8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 31, 2016

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota	0-53713	27-0383995
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

215 South Cascade Street, P.O. Box 496, Fergus Falls, MN	56538-0496
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (866) 410-8780

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Amendment of Otter Tail Corporation Credit Agreement

On October 31, 2016, Otter Tail Corporation (the “Company”) entered into an amendment dated as of October 31, 2016 (the “Fourth Amendment to OTC Credit Agreement”) to the Third Amended and Restated Credit Agreement dated as of October 29, 2012, as amended, (the “OTC Credit Agreement”) among the Company, U.S. Bank National Association, as Administrative Agent (the “OTC Agent”) and the banks party thereto from time to time (the “OTC Banks”). The OTC Credit Agreement provides for an unsecured revolving credit facility with a $150 million line of credit that the Company can draw on to refinance certain indebtedness and support the operations of the Company and its subsidiaries, and is described in and filed as Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on November 2, 2012, Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on November 1, 2013, Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on November 4, 2014 and Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on November 3, 2015.

The Fourth Amendment to OTC Credit Agreement was entered into among the Company, the OTC Agent and the OTC Banks to extend the termination date of the facility from October 29, 2020 to October 29, 2021 and to make certain other immaterial changes consistent with provisions in similar agreements. In connection with the Fourth Amendment, the Company has elected to reduce the commitment from $150 million to $130 million. The summary in this Item 1.01 of the material terms of the Fourth Amendment to OTC Credit Agreement is qualified in its entirety by reference to the full text of the Fourth Amendment to OTC Credit Agreement, a copy of which is filed as Exhibit 4.1 hereto and incorporated herein by reference.

Amendment of Otter Tail Power Company Credit Agreement

On October 31, 2016, Otter Tail Power Company (“OTP”), a wholly owned subsidiary of the Company, entered into an amendment dated as of October 31, 2016 (the “Fourth Amendment to OTP Credit Agreement”) to the Second Amended and Restated Credit Agreement dated as of October 29, 2012, as amended, (the “OTP Credit Agreement”) among OTP, U.S. Bank National Association, as Administrative Agent (the “OTP Agent”), and the Banks party thereto from time to time (the “OTP Banks”). The OTP Credit Agreement provides for an unsecured revolving credit facility with a $170 million line of credit that OTP can draw on to support the working capital needs and other capital requirements of its operations, and is described in and filed as Exhibit 4.2 to the Company’s Form 8-K filed with the SEC on November 2, 2012, Exhibit 4.2 to the Company’s Form 8-K filed with the SEC on November 1, 2013, Exhibit 4.2 to the Company’s Form 8-K filed with the SEC on November 4, 2014, and Exhibit 4.2 to the Company’s Form 8-K filed with the SEC on November 3, 2015. 

The Fourth Amendment to OTP Credit Agreement was entered into among OTP, the OTP Agent and the OTP Banks to extend the termination date of the facility from October 29, 2020 to October 29, 2021, and to make certain other immaterial changes consistent with provisions in similar agreements. The summary in this Item 1.01 of the material terms of the Fourth Amendment to OTP Credit Agreement is qualified in its entirety by reference to the full text of the Fourth Amendment to OTP Credit Agreement, a copy of which is filed as Exhibit 4.2 hereto and incorporated herein by reference.

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Certain Relationships

Certain of the banks party to one or both of the OTC Credit Agreement and the OTP Credit Agreement and/or their respective affiliates have had, and may in the future have, investment banking and other commercial dealings with the Company, OTP and their other affiliates, for which such banks or their respective affiliates have received and may in the future receive customary compensation. Such dealings have included the following: (i) U.S. Bank, JPMorgan, Bank of America, N.A. (“Bank of America”), and KeyBank National Association (“KeyBank”) are parties to both credit agreements; (ii) J.P. Morgan Securities LLC (“JPMS”), an affiliate of JPMorgan, entered into a Distribution Agreement with the Company on May 11, 2015, pursuant to which the Company may offer and sell its common shares, par value $5.00 per share, from time to time through JPMS, as the Company’s distribution agent for the offer and sale of the shares, up to an aggregate sales price of $75,000,000; (iii) in connection with the offering and sale by the Company of $100,000,000 aggregate principal amount of its 9.000% Notes due 2016 in 2009, JPMS and an affiliate of Bank of America acted as joint book-running managers, an affiliate of U.S. Bank acted as lead manager, and affiliates of Bank of the West (a party to the Otter Tail Credit Agreement), KeyBank and Wells Fargo Bank, National Association (a party to the OTP Credit Agreement) acted as co-managers; (iv) Merrill Lynch, Pierce, Fenner and Smith Incorporated (an affiliate of Bank of America) acted as placement agent in connection with the 2011 issuance by OTP of its 4.63% Senior Unsecured Notes due December 1, 2021; (v) JPMS acted as sole placement agent in connection with a note purchase agreement entered into on August 14, 2013 for the private placement of $60 million aggregate principal amount of OTP’s 4.68% Series A Senior Unsecured Notes due February 27, 2029 and $90 million aggregate principal amount of OTP’s 5.47% Series B Senior Unsecured Notes due February 27, 2044, both issued on February 27, 2014; (vi) KeyBank was the Company’s investment banker in connection with the dispositions of Aevenia, Inc. (closed February 28, 2015) and Foley Company (closed April 30, 2015); (vii) JPMorgan acted as administrative agent and JPMS acted as lead arranger and book arranger in connection with the Term Loan Agreement with the Company entered into on February 5, 2016 for a $50 million unsecured two-year term loan; and (viii) Bank of America Merrill Lynch Incorporated and US Bancorp. Investments, Inc. acted as placement agents in connection with a note purchase agreement entered into on September 23, 2016 for the private placement of $80 million aggregate principal amount of the Company’s 3.55% Guaranteed Senior Notes due December 15, 2026.

Item 2.02 Results of Operations and Financial Condition

On November 2, 2016 Otter Tail Corporation issued a press release concerning consolidated financial results for the third quarter of 2016. A copy of the press release is furnished herewith as Exhibit 99.1.

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits

4.1 Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of October 31, 2016, among Otter Tail Corporation, U.S. Bank National Association, as Administrative Agent and as a Bank, Bank of America, N.A. and JPMorgan Chase Bank, N.A., each as a Co-Syndication Agent and as a Bank, KeyBank National Association, as Documentation Agent and as a Bank, and Bank of the West as a Bank.

4.2 Fourth Amendment to Second Amended and Restated Credit Agreement, dated as of October 31, 2016, among Otter Tail Power Company, U.S. Bank National Association, as Administrative Agent and as a Bank, Bank of America, N.A. and JPMorgan Chase Bank, N.A., each as a Co-Syndication Agent and as a Bank, KeyBank National Association, as Documentation Agent and as a Bank, CoBank, ACB, as a Co-Documentation Agent and as a Bank, and Wells Fargo Bank, National Association as a Bank.

99.1 Press Release issued November 2, 2016.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OTTER TAIL CORPORATION
Date: November 3, 2016
	By	/s/ Kevin G. Moug
		Kevin G. Moug
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit	Description of Exhibit
4.1	Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of October 31, 2016, among Otter Tail Corporation, U.S. Bank National Association, as Administrative Agent and as a Bank, Bank of America, N.A. and JPMorgan Chase Bank, N.A., each as a Co-Syndication Agent and as a Bank, KeyBank National Association, as Documentation Agent and as a Bank, and Bank of the West as a Bank.
4.2	Fourth Amendment to Second Amended and Restated Credit Agreement, dated as of October 31, 2016, among Otter Tail Power Company, U.S. Bank National Association, as Administrative Agent and as a Bank, Bank of America, N.A. and JPMorgan Chase Bank, N.A., each as a Co-Syndication Agent and as a Bank, KeyBank National Association, as Documentation Agent and as a Bank, CoBank, ACB, as a Co-Documentation Agent and as a Bank, and Wells Fargo Bank, National Association as a Bank.
99.1	Press release, issued November 2, 2016

EX-4.1

Exhibit 4.1

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS FOURTH AMENDMENT (this “Amendment”), dated as of October 31, 2016, amends and modifies that certain Third Amended and Restated Credit Agreement, dated as of October 29, 2012 (as amended by the First Amendment thereto dated October 29, 2013, the Second Amendment thereto dated November 3, 2014 and the Third Amendment thereto dated October 29, 2015, the “Credit Agreement”), among Otter Tail Corporation (the “Borrower”), U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the “Agent”), and the Lenders, as defined therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement.

FOR VALUE RECEIVED, the Borrower, the Lenders and the Agent agree that the Credit Agreement is amended as follows.

ARTICLE I - AMENDMENTS

1.1         The definition of “Termination Date” appearing in Section 1.1 of the Credit Agreement is hereby amended to replace the date “October 29, 2020” with the date “October 29, 2021”.

1.2         Section 1.1 of the Credit Agreement is hereby amended to insert the following definitions alphabetically therein:

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

1.3         The definition of “Defaulting Bank” appearing in Section 1.1 of the Credit Agreement is hereby amended to delete the word “or” now appearing in clause (e) therein and substitute a comma “,” therefor and insert immediately after the phrase “an instrumentality thereof” the following: “or (iii) has or whose parent company has become the subject of a Bail-In Action”.

1.4         Article XII of the Credit Agreement is hereby amended to insert the following new Section 12.18 at the end thereof:

Section 12.18   Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)         the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)         the effects of any Bail-In Action on any such liability, including, if applicable:

(i)          a reduction in full or in part or cancellation of any such liability;

(ii)         a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)        the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

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1.5         Article VII of the Credit Agreement is hereby amended to insert the following new Section 7.19 at the end thereof:

Section 7.19: EEA Financial Institutions. Neither the Borrower nor any Subsidiary is an EEA Financial Institution.

1.6         Section 2.11(g) of the Credit Agreement is hereby amended to restate the second sentence therein in its entirety as follows:

“Subject to Section 12.18, nothing contained in the foregoing shall be deemed to constitute a waiver by the Borrower of any of its rights or remedies (whether in equity or law) against any Bank which fails to fund any of its Loans hereunder at the time or in the amount required to be funded under the terms of this Agreement.”

1.7         Schedule 1.1(a) (Commitments and Percentages), Schedule 1.1(b) (Material Subsidiaries), Schedule 1.1(c) (Departing Bank Schedule), Schedule 7.6 (Litigation and Contingent Liabilities), Schedule 7.15 (Subsidiaries), Schedule 7.16 (Partnerships/Joint Ventures), Schedule 9.4 (Exceptions to Ownership of Material Subsidiaries), Schedule 9.7 (Investments), Schedule 9.8 (Existing Liens) and Schedule 9.10 (Certain Transactions with Related Parties), are hereby amended in their entirety to be in the forms of Schedule 1.1(a), Schedule 1.1(b), Schedule 1.1(c), Schedule 7.6, Schedule 7.15, Schedule 7.16, Schedule 9.4, Schedule 9.7, Schedule 9.8 and Schedule 9.10 attached hereto and made a part hereof.

ARTICLE II - REPRESENTATIONS AND WARRANTIES

To induce the Agent and the Lenders to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower hereby warrants and represents to the Agent and the Lenders that it is duly authorized to execute and deliver this Amendment, and to perform its obligations under the Credit Agreement as amended hereby, and that this Amendment constitutes the legal, valid and binding agreement of the Borrower, enforceable in accordance with its terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies.

ARTICLE III - CONDITIONS PRECEDENT

This Amendment shall become effective on the date first set forth above, provided, however, that the effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

3.1         Warranties. Before and after giving effect to this Amendment, the representations and warranties in the Credit Agreement shall be true and correct as though made on the date hereof with respect to representations and warranties containing qualifications as to materiality, and true and correct as though made on the date hereof in all material respects with respect to representations and warranties without qualifications as to materiality, except for changes that are permitted by the terms of the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

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3.2         Defaults.    Before and after giving effect to this Amendment, no Default and no Event of Default shall have occurred and be continuing under the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.3         Documents.    The Borrower, the Agent and the Lenders shall have executed and delivered this Amendment.

3.4         Fees.    The Agent shall have received all fees and other amounts due and payable on or prior to the date hereof, including, without limitation, (i) all fees set forth in that certain Fee Letter by and between the Borrower and the Agent dated as of October 31, 2016 and (ii) to the extent invoiced reasonably in advance, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.

3.5         Reduction of Commitment.    The Agent shall have received irrevocable notice pursuant to Section 4.3 that the Borrower has elected to reduce the Commitment, effective as of the date of this Amendment to an aggregate amount not greater than $130,000,000.

ARTICLE IV - GENERAL

4.1         Expenses.    The Borrower agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys' fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith.

4.2         Counterparts.    This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.

4.3         Severability.    Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

4.4         Governing Law.    This Amendment shall be a contract made under the laws of the State of Minnesota, which laws shall govern all the rights and duties hereunder.

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4.5         Successors; Enforceability. This Amendment shall be binding upon the Borrower, the Agent and the Lenders and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Agent and the Lenders and the successors and assigns of the Agent and the Lenders. Except as hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first written above.

OTTER TAIL CORPORATION
By:	/s/ Kevin Moug
Title:	Chief Financial Officer

4334 18th Avenue South
Suite 200
Fargo, North Dakota 58103
Attention:	Mr. Kevin G. Moug,
	Chief Financial Officer
Telephone:  (701) 451-3562
Fax:  (701) 232-4108

(Signature Page to Fourth Amendment to Otter Tail Corporation Credit Agreement)

U.S. BANK NATIONAL ASSOCIATION,
as Agent and a Bank
By:	/s/ Jacquelyn Ness
Title:	Vice President
505 Second Avenue North
Mail Code EP-ND-0630
Fargo, ND 58102
Attention:  Jacquelyn Ness, Vice President
Telephone:  (701) 280-3655
Fax:  (701) 280-3580

(Signature Page to Fourth Amendment to Otter Tail Corporation Credit Agreement)

BANK OF AMERICA, N.A., as Co-Syndication Agent and as a Bank
By:	/s/ Casey Klepsch
Title:	Assistant Vice President
IL4-135-04-13
135 South LaSalle Street
Chicago, IL  60603
Attention: Casey Klepsch
Telephone:  (312) 904-7465
Fax:   (312) 992-9981

(Signature Page to Fourth Amendment to Otter Tail Corporation Credit Agreement)

JPMORGAN CHASE BANK, N.A., as Co-Syndication Agent and as a Bank
By:	/s/ Justin Martin
Title:	Authorized Officer
10 South Dearborn, 9th Floor, IL1-0090
Chicago, IL  60603
Attention:  Justin Martin
Telephone:  (312) 732-4441
Fax:  (312) 732-1762

(Signature Page to Fourth Amendment to Otter Tail Corporation Credit Agreement)

KEYBANK NATIONAL ASSOCIATION, as Documentation Agent and as a Bank
By:	/s/ Keven D. Smith
Title:	Senior Vice President
127 Public Square
Mail Code: OH-01-27-1125
Cleveland, OH 44114
Attention: Keven D. Smith
Telephone: (206) 343-6966
Fax: (216) 689-4981

(Signature Page to Fourth Amendment to Otter Tail Corporation Credit Agreement)

BANK OF THE WEST, a California Banking Corporation, as a Bank
By:	/s/ David Wang
Title:	Director
250 Marquette Ave., Suite 575
Minneapolis, MN  55401
Attention:  David Wang
Telephone:  (612) 339-1403
Fax:  (612) 339-6362

(Signature Page to Fourth Amendment to Otter Tail Corporation Credit Agreement)

Schedule 1.1(a)

Commitments and Percentages

Bank:	Initial Commitment:		Percentage:
U.S. Bank National Association	$	39,000,000		30	%
JPMorgan Chase Bank, N.A.	$	26,000,000		20	%
Bank of America, N.A.	$	26,000,000		20	%
KeyBank National Association	$	23,833,333		18.33333307692	%
Bank of the West	$	15,166,667		11.666666923077	%
Total:	$	130,000,000		100	%

Schedule 1.1(b)

Material Subsidiaries
(as of the date of the Fourth Amended and Restated Credit Agreement)

BTD Manufacturing, Inc.

Northern Pipe Products, Inc.

Varistar Corporation

Vinyltech Corporation

Schedule 1.1(c)

Departing Bank Schedule

None.

Schedule 7.6

Litigation (Section 7.6)
Contingent Liabilities (Section 7.6)

Ameren Services Company, etal v. FERC DC Circuit Case No. 07-1141.  The case is an appeal from FERC challenging its treatment of MISO Revenue Sufficiency Guarantee (“RSG”) charges for entities participating in the MISO wholesale energy market since the market’s start on April 1, 2005.  Otter Tail Power was a participant in the market and could be adversely affected by certain outcomes.

Contingent Liabilities

Based on a potential reduction by the FERC in the ROE component of the MISO Tariff, OTP has recorded a $2.4 million liability on its balance sheet as of September 30, 2016, representing OTP’s best estimate of a refund obligation that would arise, net of amounts that would be subject to recovery under state jurisdictional TCR riders, if FERC orders a reduction in ROE component of the MISO Tariff.

In 2014, the Environmental Protection Agency (EPA) published proposed standards of performance for CO2 emissions from new fossil fuel-fired power plants, proposed CO2 emission guidelines for existing fossil fuel-fired power plants and proposed CO2 standards of performance for CO2 emissions from reconstructed and modified fossil fuel-fired power plants under section 111 of the Clean Air Act. The EPA published final rules for each of these proposals on October 23, 2015. All of these rules have been challenged on legal grounds and are currently pending in the D.C. Circuit. On February 9, 2016 the U.S. Supreme Court granted a stay of the CO2 emission guidelines for existing fossil fuel-fired power plants, pending disposition of petitions for review in the D.C. Circuit and disposition of a petition for a writ of certiorari seeking review by the U.S. Supreme Court, if such a writ is sought. Oral argument before all the judges of the D.C. Circuit (en banc review) is scheduled for September 2016. Uncertainty regarding the status of the rules will likely continue for some time. OTP is actively engaged with the stakeholder processes in each of its states that have continued to move forward with planning efforts during the stay.

Schedule 7.15

Subsidiaries (Section 7.15)

Subsidiaries of Otter Tail Corporation

Company	State of Organization	Number and Class of Shares Issued and Owned by Otter Tail Corporation or its Subsidiaries	Footnote Ref.
AEV, Inc.	Minnesota	100 Shares Common	(1)
ASI, Inc.	Minnesota	100 Shares Common	(3)
BTD Manufacturing, Inc.	Minnesota	200 Shares Common	(1)
IMD, Inc.	North Dakota	980 Shares Common	(1)
Miller Welding & Iron Works, Inc.	Minnesota	1,000 Shares Common	(5)
Northern Pipe Products, Inc.	North Dakota	10,000 Shares Common	(1)
Otter Tail Assurance Limited	Cayman Islands	50,000 Shares Common	(4)
Otter Tail Energy Services Company, Inc.	Minnesota	1,000 Shares Common	(4)
Otter Tail Power Company	Minnesota	100 Shares Common	(4)
Sheridan Ridge II, LLC	Minnesota	1,000 Membership Units	(2)
Shrco, Inc.	Minnesota	100 Shares Common	(1)
T.O. Plastics, Inc.	Minnesota	100 Shares Common	(1)
Varistar Corporation	Minnesota	100 Shares Common	(4)
Vinyltech Corporation	Arizona	100 Shares Common	(1)

(1)  Subsidiary of Varistar Corporation (2)  Subsidiary of Otter Tail Energy Services Company, Inc. (3)  Subsidiary of Shrco, Inc. (4)  Subsidiary of Otter Tail Corporation (5)  Subsidiary of BTD Manufacturing, Inc.  

Schedule 7.16

Partnerships and Joint Ventures
as of June 30, 2016

Partnership Name	Type of Partnership Interest	Ownership Percentage		Book value of Investment June 30, 2016
Boston Financial Institutional Tax Credit VIII Fund	Limited		3.4	$	0
Walnut Properties Limited – Summit Group	Limited		15.7	$	0
WNC Institutional Tax Credit Fund II	Limited		13.3332	$	0
Grace Village Limited Partnership	Limited		89.0	$	0
The Homestead Limited Partnership	Limited		89.0	$	0
Lincoln Square of Alexandria Limited Partnership	Limited		89.0	$	0
Total				$	0

In the ordinary course of business, Otter Tail Power Company has entered into contractual arrangements with other regional utilities providing for ownership interests (both as tenants-in-common and discretely) in transmission and generation assets.

No Subsidiary Guarantor has any partnership or joint venture interest.

Schedule 9.4

Exceptions to Ownership of Material Subsidiaries (Section 9.4)

None.

Schedule 9.7

Investments (Section 9.7)

	As of September 30, 2016
Investment in Loan Pools (OTP)	$	68,000
Investments – Bank of Butterfield (OTAL)		9,189,548
CoBank (St Paul Bank for Coop’s)  (VSC)		73,012
Relocation Loans to Employees (OTP)		50,000
Trusts Associated with Large Transmission Projects		5,236,522
Other Miscellaneous (OTP)		10,110
Total Investments of Otter Tail Corporation and Subsidiaries	$	14,627,192

Schedule 9.8

Existing Liens (Section 9.8)

None.

Schedule 9.10

Certain Transactions with Related Parties (Section 9.10)

None.

EX-4.2

Exhibit 4.2

FOURTH AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT

THIS FOURTH AMENDMENT (this “Amendment”), dated as of October 31, 2016, amends and modifies that certain Second Amended and Restated Credit Agreement, dated as of October 29, 2012 (as amended by the First Amendment thereto dated October 29, 2013, the Second Amendment thereto dated November 3, 2014 and the Third Amendment thereto dated October 29, 2015, the “Credit Agreement”), among Otter Tail power company (the “Borrower”), U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the “Agent”), and the Lenders, as defined therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement.

FOR VALUE RECEIVED, the Borrower, the Lenders and the Agent agree that the Credit Agreement is amended as follows.

ARTICLE I - AMENDMENTS

1.1         The definition of “Termination Date” appearing in Section 1.1 of the Credit Agreement is hereby amended to replace the date “October 29, 2020” with the date “October 29, 2021”.

1.2         Section 1.1 of the Credit Agreement is hereby amended to insert the following definitions alphabetically therein:

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

1.3         The definition of “Defaulting Bank” appearing in Section 1.1 of the Credit Agreement is hereby amended to delete the word “or” now appearing in clause (e) therein and substitute a comma “,” therefor and insert immediately after the phrase “an instrumentality thereof” the following: “or (iii) has or whose parent company has become the subject of a Bail-In Action”.

1.4         Article XII of the Credit Agreement is hereby amended to insert the following new Section 12.18 at the end thereof:

Section 12.18         Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)          the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)          the effects of any Bail-In Action on any such liability, including, if applicable:

(i)           a reduction in full or in part or cancellation of any such liability;

(ii)          a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

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(iii)         the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

1.5         Article VII of the Credit Agreement is hereby amended to insert the following new Section 7.19 at the end thereof:

Section 7.19:   EEA Financial Institutions. Neither the Borrower nor any Subsidiary is an EEA Financial Institution.

1.6         Section 2.11(g) of the Credit Agreement is hereby amended to restate the second sentence therein in its entirety as follows:

“Subject to Section 12.18, nothing contained in the foregoing shall be deemed to constitute a waiver by the Borrower of any of its rights or remedies (whether in equity or law) against any Bank which fails to fund any of its Loans hereunder at the time or in the amount required to be funded under the terms of this Agreement.”

1.7           Schedule 1.1(a) (Commitments and Percentages), Schedule 1.1(b) (Material Subsidiaries), Schedule 7.6 (Litigation and Contingent Liabilities), Schedule 7.15 (Subsidiaries), Schedule 7.16 (Partnerships/Joint Ventures), Schedule 9.4 (Stock Ownership Transactions), Schedule 9.7 (Investments), Schedule 9.8 (Liens) and Schedule 9.10 (Transactions with Related Parties), are hereby amended in their entirety to be in the forms of Schedule 1.1(a), Schedule 1.1(b), Schedule 7.6, Schedule 7.15, Schedule 7.16, Schedule 9.4, Schedule 9.7, Schedule 9.8 and Schedule 9.10 attached hereto and made a part hereof.

ARTICLE II - REPRESENTATIONS AND WARRANTIES

To induce the Agent and the Lenders to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower hereby warrants and represents to the Agent and the Lenders that it is duly authorized to execute and deliver this Amendment, and to perform its obligations under the Credit Agreement as amended hereby, and that this Amendment constitutes the legal, valid and binding agreement of the Borrower, enforceable in accordance with its terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies.

ARTICLE III - CONDITIONS PRECEDENT

This Amendment shall become effective on the date first set forth above, provided, however, that the effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

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3.1         Warranties. Before and after giving effect to this Amendment, the representations and warranties in the Credit Agreement shall be true and correct as though made on the date hereof with respect to representations and warranties containing qualifications as to materiality, and true and correct as though made on the date hereof in all material respects with respect to representations and warranties without qualifications as to materiality, except for changes that are permitted by the terms of the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.2         Defaults. Before and after giving effect to this Amendment, no Default and no Event of Default shall have occurred and be continuing under the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.3         Documents. The Borrower, the Agent and the Lenders shall have executed and delivered this Amendment.

3.4         Fees. The Agent shall have received all fees and other amounts due and payable on or prior to the date hereof, including, without limitation, (i) all fees set forth in that certain Fee Letter by and between the Borrower and the Agent dated as of October 31, 2016 and (ii) to the extent invoiced reasonably in advance, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.

ARTICLE IV - GENERAL

4.1         Expenses. The Borrower agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys' fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith.

4.2         Counterparts. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.

4.3         Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

4.4         Governing Law. This Amendment shall be a contract made under the laws of the State of Minnesota, which laws shall govern all the rights and duties hereunder.

4.5         Successors; Enforceability. This Amendment shall be binding upon the Borrower, the Agent and the Lenders and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Agent and the Lenders and the successors and assigns of the Agent and the Lenders. Except as hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first written above.

OTTER TAIL POWER COMPANY
By:	/s/ Kevin Moug
Title:	Treasurer

4334 18th Avenue South
Suite 200
Fargo, North Dakota 58103
Attention:	Mr. Kevin G. Moug,
	Treasurer
Telephone:  (701) 451-3562
Fax:  (701) 232-4108

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

U.S. BANK NATIONAL ASSOCIATION,
as Agent and a Bank
By:	/s/ Jacquelyn Ness
Title:	Vice President
505 Second Avenue North
Mail Code EP-ND-0630
Fargo, ND 58102
Attention:  Jacquelyn Ness, Vice President
Telephone:  (701) 280-3655
Fax:  (701) 280-3580

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

JPMORGAN CHASE BANK, N.A., as a Co-Syndication Agent and as a Bank
By:	/s/ Justin Martin
Title:	Authorized Officer
10 South Dearborn, 9th Floor, IL1-0090
Chicago, IL 60603
Attention:  Justin Martin
Telephone:  (312) 732-4441
Fax:  (312) 732-1762

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

BANK OF AMERICA, N.A., as Co-Syndication Agent and as a Bank
By:	/s/ Casey Klepsch
Title:	Assistant Vice President

IL4-135-04-13
135 South LaSalle Street
Chicago, IL  60603
Attention:	Casey Klepsch
Telephone:	(312) 904-7465
Fax:  (312) 992-9981

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

KEYBANK NATIONAL ASSOCIATION, as Documentation Agent and as a Bank
By:	/s/ Keven D. Smith
Title:	Senior Vice President

127 Public Square

Mail Code: OH-01-27-1125

Cleveland, OH 44114

Attention: Keven D. Smith

Telephone: (206) 343-6966

Fax: (216) 689-4981

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Bank
By:	/s/ Keith Luettel
Title:	Director

90 S 7th Street, 7th Floor
MAC:  N9305-070
Minneapolis, MN  55408
Attention:	Keith Luettel
Tel:  612-667-4747
Fax:  612-316-0506

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

COBANK, ACB, as a Co-Documentation Agent and as a Bank
By:	/s/ John H. Kemper
Title:	Vice President
5500 South Quebec St.
Greenwood Village, CO  80111
Attention:  John Kemper
Telephone:  303-740-6576
Fax:  303-224-2615

(Signature Page to Fourth Amendment to Otter Tail Power Company Credit Agreement)

Schedule 1.1(a)

Commitments and Percentages

Bank	Initial Commitment:		Percentage:
U.S. Bank National Association	$	52,500,000		30.882352941176	%
JPMorgan Chase Bank, N.A.	$	32,500,000		19.117647058824	%
Bank of America, N.A.	$	32,500,000		19.117647058824	%
KeyBank National Association	$	17,500,000		10.294117647059	%
CoBank, ACB	$	17,500,000		10.294117647059	%
Wells Fargo Bank, National Association	$	17,500,000		10.294117647059	%
Total:	$	170,000,000		100	%

Schedule 1.1(b)

Material Subsidiaries of Otter Tail Power Company

None

Schedule 7.6

Litigation (Section 7.6)
Contingent Liabilities (Section 7.6)

Ameren Services Company, etal v. FERC DC Circuit Case No. 07-1141.  The case is an appeal from FERC challenging its treatment of MISO Revenue Sufficiency Guarantee (“RSG”) charges for entities participating in the MISO wholesale energy market since the market’s start on April 1, 2005.  Otter Tail Power was a participant in the market and could be adversely affected by certain outcomes.

Contingent Liabilities

Based on a potential reduction by the FERC in the ROE component of the MISO Tariff, OTP has recorded a $2.4 million liability on its balance sheet as of September 30, 2016, representing OTP’s best estimate of a refund obligation that would arise, net of amounts that would be subject to recovery under state jurisdictional TCR riders, if FERC orders a reduction in ROE component of the MISO Tariff.

In 2014, the Environmental Protection Agency (EPA) published proposed standards of performance for CO2 emissions from new fossil fuel-fired power plants, proposed CO2 emission guidelines for existing fossil fuel-fired power plants and proposed CO2 standards of performance for CO2 emissions from reconstructed and modified fossil fuel-fired power plants under section 111 of the Clean Air Act. The EPA published final rules for each of these proposals on October 23, 2015. All of these rules have been challenged on legal grounds and are currently pending in the D.C. Circuit. On February 9, 2016 the U.S. Supreme Court granted a stay of the CO2 emission guidelines for existing fossil fuel-fired power plants, pending disposition of petitions for review in the D.C. Circuit and disposition of a petition for a writ of certiorari seeking review by the U.S. Supreme Court, if such a writ is sought. Oral argument before all the judges of the D.C. Circuit (en banc review) was held on September 28, 2016. Uncertainty regarding the status of the rules will likely continue for some time. OTP is actively engaged with the stakeholder processes in each of its states that have continued to move forward with planning efforts during the stay.

Schedule 7.15
Subsidiaries (Section 7.15)

None.

Schedule 7.16

Partnerships/Joint Ventures (Section 7.16)

In the ordinary course of business, the Borrower has entered into contractual arrangements with other regional utilities providing for ownership interests (both as tenants-in-common and discretely) in transmission and generation assets.

Schedule 9.4

Stock Ownership Transactions (Section 9.4)

None.

Schedule 9.7

Investments (Section 9.7)

Otter Tail Power Company
Detail of Investments

	As of September 30, 2016
Investment in Loan Pools	$	68,000
Other Miscellaneous		10,110
Relocation Loans to Employee		50,000
Trusts Associated Large Joint Transmission Projects		5,236,522
	$	5,364,632

Schedule 9.8

Liens (Section 9.8)

None.

Schedule 9.10
Transactions with Related Parties (Section 9.10)

None.

EX-99.1

Exhibit 99.1

NEWS RELEASE

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

For release: November 2, 2016 Financial Media

Otter Tail Corporation Announces Third Quarter Earnings,

Reaffirms 2016 Earnings Guidance Range; Board of Directors Declares Quarterly Dividend

FERGUS FALLS, Minnesota - Otter Tail Corporation (NASDAQ: OTTR) today announced financial results for the quarter ended September 30, 2016.

Summary:

· Consolidated operating revenues were $197.2 million compared with $200.0 million for the third quarter of 2015.

· Consolidated net income and diluted earnings from continuing operations totaled $14.6 million and $0.37 per share, respectively, compared with $15.7 million and $0.42 per share for the third quarter of 2015.

· Consolidated net income totaled $14.6 million, or $0.37 per diluted share, compared with $15.4 million and $0.41 per diluted share for the third quarter of 2015.

· Otter Tail Corporation reaffirms its 2016 earnings guidance range of $1.50 to $1.65 per diluted share.

CEO Overview 

“Otter Tail's employees worked hard to overcome a number of challenges this quarter, and we remain confident in our plans and in our full year expectations,” said Otter Tail Corporation President and CEO Chuck MacFarlane.

“Electric segment results were negatively impacted by $0.03 per diluted share due to recording an additional estimate of refunds for revenues collected under interim rates. This accrual reflects a modification in our original request and other expected outcomes in the rate case filed in February 2016. We expect the Minnesota Public Utilities Commission to issue its final order in March 2017.

“Milder summer weather resulted in a 19.9% decrease in cooling degree days. This negatively impacted diluted earnings per share by $0.01 quarter over quarter.

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“The utility continues its solid operational performance. The two 345-kilovolt transmission projects that are under construction and part of Otter Tail Power Company's plan to grow during the next five years are on schedule and on budget. We are a 50% owner with other regional utilities in the Big Stone South-Brookings line, scheduled for completion in 2017, and the Big Stone South-Ellendale line, scheduled for completion in 2019. Otter Tail Power Company manages the Big Stone South-Ellendale project. The Midcontinent Independent System Operator recognizes both as multi-value projects.

“Our $858 million utility capital spending plan for 2016 through 2020 also includes a 248-megawatt simple-cycle natural gas combustion turbine, 200 megawatts of additional wind energy, and 30 megawatts of solar energy. We expect these and the transmission projects to drive a compounded annual growth rate of 8.0% in utility rate base through 2020, using 2014 as the base year.

“Quarter-over-quarter net income at BTD, our custom metal fabricator, was stable in the face of a recreational vehicle market that continues to soften and decreased demand for manufactured equipment used in oil and gas extraction and agriculture. Original equipment manufacturers in these markets are BTD’s customers. With expanded facilities and service offerings, we expect BTD to be in a good position to enhance earnings when market conditions improve.

“Our Plastics segment, PVC pipe companies Northern Pipe Products and Vinyltech, experienced a significant decrease in quarter over quarter revenues. Lower revenues resulted from declining sales prices, which were a response to known reductions in PVC resin costs. Overall volumes were stable, but gross margins declined primarily due to lower sales prices between the quarters. We expect these conditions to remain through the end of the year.

“We are reaffirming our 2016 diluted earnings per share guidance range of $1.50 to $1.65.”

Operating Cash Flows and Liquidity

Cash provided by operating activities of continuing operations for the nine months ended September 30, 2016 was $115.1 million compared with $81.8 million for the nine months ended September 30, 2015. Items contributing to the increase in cash provided by continuing operations between the periods include:

· A $10.8 million increase in non-cash depreciation expense.

· A $10.7 million decrease in cash used for accounts payable at Otter Tail Power Company, reflecting higher levels of payables in September 2016 for coal deliveries and transmission services and the payment, in January 2015, of large billings for coal transportation, coal and power purchased in December 2014.

· A $10.5 million increase in cash from reduced levels of receivables between the periods, including $5.6 million at BTD Manufacturing, Inc. (BTD), $2.5 million at Vinyltech and $1.0 million at T.O. Plastics.

· A $4.0 million refund of 2015 estimated tax payments received in the first quarter of 2016, as a five-year extension of bonus depreciation for income taxes, approved on December 18, 2015, resulted in the elimination of any federal income tax liability for the Company in 2015.

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The following table presents the status of our lines of credit as of September 30, 2016:

(in thousands)	Line Limit		In Use On September 30, 2016		Restricted due to Outstanding Letters of Credit		Available on September 30, 2016		Available on December 31, 2015
Otter Tail Corporation Credit Agreement	$	150,000	$	--	$	--	$	150,000	$	90,334
Otter Tail Power Company Credit Agreement		170,000		37,173		50		132,777		148,694
Total	$	320,000	$	37,173	$	50	$	282,777	$	239,028

On October 31, 2016 both the Otter Tail Corporation and the Otter Tail Power Company credit agreements were amended to extend the expiration dates by one year from October 29, 2020 to October 29, 2021. Also, the line limit on the Otter Tail Corporation Credit Agreement was reduced from $150 million to $130 million.

On September 23, 2016 we entered into a note purchase agreement for the issuance of $80 million aggregate principal amount of our 3.55% Guaranteed Senior Notes due December 15, 2026 (the 2026 Notes) in a private placement transaction. We expect to issue the 2026 Notes on December 13, 2016, and intend to use the proceeds from the issuance to repay existing debt, including the remaining $52,330,000 of our 9.000% Senior Notes due December 15, 2016, and for general corporate purposes.

Board of Directors Declared Quarterly Dividend

On November 1, 2016 the corporation’s Board of Directors declared a quarterly common stock dividend of $0.3125 per share. This dividend is payable December 10, 2016 to shareholders of record on November 15, 2016.

Segment Performance Summary

Electric

	Three Months ended September 30,
(in thousands)	2016		2015		Change
Retail Electric Revenues	$	87,755	$	89,140	$	(1,385	)
Wholesale Electric Revenues		1,656		377		1,279
Other Electric Revenues		13,312		11,050		2,262
Total Electric Revenues	$	102,723	$	100,567	$	2,156
Net Income	$	12,513	$	12,921	$	(408	)

	Three Months ended September 30,
	2016		2015		% Change
Cooling Degree Days		317		396		(19.9	)

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The following table shows cooling degree days as a percent of normal:

	Three Months ended September 30,
	2016			2015
Cooling Degree Days		89.5	%		111.5	%

The following table summarizes the estimated impact of weather changes on diluted earnings per share compared with sales under normal weather conditions and the third quarter of 2015:

	Three Months ended September 30,
	2016 vs Normal			2015 vs Normal		2016 vs 2015
Effect on Diluted Earnings Per Share	$	(0.01	)	$	0.00	$	(0.01	)

Retail electric revenues decreased $1.4 million as a result of:

· A $3.8 million increase in retail revenue related to a 9.56% interim rate increase implemented in April 2016 in conjunction with Otter Tail Power Company’s 2016 general rate increase request in Minnesota.

· A $1.2 million increase in Environmental Cost Recovery rider revenue due to the recovery of additional investment and costs related to the operation of the air quality control system (AQCS) at Big Stone Plant that was placed in service in December 2015.

· A $0.8 million increase related to increased kilowatt-hours (kwhs) sales across all customer classes offsetting the negative impact of milder weather on kwh sales and revenue.

· A $0.8 million increase in Conservation Improvement Program (CIP) cost recovery and incentive revenues.

· A $0.2 million increase in Transmission Cost Recovery and Renewable Resource Adjustment rider revenues related to increased investment in transmission plant and renewable energy resources.

more than offset by:

· A $5.3 million decrease in fuel and purchased power cost recovery revenues mainly due to a 48.3% decrease in kwhs purchased partially offset by a 28.3% increase in generation at a lower fuel-cost-per-kwh than the cost of purchased power.

· A $2.1 million reduction in interim rate revenues recorded to provide for an estimated refund related to a modification in Otter Tail Power Company’s original request and other expected outcomes in the pending Minnesota general rate case. Through the nine months ended September 30, 2016, a $2.3 million provision has been recorded for an estimated refund of a portion of interim rate revenues of $6.9 million.

· A $0.8 million decrease in revenues from reduced demand due to milder weather in the third quarter of 2016, evidenced by a 19.9% decrease in cooling degree days compared to the third quarter of 2015.

Revenue from wholesale electric sales from company-owned generation increased $1.3 million while fuel costs for wholesale generation increased $0.8 million, resulting in a $0.5 million increase in wholesale revenue net of fuel costs.

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Other electric revenues increased $2.3 million as a result of:

· A $2.7 million increase in Midcontinent Independent System Operator, Inc. (MISO) transmission tariff revenues related to increased investment in regional transmission lines and driven in part by returns on and recovery of CapX2020 and MISO-designated multi-value project (MVP) investment costs and operating expenses.

· A $0.6 million increase in MISO network integration transmission service revenues as a result of a regional transmission cooperative terminating its integrated transmission agreement with Otter Tail Power Company and becoming a member the Southwest Power Pool (SPP) in 2016.

· A $0.2 million increase in steam sales from Big Stone Plant to a nearby ethanol plant as a result of Big Stone Plant being fully operational in the third quarter of 2016 compared to operating in only August and September of 2015.

offset by:

· A $0.9 million decrease in revenue related to a reduction in work performed on projects for another regional transmission owner.

· A $0.4 million reduction in integrated transmission agreement revenues from two regional transmission providers related to the curtailment of services under an agreement with one provider and termination of an agreement with the other provider.

Production fuel costs increased $3.7 million as a result of a 40.5% increase in kwhs generated from our steam-powered and combustion turbine generators related to Big Stone Plant and Coyote Station being fully operational in the third quarter of 2016. In the third quarter of 2015, Big Stone Plant was down for an extended maintenance outage and Coyote Station was operating at reduced load due to ongoing repairs related to a December 2014 boiler feed pump failure and fire.

The cost of purchased power to serve retail customers decreased $7.3 million due to a 48.3% decrease in kwhs purchased partially offset by an 18.6% increase in the cost per kwh purchased. The decrease in kwhs purchased was the result of increased availability and generation from company-owned resources. The increased cost per kwh purchased is related to contractual prices being paid for purchased power under a long-term supply agreement.

Electric operating and maintenance expenses increased $3.6 million as a result of:

· A $1.2 million increase in MISO transmission service charges due to increased transmission investment by other MISO members.

· A $0.9 million increase in operating supply and maintenance costs mainly related to increased generation at Coyote Station and Big Stone Plant and increased expenditures for vegetation maintenance.

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· A $0.6 million increase in storm repair and other expenses mainly associated with excessive storm damage in Otter Tail Power Company’s Minnesota service area in July of 2016.

· A $0.6 million increase in pollution control reagent costs at Big Stone Plant and Coyote Station related to compliance with Environmental Protection Agency power plant emission regulations.

· A $0.5 million increase in transmission expenses from the SPP as a result of a regional transmission cooperative terminating its integrated transmission agreement with Otter Tail Power Company and becoming a member of the SPP in 2016.

· A $0.2 million increase in CIP program expenditures.

offset by:

· A $0.5 million decrease in costs related to a reduction in work performed on projects for another regional transmission owner.

Depreciation and amortization expense increased $2.2 million mainly due to the Big Stone Plant AQCS being placed in service in December 2015.

Manufacturing

	Three Months ended September 30,
(in thousands)	2016		2015		Change
Revenues	$	52,171	$	52,460	$	(289	)
Net Income	$	1,246	$	1,714	$	(468	)

At BTD, a revenue increase of $1.6 million includes:

· A $3.7 million increase in revenues at BTD-Georgia as a result of BTD acquiring and operating the Georgia plant in September 2015, compared with three months of operations in the third quarter of 2016.

offset by:

· A $2.1 million decrease in revenues at BTD’s Minnesota and Illinois plants, mainly related to a decline in sales to manufacturers of recreational and agricultural equipment and heavy machinery due to softness in end markets served by those manufacturers.

Cost of products sold at BTD increased $0.3 million. This includes a $4.0 million increase in cost of products sold at BTD-Georgia, offset by a $3.7 million decrease in cost of products sold at BTD’s other facilities. The $3.7 million decrease is related to the decrease in sales. Operating expenses at BTD increased $0.5 million, mainly in the areas of labor and benefit costs and computer-related expenditures, and included a $0.2 million increase in operating expenses at BTD-Georgia.

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Depreciation and amortization expenses at BTD increased $1.1 million, including a $0.6 million increase at BTD-Georgia, and a $0.5 million increase BTD’s Minnesota facilities as a result of placing new assets in service in Minnesota in 2015 and 2016. BTD’s interest expense increase of $0.1 million was entirely at BTD-Georgia. A favorable tax variance at BTD, due to an increase in research and development tax credits recorded in 2016, resulted in essentially no change in quarter over quarter net income. A $0.8 million increase in net income at BTD’s Minnesota and Illinois locations was mostly offset by a $0.7 million increase in net losses at BTD-Georgia.

At T.O. Plastics, revenues decreased $1.9 million, including a $1.2 million decrease in industrial market sales and a $0.6 million decrease in revenues from sales of horticultural containers. The decrease in industrial market sales is primarily due to a continued decline in sales volumes to a customer insourcing product into its own manufacturing facilities.

The decrease in revenues was partially offset by a $0.6 million decrease in cost of products sold and a $0.4 million decrease in selling, benefits and administrative and general expenses, resulting in a $0.5 million decrease in net income at T.O. Plastics between the quarters.

Plastics

	Three Months ended September 30,
(in thousands)	2016		2015		Change
Revenues	$	42,292	$	47,025	$	(4,733	)
Net Income	$	2,346	$	3,534	$	(1,188	)

The decrease in Plastics segment revenues is the result of a 10.4% decrease in the price per pound of polyvinyl chloride (PVC) pipe sold, while quarter over quarter sales volume was essentially unchanged. The decline in sales price per pound is due to a continued softening in sales prices as a result of lower raw material prices. Increased pipe sales in Colorado and Utah and the Midwest and South-Central regions of the United States were mostly offset by decreased sales volumes in California, Minnesota and North Dakota. Lower material costs, which did not decline as much as sales prices, resulted in a $2.7 million decrease in costs of product sold. The cost decrease in combination with a $0.3 million decrease in operating expenses fell short of offsetting the impact of lower pipe prices, resulting in a $1.2 million decrease in Plastics segment net income.

The PVC pipe industry is highly sensitive to commodity raw material pricing volatility. Historically, when resin prices are rising or stable, margins and sales volume have been higher and when resin prices are falling, sales volumes and margins have been lower.

Corporate

Corporate costs, net-of-tax, decreased $0.9 million between the quarters as a result of:

· A $0.4 million net-of-tax increase in the cash value of corporate-owned life insurance policies.

· A $0.3 million net-of-tax reduction in insurance costs related to reduced claims at our captive insurance company.

· A $0.2 million net-of-tax reduction in accounting and legal fees.

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2016 Business Outlook

We are reaffirming our consolidated diluted earnings per share guidance for 2016 to be in the range of $1.50 to $1.65. This guidance reflects the current mix of businesses we own, considers the cyclical nature of some of our businesses, and reflects current regulatory factors and economic challenges facing our Electric, Manufacturing and Plastics segments and strategies for improving future operating results. We expect capital expenditures for 2016 to be $159 million compared with $160 million in capital expenditures in 2015. Major projects in our planned expenditures for 2016 include investments in two large transmission line projects for the Electric segment, which positively impact earnings by providing an immediate return on invested funds through rider recovery mechanisms.

Segment components of our 2016 earnings per share initial and revised guidance range compared with 2015 actual earnings are as follows:

Diluted Earnings Per Share	2015 EPS by Segment	2016 Guidance February 8, 2016		2016 Guidance August 8, 2016		2016 Guidance November 2, 2016
		Low	High	Low	High	Low	High
Electric	$1.29	$1.29	$1.32	$1.27	$1.30	$1.24	$1.27
Manufacturing	$0.11	$0.11	$0.15	$0.14	$0.18	$0.16	$0.20
Plastics	$0.32	$0.26	$0.30	$0.24	$0.28	$0.24	$0.28
Corporate	($0.16)	($0.16)	($0.12)	($0.15)	($0.11)	($0.14)	($0.10)
Total – Continuing Operations	$1.56	$1.50	$1.65	$1.50	$1.65	$1.50	$1.65
Expected Return on Equity		9.3%	10.2%	9.3%	10.2%	9.2%	10.1%

Contributing to our earnings guidance for 2016 are the following items:

· We now expect 2016 Electric segment net income to be comparable with 2015 segment net income based on:

o Normalized weather for the remainder of 2016. Mild weather in the first nine months of 2016 has had a negative impact on diluted earnings per share of approximately $0.05 compared to our original 2016 expected earnings based on normal temperatures and $0.04 compared to the nine months ended September 30, 2015.

o Constructive outcome of the rate case filed in Minnesota in February 2016. We are currently receiving revenues under interim rates (subject to refund) related to this rate case. The Minnesota Public Utilities Commission determines our rates. Our ability to obtain final rates similar to interim rates and reasonable rates of return depends on regulatory action under applicable statutes and regulations. We cannot provide assurance our interim rates will become final and that our revised 10.05% requested return on equity will ultimately be approved. Through September of 2016, Otter Tail Power Company revenue has increased $4.6 million as a result of the interim rate increase, which includes $6.9 million billed and accrued under interim rates net of a $2.3 million provision for an estimated refund related to a modification in Otter Tail Power Company’s original request and other expected outcomes in the rate case. Compared to our original 2016 expected earnings, the refund provision has had a negative impact on diluted earnings per share of approximately $0.04 through September 30, 2016 and projected to be $0.06 by year-end 2016.

8

o Rider recovery increases, including environmental riders in Minnesota, North Dakota and South Dakota related to the Big Stone AQCS environmental upgrades and transmission riders related to the Electric segment’s continuing investments in its share of the MISO-designated MVPs in South Dakota.

o Meeting forecasted sales to pipeline and commercial customers.

o A decrease in pension costs as a result of an increase in the discount rate from 4.35% to 4.76%.

offset by:

o The effect of the 2015 adoption of bonus depreciation for income taxes reducing projected earnings from Electric segment operations by $0.06 per share in 2016.

o Higher depreciation and property tax expenses due to large capital projects being put into service.

o Higher short-term interest costs as major construction projects continue to be funded.

o Increased operating expenses associated with reagents.

o Increased transmission expenses associated with termination of historic integrated transmission agreements.

o Higher post-retirement and post-employment medical costs than initially expected for 2016 due to changes in actuarial estimates and increased claims in 2016.

· We are increasing our guidance for 2016 net income from our Manufacturing segment based on positive results through the first nine months of the year driven by improved productivity, despite softening end markets, and continued focus on improved productivity and cost reductions for the remainder of the year.

· In spite of softening end markets, we expect 2016 net income from our Manufacturing segment to increase over 2015 by $3.0 million due to:

o Increased sales volume at BTD as a result of having BTD-Georgia in place for a full year. Full year sales for BTD-Georgia are estimated to be $25 million compared with original expectations of $33 million. The decline is due to continued softness in end markets served by the BTD-Georgia location.

o Improved margins on product mix that occurred in the second quarter and improved margins on parts and tooling sales driven by improved productivity resulting from lower expediting costs, costs of quality and maintenance expenses in our Illinois and Minnesota plants.

offset by:

o An expected decline in revenue, excluding the full year impact of BTD-Georgia revenues, of approximately 4%, compared with an original growth expectation of 7%. This change is due to challenging market conditions impacting end markets served by BTD, which has significant exposure to agriculture, oil and gas and recreational vehicle end markets. All of these end markets are forecasted to be down in 2016 compared to 2015.

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o Continued challenges of on time deliveries, low productivity and end market softness at BTD-Georgia.

o Higher facility costs associated with BTD’s expansion of its square footage at its Minnesota plants.

o A decrease in earnings from T.O. Plastics mainly driven by an expected decrease in operating margins due to a shift in product mix relating to a customer bringing a product back into its own manufacturing facilities.

o Backlog for the manufacturing companies of approximately $42 million for 2016 compared with $45 million one year ago.

· We are maintaining our August guidance for 2016 net income from our Plastics segment. Net income for 2016 from this segment is expected to be down from 2015 with lower expected operating margins due to tighter spreads between raw material costs and sales prices, along with higher labor and freight costs.

· We continue to expect lower corporate costs than originally estimated for 2016 due to continued cost reduction efforts.

CONFERENCE CALL AND WEBCAST

Otter Tail Corporation will host a live webcast on Thursday, November 3, 2016, at 10:00 a.m. CDT to discuss its financial and operating performance.

The presentation will be posted on our website before the webcast. To access the live webcast go to www.ottertail.com/presentations.cfm and select “Webcast”. Please allow extra time prior to the call to visit the site and download any necessary software that may be needed to listen to the webcast. An archived copy of the webcast will be available on our website shortly following the call.

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

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

The information in this release includes certain forward-looking information, including 2016 expectations, made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations are based on reasonable assumptions, actual results may differ materially from those expectations. The following factors, among others, could cause our actual results to differ materially from those discussed in the forward-looking statements:

· 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 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.

· 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.

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· We made a $10.0 million discretionary contribution to our defined benefit pension plan in January 2016. 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.

· Declines in projected operating cash flows at any of our reporting units 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.

· We rely on our information systems to conduct our business and failure to protect these systems against security breaches or cyber-attacks 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.

· 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 business mix through capital projects, acquisitions and dispositions may not be successful, which could result in poor financial performance.

· We may, from time to time, sell assets 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 assets sold and other potential liabilities. The sale of any of our businesses could expose us to additional risks associated with indemnification obligations under the applicable sales agreements and any related disputes.

· 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.

· We may experience fluctuations in revenues and expenses related to our electric 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.

· Actions by the regulators of our electric operations could result in rate reductions, lower revenues and earnings or delays in recovering capital expenditures.

· Otter Tail Power Company’s operations are subject to an extensive legal and regulatory framework under federal and state laws as well as regulations imposed by other organizations that may have a negative impact on our business and results of operations.

· Otter Tail Power Company’s electric generating facilities are subject to operational risks that could result in unscheduled plant outages, unanticipated operation and maintenance expenses and increased power purchase costs.

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· Changes to regulation of generating plant emissions, including but not limited to carbon dioxide emissions, could affect our operating costs and the costs of supplying electricity to our customers.

· Competition from foreign and domestic manufacturers, the price and availability of raw materials, prices and supply of scrap or recyclable material and general economic conditions could affect the revenues and earnings of our manufacturing businesses.

· Our plastics operations are highly dependent on a limited number of vendors for PVC resin and a limited supply of resin. The loss of a key vendor, or any interruption or delay in the supply of PVC resin, could result in reduced sales or increased costs for this segment.

· We 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 our competitors.

· Changes 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.

For a further discussion of other risk factors and cautionary statements, refer to reports we file with the Securities and Exchange Commission.

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

See Otter Tail Corporation’s results of operations for the three and nine months ended September 30, 2016 and 2015 in the following financial statements: Consolidated Statements of Income, Consolidated Balance Sheets – Assets, Consolidated Balance Sheets – Liabilities and Equity, and Consolidated Statements of Cash Flows.

# # #

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Otter Tail Corporation

Consolidated Statements of Income

In thousands, except share and per share amounts

(not audited)

	Quarter Ended September 30,						Year-to-Date September 30,
	2016			2015			2016			2015
Operating Revenues by Segment
Electric	$	102,723		$	100,567		$	313,642		$	305,078
Manufacturing		52,171			52,460			170,443			160,492
Plastics		42,292			47,025			122,841			125,531
Intersegment Eliminations		(11	)		(29	)		(27	)		(84	)
Total Operating Revenues		197,175			200,023			606,899			591,017
Operating Expenses
Fuel and Purchased Power		26,262			29,849			83,965			92,007
Nonelectric Cost of Goods Sold (depreciation included below)		75,405			78,428			228,993			224,912
Electric Operating and Maintenance Expense		36,207			32,648			115,206			107,929
Nonelectric Operating and Maintenance Expense		10,197			10,771			30,890			32,057
Depreciation and Amortization		18,314			15,141			55,128			44,337
Property Taxes - Electric		3,506			3,560			10,774			10,324
Total Operating Expenses		169,891			170,397			524,956			511,566
Operating Income (Loss) by Segment
Electric		23,340			23,320			63,374			61,427
Manufacturing		2,382			3,469			12,042			9,890
Plastics		4,187			5,988			13,939			16,824
Corporate		(2,625	)		(3,151	)		(7,412	)		(8,690	)
Total Operating Income		27,284			29,626			81,943			79,451
Interest Charges		8,026			7,730			23,996			23,175
Other Income		499			334			2,431			1,473
Income Tax Expense – Continuing Operations		5,163			6,521			15,738			14,602
Net Income (Loss) by Segment – Continuing Operations
Electric		12,513			12,921			34,199			34,351
Manufacturing		1,246			1,714			6,108			4,810
Plastics		2,346			3,534			7,983			9,919
Corporate		(1,511	)		(2,460	)		(3,650	)		(5,933	)
Net Income from Continuing Operations		14,594			15,709			44,640			43,147
Discontinued Operations
Income (Loss) - net of Income Tax Expense (Benefit) of $14, ($168), $114 and ($2,873) for the respective periods		22			(252	)		171			(4,316	)
Impairment Loss - net of Income Tax Benefit of $0 for the nine months ended September 30, 2015		--			--			--			(1,000	)
(Loss) Gain on Disposition - net of Income Tax (Benefit) Expense of ($43) and $4,493 for the three and nine months ended Sept. 30, 2015		--			(65	)		--			6,932
Net Income (Loss) from Discontinued Operations		22			(317	)		171			1,616
Net Income	$	14,616		$	15,392		$	44,811		$	44,763
Average Number of Common Shares Outstanding
Basic		38,832,659			37,575,413			38,316,324			37,417,283
Diluted		39,005,706			37,794,543			38,457,401			37,636,413
Basic Earnings (Loss) Per Common Share:
Continuing Operations	$	0.38		$	0.42		$	1.17		$	1.15
Discontinued Operations		--			(0.01	)		--			0.05
	$	0.38		$	0.41		$	1.17		$	1.20
Diluted Earnings (Loss) Per Common Share:
Continuing Operations	$	0.37		$	0.42		$	1.16		$	1.15
Discontinued Operations		--			(0.01	)		0.01			0.04
	$	0.37		$	0.41		$	1.17		$	1.19

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Otter Tail Corporation

Consolidated Balance Sheets

Assets

in thousands

(not audited)

	September 30,		December 31,
	2016		2015
Current Assets
Cash and Cash Equivalents	$	--	$	--
Accounts Receivable:
Trade—Net		69,556		62,974
Other		7,082		9,073
Inventories		80,848		85,416
Unbilled Revenues		14,882		17,869
Income Taxes Receivable		--		4,000
Regulatory Assets		19,958		18,904
Other		11,139		8,453
Assets of Discontinued Operations		249		--
Total Current Assets		203,714		206,689
Investments		8,065		8,284
Other Assets		33,707		32,784
Goodwill		37,572		39,732
Other Intangibles—Net		15,291		15,673
Regulatory Assets		118,123		127,707
Plant
Electric Plant in Service		1,842,931		1,820,763
Nonelectric Operations		215,074		201,343
Construction Work in Progress		143,999		79,612
Total Gross Plant		2,202,004		2,101,718
Less Accumulated Depreciation and Amortization		749,569		713,904
Net Plant		1,452,435		1,387,814
Total	$	1,868,907	$	1,818,683

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Otter Tail Corporation

Consolidated Balance Sheets

Liabilities and Equity

in thousands

(not audited)

	September 30,			December 31,
	2016			2015
Current Liabilities
Short-Term Debt	$	37,173		$	80,672
Current Maturities of Long-Term Debt		85,490			52,422
Accounts Payable		77,704			89,499
Accrued Salaries and Wages		15,573			16,182
Accrued Taxes		12,635			14,827
Other Accrued Liabilities		16,050			15,416
Liabilities of Discontinued Operations		1,631			2,098
Total Current Liabilities		246,256			271,116
Pensions Benefit Liability		95,653			104,912
Other Postretirement Benefits Liability		49,718			48,730
Other Noncurrent Liabilities		25,857			23,854
Deferred Credits
Deferred Income Taxes		222,244			207,669
Deferred Tax Credits		23,264			24,506
Regulatory Liabilities		79,835			77,432
Other		8,604			11,595
Total Deferred Credits		333,947			321,202
Capitalization
Long-Term Debt—Net		460,757			443,846
Cumulative Preferred Shares		—			—
Cumulative Preference Shares		—			—
Common Equity
Common Shares, Par Value $5 Per Share		196,123			189,286
Premium on Common Shares		329,288			293,610
Retained Earnings		134,884			126,025
Accumulated Other Comprehensive Loss		(3,576	)		(3,898	)
Total Common Equity		656,719			605,023
Total Capitalization		1,117,476			1,048,869
Total	$	1,868,907		$	1,818,683

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Otter Tail Corporation

Consolidated Statements of Cash Flows

In thousands

(not audited)

	For the Nine Months Ended September 30,
In thousands	2016			2015
Cash Flows from Operating Activities
Net Income	$	44,811		$	44,763
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Net Gain from Sale of Discontinued Operations		--			(6,932	)
Net (Income) Loss from Discontinued Operations		(171	)		5,316
Depreciation and Amortization		55,128			44,337
Deferred Tax Credits		(1,242	)		(1,408	)
Deferred Income Taxes		14,924			12,244
Change in Deferred Debits and Other Assets		5,595			13,839
Discretionary Contribution to Pension Plan		(10,000	)		(10,000	)
Change in Noncurrent Liabilities and Deferred Credits		5,999			4,345
Allowance for Equity/Other Funds Used During Construction		(605	)		(944	)
Change in Derivatives Net of Regulatory Deferral		--			(28	)
Stock Compensation Expense – Equity Awards		1,151			1,428
Other—Net		(73	)		(27	)
Cash (Used for) Provided by Current Assets and Current Liabilities:
Change in Receivables		(3,490	)		(14,020	)
Change in Inventories		4,766			5,721
Change in Other Current Assets		1,690			2,163
Change in Payables and Other Current Liabilities		(5,945	)		(17,490	)
Change in Interest and Income Taxes Receivable/Payable		2,538			(1,499	)
Net Cash Provided by Continuing Operations		115,076			81,808
Net Cash Used for Discontinued Operations		(333	)		(11,581	)
Net Cash Provided by Operating Activities		114,743			70,227
Cash Flows from Investing Activities
Capital Expenditures		(125,913	)		(115,321	)
Proceeds from Disposal of Noncurrent Assets		4,167			2,956
Acquisition Purchase Price Adjustment (Payment)		1,500			(30,806	)
Cash Used for Investments and Other Assets		(3,161	)		(7,297	)
Net Cash Used in Investing Activities - Continuing Operations		(123,407	)		(150,468	)
Net Proceeds from Sale of Discontinued Operations		--			32,765
Net Cash Used in Investing Activities - Discontinued Operations		--			(1,769	)
Net Cash Used in Investing Activities		(123,407	)		(119,472	)
Cash Flows from Financing Activities
Changes in Checks Written in Excess of Cash		(841	)		(1,236	)
Net Short-Term Debt (Repayments) Borrowings		(43,499	)		76,098
Proceeds from Issuance of Common Stock – net of Issuance Expenses		39,378			10,979
Payments for Retirement of Capital Stock		(104	)		(1,596	)
Proceeds from Issuance of Long-Term Debt		50,000			--
Short-Term and Long-Term Debt Issuance Expenses		(157	)		(7	)
Payments for Retirement of Long-Term Debt		(161	)		(149	)
Dividends Paid and Other Distributions		(35,952	)		(34,607	)
Net Cash Provided by Financing Activities – Continuing Operations		8,664			49,482
Net Cash Provided by Financing Activities – Discontinued Operations		--			321
Net Cash Provided by Financing Activities		8,664			49,803
Net Change in Cash and Cash Equivalents – Discontinued Operations		--			(10	)
Net Change in Cash and Cash Equivalents		--			548
Cash and Cash Equivalents at Beginning of Period		--			--
Cash and Cash Equivalents at End of Period	$	--		$	548

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