[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|
|
EXCHANGE ACT OF 1934
|
For the quarterly period ended
|
March 31, 2012
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|
|
EXCHANGE ACT OF 1934
|
For the transition period from
|
to
|
Commission file number
|
0-53713
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OTTER TAIL CORPORATION
|
(Exact name of registrant as specified in its charter)
|
Minnesota
|
27-0383995
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
215 South Cascade Street, Box 496, Fergus Falls, Minnesota
|
56538-0496
|
(Address of principal executive offices)
|
(Zip Code)
|
866-410-8780
|
(Registrant's telephone number, including area code)
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer X | Accelerated filer __ |
Non-accelerated filer __
|
Smaller reporting company __ |
(Do not check if a smaller reporting company) |
Page No.
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2 & 3
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4
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5
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6
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7-30
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31-44
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44-46
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46
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47
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47
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47
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||
47
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Otter Tail Corporation
|
||||||||
(not audited)
|
||||||||
(in thousands)
|
March 31,
2012
|
December 31,
2011
|
||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and Cash Equivalents
|
$ | -- | $ | 14,652 | ||||
Accounts Receivable:
|
||||||||
Trade—Net
|
139,350 | 116,522 | ||||||
Other
|
16,019 | 18,807 | ||||||
Inventories
|
82,959 | 77,983 | ||||||
Deferred Income Taxes
|
12,335 | 12,307 | ||||||
Accrued Utility Revenues
|
12,150 | 13,719 | ||||||
Costs and Estimated Earnings in Excess of Billings
|
66,394 | 67,109 | ||||||
Regulatory Assets
|
24,980 | 27,391 | ||||||
Other
|
20,867 | 21,414 | ||||||
Assets of Discontinued Operations
|
529 | 29,692 | ||||||
Total Current Assets
|
375,583 | 399,596 | ||||||
Investments
|
11,337 | 11,093 | ||||||
Other Assets
|
27,812 | 26,997 | ||||||
Goodwill
|
39,406 | 39,406 | ||||||
Other Intangibles—Net
|
15,038 | 15,286 | ||||||
Deferred Debits
|
||||||||
Unamortized Debt Expense
|
6,125 | 6,458 | ||||||
Regulatory Assets
|
122,481 | 124,137 | ||||||
Total Deferred Debits
|
128,606 | 130,595 | ||||||
Plant
|
||||||||
Electric Plant in Service
|
1,378,651 | 1,372,534 | ||||||
Nonelectric Operations
|
309,565 | 310,320 | ||||||
Construction Work in Progress
|
63,469 | 54,439 | ||||||
Total Gross Plant
|
1,751,685 | 1,737,293 | ||||||
Less Accumulated Depreciation and Amortization
|
670,349 | 659,744 | ||||||
Net Plant
|
1,081,336 | 1,077,549 | ||||||
Total Assets
|
$ | 1,679,118 | $ | 1,700,522 | ||||
See accompanying notes to consolidated financial statements.
|
Otter Tail Corporation
|
||||||||
Consolidated Balance Sheets
|
||||||||
(not audited)
|
||||||||
(in thousands, except share data)
|
March 31,
2012
|
December 31,
2011
|
||||||
LIABILITIES AND EQUITY
|
||||||||
Current Liabilities
|
||||||||
Short-Term Debt
|
$ | 3,311 | $ | -- | ||||
Current Maturities of Long-Term Debt
|
3,000 | 3,033 | ||||||
Accounts Payable
|
121,518 | 115,514 | ||||||
Accrued Salaries and Wages
|
14,279 | 19,043 | ||||||
Accrued Taxes
|
12,149 | 11,841 | ||||||
Derivative Liabilities
|
24,686 | 18,770 | ||||||
Other Accrued Liabilities
|
7,842 | 5,540 | ||||||
Liabilities of Discontinued Operations
|
37 | 13,763 | ||||||
Total Current Liabilities
|
186,822 | 187,504 | ||||||
Pensions Benefit Liability
|
97,719 | 106,818 | ||||||
Other Postretirement Benefits Liability
|
49,013 | 48,263 | ||||||
Other Noncurrent Liabilities
|
26,670 | 19,002 | ||||||
Commitments and Contingencies (note 9)
|
||||||||
Deferred Credits
|
||||||||
Deferred Income Taxes
|
161,041 | 177,264 | ||||||
Deferred Tax Credits
|
32,868 | 33,182 | ||||||
Regulatory Liabilities
|
69,003 | 69,106 | ||||||
Other
|
540 | 520 | ||||||
Total Deferred Credits
|
263,452 | 280,072 | ||||||
Capitalization
|
||||||||
Long-Term Debt, Net of Current Maturities
|
471,878 | 471,915 | ||||||
Cumulative Preferred Shares
Authorized 1,500,000 Shares Without Par Value;
Outstanding 2012 and 2011 – 155,000 Shares
|
15,500 | 15,500 | ||||||
|
||||||||
Cumulative Preference Shares – Authorized 1,000,000 Shares Without Par Value;
Outstanding - None
|
-- | -- | ||||||
Common Shares, Par Value $5 Per Share—Authorized, 50,000,000 Shares;
|
||||||||
Outstanding, 2012—36,107,795 Shares; 2011—36,101,695 Shares
|
180,539 | 180,509 | ||||||
Premium on Common Shares
|
253,267 | 253,123 | ||||||
Retained Earnings
|
137,566 | 141,248 | ||||||
Accumulated Other Comprehensive Loss
|
(3,308 | ) | (3,432 | ) | ||||
Total Common Equity
|
568,064 | 571,448 | ||||||
Total Capitalization
|
1,055,442 | 1,058,863 | ||||||
Total Liabilities and Equity
|
$ | 1,679,118 | $ | 1,700,522 | ||||
See accompanying notes to consolidated financial statements.
|
Otter Tail Corporation
|
||||||||
(not audited)
|
||||||||
Three Months Ended
March 31,
|
||||||||
(in thousands, except share and per-share amounts)
|
2012
|
2011
|
||||||
Operating Revenues
|
||||||||
Electric
|
$ | 89,938 | $ | 91,526 | ||||
Nonelectric
|
187,651 | 157,622 | ||||||
Total Operating Revenues
|
277,589 | 249,148 | ||||||
Operating Expenses
|
||||||||
Production Fuel - Electric
|
15,424 | 19,577 | ||||||
Purchased Power - Electric System Use
|
14,158 | 12,377 | ||||||
Electric Operation and Maintenance Expenses
|
30,013 | 28,708 | ||||||
Asset Impairment Charge - Electric
|
432 | -- | ||||||
Cost of Goods Sold - Nonelectric (excludes depreciation; included below)
|
162,990 | 140,339 | ||||||
Other Nonelectric Expenses
|
17,491 | 13,076 | ||||||
Depreciation and Amortization
|
17,053 | 17,106 | ||||||
Property Taxes - Electric
|
2,617 | 2,409 | ||||||
Total Operating Expenses
|
260,178 | 233,592 | ||||||
Operating Income
|
17,411 | 15,556 | ||||||
Interest Charges
|
8,616 | 9,476 | ||||||
Other Income
|
993 | 371 | ||||||
Income from Continuing Operations Before Income Taxes
|
9,788 | 6,451 | ||||||
Income Taxes – Continuing Operations
|
297 | 1,238 | ||||||
Net Income from Continuing Operations
|
9,491 | 5,213 | ||||||
Discontinued Operations
|
||||||||
Income - net of Income Tax Expense of $584 and $288 for the respective periods
|
841 | 483 | ||||||
Loss on Disposition - net of Income Tax Benefit of ($134) in 2012
|
(3,089 | ) | -- | |||||
Net (Loss) Income from Discontinued Operations
|
(2,248 | ) | 483 | |||||
Net Income
|
7,243 | 5,696 | ||||||
Preferred Dividend Requirements
|
184 | 184 | ||||||
Earnings Available for Common Shares
|
$ | 7,059 | $ | 5,512 | ||||
Average Number of Common Shares Outstanding—Basic
|
35,995,179 | 35,876,853 | ||||||
Average Number of Common Shares Outstanding—Diluted
|
36,129,192 | 36,081,426 | ||||||
Basic Earnings Per Common Share:
|
||||||||
Continuing Operations (net of preferred dividend requirement)
|
$ | 0.26 | $ | 0.14 | ||||
Discontinued Operations
|
(0.06 | ) | 0.01 | |||||
0.20 | 0.15 | |||||||
Diluted Earnings Per Common Share:
|
||||||||
Continuing Operations (net of preferred dividend requirement)
|
$ | 0.26 | $ | 0.14 | ||||
Discontinued Operations
|
(0.06 | ) | 0.01 | |||||
0.20 | 0.15 | |||||||
Dividends Declared Per Common Share
|
$ | 0.2975 | $ | 0.2975 | ||||
See accompanying notes to consolidated financial statements.
|
Otter Tail Corporation
|
||||||||
(not audited)
|
||||||||
Three Months Ended
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Net Income
|
$ | 7,243 | $ | 5,696 | ||||
Other Comprehensive (Loss) Income:
|
||||||||
Unrealized Gain (Loss) on Available-for-Sale Securities:
|
||||||||
Gain (Loss) Arising During Period
|
104 | (17 | ) | |||||
Income Tax (Expense) Benefit
|
(41 | ) | 7 | |||||
Gain (Loss) on Available-for-Sale Securities – net-of-tax
|
63 | (10 | ) | |||||
Foreign Currency Translation Adjustment Gain:
|
||||||||
Unrealized Net Change During Period
|
-- | 645 | ||||||
Income Tax Expense
|
-- | (200 | ) | |||||
Foreign Currency Translation Adjustment Gain – net-of-tax
|
-- | 445 | ||||||
Pension and Postretirement Benefit Plans:
|
||||||||
Actuarial Loss -- Regulatory Allocation Adjustment (ESSRP)
|
-- | (1,621 | ) | |||||
Amortization of Unrecognized Postretirement Benefit Losses and Costs
|
102 | 171 | ||||||
Income Tax (Expense) Benefit
|
(41 | ) | 580 | |||||
Pension and Postretirement Benefit Plans – net-of-tax
|
61 | (870 | ) | |||||
Total Other Comprehensive Income (Loss)
|
124 | (435 | ) | |||||
Total Comprehensive Income
|
$ | 7,367 | $ | 5,261 | ||||
See accompanying notes to consolidated financial statements.
|
Otter Tail Corporation
|
||||||||
(not audited)
|
||||||||
Three Months Ended
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net Income
|
$ | 7,243 | $ | 5,696 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
||||||||
Net Loss from Sale of Discontinued Operations
|
3,089 | -- | ||||||
Income from Discontinued Operations
|
(841 | ) | (483 | ) | ||||
Depreciation and Amortization
|
17,053 | 17,106 | ||||||
Asset Impairment Charge
|
432 | -- | ||||||
Deferred Tax Credits
|
(522 | ) | (659 | ) | ||||
Deferred Income Taxes
|
(7,717 | ) | 4,124 | |||||
Change in Deferred Debits and Other Assets
|
7,872 | 6,266 | ||||||
Discretionary Contribution to Pension Plan
|
(10,000 | ) | -- | |||||
Change in Noncurrent Liabilities and Deferred Credits
|
9,299 | 85 | ||||||
Allowance for Equity (Other) Funds Used During Construction
|
(162 | ) | (116 | ) | ||||
Change in Derivatives Net of Regulatory Deferral
|
281 | (59 | ) | |||||
Stock Compensation Expense – Equity Awards
|
287 | 452 | ||||||
Other—Net
|
321 | 304 | ||||||
Cash (Used for) Provided by Current Assets and Current Liabilities:
|
||||||||
Change in Receivables
|
(20,040 | ) | (30,390 | ) | ||||
Change in Inventories
|
(4,976 | ) | (1,675 | ) | ||||
Change in Other Current Assets
|
(3,034 | ) | (634 | ) | ||||
Change in Payables and Other Current Liabilities
|
5,598 | 1,873 | ||||||
Change in Interest and Income Taxes Receivable/Payable
|
2,251 | 1,245 | ||||||
Net Cash Provided by Continuing Operations
|
6,434 | 3,135 | ||||||
Net Cash Provided by Discontinued Operations
|
1,417 | 3,826 | ||||||
Net Cash Provided by Operating Activities
|
7,851 | 6,961 | ||||||
Cash Flows from Investing Activities
|
||||||||
Capital Expenditures
|
(36,321 | ) | (20,596 | ) | ||||
Proceeds from Disposal of Noncurrent Assets
|
1,824 | 258 | ||||||
Net Increase in Other Investments
|
(1,321 | ) | (598 | ) | ||||
Net Cash Used in Investing Activities - Continuing Operations
|
(35,818 | ) | (20,936 | ) | ||||
Net Proceeds from Sale of Discontinued Operations
|
24,362 | -- | ||||||
Net Cash Used in Investing Activities - Discontinued Operations
|
(11,705 | ) | (2,522 | ) | ||||
Net Cash Used in Investing Activities
|
(23,161 | ) | (23,458 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Change in Checks Written in Excess of Cash
|
10,546 | (8,463 | ) | |||||
Net Short-Term Borrowings
|
3,311 | 37,486 | ||||||
Proceeds from Issuance of Long-Term Debt
|
-- | 1,500 | ||||||
Short-Term and Long-Term Debt Issuance Expenses
|
(10 | ) | (686 | ) | ||||
Payments for Retirement of Long-Term Debt
|
(70 | ) | (70 | ) | ||||
Dividends Paid and Other Distributions
|
(11,037 | ) | (11,041 | ) | ||||
Net Cash Provided by Financing Activities - Continuing Operations
|
2,740 | 18,726 | ||||||
Net Cash Used in Financing Activities - Discontinued Operations
|
(1,409 | ) | (1,502 | ) | ||||
Net Cash Provided by Financing Activities
|
1,331 | 17,224 | ||||||
Net Change in Cash and Cash Equivalents - Discontinued Operations
|
(673 | ) | 1,145 | |||||
Effect of Foreign Exchange Rate Fluctuations on Cash – Discontinued Operations
|
-- | (288 | ) | |||||
Net Change in Cash and Cash Equivalents
|
(14,652 | ) | 1,584 | |||||
Cash and Cash Equivalents at Beginning of Period
|
14,652 | -- | ||||||
Cash and Cash Equivalents at End of Period
|
$ | -- | $ | 1,584 | ||||
See accompanying notes to consolidated financial statements.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2012
|
2011
|
|||||||
Percentage-of-Completion Revenues
|
32.2 | % | 35.5 | % |
March 31,
|
December 31,
|
|||||||
(in thousands)
|
2012
|
2011
|
||||||
Costs Incurred on Uncompleted Contracts
|
$ | 457,977 | $ | 583,346 | ||||
Less Billings to Date
|
(421,796 | ) | (550,070 | ) | ||||
Plus Estimated Earnings Recognized
|
22,232 | 24,478 | ||||||
$ | 58,413 | $ | 57,754 |
|
March 31,
|
December 31,
|
||||||
(in thousands)
|
2012
|
2011
|
||||||
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts
|
$ | 66,394 | $ | 67,109 | ||||
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts
|
(7,981 | ) | (9,355 | ) | ||||
$ | 58,413 | $ | 57,754 |
|
March 31,
|
December 31,
|
||||||
(in thousands)
|
2012
|
2011
|
||||||
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts - DMI
|
$ | 54,199 | $ | 54,541 |
(in thousands)
|
||||
Warranty Reserve Balance, December 31, 2011
|
$ | 3,170 | ||
Provision for Warranties Issued During the Year
|
325 | |||
Settlements Made During the Year
|
(380 | ) | ||
Adjustments to Warranty Estimates for Prior Years
|
(38 | ) | ||
Warranty Reserve Balance, March 31, 2012
|
$ | 3,077 |
|
March 31,
|
December 31,
|
||||||
(in thousands)
|
2012
|
2011
|
||||||
Accounts Receivable Retained by Customers
|
$ | 13,387 | $ | 13,526 |
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Accounts Receivable Sold
|
$ | 21,028 | $ | 19,048 | ||||
Discounts, Fees and Commissions Paid on Sale of Accounts Receivable
|
$ | 197 | $ | 118 |
March 31, 2012 (in thousands)
|
Level 1
|
Level 2
|
Level 3
|
||||||
Assets:
|
|||||||||
Investments for Nonqualified Retirement Savings Retirement Plan:
|
|||||||||
Money Market and Mutual Funds
|
$ | 1,264 | $ | -- | |||||
Equity Securities
|
127 | ||||||||
Forward Gasoline Purchase Contracts
|
15 | ||||||||
Forward Energy Contracts
|
5,391 | ||||||||
Investments of Captive Insurance Company:
|
|||||||||
Money Market Fund
|
80 | ||||||||
Corporate Debt Securities
|
7,846 | ||||||||
U.S. Government Debt Securities
|
1,297 | ||||||||
Money Market Fund - Escrow Account Idaho Pacific Holdings, Inc. (IPH) Sale
|
3,001 | ||||||||
Total Assets
|
$ | 4,472 | $ | 14,549 | |||||
Liabilities:
|
|||||||||
Forward Gasoline Purchase Contracts
|
$ | -- | $ | 4 | |||||
Forward Energy Contracts
|
-- | 24,682 | |||||||
Total Liabilities
|
$ | -- | $ | 24,686 |
December 31, 2011 (in thousands)
|
Level 1
|
Level 2
|
Level 3
|
||||||
Assets:
|
|||||||||
Investments for Nonqualified Retirement Savings Retirement Plan:
|
|||||||||
Money Market and Mutual Funds
|
$ | 364 | $ | -- | |||||
Forward Gasoline Purchase Contracts
|
9 | ||||||||
Forward Energy Contracts
|
3,803 | ||||||||
Regulatory Asset – Deferred Mark-to-Market Losses on Forward Energy Contracts
|
15,957 | ||||||||
Investments of Captive Insurance Company:
|
|||||||||
Corporate Debt Securities
|
8,083 | ||||||||
U.S. Government Debt Securities
|
707 | ||||||||
Money Market Fund - Escrow Account (IPH) Sale
|
3,001 | ||||||||
Total Assets
|
$ | 4,081 | $ | 27,843 | |||||
Liabilities:
|
|||||||||
Forward Energy Contracts
|
$ | -- | $ | 18,770 | |||||
Regulatory Liability – Deferred Mark-to-Market Gains on Forward Energy Contracts
|
96 | ||||||||
Total Liabilities
|
$ | -- | $ | 18,866 |
March 31,
|
December 31,
|
|||||||
(in thousands)
|
2012
|
2011
|
||||||
Finished Goods
|
$ | 24,569 | $ | 21,373 | ||||
Work in Process
|
12,589 | 11,951 | ||||||
Raw Material, Fuel and Supplies
|
45,801 | 44,659 | ||||||
Total Inventories
|
$ | 82,959 | $ | 77,983 |
(in thousands)
|
Gross Balance
December 31,
2011
|
Accumulated Impairments
|
Balance (net of impairments)
December 31,
2011
|
Adjustments
to Goodwill
in 2012
|
Balance (net of impairments)
March 31,
2012
|
|||||||||||||||
Electric
|
$ | 240 | $ | (240 | ) | $ | -- | $ | -- | $ | -- | |||||||||
Wind Energy
|
288 | -- | 288 | -- | 288 | |||||||||||||||
Manufacturing
|
24,445 | (12,259 | ) | 12,186 | -- | 12,186 | ||||||||||||||
Construction
|
7,630 | -- | 7,630 | -- | 7,630 | |||||||||||||||
Plastics
|
19,302 | -- | 19,302 | -- | 19,302 | |||||||||||||||
Total
|
$ | 51,905 | $ | (12,499 | ) | $ | 39,406 | $ | -- | $ | 39,406 |
March 31, 2012 (in thousands)
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying
Amount
|
Amortization
Periods
|
|||||||||
Amortizable Intangible Assets:
|
|||||||||||||
Customer Relationships
|
$ | 16,811 | $ | 3,449 | $ | 13,362 |
15 – 25 years
|
||||||
Covenants Not to Compete
|
713 | 712 | 1 |
3 – 5 years
|
|||||||||
Other Intangible Assets Including Contracts
|
2,192 | 517 | 1,675 |
5 – 30 years
|
|||||||||
Total
|
$ | 19,716 | $ | 4,678 | $ | 15,038 | |||||||
December 31, 2011 (in thousands)
|
|||||||||||||
Amortizable Intangible Assets:
|
|||||||||||||
Customer Relationships
|
$ | 16,811 | $ | 3,236 | $ | 13,575 |
15 – 25 years
|
||||||
Covenants Not to Compete
|
713 | 709 | 4 |
3 – 5 years
|
|||||||||
Other Intangible Assets Including Contracts
|
2,192 | 485 | 1,707 |
5 – 30 years
|
|||||||||
Total
|
$ | 19,716 | $ | 4,430 | $ | 15,286 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Amortization Expense – Intangible Assets
|
$ | 247 | $ | 224 |
(in thousands)
|
2012
|
2013
|
2014
|
2015
|
2016
|
|||||||||||||||
Estimated Amortization Expense – Intangible Assets
|
$ | 981 | $ | 977 | $ | 977 | $ | 977 | $ | 945 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
(Decrease) Increase in Accounts Payable Related to Capital Expenditures
|
$ | (13,562 | ) | $ | 13 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2012
|
2011
|
|||||||
United States of America
|
97.8 | % | 98.8 | % | ||||
Canada
|
1.4 | % | 1.1 | % | ||||
All Other Countries (none greater than 1%)
|
0.8 | % | 0.1 | % |
Three Months Ended
|
||||||||||||||||
March 31,
|
June 30,
|
September 30,
|
||||||||||||||
(in thousands)
|
2012
|
2011
|
2011
|
2011
|
||||||||||||
Electric
|
$ | 90,003 | $ | 91,596 | $ | 78,031 | $ | 85,172 | ||||||||
Wind Energy
|
52,102 | 46,988 | 55,025 | 52,595 | ||||||||||||
Manufacturing
|
65,994 | 55,361 | 57,320 | 55,625 | ||||||||||||
Construction
|
35,617 | 37,515 | 49,133 | 53,247 | ||||||||||||
Plastics
|
34,875 | 18,478 | 44,373 | 36,231 | ||||||||||||
Corporate Revenues and Intersegment Eliminations
|
(1,002 | ) | (790 | ) | (584 | ) | (497 | ) | ||||||||
Total
|
$ | 277,589 | $ | 249,148 | $ | 283,298 | $ | 282,373 |
Three Months Ended
|
||||||||||||||||
March 31,
|
June 30,
|
September 30,
|
||||||||||||||
(in thousands)
|
2012
|
2011
|
2011
|
2011
|
||||||||||||
Electric
|
$ | 4,851 | $ | 5,088 | $ | 4,990 | $ | 4,796 | ||||||||
Wind Energy
|
1,700 | 1,701 | 1,858 | 1,775 | ||||||||||||
Manufacturing
|
1,336 | 1,211 | 1,255 | 1,229 | ||||||||||||
Construction
|
253 | 220 | 227 | 251 | ||||||||||||
Plastics
|
346 | 363 | 402 | 411 | ||||||||||||
Corporate and Intersegment Eliminations
|
130 | 893 | 406 | 234 | ||||||||||||
Total
|
$ | 8,616 | $ | 9,476 | $ | 9,138 | $ | 8,696 |
Three Months Ended
|
||||||||||||||||
March 31,
|
June 30,
|
September 30,
|
||||||||||||||
(in thousands)
|
2012
|
2011
|
2011
|
2011
|
||||||||||||
Electric
|
$ | 1,622 | $ | 2,600 | $ | 7 | $ | 3,364 | ||||||||
Wind Energy
|
(156 | ) | (1,549 | ) | (2,174 | ) | (383 | ) | ||||||||
Manufacturing
|
1,469 | 1,790 | 1,561 | 781 | ||||||||||||
Construction
|
(2,776 | ) | (210 | ) | 130 | (115 | ) | |||||||||
Plastics
|
2,175 | (241 | ) | 2,144 | 1,295 | |||||||||||
Corporate
|
(2,037 | ) | (1,152 | ) | (1,753 | ) | (2,560 | ) | ||||||||
Total
|
$ | 297 | $ | 1,238 | $ | (85 | ) | $ | 2,382 |
Three Months Ended
|
||||||||||||||||
March 31,
|
June 30,
|
September 30,
|
||||||||||||||
(in thousands)
|
2012
|
2011
|
2011
|
2011
|
||||||||||||
Electric
|
$ | 11,016 | $ | 11,142 | $ | 7,386 | $ | 10,900 | ||||||||
Wind Energy
|
(690 | ) | (6,232 | ) | (6,566 | ) | (2,770 | ) | ||||||||
Manufacturing
|
2,211 | 2,658 | 2,769 | 1,366 | ||||||||||||
Construction
|
(4,171 | ) | (325 | ) | 184 | (179 | ) | |||||||||
Plastics
|
3,253 | (374 | ) | 3,312 | 1,970 | |||||||||||
Corporate
|
(2,312 | ) | (1,840 | ) | (2,144 | ) | (4,135 | ) | ||||||||
Discontinued Operations
|
(2,248 | ) | 483 | 13,381 | (968 | ) | ||||||||||
Total
|
$ | 7,059 | $ | 5,512 | $ | 18,322 | $ | 6,184 |
March 31,
|
December 31,
|
|||||||
(in thousands)
|
2012
|
2011
|
||||||
Electric
|
$ | 1,167,688 | $ | 1,170,449 | ||||
Wind Energy
|
150,400 | 149,234 | ||||||
Manufacturing
|
163,855 | 154,908 | ||||||
Construction
|
67,288 | 69,453 | ||||||
Plastics
|
87,066 | 72,200 | ||||||
Corporate
|
42,292 | 54,586 | ||||||
Discontinued Operations
|
529 | 29,692 | ||||||
Total
|
$ | 1,679,118 | $ | 1,700,522 |
March 31, 2012
|
Remaining
Recovery/
|
||||||||||||
(in thousands)
|
Current
|
Long-Term
|
Total
|
Refund Period
|
|||||||||
Regulatory Assets:
|
|||||||||||||
Unrecognized Transition Obligation, Prior Service Costs and Actuarial Losses on Pensions and Other Postretirement Benefits
|
$ | 7,047 | $ | 93,570 | $ | 100,617 |
see notes
|
||||||
Deferred Marked-to-Market Losses
|
7,268 | 12,770 | 20,038 |
41 months
|
|||||||||
Deferred Conservation Improvement Program Costs & Accrued Incentives
|
3,503 | 3,166 | 6,669 |
15 months
|
|||||||||
Accumulated ARO Accretion/Depreciation Adjustment
|
-- | 3,777 | 3,777 |
asset lives
|
|||||||||
Big Stone II Unrecovered Project Costs – Minnesota
|
503 | 2,015 | 2,518 |
54 months
|
|||||||||
Debt Reacquisition Premiums
|
277 | 2,180 | 2,457 |
246 months
|
|||||||||
Minnesota Renewable Resource Rider Accrued Revenues
|
1,148 | 1,057 | 2,205 |
30 months
|
|||||||||
Deferred Income Taxes
|
-- | 2,200 | 2,200 |
asset lives
|
|||||||||
Big Stone II Unrecovered Project Costs – North Dakota
|
1,364 | 447 | 1,811 |
16 months
|
|||||||||
North Dakota Renewable Resource Rider Accrued Revenues
|
1,045 | 301 | 1,346 |
24 months
|
|||||||||
North Dakota Transmission Rider Accrued Revenues
|
1,201 | -- | 1,201 |
12 months
|
|||||||||
Big Stone II Unrecovered Project Costs – South Dakota
|
100 | 786 | 886 |
106 months
|
|||||||||
General Rate Case Recoverable Expenses
|
679 | 143 | 822 |
22 months
|
|||||||||
Minnesota Transmission Rider Accrued Revenue
|
329 | -- | 329 |
12 months
|
|||||||||
MISO Schedule 16 and 17 Deferred Administrative Costs - ND
|
249 | -- | 249 |
8 months
|
|||||||||
MISO Schedule 26 Transmission Cost Recovery Rider True-up
|
189 | -- | 189 |
9 months
|
|||||||||
Deferred Holding Company Formation Costs
|
55 | 69 | 124 |
27 months
|
|||||||||
Other Regulatory Assets
|
23 | -- | 23 |
12 months
|
|||||||||
Total Regulatory Assets
|
$ | 24,980 | $ | 122,481 | $ | 147,461 | |||||||
Regulatory Liabilities:
|
|||||||||||||
Accumulated Reserve for Estimated Removal Costs – Net of Salvage
|
$ | -- | $ | 65,717 | $ | 65,717 |
asset lives
|
||||||
Deferred Income Taxes
|
-- | 3,170 | 3,170 |
asset lives
|
|||||||||
Deferred Marked-to-Market Gains
|
137 | -- | 137 |
11 months
|
|||||||||
Deferred Gain on Sale of Utility Property – Minnesota Portion
|
5 | 116 | 121 |
261 months
|
|||||||||
South Dakota – Nonasset-Based Margin Sharing Excess
|
56 | -- | 56 |
9 months
|
|||||||||
Total Regulatory Liabilities
|
$ | 198 | $ | 69,003 | $ | 69,201 | |||||||
Net Regulatory Asset Position
|
$ | 24,782 | $ | 53,478 | $ | 78,260 |
December 31, 2011
|
Remaining
Recovery/
|
||||||||||||
(in thousands)
|
Current
|
Long-Term
|
Total
|
Refund Period
|
|||||||||
Regulatory Assets:
|
|||||||||||||
Unrecognized Transition Obligation, Prior Service Costs and Actuarial Losses on Pensions and Other Postretirement Benefits
|
$ | 6,304 | $ | 96,074 | $ | 102,378 |
see notes
|
||||||
Deferred Marked-to-Market Losses
|
5,208 | 10,749 | 15,957 |
44 months
|
|||||||||
Deferred Conservation Improvement Program Costs & Accrued Incentives
|
5,234 | 2,208 | 7,442 |
18 months
|
|||||||||
Accrued Cost-of-Energy Revenue
|
4,043 | -- | 4,043 |
12 months
|
|||||||||
Accumulated ARO Accretion/Depreciation Adjustment
|
-- | 3,662 | 3,662 |
asset lives
|
|||||||||
Minnesota Renewable Resource Rider Accrued Revenues
|
1,461 | 1,306 | 2,767 |
33 months
|
|||||||||
Big Stone II Unrecovered Project Costs – Minnesota
|
495 | 2,144 | 2,639 |
57 months
|
|||||||||
Debt Reacquisition Premiums
|
280 | 2,246 | 2,526 |
249 months
|
|||||||||
Deferred Income Taxes
|
-- | 2,382 | 2,382 |
asset lives
|
|||||||||
Big Stone II Unrecovered Project Costs – North Dakota
|
1,340 | 862 | 2,202 |
19 months
|
|||||||||
North Dakota Renewable Resource Rider Accrued Revenues
|
785 | 1,325 | 2,110 |
24 months
|
|||||||||
General Rate Case Recoverable Expenses
|
721 | 285 | 1,006 |
25 months
|
|||||||||
Big Stone II Unrecovered Project Costs – South Dakota
|
100 | 811 | 911 |
109 months
|
|||||||||
North Dakota Transmission Rider Accrued Revenue
|
518 | -- | 518 |
12 months
|
|||||||||
MISO Schedule 16 and 17 Deferred Administrative Costs - ND
|
343 | -- | 343 |
11 months
|
|||||||||
MISO Schedule 26 Transmission Cost Recovery Rider True-up
|
252 | -- | 252 |
12 months
|
|||||||||
Deferred Holding Company Formation Costs
|
55 | 83 | 138 |
30 months
|
|||||||||
South Dakota – Asset-Based Margin Sharing Shortfall
|
138 | -- | 138 |
2 months
|
|||||||||
South Dakota Transmission Rider Accrued Revenues
|
114 | -- | 114 |
12 months
|
|||||||||
Total Regulatory Assets
|
$ | 27,391 | $ | 124,137 | $ | 151,528 | |||||||
Regulatory Liabilities:
|
|||||||||||||
Accumulated Reserve for Estimated Removal Costs – Net of Salvage
|
$ | -- | $ | 65,610 | $ | 65,610 |
asset lives
|
||||||
Deferred Income Taxes
|
-- | 3,379 | 3,379 |
asset lives
|
|||||||||
Deferred Gain on Sale of Utility Property – Minnesota Portion
|
6 | 117 | 123 |
264 months
|
|||||||||
Deferred Marked-to-Market Gains
|
96 | -- | 96 |
12 months
|
|||||||||
South Dakota – Nonasset-Based Margin Sharing Excess
|
54 | -- | 54 |
12 months
|
|||||||||
Minnesota Transmission Rider Accrued Refund
|
28 | -- | 28 |
see notes
|
|||||||||
Total Regulatory Liabilities
|
$ | 184 | $ | 69,106 | $ | 69,290 | |||||||
Net Regulatory Asset Position
|
$ | 27,207 | $ | 55,031 | $ | 82,238 |
(in thousands)
|
March 31, 2012
|
December 31, 2011
|
||||||
Other Current Asset – Derivative Asset
|
$ | 5,391 | $ | 3,803 | ||||
Regulatory Asset – Current Deferred Marked-to-Market Loss
|
7,268 | 5,208 | ||||||
Regulatory Asset – Long-Term Deferred Marked-to-Market Loss
|
12,770 | 10,749 | ||||||
Total Assets
|
25,429 | 19,760 | ||||||
Derivative Liability
|
(24,682 | ) | (18,770 | ) | ||||
Regulatory Liability – Current Deferred Marked-to-Market Gain
|
(137 | ) | (96 | ) | ||||
Total Liabilities
|
(24,819 | ) | (18,866 | ) | ||||
Fair Value Adjustments Included in Earnings
|
$ | 610 | $ | 894 |
(in thousands)
|
Year-to-Date
March 31, 2012
|
Year-to-Date
March 31, 2011
|
||||||
Cumulative Fair Value Adjustments Included in Earnings - Beginning of Year
|
$ | 894 | $ | 763 | ||||
Less: Amounts Realized on Settlement of Contracts Entered into in Prior Periods
|
(478 | ) | (96 | ) | ||||
Changes in Fair Value of Contracts Entered into in Prior Periods
|
(33 | ) | (32 | ) | ||||
Cumulative Fair Value Adjustments in Earnings of Contracts Entered into in Prior Years at End of Period
|
383 | 635 | ||||||
Changes in Fair Value of Contracts Entered into in Current Period
|
227 | (3 | ) | |||||
Cumulative Fair Value Adjustments Included in Earnings - End of Period
|
$ | 610 | $ | 632 |
(in thousands)
|
2nd Qtr
2012
|
3rd Qtr
2012
|
4th Qtr
2012
|
1st Qtr
2013
|
Total
|
|||||||||||||||
Net Gain
|
$ | 399 | $ | 81 | $ | 95 | $ | 35 | $ | 610 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Net Gains (Losses) on Forward Electric Energy Contracts
|
$ | 194 | $ | (8 | ) |
March 31, 2012
|
December 31, 2011
|
|||||||||||||||
(in thousands)
|
Exposure
|
Counterparties
|
Exposure
|
Counterparties
|
||||||||||||
Net Credit Risk on Forward Energy Contracts
|
$ | 1,793 | 8 | $ | 1,677 | 10 | ||||||||||
Net Credit Risk to Single Largest Counterparty
|
$ | 1,053 | $ | 737 |
Current Liability – Marked-to-Market Loss (in thousands)
|
March 31,
2012
|
December 31,
2011
|
|||||
Loss Contracts Covered by Deposited Funds or Letters of Credit
|
$ | 4,502 | $ | 3,423 | |||
Contracts Requiring Cash Deposits if OTP’s Credit Falls Below Investment Grade1
|
20,180 | 15,347 | |||||
Loss Contracts with No Ratings Triggers or Deposit Requirements
|
-- | -- | |||||
Total Current Liability – Marked-to-Market Loss
|
$ | 24,682 | $ | 18,770 | |||
1 Certain OTP derivative energy contracts contain provisions that require an investment grade credit rating from each of the major credit rating agencies on OTP’s debt. If OTP’s debt ratings were to fall below investment grade, the counterparties to these forward energy contracts could request the immediate deposit of cash to cover contracts in net liability positions.
|
|||||||
Contracts Requiring Cash Deposits if OTP’s Credit Falls Below Investment Grade
|
$ | 20,180 | $ | 15,347 | |||
Offsetting Gains with Counterparties under Master Netting Agreements
|
(3,235 | ) | (3,471 | ) | |||
Reporting Date Deposit Requirement if Credit Risk Feature Triggered
|
$ | 16,945 | $ | 11,876 |
Common Shares Outstanding, December 31, 2011
|
36,101,695 | |||
Issuances:
|
||||
Vesting of Restricted Stock Units
|
7,925 | |||
Retirements:
|
||||
Forfeiture of Unvested Restricted Stock
|
(1,825 | ) | ||
Common Shares Outstanding, March 31, 2012
|
36,107,795 |
Quarter Ended March 31,
|
Options Outstanding
|
Range of Exercise Prices
|
||||||
2012
|
156,397 | $ | 24.93 – $31.34 | |||||
2011
|
383,460 | $ | 24.93 – $31.34 |
Three months ended
|
||||||||
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Employee Stock Purchase Plan (15% discount)
|
$ | 39 | $ | 62 | ||||
Restricted Stock Granted to Directors
|
136 | 192 | ||||||
Restricted Stock Granted to Employees
|
58 | 115 | ||||||
Restricted Stock Units Granted to Employees
|
54 | 83 | ||||||
Stock Performance Awards Granted to Executive Officers
|
-- | -- | ||||||
Totals
|
$ | 287 | $ | 452 |
(in thousands)
|
Line Limit
|
In Use on
March 31,
2012
|
Restricted due to Outstanding
Letters of Credit
|
Available on
March 31,
2012
|
Available on
December 31,
2011
|
|||||||||||||||
Otter Tail Corporation Credit Agreement
|
$ | 200,000 | $ | 1,095 | $ | 850 | $ | 198,055 | $ | 198,776 | ||||||||||
OTP Credit Agreement
|
170,000 | 2,193 | 4,550 | 163,257 | 165,950 | |||||||||||||||
Total
|
$ | 370,000 | $ | 3,288 | $ | 5,400 | $ | 361,312 | $ | 364,726 |
March 31, 2012 (in thousands)
|
OTP
|
Varistar
|
Otter Tail
Corporation
|
Otter Tail
Corporation Consolidated
|
||||||||||||
Short-Term Debt
|
$ | 2,193 | $ | 23 | $ | 1,095 | $ | 3,311 | ||||||||
Long-Term Debt:
|
||||||||||||||||
9.000% Notes, due December 15, 2016
|
$ | 100,000 | $ | 100,000 | ||||||||||||
Senior Unsecured Notes 5.95%, Series A, due August 20, 2017
|
$ | 33,000 | 33,000 | |||||||||||||
Grant County, South Dakota Pollution Control
Refunding Revenue Bonds 4.65%, due September 1, 2017
|
5,090 | 5,090 | ||||||||||||||
Senior Unsecured Note 8.89%, due November 30, 2017
|
50,000 | 50,000 | ||||||||||||||
Senior Unsecured Notes 4.63%, due December 1, 2021
|
140,000 | 140,000 | ||||||||||||||
Senior Unsecured Notes 6.15%, Series B, due August 20, 2022
|
30,000 | 30,000 | ||||||||||||||
Mercer County, North Dakota Pollution Control
Refunding Revenue Bonds 4.85%, due September 1, 2022
|
20,105 | 20,105 | ||||||||||||||
Senior Unsecured Notes 6.37%, Series C, due August 20, 2027
|
42,000 | 42,000 | ||||||||||||||
Senior Unsecured Notes 6.47%, Series D, due August 20, 2037
|
50,000 | 50,000 | ||||||||||||||
Other Obligations - Various up to 3.95% at March 31, 2012
|
$ | 2,833 | 1,854 | 4,687 | ||||||||||||
Total
|
$ | 320,195 | $ | 2,833 | $ | 151,854 | $ | 474,882 | ||||||||
Less: Current Maturities
|
-- | 2,833 | 167 | 3,000 | ||||||||||||
Unamortized Debt Discount
|
-- | -- | 4 | 4 | ||||||||||||
Total Long-Term Debt
|
$ | 320,195 | $ | -- | $ | 151,683 | $ | 471,878 | ||||||||
Total Short-Term and Long-Term Debt (with current maturities)
|
$ | 322,388 | $ | 2,856 | $ | 152,945 | $ | 478,189 |
December 31, 2011 (in thousands)
|
OTP
|
Varistar
|
Otter Tail Corporation
|
Otter Tail Corporation Consolidated
|
||||||||||||
Short-Term Debt
|
$ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Long-Term Debt:
|
||||||||||||||||
9.000% Notes, due December 15, 2016
|
$ | 100,000 | $ | 100,000 | ||||||||||||
Senior Unsecured Notes 5.95%, Series A, due August 20, 2017
|
$ | 33,000 | 33,000 | |||||||||||||
Grant County, South Dakota Pollution Control
Refunding Revenue Bonds 4.65%, due September 1, 2017
|
5,090 | 5,090 | ||||||||||||||
Senior Unsecured Note 8.89%, due November 30, 2017
|
50,000 | 50,000 | ||||||||||||||
Senior Unsecured Notes 4.63%, due December 1, 2021
|
140,000 | 140,000 | ||||||||||||||
Senior Unsecured Notes 6.15%, Series B, due August 20, 2022
|
30,000 | 30,000 | ||||||||||||||
Mercer County, North Dakota Pollution Control
Refunding Revenue Bonds 4.85%, due September 1, 2022
|
20,105 | 20,105 | ||||||||||||||
Senior Unsecured Notes 6.37%, Series C, due August 20, 2027
|
42,000 | 42,000 | ||||||||||||||
Senior Unsecured Notes 6.47%, Series D, due August 20, 2037
|
50,000 | 50,000 | ||||||||||||||
Other Obligations - Various up to 3.95% at December 31, 2011
|
$ | 2,868 | 1,889 | 4,757 | ||||||||||||
Total
|
$ | 320,195 | $ | 2,868 | $ | 151,889 | $ | 474,952 | ||||||||
Less: Current Maturities
|
-- | 2,868 | 165 | 3,033 | ||||||||||||
Unamortized Debt Discount
|
-- | -- | 4 | 4 | ||||||||||||
Total Long-Term Debt
|
$ | 320,195 | $ | -- | $ | 151,720 | $ | 471,915 | ||||||||
Total Short-Term and Long-Term Debt (with current maturities)
|
$ | 320,195 | $ | 2,868 | $ | 151,885 | $ | 474,948 |
Three Months Ended
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Service Cost—Benefit Earned During the Period
|
$ | 1,294 | $ | 1,175 | ||||
Interest Cost on Projected Benefit Obligation
|
3,108 | 3,175 | ||||||
Expected Return on Assets
|
(3,608 | ) | (3,537 | ) | ||||
Amortization of Prior-Service Cost
|
102 | 100 | ||||||
Amortization of Net Actuarial Loss
|
1,231 | 650 | ||||||
Net Periodic Pension Cost
|
$ | 2,127 | $ | 1,563 |
Three Months Ended
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Service Cost—Benefit Earned During the Period
|
$ | 11 | $ | 20 | ||||
Interest Cost on Projected Benefit Obligation
|
370 | 408 | ||||||
Amortization of Prior-Service Cost
|
18 | 19 | ||||||
Amortization of Net Actuarial Loss
|
82 | 61 | ||||||
Net Periodic Pension Cost
|
$ | 481 | $ | 508 |
Three Months Ended
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Service Cost—Benefit Earned During the Period
|
$ | 461 | $ | 425 | ||||
Interest Cost on Projected Benefit Obligation
|
881 | 850 | ||||||
Amortization of Transition Obligation
|
187 | 187 | ||||||
Amortization of Prior-Service Cost
|
52 | 50 | ||||||
Amortization of Net Actuarial Loss
|
391 | 213 | ||||||
Effect of Medicare Part D Expected Subsidy
|
(487 | ) | (525 | ) | ||||
Net Periodic Postretirement Benefit Cost
|
$ | 1,485 | $ | 1,200 |
March 31, 2012
|
December 31, 2011
|
|||||||||||||||
(in thousands)
|
Carrying
Amount
|
Fair Value
|
Carrying
Amount
|
Fair Value
|
||||||||||||
Cash and Cash Equivalents
|
$ | -- | $ | -- | $ | 14,652 | $ | 14,652 | ||||||||
Long-Term Debt
|
$ | (471,878 | ) | $ | (529,957 | ) | $ | (471,915 | ) | $ | (525,041 | ) |
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Income Before Income Taxes – Continuing Operations
|
$ | 9,788 | $ | 6,451 | ||||
Add Back Canadian Losses not Subject to Income Tax Benefits
|
451 | 3,497 | ||||||
Income Before Income Taxes – Continuing Operations, Subject to Taxes
|
10,239 | 9,948 | ||||||
Tax Computed at Company’s Net Composite Federal and State Statutory Rate (39%)
|
3,993 | 3,879 | ||||||
Increases (Decreases) in Tax from:
|
||||||||
Federal Production Tax Credits
|
(1,987 | ) | (1,976 | ) | ||||
Reversal of Accrued Interest on Removal of Cost Capitalization Audit Issue
|
(676 | ) | -- | |||||
Corporate Owned Life Insurance
|
(372 | ) | (88 | ) | ||||
North Dakota Wind Tax Credit Amortization – Net of Federal Taxes
|
(222 | ) | (290 | ) | ||||
Medicare Part D Subsidy
|
(197 | ) | (192 | ) | ||||
Employee Stock Ownership Plan Dividend Deduction
|
(190 | ) | (194 | ) | ||||
Canadian Revenue Authority Audit Settlement
|
-- | 156 | ||||||
Other Items - Net
|
(52 | ) | (57 | ) | ||||
Income Tax Expense – Continuing Operations
|
$ | 297 | $ | 1,238 | ||||
Effective Income Tax Rate – Continuing Operations
|
3.0 | % | 19.2 | % |
For the Three Months Ended March 31, 2012
|
||||||||||||||||||||
(in thousands)
|
Wylie
|
Aviva
|
DMS
|
Intercompany Transactions Adjustment
|
Total
|
|||||||||||||||
Operating Revenues
|
$ | -- | $ | 1 | $ | 16,362 | $ | (11 | ) | $ | 16,352 | |||||||||
Operating Expenses
|
159 | 13 | 14,741 | (11 | ) | 14,902 | ||||||||||||||
Operating (Loss) Income
|
(159 | ) | (12 | ) | 1,621 | -- | 1,450 | |||||||||||||
Interest Charges
|
-- | -- | 279 | (132 | ) | 147 | ||||||||||||||
Other Income
|
-- | -- | 122 | -- | 122 | |||||||||||||||
Income Tax (Benefit) Expense
|
(64 | ) | (5 | ) | 600 | 53 | 584 | |||||||||||||
Net (Loss) Income from Operations
|
(95 | ) | (7 | ) | 864 | 79 | 841 | |||||||||||||
Loss on Disposition Before Taxes
|
(44 | ) | -- | (3,179 | ) | -- | (3,223 | ) | ||||||||||||
Income Tax Benefit on Disposition
|
(18 | ) | -- | (116 | ) | -- | (134 | ) | ||||||||||||
Net Loss on Disposition
|
(26 | ) | -- | (3,063 | ) | -- | (3,089 | ) | ||||||||||||
Net Income (Loss)
|
$ | (121 | ) | $ | (7 | ) | $ | (2,199 | ) | $ | 79 | $ | (2,248 | ) |
For the Three Months Ended March 31, 2011
|
||||||||||||||||||||||||
(in thousands)
|
IPH
|
Wylie
|
Aviva
|
DMS
|
Intercompany Transactions Adjustment
|
Total
|
||||||||||||||||||
Operating Revenues
|
$ | 20,645 | $ | 14,609 | $ | 952 | $ | 22,495 | $ | (523 | ) | $ | 58,178 | |||||||||||
Operating Expenses
|
17,617 | 17,535 | 1,503 | 21,412 | (523 | ) | 57,544 | |||||||||||||||||
Operating Income (Loss)
|
3,028 | (2,926 | ) | (551 | ) | 1,083 | -- | 634 | ||||||||||||||||
Interest Charges
|
8 | 213 | 96 | 400 | (697 | ) | 20 | |||||||||||||||||
Other (Deductions) Income
|
(146 | ) | 11 | (4 | ) | 298 | (2 | ) | 157 | |||||||||||||||
Income Tax Expense (Benefit)
|
1,112 | (1,249 | ) | (260 | ) | 409 | 276 | 288 | ||||||||||||||||
Net Income (Loss)
|
$ | 1,762 | $ | (1,879 | ) | $ | (391 | ) | $ | 572 | $ | 419 | $ | 483 |
March 31, 2012
|
||||||||||||||||||||
(in thousands)
|
IPH
|
Wylie
|
Aviva
|
DMS
|
Total
|
|||||||||||||||
Current Assets
|
$ | -- | $ | -- | $ | 529 | $ | -- | $ | 529 | ||||||||||
Net Plant
|
-- | -- | -- | -- | -- | |||||||||||||||
Assets of Discontinued Operations
|
$ | -- | $ | -- | $ | 529 | $ | -- | $ | 529 | ||||||||||
Current Liabilities
|
$ | -- | $ | -- | $ | 269 | $ | -- | $ | 269 | ||||||||||
Deferred Income Taxes
|
-- | -- | (232 | ) | -- | (232 | ) | |||||||||||||
Deferred Credits - Other
|
-- | -- | -- | -- | -- | |||||||||||||||
Long-Term Debt
|
-- | -- | -- | -- | -- | |||||||||||||||
Liabilities of Discontinued Operations
|
$ | -- | $ | -- | $ | 37 | $ | -- | $ | 37 |
December 31, 2011
|
||||||||||||||||||||
(in thousands)
|
IPH
|
Wylie
|
Aviva
|
DMS
|
Total
|
|||||||||||||||
Current Assets
|
$ | -- | $ | -- | $ | 912 | $ | 28,408 | $ | 29,320 | ||||||||||
Net Plant
|
-- | -- | -- | 372 | 372 | |||||||||||||||
Assets of Discontinued Operations
|
$ | -- | $ | -- | $ | 912 | $ | 28,780 | $ | 29,692 | ||||||||||
Current Liabilities
|
$ | -- | $ | -- | $ | 399 | $ | 14,341 | $ | 14,740 | ||||||||||
Deferred Income Taxes
|
-- | -- | (232 | ) | (1,579 | ) | (1,811 | ) | ||||||||||||
Deferred Credits - Other
|
-- | -- | -- | 119 | 119 | |||||||||||||||
Long-Term Debt
|
-- | -- | -- | 715 | 715 | |||||||||||||||
Liabilities of Discontinued Operations
|
$ | -- | $ | -- | $ | 167 | $ | 13,596 | $ | 13,763 |
Award
|
Shares/Units
Granted
|
Grant-Date
Fair Value
per Share
|
Vesting
|
||||||
Restricted Stock Granted to Nonemployee Directors
|
24,000 | $ | 21.32 |
25% per year through April 8, 2016
|
|||||
Restricted Stock Granted to Executive Officers
|
24,500 | $ | 21.32 |
25% per year through April 8, 2016
|
|||||
Stock Performance Awards Granted to Executive Officers
|
80,800 | $ | 21.75 |
December 31, 2014
|
|||||
Restricted Stock Units Granted to Employees
|
12,800 | $ | 17.14 |
100% on April 8, 2016
|
Intersegment Eliminations (in thousands)
|
March 31, 2012
|
March 31, 2011
|
||||||
Operating Revenues:
|
||||||||
Electric
|
$ | 65 | $ | 70 | ||||
Nonelectric
|
937 | 720 | ||||||
Cost of Goods Sold
|
945 | 543 | ||||||
Other Nonelectric Expenses
|
57 | 247 |
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Retail Sales Revenues
|
$ | 81,422 | $ | 82,903 | $ | (1,481 | ) | (1.8 | ) | |||||||
Wholesale Revenues – Company Generation
|
2,079 | 2,736 | (657 | ) | (24.0 | ) | ||||||||||
Net Revenue – Energy Trading Activity
|
412 | 228 | 184 | 80.7 | ||||||||||||
Other Revenues
|
6,090 | 5,729 | 361 | 6.3 | ||||||||||||
Total Operating Revenues
|
$ | 90,003 | $ | 91,596 | $ | (1,593 | ) | (1.7 | ) | |||||||
Production Fuel
|
15,424 | 19,577 | (4,153 | ) | (21.2 | ) | ||||||||||
Purchased Power – System Use
|
14,158 | 12,377 | 1,781 | 14.4 | ||||||||||||
Other Operation and Maintenance Expenses
|
30,013 | 28,708 | 1,305 | 4.5 | ||||||||||||
Asset Impairment Charge
|
432 | -- | 432 | -- | ||||||||||||
Depreciation and Amortization
|
10,400 | 10,039 | 361 | 3.6 | ||||||||||||
Property Taxes
|
2,617 | 2,409 | 208 | 8.6 | ||||||||||||
Operating Income
|
$ | 16,959 | $ | 18,486 | $ | (1,527 | ) | (8.3 | ) |
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
Electric kwh Sales (in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Retail kilowatt-hour (kwh) Sales
|
1,204,605 | 1,306,123 | (101,518 | ) | (7.8 | ) | ||||||||||
Wholesale kwh Sales – Company Generation
|
95,391 | 98,257 | (2,866 | ) | (2.9 | ) | ||||||||||
Wholesale kwh Sales – Purchased Power Resold
|
6,400 | 63,252 | (56,862 | ) | (89.9 | ) |
|
●
|
a $4.4 million decrease in revenues, mainly due to a 7.8% reduction in retail kwh sales resulting from significantly milder weather in the first quarter of 2012 as heating degree days were down 27.8% compared with the first quarter of 2011,
|
|
●
|
a $2.8 million decrease in revenue related to the recovery of fuel and purchased power costs, and
|
|
●
|
a $1.0 million reduction in accrued conservation program cost recovery revenues related to the timing of the recognition of conservation costs recovered through the Minnesota Conservation Improvement Program surcharge,
|
|
●
|
a $3.0 million increase in revenue related to revised winter rates implemented in Minnisota in October 2011 on finalization of Otter Tail Power Company's 2010 general rate case,
|
|
●
|
a $2.3 million revenue reduction in the first quarter of 2011 related to accruing a refund of a portion of revenues collected under interim rates during the most recent Minnesota rate case, and
|
|
●
|
a $1.4 million increase in transmission costs recovery rider revenues as a result of increased investment in transmission assets.
|
|
●
|
a $2.1 million increase in transmission tariff revenues due, in part, to revenues from CapX2020 transmission project investments,
|
|
●
|
a reduction in revenue related to the sale of access rights through an Otter Tail Energy Services Company (OTESCO) wind farm development site in the first quarter of 2011 for $1.1 million, and
|
|
●
|
a $0.6 million reduction in revenues from steam sales at Big Stone Plant to a nearby ethanol plant as a result of the customer generating more of its own steam from its natural gas fired boiler in response to low natural gas prices.
|
|
●
|
a $0.9 million increase in employee benefit expenses mainly due to increases in pension and retirement health benefit costs resulting from a reduction in the discount rate related to projected benefit obligations,
|
|
●
|
a $0.8 million increase in MISO Schedule 26 transmission service charges,
|
|
●
|
a $0.4 million increase in vegetation management expenses,
|
|
●
|
bad debt expense was $0.4 million less in the first quarter of 2011 as a result of OTP adjusting its allowance for uncollectible accounts, and
|
|
●
|
a $0.2 million increase in amortized expenses related to the recovery of OTP's Minnesota portion of Big Stone II plant abandonment costs, which began in the fourth quarter of 2011,
|
|
●
|
a $1.0 million reduction in incurred conservation program costs, commensurate with a reduction in accrued revenues related to the future recovery of those costs, and
|
|
●
|
a $0.4 million decrease in expenses related to recording a discount on the Minnesota portion of Big Stone II recoverable costs in the first quarter of 2011 based on a settlement agreement with the Minnesota Public Utilities Commission granting recovery of a portion of the abandoned project's costs.
|
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Revenues
|
$ | 52,102 | $ | 46,988 | $ | 5,114 | 10.9 | |||||||||
Cost of Goods Sold
|
47,584 | 47,884 | (300 | ) | (0.6 | ) | ||||||||||
Operating Expenses
|
1,578 | 2,478 | (900 | ) | (36.3 | ) | ||||||||||
Depreciation and Amortization
|
2,082 | 2,512 | (430 | ) | (17.1 | ) | ||||||||||
Operating Income (Loss)
|
$ | 858 | $ | (5,886 | ) | $ | 6,744 | 114.6 |
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Operating Revenues
|
$ | 65,994 | $ | 55,361 | $ | 10,633 | 19.2 | |||||||||
Cost of Goods Sold
|
50,711 | 41,989 | 8,722 | 20.8 | ||||||||||||
Operating Expenses
|
7,086 | 4,548 | 2,538 | 55.8 | ||||||||||||
Depreciation and Amortization
|
3,196 | 3,170 | 26 | 0.8 | ||||||||||||
Operating Income
|
$ | 5,001 | $ | 5,654 | $ | (653 | ) | (11.5 | ) |
|
●
|
Revenues at BTD Manufacturing, Inc. (BTD), our metal parts stamping and fabrication company, increased $11.9 million as a result of higher sales volume due to improved customer demand.
|
|
●
|
Revenues at T.O. Plastics, Inc. (T.O. Plastics), our manufacturer of thermoformed plastic and horticultural products, increased by $0.6 million due to increased sales of industrial products.
|
|
●
|
Revenues at ShoreMaster, Inc. (ShoreMaster), our waterfront equipment business, decreased $1.8 million, reflecting a $2.5 million decrease in commercial sales, partially offset by a $0.7 million increase in residential sales.
|
|
●
|
Cost of goods sold at BTD increased $9.2 million as a result of increased sales volume.
|
|
●
|
Cost of goods sold at T.O. Plastics increased $0.4 million as a result of costs associated with the increase in sales of industrial products, offset by a $0.3 million decrease in costs related to improved productivity and efficiencies.
|
|
●
|
Cost of goods sold at ShoreMaster decreased $0.6 million. A decrease in costs related to the reduction in sales of commercial products was partially offset by $0.5 million in costs incurred to relocate ShoreMaster’s commercial production operations in Camdenton, Missouri to its Fergus Falls, Minnesota and St. Augustine, Florida locations.
|
|
●
|
Operating expenses at BTD increased $1.3 million due to increased salary and benefit expenses related to workforce expansion, and increases in expenditures for contracted services and travel.
|
|
●
|
Operating expenses at T.O. Plastics decreased $0.1 million between the quarters.
|
|
●
|
Operating expenses at ShoreMaster increased $1.3 million, reflecting a $0.4 million increase in expenses for outside professional services, a first quarter 2011 expense reduction of $0.7 million from the collection of a receivable written off as uncollectible prior to 2011, and a $0.2 million gain on a first quarter 2011 asset sale.
|
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Operating Revenues
|
$ | 35,617 | $ | 37,515 | $ | (1,898 | ) | (5.1 | ) | |||||||
Cost of Goods Sold
|
38,693 | 34,289 | 4,404 | 12.8 | ||||||||||||
Operating Expenses
|
3,280 | 3,106 | 174 | 5.6 | ||||||||||||
Depreciation and Amortization
|
434 | 445 | (11 | ) | (2.5 | ) | ||||||||||
Operating Loss
|
$ | (6,790 | ) | $ | (325 | ) | $ | (6,465 | ) | -- |
|
●
|
Revenues at Foley Company, a mechanical and prime contractor on industrial projects, decreased $7.1 million, mainly due to the effect of cost overruns on estimated revenues recognized under percentage-of-completion accounting.
|
|
●
|
Revenues at Aevenia, Inc. (Aevenia), our electrical design and construction services company, increased $5.2 million between the quarters as a result an increase in electrical transmission, distribution and substation work facilitated by the mild weather in the first quarter of 2012.
|
|
●
|
Cost of goods sold at Foley Company decreased $0.3 million between the quarters.
|
|
●
|
Cost of goods sold at Aevenia increased $4.7 million between the quarters as a result of the increase in electrical transmission, distribution and substation work performed in the first quarter of 2012.
|
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Operating Revenues
|
$ | 34,875 | $ | 18,478 | $ | 16,397 | 88.7 | |||||||||
Cost of Goods Sold
|
26,947 | 16,720 | 10,227 | 61.2 | ||||||||||||
Operating Expenses
|
1,363 | 1,221 | 142 | 11.6 | ||||||||||||
Depreciation and Amortization
|
813 | 803 | 10 | 1.2 | ||||||||||||
Operating Income (Loss)
|
$ | 5,752 | $ | (266 | ) | $ | 6,018 | -- |
Three Months Ended
|
||||||||||||||||
March 31,
|
%
|
|||||||||||||||
(in thousands)
|
2012
|
2011
|
Change
|
Change
|
||||||||||||
Operating Expenses
|
$ | 4,241 | $ | 1,970 | $ | 2,271 | 115.3 | |||||||||
Depreciation and Amortization
|
128 | 137 | (9 | ) | (6.6 | ) |
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Income Before Income Taxes – Continuing Operations
|
$ | 9,788 | $ | 6,451 | ||||
Add Back Canadian Losses not Subject to Income Tax Benefits
|
451 | 3,497 | ||||||
Income Before Income Taxes – Continuing Operations, Subject to Taxes
|
10,239 | 9,948 | ||||||
Tax Computed at Company’s Net Composite Federal and State Statutory Rate (39%)
|
3,993 | 3,879 | ||||||
Increases (Decreases) in Tax from:
|
||||||||
Federal Production Tax Credits (PTCs)
|
(1,987 | ) | (1,976 | ) | ||||
Reversal of Accrued Interest on Removal of Cost Capitalization Audit Issue
|
(676 | ) | -- | |||||
Corporate Owned Life Insurance
|
(372 | ) | (88 | ) | ||||
North Dakota Wind Tax Credit Amortization – Net of Federal Taxes
|
(222 | ) | (290 | ) | ||||
Medicare Part D Subsidy
|
(197 | ) | (192 | ) | ||||
Employee Stock Ownership Plan Dividend Deduction
|
(190 | ) | (194 | ) | ||||
Canadian Revenue Authority Audit Settlement
|
-- | 156 | ||||||
Other Items - Net
|
(52 | ) | (57 | ) | ||||
Income Tax Expense – Continuing Operations
|
$ | 297 | $ | 1,238 | ||||
Effective Income Tax Rate – Continuing Operations
|
3.0 | % | 19.2 | % |
For the Three Months Ended March 31, 2012
|
||||||||||||||||||||
(in thousands)
|
Wylie
|
Aviva
|
DMS
|
Intercompany Transactions Adjustment
|
Total
|
|||||||||||||||
Operating Revenues
|
$ | -- | $ | 1 | $ | 16,362 | $ | (11 | ) | $ | 16,352 | |||||||||
Operating Expenses
|
159 | 13 | 14,741 | (11 | ) | 14,902 | ||||||||||||||
Operating (Loss) Income
|
(159 | ) | (12 | ) | 1,621 | -- | 1,450 | |||||||||||||
Interest Charges
|
-- | -- | 279 | (132 | ) | 147 | ||||||||||||||
Other Income
|
-- | -- | 122 | -- | 122 | |||||||||||||||
Income Tax (Benefit) Expense
|
(64 | ) | (5 | ) | 600 | 53 | 584 | |||||||||||||
Net (Loss) Income from Operations
|
(95 | ) | (7 | ) | 864 | 79 | 841 | |||||||||||||
Loss on Disposition Before Taxes
|
(44 | ) | -- | (3,179 | ) | -- | (3,223 | ) | ||||||||||||
Income Tax Benefit on Disposition
|
(18 | ) | -- | (116 | ) | -- | (134 | ) | ||||||||||||
Net Loss on Disposition
|
(26 | ) | -- | (3,063 | ) | -- | (3,089 | ) | ||||||||||||
Net Income (Loss)
|
$ | (121 | ) | $ | (7 | ) | $ | (2,199 | ) | $ | 79 | $ | (2,248 | ) |
For the Three Months Ended March 31, 2011
|
||||||||||||||||||||||||
(in thousands)
|
IPH
|
Wylie
|
Aviva
|
DMS
|
Intercompany Transactions Adjustment
|
Total
|
||||||||||||||||||
Operating Revenues
|
$ | 20,645 | $ | 14,609 | $ | 952 | $ | 22,495 | $ | (523 | ) | $ | 58,178 | |||||||||||
Operating Expenses
|
17,617 | 17,535 | 1,503 | 21,412 | (523 | ) | 57,544 | |||||||||||||||||
Operating Income (Loss)
|
3,028 | (2,926 | ) | (551 | ) | 1,083 | -- | 634 | ||||||||||||||||
Interest Charges
|
8 | 213 | 96 | 400 | (697 | ) | 20 | |||||||||||||||||
Other (Deductions) Income
|
(146 | ) | 11 | (4 | ) | 298 | (2 | ) | 157 | |||||||||||||||
Income Tax Expense (Benefit)
|
1,112 | (1,249 | ) | (260 | ) | 409 | 276 | 288 | ||||||||||||||||
Net Income (Loss)
|
$ | 1,762 | $ | (1,879 | ) | $ | (391 | ) | $ | 572 | $ | 419 | $ | 483 |
(in thousands)
|
Line Limit
|
In Use on
March 31, 2012
|
Restricted due to Outstanding
Letters of Credit
|
Available on
March 31, 2012
|
Available on
December 31, 2011
|
|||||||||||||||
Otter Tail Corporation Credit Agreement
|
$ | 200,000 | $ | 1,095 | $ | 850 | $ | 198,055 | $ | 198,776 | ||||||||||
OTP Credit Agreement
|
170,000 | 2,193 | 4,550 | 163,257 | 165,950 | |||||||||||||||
Total
|
$ | 370,000 | $ | 3,288 | $ | 5,400 | $ | 361,312 | $ | 364,726 |
●
|
Under the Credit Agreement, we may not permit the ratio of our Interest-bearing Debt to Total Capitalization to be greater than 0.60 to 1.00 or permit our Interest and Dividend Coverage Ratio to be less than 1.50 to 1.00 (each measured on a consolidated basis), as provided in the Credit Agreement. As of March 31, 2012 our Interest and Dividend Coverage Ratio calculated under the requirements of the Credit Agreement was 1.80 to 1.00.
|
●
|
Under the Cascade Note Purchase Agreement, we may not permit our ratio of Consolidated Debt to Consolidated Total Capitalization to be greater than 0.60 to 1.00 or our Interest Charges Coverage Ratio to be less than 1.50 to 1.00 (each measured on a consolidated basis), permit the ratio of OTP’s Debt to OTP’s Total Capitalization to be greater than 0.60 to 1.00, or permit Priority Debt to exceed 20% of Varistar Consolidated Total Capitalization, as provided in the Cascade Note Purchase Agreement. As of March 31, 2012 our Interest Charges Coverage Ratio calculated under the requirements of the Cascade Note Purchase Agreement was 1.71 to 1.00.
|
●
|
Under the OTP Credit Agreement, OTP may not permit the ratio of its Interest-bearing Debt to Total Capitalization to be greater than 0.60 to 1.00 or permit its Interest and Dividend Coverage Ratio to be less than 1.50 to 1.00, as provided in the OTP Credit Agreement. As of March 31, 2012 OTP’s Interest and Dividend Coverage Ratio calculated under the requirements of the OTP Credit Agreement was 3.34 to 1.00.
|
●
|
Under the 2007 Note Purchase Agreement, the 2011 Note Purchase Agreement and the financial guaranty insurance policy with Ambac Assurance Corporation relating to certain pollution control refunding bonds, OTP may not permit the ratio of its Consolidated Debt to Total Capitalization to be greater than 0.60 to 1.00 or permit its Interest and Dividend Coverage Ratio to be less than 1.50 to 1.00, in each case as provided in the related borrowing or insurance agreement. In addition, under the 2007 Note Purchase Agreement and the 2011 Note Purchase Agreement, OTP may not permit its Priority Debt to exceed 20% of its Total Capitalization, as provided in the related agreement. As of March 31, 2012 OTP’s Interest and Dividend Coverage Ratio and Interest Charges Coverage Ratio, calculated under the requirements of the 2007 Note Purchase Agreement and 2011 Note Purchase Agreement, was 3.34 to 1.00.
|
Original 2012 Earnings Per Share
Guidance Range
|
Updated 2012 Earnings Per Share
Guidance Range
|
||||||||||||||||
Low
|
High
|
Low
|
High
|
||||||||||||||
Electric
|
$ | 1.05 | $ | 1.10 |
Electric
|
$ | 1.00 | $ | 1.05 | ||||||||
Wind Energy
|
$ | (0.15 | ) | $ | 0.00 |
Wind Energy
|
$ | (0.10 | ) | $ | 0.00 | ||||||
Manufacturing
|
$ | 0.30 | $ | 0.35 |
Manufacturing
|
$ | 0.36 | $ | 0.41 | ||||||||
Construction
|
$ | 0.02 | $ | 0.07 |
Construction
|
$ | (0.13 | ) | $ | (0.08 | ) | ||||||
Plastics
|
$ | 0.06 | $ | 0.11 |
Plastics
|
$ | 0.18 | $ | 0.23 | ||||||||
Corporate
|
$ | (0.28 | ) | $ | (0.23 | ) |
Corporate
|
$ | (0.26 | ) | $ | (0.21 | ) | ||||
Total – Continuing Operations
|
$ | 1.00 | $ | 1.40 |
Total – Continuing Operations
|
$ | 1.05 | $ | 1.40 | ||||||||
Earnings – Discontinued Operations
|
$ | 0.00 | $ | 0.03 | |||||||||||||
Loss on Sale of Discontinued Operations
|
$ | (0.10 | ) | $ | (0.08 | ) | |||||||||||
Total
|
$ | 0.95 | $ | 1.35 |
●
|
We now expect net income to decrease slightly in our Electric segment in 2012 compared with 2011 as a result of the extremely mild weather in the first quarter of 2012. Anticipated increases in rider recovery revenues and capitalized interest costs on higher levels of construction expenditures are expected to be partially offset by lower conservation improvement program incentives and increases in operating and maintenance expenses due to higher postretirement benefit costs.
|
●
|
We expect improvement in operations of our Wind Energy segment to continue in 2012. DMI has been able to stabilize production, improve productivity, align headcount with current production demands and eliminate the need for outsourced quality assurance staffing. Order backlog will continue to support current plant staffing at DMI’s Tulsa and West Fargo plants. DMI continues to experience pricing pressure on new orders due to overcapacity in the U.S. market and significantly lower steel costs available to Asian manufacturers. Backlog in the Wind Energy segment is $114 million for 2012 compared with $134 million one year ago.
|
●
|
We expect earnings from our Manufacturing segment to improve beyond our initial expectations for 2012 due to increased order volume at BTD in excess of initial 2012 projections, continuing improvement in economic conditions in the industries BTD serves, and enhanced performance from T.O. Plastics. Consistent with our initial expectations, ShoreMaster’s earnings are still expected to improve over 2011 earnings as a result of bringing costs in line with current revenue levels, improved performance in residential operations and the closure of ShoreMaster’s Camdenton, Missouri plant. Camdenton’s commercial production operations were consequently relocated to ShoreMaster’s Fergus Falls, Minnesota and St. Augustine, Florida facilities. Backlog in place for the manufacturing companies is $111 million for 2012 compared with $87 million one year ago.
|
●
|
We now expect a net loss from our Construction segment in 2012 as Foley continued to experience cost overruns on certain major projects in the first quarter of 2012. Backlog in place for the construction businesses is $83 million for 2012 compared with $105 million one year ago.
|
●
|
We now expect an increase in our Plastics segment net income in 2012 based on the strength of its first quarter performance and current market conditions.
|
●
|
Corporate general and administrative costs are expected to remain relatively flat between the years.
|
●
|
We are subject to federal and state legislation, regulations and actions that may have a negative impact on our business and results of operations.
|
●
|
Federal and state environmental regulation could require us to incur substantial capital expenditures and increased operating costs.
|
●
|
Volatile financial markets and changes in our debt ratings could restrict our ability to access capital and could increase our borrowing costs and pension plan and postretirement health care expenses.
|
●
|
We rely 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 we are not able to access capital at competitive rates, our ability to implement our business plans may be adversely affected.
|
●
|
We may, from time to time, sell one or more of our nonelectric businesses to provide capital to fund investments in our electric utility business or for other corporate purposes, which could result in the recognition of a loss on the sale of any business sold.
|
●
|
We may experience fluctuations in revenues and expenses related to our operations, which may cause our financial results to fluctuate and could impair our ability to make distributions to our shareholders or scheduled payments on our debt obligations, or to meet covenants under our borrowing agreements.
|
●
|
Disruptions, uncertainty or volatility in the financial markets can also adversely impact our results of operations, the ability of our customers to finance purchases of goods and services, and our financial condition, as well as exert downward pressure on stock prices and/or limit our ability to sustain our current common stock dividend level.
|
●
|
We made a $10.0 million discretionary contribution to our defined benefit pension plan in January 2012. We 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 our long-term rate of return assumptions or relief under the Pension Protection Act is no longer granted.
|
●
|
Any significant impairment of our goodwill would cause a decrease in our asset values and a reduction in our net operating income.
|
●
|
A sustained decline in our common stock price below book value or declines in projected operating cash flows at any of our operating companies may result in goodwill impairments that could adversely affect our results of operations and financial position, as well as financing agreement covenants.
|
●
|
The inability of our subsidiaries to provide sufficient earnings and cash flows to allow us to meet our financial obligations and debt covenants and pay dividends to our shareholders could have an adverse effect on us.
|
●
|
Economic conditions could negatively impact our businesses.
|
●
|
If we are unable to achieve the organic growth we expect, our financial performance may be adversely affected.
|
●
|
Our plans to grow and realign our diversified business mix through capital projects, acquisitions and dispositions may not be successful, which could result in poor financial performance.
|
●
|
Our plans to grow and operate our nonelectric businesses could be limited by state law.
|
●
|
Our subsidiaries enter into production and construction contracts, including contracts for new product designs, which could expose them to unforeseen costs and costs not within their control, which may not be recoverable and could adversely affect our results of operations and financial condition.
|
●
|
Significant warranty claims and remediation costs in excess of amounts normally reserved for such items could adversely affect our results of operations and financial condition.
|
●
|
We are subject to risks associated with energy markets.
|
●
|
We are subject to risks and uncertainties related to the timing and recovery of deferred tax assets which could have a negative impact on our net income in future periods.
|
●
|
Certain of our operating companies sell products to consumers that could be subject to recall.
|
●
|
Competition is a factor in all of our businesses.
|
●
|
We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed.
|
●
|
Actions by the regulators of our electric operations 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.
|
●
|
Changes to regulation of generating plant emissions, including but not limited to carbon dioxide (CO2) emissions, could affect OTP’s operating costs and the costs of supplying electricity to its customers.
|
●
|
The U.S. wind industry is reliant on tax and other economic incentives and political and governmental policies. A significant change in these incentives and policies could negatively impact our results of operations and growth. The Federal Production Tax Credit is currently scheduled to expire on December 31, 2012.
|
●
|
Our wind tower manufacturing business is substantially dependent on a few significant customers.
|
●
|
Prolonged periods of low utilization of DMI’s wind tower production plants, due to a continuing softening of demand for its product, could cause DMI to idle certain facilities. In the fourth quarter of 2011, DMI idled its wind tower production plant in Fort Erie, Ontario. Should this softened demand for wind towers continue, these events may result in impairment charges on certain of DMI’s facilities if future cash flow estimates, based on information available to management at the time, indicate that the plants carrying values may not be recoverable or, if any plant assets are sold below their carrying values, significant losses may be incurred.
|
●
|
Competition from foreign and domestic manufacturers, cost management in a fixed price contract project environment, the price and availability of raw materials, the ability of suppliers to deliver materials at contracted prices, fluctuations in foreign currency exchange rates and general economic conditions could affect the revenues and earnings of our wind energy and manufacturing businesses.
|
●
|
A significant failure or an inability to properly bid or perform on projects by our wind energy, construction or manufacturing businesses could lead to adverse financial results and could lead to the possibility of delay or liquidated damages.
|
●
|
Our 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.
|
●
|
Our 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.
|
(in thousands)
|
March 31, 2012
|
December 31, 2011
|
||||||
Other Current Asset – Derivative Asset
|
$ | 5,391 | $ | 3,803 | ||||
Regulatory Asset – Current Deferred Marked-to-Market Loss
|
7,268 | 5,208 | ||||||
Regulatory Asset – Long-Term Deferred Marked-to-Market Loss
|
12,770 | 10,749 | ||||||
Total Assets
|
25,429 | 19,760 | ||||||
Derivative Liability
|
(24,682 | ) | (18,770 | ) | ||||
Regulatory Liability – Current Deferred Marked-to-Market Gain
|
(137 | ) | (96 | ) | ||||
Total Liabilities
|
(24,819 | ) | (18,866 | ) | ||||
Fair Value Adjustments Included in Earnings
|
$ | 610 | $ | 894 |
(in thousands)
|
Year-to-Date
March 31, 2012
|
Year-to-Date
March 31, 2011
|
||||||
Cumulative Fair Value Adjustments Included in Earnings - Beginning of Year
|
$ | 894 | $ | 763 | ||||
Less: Amounts Realized on Settlement of Contracts Entered into in Prior Periods
|
(478 | ) | (96 | ) | ||||
Changes in Fair Value of Contracts Entered into in Prior Periods
|
(33 | ) | (32 | ) | ||||
Cumulative Fair Value Adjustments in Earnings of Contracts Entered into in Prior Years at End of Period
|
383 | 635 | ||||||
Changes in Fair Value of Contracts Entered into in Current Period
|
227 | (3 | ) | |||||
Cumulative Fair Value Adjustments Included in Earnings - End of Period
|
$ | 610 | $ | 632 |
(in thousands)
|
2nd Qtr
2012
|
3rd Qtr
2012
|
4th Qtr
2012
|
1st Qtr
2013
|
Total
|
|||||||||||||||
Net Gain
|
$ | 399 | $ | 81 | $ | 95 | $ | 35 | $ | 610 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Net Gains (Losses) on Forward Electric Energy Contracts
|
$ | 194 | $ | (8 | ) |
|
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document.
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
Exhibit Number
|
Description
|
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Edward J. McIntyre | |
Edward J. McIntyre | |
President and Chief Executive Officer | |
May 10, 2012
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Kevin G. Moug | |
Kevin G. Moug | |
Chief Financial Officer | |
May 10, 2012
|
Costs and Estimated Earnings in Excess of Billings (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Uncompleted Contracts [Line Items] | ||
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | $ 66,394 | $ 67,109 |
DMI Industries, Inc
|
||
Uncompleted Contracts [Line Items] | ||
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | $ 54,199 | $ 54,541 |
Rate and Regulatory Matters - Additional Information (Detail) (USD $)
|
3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2012
Capacity Expansion Twenty Twenty
Project
Entity
|
Aug. 26, 2011
South Dakota Public Utilities Commission
|
Apr. 29, 2011
South Dakota Public Utilities Commission
|
Apr. 29, 2011
South Dakota Public Utilities Commission
Maximum
|
Apr. 30, 2012
South Dakota Public Utilities Commission
Subsequent Event
|
Mar. 31, 2012
South Dakota Public Utilities Commission
Big Stone Air Quality Control System
|
Mar. 31, 2012
Otter Tail Power Company
Renewable Energy Standards, Conservation, Renewable Resource Riders
2012
|
Mar. 31, 2012
Otter Tail Power Company
Renewable Energy Standards, Conservation, Renewable Resource Riders
2016
|
Mar. 31, 2012
Otter Tail Power Company
Renewable Energy Standards, Conservation, Renewable Resource Riders
2020
|
Mar. 31, 2012
Otter Tail Power Company
Renewable Energy Standards, Conservation, Renewable Resource Riders
2025
|
May 01, 2012
Otter Tail Power Company
Transmission Cost Recovery Rider
Subsequent Event
|
Mar. 31, 2012
Otter Tail Power Company
Conservation Improvement Program
Minimum
|
Dec. 31, 2011
Otter Tail Power Company
Minnesota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Apr. 25, 2011
Otter Tail Power Company
Minnesota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Mar. 31, 2011
Otter Tail Power Company
Minnesota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Apr. 02, 2010
Otter Tail Power Company
Minnesota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Mar. 31, 2012
Otter Tail Power Company
Minnesota Public Utilities Commission
Transmission Cost Recovery Rider
|
Mar. 31, 2012
Otter Tail Power Company
Minnesota Public Utilities Commission
Conservation Improvement Program
|
Mar. 31, 2011
Otter Tail Power Company
Minnesota Public Utilities Commission
Conservation Improvement Program
|
Mar. 30, 2012
Otter Tail Power Company
Minnesota Public Utilities Commission
Conservation Improvement Program
|
Jan. 11, 2012
Otter Tail Power Company
Minnesota Public Utilities Commission
Conservation Improvement Program
|
Mar. 31, 2012
Otter Tail Power Company
Minnesota Public Utilities Commission
Luverne Wind Farm Project
Renewable Energy Standards, Conservation, Renewable Resource Riders
|
Oct. 01, 2011
Otter Tail Power Company
Minnesota Public Utilities Commission
Luverne Wind Farm Project
Renewable Energy Standards, Conservation, Renewable Resource Riders
|
Jan. 12, 2010
Otter Tail Power Company
Minnesota Public Utilities Commission
Luverne Wind Farm Project
Renewable Energy Standards, Conservation, Renewable Resource Riders
|
Mar. 31, 2012
Otter Tail Power Company
Minnesota Public Utilities Commission
Fargo Project
|
Mar. 31, 2012
Otter Tail Power Company
North Dakota Public Service Commission
Renewable Resource Cost Recovery Rider
|
Dec. 29, 2011
Otter Tail Power Company
North Dakota Public Service Commission
Renewable Resource Cost Recovery Rider
|
Sep. 30, 2010
Otter Tail Power Company
North Dakota Public Service Commission
Renewable Resource Cost Recovery Rider
|
Apr. 21, 2011
Otter Tail Power Company
South Dakota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Sep. 28, 2010
Otter Tail Power Company
South Dakota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Aug. 20, 2010
Otter Tail Power Company
South Dakota Public Utilities Commission
General Rate Case Filing Twenty Ten
|
Aug. 20, 2010
Otter Tail Power Company
South Dakota Public Utilities Commission
General Rate Case Filing Twenty Ten
Maximum
|
Dec. 01, 2011
Otter Tail Power Company
South Dakota Public Utilities Commission
Transmission Cost Recovery Rider
|
Mar. 31, 2012
Otter Tail Power Company
Federal Energy Regulatory Commission
|
Dec. 31, 2010
Otter Tail Power Company
Federal Energy Regulatory Commission
Project
|
|
Regulatory Matters [Line Items] | |||||||||||||||||||||||||||||||||||||
General rate increase request | 8.01% | 10.00% | |||||||||||||||||||||||||||||||||||
Number of days the proposed rates are suspended for review | 180 days | 1 day | |||||||||||||||||||||||||||||||||||
Interim rate increase request | 3.80% | ||||||||||||||||||||||||||||||||||||
General rate revenue increase approved | $ 5,000,000 | $ 643,000 | |||||||||||||||||||||||||||||||||||
Percentage of general rate revenue increase approved | 3.76% | 2.32% | |||||||||||||||||||||||||||||||||||
Big Stone II Investment cost incurred, recovery period | 5 years | ||||||||||||||||||||||||||||||||||||
Overall increase rate to customers | 1.60% | ||||||||||||||||||||||||||||||||||||
Interim rate increase approved | 3.80% | ||||||||||||||||||||||||||||||||||||
Interim rate refund, approximate | 3,900,000 | ||||||||||||||||||||||||||||||||||||
Allowed rate of return on rate base | 8.61% | 8.33% | 8.50% | ||||||||||||||||||||||||||||||||||
Allowed rate of return on equity | 10.74% | 10.43% | |||||||||||||||||||||||||||||||||||
Capital structure, long term debt percentage | 48.28% | ||||||||||||||||||||||||||||||||||||
Capital structure, common equity percentage | 51.72% | ||||||||||||||||||||||||||||||||||||
Percentage of qualifying renewable sources in electric sale | 12.00% | 17.00% | 20.00% | 25.00% | |||||||||||||||||||||||||||||||||
Transmission cost recovery rider rate per kwh for large general service customers | 0.00083 | ||||||||||||||||||||||||||||||||||||
Renewable resource adjustment rate per kwh for large general service class | 0.00087 | 0.00684 | 0.00410 | 0.00473 | |||||||||||||||||||||||||||||||||
Renewable resource adjustment rate per kW for large general service class | 0.092 | 0.298 | 0.705 | 0.212 | |||||||||||||||||||||||||||||||||
Renewable resource adjustment rate per kwh for all other customer classes | 0.00103 | 0.00760 | 0.00556 | 0.00510 | |||||||||||||||||||||||||||||||||
Regulatory asset | 147,461,000 | 151,528,000 | 300,000 | 6,700,000 | 2,200,000 | ||||||||||||||||||||||||||||||||
Expected cost recovery from customers | 16,200,000 | 10,100,000 | 15,800,000 | ||||||||||||||||||||||||||||||||||
Surcharge revenues and financial incentives recognized during period | 800,000 | 1,800,000 | |||||||||||||||||||||||||||||||||||
Transmission cost recovery rider rate per kW for large general service customers | 0.785 | 0.391 | 0.072 | ||||||||||||||||||||||||||||||||||
Transmission cost recovery rider rate per kwh for controlled service customers | 0.00031 | 0.00019 | 0.00020 | ||||||||||||||||||||||||||||||||||
Transmission cost recovery rider rate per kwh for lighting customers | 0.00113 | 0.00085 | 0.00108 | ||||||||||||||||||||||||||||||||||
Transmission cost recovery rider rate per kwh for all other customers | 0.00205 | 0.00126 | 0.00180 | ||||||||||||||||||||||||||||||||||
Percentage of operating revenue from service to be invested in energy conservation | 1.50% | ||||||||||||||||||||||||||||||||||||
Financial incentive filing request | 73,415 | 78,900 | 2,600,000 | ||||||||||||||||||||||||||||||||||
Surcharge adjustment | 0.00063 | ||||||||||||||||||||||||||||||||||||
Financial incentives approved | 73,145 | 3,500,000 | |||||||||||||||||||||||||||||||||||
Conservation improvement programs surcharge | 3.00% | 3.80% | |||||||||||||||||||||||||||||||||||
General rate revenue increase request | 2,800,000 | ||||||||||||||||||||||||||||||||||||
Percentage of incentive payment to budget amount | 30.00% | ||||||||||||||||||||||||||||||||||||
Percentage of prudently incurred costs of construction work in progress, authorized for recovery by formula transmission rate | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||
Percentage of prudently incurred costs of cancelled or abandoned transmission facilities, authorized for recovery by formula transmission rate | 100.00% | ||||||||||||||||||||||||||||||||||||
Number of projects authorized for recovery of costs if abandoned | 3 | ||||||||||||||||||||||||||||||||||||
Number of investor | 11 | ||||||||||||||||||||||||||||||||||||
Number of projects | 4 | ||||||||||||||||||||||||||||||||||||
Investment cost incurred | $ 10,800,000 | ||||||||||||||||||||||||||||||||||||
BART compliant air quality control system implementation period | 5 years |
Amortization Expense for Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Expense - Intangible Assets | $ 247 | $ 224 |
Status of Lines of Credit (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Line of Credit Facility [Line Items] | ||
Line Limit | $ 370,000 | |
In Use | 3,288 | |
Restricted due to Outstanding Letters of Credit | 5,400 | |
Available | 361,312 | 364,726 |
Otter Tail Corporation Credit Agreement
|
||
Line of Credit Facility [Line Items] | ||
Line Limit | 200,000 | |
In Use | 1,095 | |
Restricted due to Outstanding Letters of Credit | 850 | |
Available | 198,055 | 198,776 |
OTP Credit Agreement
|
||
Line of Credit Facility [Line Items] | ||
Line Limit | 170,000 | |
In Use | 2,193 | |
Restricted due to Outstanding Letters of Credit | 4,550 | |
Available | $ 163,257 | $ 165,950 |
Income Tax Expense (Benefit) - Continuing Operations Effective Income Tax Rate (Parenthetical) (Detail)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Income Taxes [Line Items] | ||
Composite Federal and State Statutory Rate | 39.00% | 39.00% |
Income Tax Expense - Continuing Operations (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) - Continuing Operations Effective Income Tax Rate | The
following table provides a reconciliation of income tax expense
calculated at the net composite federal and state statutory rate on
income from continuing operations before income taxes and income
tax expense for continuing operations reported on the
Company’s consolidated statements of income for the three
month periods ended March 31, 2012 and 2011:
|
Discontinued Operations - Additional Information (Detail) (USD $)
|
3 Months Ended | 0 Months Ended | 6 Months Ended | 1 Months Ended | ||
---|---|---|---|---|---|---|
Mar. 31, 2012
|
May 06, 2011
IPH
|
Dec. 31, 2011
IPH
|
Dec. 29, 2011
Wylie
|
Jan. 31, 2012
Aviva
|
Feb. 29, 2012
DMS
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of discontinued operations | $ 24,362,000 | $ 87,000,000 | $ 25,000,000 | $ 300,000 | $ 28,300,000 | |
Proceeds from sale of discontinued operations, deposited in an escrow account | 3,000,000 | |||||
Discontinued operations, purchase price adjustments | $ 1,200,000 |
Breakdown of Assignment of Consolidated Short-Term and Long-Term Debt Outstanding (Parenthetical) (Detail)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
|
9.000% Notes, due December 15, 2016
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 9.00% | 9.00% |
Long-Term Debt, Due Date | Dec. 15, 2016 | Dec. 15, 2016 |
Senior Unsecured Notes 5.95%, Series A, due August 20, 2017
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 5.95% | 5.95% |
Long-Term Debt, Due Date | Aug. 20, 2017 | Aug. 20, 2017 |
Grant County, South Dakota Pollution Control Refunding Revenue Bonds 4.65%, due September 1, 2017
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 4.65% | 4.65% |
Long-Term Debt, Due Date | Sep. 01, 2017 | Sep. 01, 2017 |
Senior Unsecured Note 8.89%, due November 30, 2017
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 8.89% | 8.89% |
Long-Term Debt, Due Date | Nov. 30, 2017 | Nov. 30, 2017 |
Senior Unsecured Notes 4.63 Percent Due December 1, 2021
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 4.63% | 4.63% |
Long-Term Debt, Due Date | Dec. 01, 2021 | Dec. 01, 2021 |
Senior Unsecured Notes 6.15%, Series B, due August 20, 2022
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 6.15% | 6.15% |
Long-Term Debt, Due Date | Aug. 20, 2022 | Aug. 20, 2022 |
Mercer County, North Dakota Pollution Control Refunding Revenue Bonds 4.85%, due September 1, 2022
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 4.85% | 4.85% |
Long-Term Debt, Due Date | Sep. 01, 2022 | Sep. 01, 2022 |
Senior Unsecured Notes 6.37%, Series C, due August 20, 2027
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 6.37% | 6.37% |
Long-Term Debt, Due Date | Aug. 20, 2027 | Aug. 20, 2027 |
Senior Unsecured Notes 6.47%, Series D, due August 20, 2037
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 6.47% | 6.47% |
Long-Term Debt, Due Date | Aug. 20, 2037 | Aug. 20, 2037 |
Other Obligations - Various up to 3.95%
|
||
Debt Disclosure [Line Items] | ||
Long-Term Debt, Interest Rate | 3.95% | 3.95% |
Fair Value of Financial Instruments (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Carrying Amount
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and Cash Equivalents | $ 14,652 | |
Long-Term Debt | (471,878) | (471,915) |
Fair Value
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and Cash Equivalents | 14,652 | |
Long-Term Debt | $ (529,957) | $ (525,041) |
Major Components of Assets and Liabilities of Discontinued Operations (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Current Assets | $ 529 | $ 29,320 |
Net Plant | 372 | |
Assets of Discontinued Operations | 529 | 29,692 |
Current Liabilities | 269 | 14,740 |
Deferred Income Taxes | (232) | (1,811) |
Deferred Credits - Other | 119 | |
Long-Term Debt | 715 | |
Liabilities of Discontinued Operations | 37 | 13,763 |
Aviva
|
||
Current Assets | 529 | 912 |
Assets of Discontinued Operations | 529 | 912 |
Current Liabilities | 269 | 399 |
Deferred Income Taxes | (232) | (232) |
Liabilities of Discontinued Operations | 37 | 167 |
DMS
|
||
Current Assets | 28,408 | |
Net Plant | 372 | |
Assets of Discontinued Operations | 28,780 | |
Current Liabilities | 14,341 | |
Deferred Income Taxes | (1,579) | |
Deferred Credits - Other | 119 | |
Long-Term Debt | 715 | |
Liabilities of Discontinued Operations | $ 13,596 |
Short Term and Long Term Borrowings - Additional Information (Detail) (USD $)
|
Mar. 31, 2012
|
---|---|
Short-term Debt [Line Items] | |
Short-Term Debt | $ 3,311,000 |
Foley Company
|
|
Short-term Debt [Line Items] | |
Short-Term Debt | $ 23,000 |
Segment Information (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Percent of Sales Revenue by Country | The
following table presents the percent of consolidated sales revenue
by country:
|
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Information on Continuing Operations for Business Segments | Information
for the business segments for the three months ended March 31,
2012 and amounts restated to reflect continuing operations for the
three month periods ended March 31, June 30, and September 30,
2011, and total assets by business segment as of March 31, 2012 and
December 31, 2011 are presented in the following
tables:
Operating Revenue
Interest Expense
Income Taxes
Earnings Available for Common Shares
Identifiable Assets
|
Supplemental Disclosure of Cash Flow Information (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Schedule of Cash Flow, Supplemental [Line Items] | ||
(Decrease) Increase in Accounts Payable Related to Capital Expenditures | $ (13,562) | $ 13 |
Accounts Receivable Retained by Customers Pending Project Completion (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable Retained by Customers | $ 13,387 | $ 13,526 |
Pension Plan and Other Postretirement Benefits - Additional Information (Detail) (USD $)
|
1 Months Ended | |
---|---|---|
Jan. 31, 2012
|
Dec. 31, 2011
|
|
Defined Benefit Plan Disclosure [Line Items] | ||
Funding requirement, minimum | $ 3,015,000 | |
Plan contribution | $ 10,000,000 |
Summary of Costs Incurred and Billings and Estimated Earnings Recognized on Uncompleted Contracts (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Uncompleted Contracts [Line Items] | ||
Costs Incurred on Uncompleted Contracts | $ 457,977 | $ 583,346 |
Less Billings to Date | (421,796) | (550,070) |
Plus Estimated Earnings Recognized | 22,232 | 24,478 |
Unbilled Contracts Receivable, Total | $ 58,413 | $ 57,754 |
Percent of Sales Revenue by Country (Detail)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
United States of America
|
||
Percentage of sales revenue | 97.80% | 98.80% |
Canada
|
||
Percentage of sales revenue | 1.40% | 1.10% |
All Other Countries (none greater than 1%)
|
||
Percentage of sales revenue | 0.80% | 0.10% |
Amounts of Compensation Expense Recognized under Stock-Based Payment Programs (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Compensation expense | $ 287 | $ 452 |
Employee Stock Purchase Plan
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Compensation expense | 39 | 62 |
Restricted Stock | Director
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Compensation expense | 136 | 192 |
Restricted Stock | Employee
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Compensation expense | 58 | 115 |
Restricted Stock Units (RSUs) | Employee
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Compensation expense | $ 54 | $ 83 |
Information on OTP's Credit Risk Exposure on Delivered and Marked-to-Market Forward Contracts (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
Entity
|
Dec. 31, 2011
Entity
|
---|---|---|
Net Credit Risk on Forward Energy Contracts
|
||
Derivative [Line Items] | ||
Exposure | $ 1,793 | $ 1,677 |
Counterparties | 8 | 10 |
Net Credit Risk to Single Largest Counterparty
|
||
Derivative [Line Items] | ||
Exposure | $ 1,053 | $ 737 |
Segment Information
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
|
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Segment Information |
2. Segment Information
The
Company's businesses have been classified into five segments to be
consistent with its business strategy and the reporting and review
process used by the Company’s chief operating decision
makers. These businesses sell products and provide services to
customers primarily in the United States. The five segments are:
Electric, Wind Energy, Manufacturing, Construction and
Plastics.
Electric includes the production, transmission, distribution and
sale of electric energy in Minnesota, North Dakota and South Dakota
by OTP. In addition, OTP is an active wholesale participant in the
Midwest Independent Transmission System Operator (MISO) markets.
OTP’s operations have been the Company’s primary
business since 1907. Additionally, the electric segment includes
Otter Tail Energy Services Company (OTESCO), which provides
technical and engineering services.
Wind Energy consists of DMI, a steel fabrication company primarily
involved in the production of wind towers sold in the United States
and Canada, with manufacturing facilities in North Dakota, Oklahoma
and Ontario, Canada. The facility in Ontario, Canada was idled in
the fourth quarter of 2011 due to a lack of orders for wind
towers.
Manufacturing consists of businesses in the following manufacturing
activities: contract machining, metal parts stamping and
fabrication, and production of waterfront equipment, material and
handling trays and horticultural containers. These businesses have
manufacturing facilities in Florida, Illinois and Minnesota and
sell products primarily in the United States.
Construction consists of businesses involved in residential,
commercial and industrial electric contracting and construction of
fiber optic and electric distribution systems, water, wastewater
and HVAC systems primarily in the central United
States.
Plastics consists of businesses producing polyvinyl chloride (PVC)
pipe in the upper Midwest and Southwest regions of the United
States.
OTP and OTESCO are wholly owned subsidiaries of the Company. All of
the Company’s other businesses are owned by its wholly owned
subsidiary, Varistar Corporation (Varistar).
The Company’s corporate operating costs include items such as
corporate staff and overhead costs, the results of the
Company’s captive insurance company and other items excluded
from the measurement of operating segment performance. Corporate
assets consist primarily of cash, prepaid expenses, investments and
fixed assets. Corporate is not an operating segment. Rather, it is
added to operating segment totals to reconcile to totals on the
Company’s consolidated financial
statements.
The Company had one customer within the Wind Energy segment that
accounted for 10.8% of the Company’s consolidated revenues in
2011. Substantially all of the Company’s long-lived assets
are within the United States except for a wind tower manufacturing
plant in Fort Erie, Ontario, Canada.
The following table presents the percent of consolidated sales
revenue by country:
The Company evaluates the performance of its business segments and
allocates resources to them based on earnings contribution and
return on total invested capital. Information for the business
segments for the three months ended March 31, 2012 and amounts
restated to reflect continuing operations for the three month
periods ended March 31, June 30, and September 30, 2011, and total
assets by business segment as of March 31, 2012 and
December 31, 2011 are presented in the following
tables:
Operating
Revenue
Interest
Expense
Income
Taxes
Earnings
Available for Common Shares
Identifiable
Assets
|
Breakdown of OTP's Credit Risk Standing on Forward Energy Contracts in Marked-to-Market Loss Positions (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
||||
---|---|---|---|---|---|---|
Current Liability - Marked-to-Market Loss (in thousands) | ||||||
Loss Contracts Covered by Deposited Funds or Letters of Credit | $ 4,502 | $ 3,423 | ||||
Contracts Requiring Cash Deposits if OTP's Credit Falls Below Investment Grade | 20,180 | [1] | 15,347 | [1] | ||
Loss Contracts with No Ratings Triggers or Deposit Requirements | ||||||
Total Current Liability - Marked-to-Market Loss | $ 24,682 | $ 18,770 | ||||
|