately $7.4
million in 2009 compared with $3.6 million in 2008--related to the
ownership and operation of OTP's wind turbines.
Fourth Quarter 2009 Results
Diluted earnings per share were $0.23 compared with $0.38 for the
fourth quarter of 2008. Revenues were $258.0 million compared with
$334.4 million for the same quarter a year ago. Operating income was
$13.1 million compared with $25.8 million for the fourth quarter of
2008. Net income was $8.3 million compared with $13.7 million in the
fourth quarter of 2008. Net income increases in the electric, plastics
and food ingredient processing segments were more than offset by
decreases in net income in the corporation's manufacturing, health
services and other business operations segments and a $0.5 million
increase in unallocated corporate expenses.
2010 Business Outlook
The corporation anticipates 2010 diluted earnings per share to be in
the range of $1.00 to $1.40. This guidance considers the cyclical
nature of some of the corporation's businesses and reflects challenges
presented by current economic conditions and the corporation's plans
and strategies for improving operating results as the economy recovers.
The corporation's current consolidated capital expenditures expectation
for 2010 is in the range of $75-85 million. This compares with $177
million of capital expenditures in 2009. The corporation continues to
explore investments in generation and transmission projects for the
electric segment that could have positive impacts on the corporation's
earnings and returns on capital.
Contributing to the earnings guidance for 2010 are the following items:
-- The corporation expects lower levels of net income from its electric
segment in 2010. This decrease is due to continued soft wholesale power
markets, lower AFUDC earnings as there are no large construction
projects expected in 2010, and increased operating and maintenance
expense in 2010 due primarily to increased employee benefit costs.
Expectations in 2010 also reflect an interim rate increase of
approximately $1.5 million in the Minnesota jurisdiction.
-- The corporation expects its plastics segment's 2010 performance to
improve and be more in line with 2008 results.
-- The corporation expects earnings from its manufacturing segment to
improve in 2010 as a result of the following:
-- Improved earnings are expected at BTD in 2010 due to productivity
improvements and cost reductions made in 2009.
-- Results at ShoreMaster are expected to be near breakeven in 2010 given
the restructuring of costs that occurred in 2009. ShoreMaster continues
to be affected by current depressed economic conditions and does not
expect any improvement to overall business conditions until the economy
starts to recover.
-- Improved earnings are expected at DMI in 2010 due to a better backlog of
business going into 2010 and continued improvements in productivity from
cost controls implemented in 2009.
-- Slightly better earnings are expected at T. O. Plastics in 2010 compared
with 2009.
-- Backlog in place in the manufacturing segment to support 2010 revenues
is approximately $239 million compared with $241 million one year ago.
-- The corporation expects increased net income from its health services
segment in 2010. In an effort to right-size its fleet of imaging assets,
health services will not renew leases on a large number of imaging
assets that come off lease in 2010. This will result in a lower level of
rental costs in 2010.
-- The corporation expects a similar level of net income from its food
ingredient processing business in 2010 compared with 2009.
-- The other business operations segment is expected to have improved
earnings in 2010 compared with 2009. Backlog in place for the
construction businesses is $84 million for 2010 compared with $71
million one year ago.
-- Corporate general and administrative costs are expected to return to
more normal levels in 2010.
Risk Factors and Forward-Looking Statements that Could Affect Future
Results
The information in this release includes certain forward-looking
information, including 2010 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:
-- The corporation is subject to federal and state legislation, regulations
and actions that may have a negative impact on its business and results
of operations.
-- Federal and state environmental regulation could require the corporation
to incur substantial capital expenditures and increased operating costs.
-- Volatile 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.
-- The corporation relies on access to the 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.
-- Disruptions, 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
level.
-- The value of the corporation's defined benefit pension plan assets
declined significantly in 2008 due to volatile equity markets. Asset
values increased in 2009 and the corporation made a $4 million
discretionary contribution to the pension plan in 2009. If the market
value of pension plan assets declines again as in 2008 or does not
increase as projected and relief under the Pension Protection Act is no
longer granted, the corporation could be required to contribute
additional capital to the pension plan in future years.
-- Any significant impairment of the corporation's goodwill would cause a
decrease in its asset values and a reduction in its net operating
performance.
-- A 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 credit facility covenants.
-- Economic conditions could negatively impact the corporation's
businesses.
-- If the corporation is unable to achieve the organic growth it expects,
its financial performance may be adversely affected.
-- The corporation's plans to grow and diversify through acquisitions and
capital projects may not be successful, which could result in poor
financial performance.
-- The corporation's plans to acquire additional businesses and grow and
operate its nonelectric businesses could be limited by state law.
-- The terms of some of the corporation's contracts could expose it to
unforeseen costs and costs not within its control, which may not be
recoverable and could adversely affect its results of operations and
financial condition.
-- The corporation is subject to risks associated with energy markets.
-- Certain of the corporation's operating companies sell products to
consumers that could be subject to recall.
-- Competition is a factor in all of the corporation's businesses.
-- The 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.
-- In September 2009, OTP announced its withdrawal as a participating
utility and the lead developer for the planned construction of a second
electric generating unit at its Big Stone Plant site. As of December 31,
2009 OTP had incurred $13.0 million in costs related to the project. OTP
has deferred recognition of these costs as operating expenses pending
determination of recoverability by the state and federal regulatory
commissions that approve its rates. If OTP is denied recovery of all or
any portion of these deferred costs, such costs would be subject to
expense in the period they are deemed to be unrecoverable.
-- Actions by the regulators of the electric segment could result in rate
reductions, lower revenues and earnings or delays in recovering capital
expenditures.
-- OTP could be required to absorb a disproportionate share of costs for
investments in transmission infrastructure required to provide
independent power producers access to the transmission grid. These costs
may not be recoverable through a transmission tariff and could result in
reduced returns on invested capital and/or increased rates to OTP's
retail electric customers.
-- OTP'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.
-- Fluctuations in wholesale electric sales and prices could result in
earnings volatility.
-- Wholesale sales of electricity from excess generation could be affected
by reductions in coal shipments to the Big Stone and Hoot Lake plants
due to supply constraints or rail transportation problems beyond the
corporation's control.
-- Changes to regulation of generating plant emissions, including but not
limited to carbon dioxide ("CO2") emissions, could affect our operating
costs and the costs of supplying electricity to our customers.
-- The 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 business.
-- The 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.
-- Reductions in PVC resin prices can negatively impact PVC pipe prices,
profit margins on PVC pipe sales and the value of PVC pipe held in
inventory.
-- Competition from foreign and domestic manufacturers, the price and
availability of raw materials, fluctuations in foreign currency exchange
rates and general economic conditions could affect the revenues and
earnings of the corporation's manufacturing businesses.
-- Changes in the rates or method of third-party reimbursements for
diagnostic imaging services could result in reduced demand for those
services or create downward pricing pressure, which would decrease
revenues and earnings for the corporation's health services segment.
-- The corporation's health services businesses may be unable to continue
to maintain agreements with Philips Medical from which the businesses
derive significant revenues from the sale and service of Philips Medical
diagnostic imaging equipment.
-- Technological change in the diagnostic imaging industry could reduce the
demand for diagnostic imaging services and require the corporation's
health services operations to incur significant costs to upgrade its
equipment.
-- Actions by regulators of the corporation's health services operations
could result in monetary penalties or restrictions in the corporation's
health services operations.
-- The corporation's food ingredient processing segment operates in a
highly competitive market and is dependent on adequate sources of
potatoes for processing. Should the supply of potatoes be affected by
poor growing conditions, this could negatively impact the results of
operations for this segment.
-- The corporation's food ingredient processing business could be adversely
affected by changes in foreign currency exchange rates.
-- A significant failure or an inability to properly bid or perform on
projects by the corporation's construction or manufacturing businesses
could lead to adverse financial results.
For a further discussion of other risk factors and cautionary
statements, refer to reports the corporation files with the Securities
and Exchange Commission.
About The Corporation: Otter Tail Corporation has interests in
diversified operations that include an electric utility, manufacturing,
health services, food ingredient processing and infrastructure
businesses which include plastics, construction and transportation.
Otter Tail Corporation stock trades on the NASDAQ Global Select Market
under the symbol OTTR. The latest investor and corporate information is
available at www.ottertail.com. Corporate offices are located in Fergus
Falls, Minnesota, and Fargo, North Dakota.
The Otter Tail Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4958
See Otter Tail Corporation's results of operations for the three and
twelve months ended December 31, 2009 and 2008 in the attached
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
For the Three and Twelve Months Ended December 31, 2009 and 2008
In thousands, except share and per share amounts
Quarter Ended December Year-to-Date December
31, 31,
2009 2008 2009 2008
Operating Revenues by
Segment:
Electric $81,868 $90,881 $314,625 $340,020
Plastics 17,142 16,767 80,208 116,452
Manufacturing 75,105 124,747 323,895 470,462
Health Services 26,594 31,376 110,006 122,520
Food Ingredient Processing 19,740 18,223 79,098 65,367
Other Business Operations 38,473 53,671 136,088 199,511
Corporate Revenue and
Intersegment Eliminations (946) (1,224) (4,408) (3,135)
---------- ---------- ------------ ----------
Total Operating Revenues 257,976 334,441 1,039,512 1,311,197
Operating Expenses:
Fuel and Purchased Power 28,382 35,217 112,329 128,259
Nonelectric Cost of Goods
Sold (depreciation
included below) 135,601 191,835 565,199 775,292
Electric Operating and
Maintenance Expense 28,565 29,244 114,720 124,249
Nonelectric Operating and
Maintenance Expense 33,121 34,839 126,641 143,050
Product Recall and Testing
Costs (141) -- 1,625 --
Plant Closure Costs -- -- -- 2,295
Depreciation and
Amortization 19,343 17,460 73,608 65,060
---------- ---------- ------------ ----------
Total Operating Expenses 244,871 308,595 994,122 1,238,205
Operating Income (Loss) by
Segment:
Electric 14,976 18,043 50,630 55,757
Plastics 1,517 (1,425) 627 4,260
Manufacturing (659) 7,556 1,300 15,754
Health Services (1,909) 1,262 (3,060) 1,008
Food Ingredient Processing 2,993 1,514 12,251 2,860
Other Business Operations 165 3,188 (2,715) 9,758
Corporate (3,978) (4,292) (13,643) (16,405)
---------- ---------- ------------ ----------
Total Operating Income 13,105 25,846 45,390 72,992
Interest Charges 8,234 5,935 28,514 26,958
Other Income 923 1,383 4,550 4,128
Income Taxes (2,526) 7,547 (4,605) 15,037
Net Income (Loss) by
Segment
Electric 11,631 10,689 34,079 33,234
Plastics 810 (1,033) (59) 1,880
Manufacturing (868) 4,109 (2,025) 5,269
Health Services (1,221) 610 (2,096) 85
Food Ingredient Processing 1,863 947 7,407 1,681
Other Business Operations 95 1,909 (1,891) 5,279
Corporate (3,990) (3,484) (9,384) (12,303)
---------- ---------- ------------ ----------
Total Net Income 8,320 13,747 26,031 35,125
Preferred Stock Dividend 184 184 736 736
---------- ---------- ------------ ----------
Balance for Common: $8,136 $13,563 $25,295 $34,389
========== ========== ============ ==========
Average Number of Common
Shares Outstanding:
Basic 35,610,707 35,311,160 35,463,097 31,409,076
Diluted 35,865,618 35,515,716 35,716,981 31,673,069
Earnings Per Common Share:
Basic $0.23 $0.38 $0.71 $1.09
Diluted $0.23 $0.38 $0.71 $1.09
Otter Tail Corporation
Consolidated Balance Sheets
Assets
In thousands
December December
31, 31,
2009 2008
Current Assets
Cash and Cash Equivalents $4,432 $7,565
Accounts Receivable:
Trade--Net 95,747 136,609
Other 10,883 13,587
Inventories 86,515 101,955
Deferred Income Taxes 11,457 8,386
Accrued Utility and
Cost-of-Energy Revenues 15,840 24,030
Costs and Estimated
Earnings in Excess of
Billings 61,835 65,606
Income Taxes Receivable 48,049 26,754
Other 15,265 8,519
---------- ----------
Total Current Assets 350,023 393,011
---------- ----------
Investments 9,889 7,542
Other Assets 26,098 22,615
Goodwill 106,778 106,778
Other Intangibles---Net 33,887 35,441
Deferred Debits
Unamortized Debt Expense
and Reacquisition
Premiums 10,676 7,247
Regulatory Assets and
Other Deferred Debits 118,700 82,384
---------- ----------
Total Deferred Debits 129,376 89,631
---------- ----------
Plant
Electric Plant in Service 1,313,015 1,205,647
Nonelectric Operations 362,088 321,032
---------- ----------
Total 1,675,103 1,526,679
Less Accumulated
Depreciation and
Amortization 599,839 548,070
---------- ----------
Plant--Net of Accumulated
Depreciation and
Amortization 1,075,264 978,609
Construction Work in
Progress 23,363 58,960
---------- ----------
Net Plant 1,098,627 1,037,569
---------- ----------
Total $1,754,678 $1,692,587
========== ==========
Otter Tail Corporation
Consolidated Balance Sheets
Liabilities and Equity
In thousands
December December
31, 31,
2009 2008
Current Liabilities
Short-Term Debt $7,585 $134,914
Current Maturities of
Long-Term Debt 59,053 3,747
Accounts Payable 83,724 113,422
Accrued Salaries and Wages 21,057 29,688
Accrued Taxes 11,304 10,939
Other Accrued Liabilities 24,319 12,034
---------- ----------
Total Current Liabilities 207,042 304,744
---------- ----------
Pensions Benefit Liability 95,039 80,912
Other Postretirement
Benefits Liability 37,712 32,621
Other Noncurrent
Liabilities 22,697 19,391
Deferred Credits
Deferred Income Taxes 155,306 123,086
Deferred Tax Credits 47,660 34,288
Regulatory Liabilities 64,274 64,684
Other 562 397
---------- ----------
Total Deferred Credits 267,802 222,455
---------- ----------
Capitalization
Long-Term Debt, Net of
Current Maturities 436,170 339,726
Class B Stock Options of
Subsidiary 1,220 1,220
Cumulative Preferred Shares 15,500 15,500
Cumulative Preference
Shares -- --
Common Shares, Par Value $5
Per Share 179,061 176,923
Premium on Common Shares 250,398 241,731
Retained Earnings 243,352 260,364
Accumulated Other
Comprehensive Loss (1,315) (3,000)
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Total Common Equity 671,496 676,018
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Total Capitalization 1,124,386 1,032,464
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Total $1,754,678 $1,692,587
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Otter Tail Corporation
Consolidated Statements of Cash Flows
In thousands
For The Years Ended
December 31,
2009 2008
--------- ---------
Cash Flows from Operating Activities
Net Income $26,031 $35,125
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 73,608 65,060
Deferred Tax Credits (2,331) (1,692)
Deferred Income Taxes 44,792 40,665
Change in Deferred Debits and Other Assets (18,527) (41,851)
Discretionary Contribution to Pension Plan (4,000) (2,000)
Change in Noncurrent Liabilities and
Deferred Credits 24,895 40,918
Allowance for Equity (Other) Funds Used
During Construction (3,180) (2,786)
Change in Derivatives Net of Regulatory
Deferral (1,442) 1,044
Stock Compensation Expense 3,563 3,850
Other--Net 1,489 298
Cash Provided by (Used for) Current Assets
and Current Liabilities:
Change in Receivables 43,822 19,522
Change in Inventories 16,344 (743)
Change in Other Current Assets 13,146 (12,362)
Change in Payables and Other Current
Liabilities (34,490) (8,572)
Change in Interest and Income Taxes
Payable/Receivable (20,970) (25,155)
--------- ---------
Net Cash Provided by Operating Activities 162,750 111,321
Cash Flows from Investing Activities
Capital Expenditures (177,125) (265,888)
2009 American Recovery and Reinvestment Act
Grant for Luverne Wind Farm 30,182 --
Proceeds from Disposal of Noncurrent Assets 4,909 8,174
Acquisitions---Net of Cash Acquired -- (41,674)
Net (Decrease) Increase in Other
Investments and Long-Term Assets (5,706) 4
--------- ---------
Net Cash Used in Investing Activities (147,740) (299,384)
Cash Flows from Financing Activities
Net Short-Term Borrowings (127,329) 39,914
Proceeds from Issuance of Common Stock 7,420 162,978
Common Stock Issuance Expenses (23) (6,418)
Payments for Retirement of Common Stock (229) (91)
Proceeds from Issuance of Long-Term Debt 175,000 1,240
Short-Term and Long-Term Debt Issuance
Expenses (5,526) (1,252)
Payments for Retirement of Long-Term Debt (23,356) (3,639)
Dividends Paid (43,043) (38,093)
--------- ---------
Net Cash (Used in) Provided by Financing
Activities (17,086) 154,639
Effect of Foreign Exchange Rate Fluctuations
on Cash (1,057) 1,165
--------- ---------
Net Change in Cash and Cash Equivalents (3,133) (32,259)
Cash and Cash Equivalents at Beginning of
Period 7,565 39,824
--------- ---------
Cash and Cash Equivalents at End of Period $4,432 $7,565
========= =========
CONTACT: Otter Tail Corporation
Media contact:
Michael J. Olsen, VP of Corporate Communications
(701) 451-3580
(866) 410-8780
Investor contact:
Loren Hanson, Director of Shareholder Services
(218) 739-8481
(800) 664-1259
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