8-K

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): May 3, 2004

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota
(State or other jurisdiction
of incorporation) 0-00368
(Commission
File Number) 41-0462685
(I.R.S. Employer
Identification No.)

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

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

(Former name or former address, if changed since last report.)

TABLE OF CONTENTS

	Item 12. Results of Operations and Financial Condition
	Signature
EXHIBIT INDEX
Press Release

Item 12. Results of Operations and Financial Condition

     On May 3, 2004 Otter Tail Corporation issued a press release concerning financial results for the first quarter of 2004, a copy of which is furnished herewith as Exhibit 99.1.

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: May 3, 2004	By	/s/ Kevin G. Moug
		Kevin G. Moug Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	Press release, dated May 3, 2004

3

EX-99.1

	Exhibit 99.1
NEWS RELEASE

Contact: Amy Richardson, Director of Communications, (701) 451-3580 or (866) 410-8780

For release: May 3, 2004 Financial Media

Otter Tail Corporation Announces First Quarter Results;
Recognized as Mergent Dividend Achiever

     Otter Tail Corporation (Nasdaq: OTTR) announced unaudited financial results for the three months ended March 31, 2004, reporting consolidated earnings of $7.9 million compared with $9.7 million for the same period last year. Diluted earnings per share were $0.31 compared with $0.38 cents a year ago. Revenues totaled $206.6 million for the three months ended March 31, 2004 compared with $172.2 million for the three months ended March 31, 2003.

     “Our electric operations continued to produce strong results but some of our nonelectric businesses continued to lag behind expectations,” said John Erickson, president and chief executive officer of Otter Tail Corporation. “While our first quarter results were slightly below our internal expectations, we expect solid results for the remainder of 2004 and reaffirm our earnings guidance of $1.55 to $1.70 of diluted earnings per share.”

     “A key value we provide to shareholders is dependable dividends. I am pleased to report that Otter Tail Corporation once again has been listed in Mergent’s Dividend Achievers, which each year recognizes those companies that consistently reward their shareholders through outstanding records of dividend increases,” Erickson said. To qualify as a dividend achiever, a company must have raised its annual cash dividend for at least 10 consecutive calendar years. In 2003, 305 companies out of Mergent’s 15,000-plus public company database met the requirements. Otter Tail Corporation has paid dividends on its common stock each quarter since 1938 without interruption or reduction and has increased its dividends annually since 1975.

Quarterly Performance Summary

Electric

     Net income in the electric segment for the quarter ended March 31, 2004 of $9.8 million equaled net income for the quarter ended March 31, 2003. Retail revenues were $63.2 million for the quarter ended March 31, 2004 compared with $59.3 million for the quarter ended March 31, 2003. The 6.6% increase in retail revenue is primarily due to a 4.1% increase in megawatt hour (mwh) sales combined with a

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$0.7 million increase in fuel cost recovery revenue. Electric revenues increased as a result of higher consumption, mainly by commercial and industrial customers, increased steam sales and revenue from transmission related services. Weather was not a discernable factor in the increase in sales. Wholesale electric sales from company-owned generation increased to $4.1 million from $3.9 million for the same period last year on a 17.5% increase in mwh sales. Net revenue from the resale of purchased power, including net gains on forward energy contracts, decreased from $2.5 million in 2003 to $2.1 million in 2004. The $4.8 million increase in electric segment revenue was offset by a $2.9 million increase in fuel and purchased power costs related to the increases in retail and wholesale electric sales, and $1.9 million in increased operating and maintenance expenses mainly related to increased wages, employee benefit costs and line maintenance expenses. A $0.5 million decrease in depreciation expense between the periods was offset by a reduction in capitalized interest related to the completion of the Solway combustion turbine in June 2003.

Plastics

     Net income for the plastics segment was $0.6 million for the quarter ended March 31, 2004 compared with $1.4 million for the exceptionally strong quarter ended March 31, 2003. Although plastics revenues increased by $3.5 million and pounds of PVC pipe sold increased by 11.6% between the quarters, a 24.5% increase in material and production costs resulted in a 33.4% reduction in gross margins per pound of pipe sold. The average cost of PVC resin increased 13.0% between the periods. The increase in material and production costs combined with a $186,000 increase in operating and maintenance expenses and a $97,000 increase in depreciation expense contributed to the decrease in net earnings between the quarters. These increases in expenses are partially attributable to the operations of the new plant in Hampton, Iowa. This plant was still under construction during the quarter ended March 31, 2003.

Manufacturing

     The manufacturing segment had a net loss of $142,000 for the quarter ended March 31, 2004 compared with net income of $385,000 for the quarter ended March 31, 2003. Revenues increased $12.1 million to $46.8 million compared with $34.7 million in the first quarter of 2003. The revenue increase was more than offset by $12.5 million in increased material and production costs and $0.5 million in increased operating, maintenance and depreciation expenses. Net income from the corporation’s waterfront equipment manufacturer increased $157,000 on $2.9 million in increased sales revenue. Net income from the corporation’s manufacturer of thermoformed plastics and horticultural products decreased $367,000 between the quarters entirely due to increases in raw material prices. Net income from the corporation’s manufacturers of wind towers and structural steel products decreased $270,000 between the quarters. Increases in steel costs, the continuing delay in a renewal of the expired federal production tax credit for wind energy and excess industry capacity has contributed to a decrease in operating margins in this segment.

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Health Services

     Net income in the health services segment was $101,000 for the quarter ended March 31, 2004 compared to a net loss of $92,000 for the quarter ended March 31, 2003. Revenues from sales of diagnostic imaging equipment increased $1.8 million resulting in a $374,000 increase in net income between the quarters. While the imaging business experienced a $2.0 million increase in revenues, net income decreased $181,000 between the quarters primarily as a result of the Houston-based operations not performing in accordance with internal expectations.

Other Business Operations

     The other business operations had a net loss of $2.3 million for the quarter ended March 31, 2004 compared with a net loss of $1.7 million for the quarter ended March 31, 2003. This increase was due to an increase in net losses at the construction companies caused by losses incurred on certain jobs and lower volumes of work than planned due to excess capacity in the construction industry. These companies normally report operating losses during the winter when construction activity is down. The increase in loss was also due to an increase in unallocated corporate overhead costs related to increased employee benefit costs. Results of operations from the other companies included in this segment (energy services, telecommunications and transportation) were flat between the quarters.

2004 Outlook

Otter Tail Corporation reaffirms 2004 earnings guidance in the range of $1.55 to $1.70 of diluted earnings per share. Operating results are expected to show the strongest improvement in the second half of 2004.

Electric

     For the remainder of 2004, the corporation anticipates continued strong performance from the electric segment, although results are not expected to equal the record levels of 2003. While retail and wholesale revenues are expected to remain steady, the corporation also expects increased operating expenses mainly related to higher employee benefit costs and less opportunity for outside construction work compared to 2003.

Plastics

     The corporation expects the plastics segment to have a strong performance throughout the remainder of the year. PVC resin prices have been increasing, causing the sale price of PVC pipe to increase as well. Backlog is strong and customers are increasing pipe orders in anticipation of higher pipe prices and strong rural water pipe demand.

3

Manufacturing

     While the results of operations for this segment were down for the quarter ended March 31, 2004 compared with the quarter ended March 31, 2003, there are objective signs of improved activity for the rest of the year. Several of the corporation’s manufacturing companies are attempting to implement price increases to customers to mitigate the cost increases in raw materials. The corporation’s manufacturers of wind towers and structural steel products have backlogs that are expected to result in improved margins during the rest of the year. These businesses will continue to be affected by the uncertainty with regard to the renewal of the federal production tax credit for wind energy and the pricing and availability of steel and other commodities. The corporation’s waterfront equipment business is expected to continue its strong sales growth in both its residential and commercial business and has recently been awarded a significant marina renovation and expansion project, which will extend over a two-year period.

Health Services

     Revenues from the company that sells and services medical diagnostic and monitoring equipment are expected to remain strong throughout 2004 and produce financial results consistent with 2003. Management continues to address the cost structure of the diagnostic imaging operations with a continued emphasis on improving non-performing routes. It is expected this part of the health services segment will show improved earnings in comparison to 2003.

Other Business Operations

     While market conditions remain extremely competitive in the construction business, there is improvement in the backlog of work. Bidding activity is increasing and jobs are being awarded in the second quarter of 2004 for work to be performed throughout the rest of the year.

About The Corporation

     Otter Tail Corporation’s corporate offices are in Fergus Falls, Minnesota, and Fargo, North Dakota. The corporation has diversified operations with interests in the electric utility, plastics, manufacturing, health services and other businesses. Otter Tail Corporation stock trades on The Nasdaq Stock Market® under the symbol OTTR. The latest investor and other corporate information is available on its website at www.ottertail.com.

Forward-looking statements

     Forward-looking statements in this news release are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to a number of factors including, but not limited to, the corporation’s ongoing involvement in diversification efforts, the timing and scope of deregulation and open competition, market valuations of forward energy contracts, growth of electric revenues, impact of the investment performance of the utility’s pension plan, changes in the economy, governmental and regulatory action, weather conditions, fuel and purchased power costs, environmental issues, resin prices, and other factors discussed from time to time in reports the corporation files with the Securities and Exchange Commission.

Unaudited results for the quarter ended March 31, 2004 are in the attached spreadsheet file, pages 5-7.

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Otter Tail Corporation
Consolidated Statements of Income
For the three months ended March 31, 2004 and 2003
In thousands, except share and per share amounts
Unaudited

					Quarter Ended - March 31,
					2004			2003
Operating revenues by segment:
		Electric			$	72,855		$	68,070
		Plastics				26,436			22,935
		Manufacturing				46,839			34,719
		Health services				25,676			21,818
		Other business operations				35,492			24,803
		Intersegment eliminations				(713	)		(155	)
				Total operating revenues		206,585			172,190
Operating expenses:
		Fuel and purchase power				25,519			22,589
		Nonelectric cost of goods sold				107,685			78,569
		Electric operating and maintenance expense				23,930			22,045
		Nonelectric operating and maintenance expense				22,217			19,529
		Depreciation and amortization				11,173			11,156
				Total operating expenses		190,524			153,888
Operating income (loss) by segment:
		Electric				17,470			16,984
		Plastics				1,289			2,652
		Manufacturing				333			1,209
		Health services				424			112
		Other business operations				(3,455	)		(2,655	)
				Total operating income		16,061			18,302
Interest charges						4,429			4,392
Other income—net						37			330
Income taxes						3,574			4,378
Net income (loss) by segment:
		Electric				9,822			9,812
		Plastics				639			1,434
		Manufacturing				(142	)		385
		Health services				101			(92	)
		Other business operations				(2,325	)		(1,677	)
			Total net income			8,095			9,862
Preferred stock dividend						184			184
Balance for common:					$	7,911		$	9,678
Average common shares outstanding:
	Basic					25,793,041			25,592,361
	Diluted					25,936,219			25,729,714
Earnings per share:
	Basic				$	0.31		$	0.38
	Diluted				$	0.31		$	0.38

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Otter Tail Corporation
Consolidated Balance Sheets
Assets
In thousands
(Unaudited)

				March 31,		December 31,
				2004		2003
Current assets
Cash and cash equivalents				$	—	$	7,305
Accounts receivable:
	Trade—net				116,228		107,634
	Other				6,218		7,830
Inventories					60,518		56,966
Deferred income taxes					3,422		3,532
Accrued utility revenues					12,844		14,866
Costs in excess of billings					6,105		4,591
Other					10,704		10,385
		Total current assets			216,039		213,109
Investments and other assets					35,587		35,987
Goodwill—net					72,769		72,556
Intangibles—net					6,917		7,096
Deferred debits:
Unamortized debt expense and reacquisition premiums					7,853		8,081
Regulatory assets					13,927		14,669
Other					637		1,600
		Total deferred debits			22,417		24,350
Plant
Electric plant in service					872,175		875,364
Nonelectric operations					195,046		193,858
		Total			1,067,221		1,069,222
Less accumulated depreciation and amortization					455,500		453,791
Plant—net of accumulated depreciation and amortization					611,721		615,431
Construction work in progress					18,991		17,894
		Net plant			630,712		633,325
			Total	$	984,441	$	986,423

6

Otter Tail Corporation
Consolidated Balance Sheets
Liabilities and Equity
In thousands
(Unaudited)

				March 31,				December 31,
				2004				2003
Current liabilities
Short-term debt					$	35,000		$	30,000
Current maturities of long-term debt						9,450			9,718
Accounts payable						76,181			83,338
Accrued salaries and wages						11,601			14,677
Accrued federal and state income taxes						4,164			4,152
Other accrued taxes						10,651			10,491
Other accrued liabilities						9,985			10,003
	Total current liabilities					157,032			162,379
Pensions benefit liability						17,459			16,919
Other postretirement benefits liability						23,970			23,230
Other noncurrent liabilities						11,128			11,102
Deferred credits
Accumulated deferred income taxes						102,590			101,596
Accumulated deferred investment tax credit						11,342			11,630
Regulatory liabilities						42,282			42,926
Other						2,154			2,061
	Total deferred credits					158,368			158,213
Capitalization
Long-term debt						262,975			265,193
Cumulative preferred 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						129,237			128,619
Premium on common shares						28,975			26,515
Unearned compensation						(3,090	)		(3,313	)
Retained earnings						187,316			186,495
Accumulated other comprehensive loss						(4,429	)		(4,429	)
	Total common equity					338,009			333,887
		Total capitalization				616,484			614,580
			Total		$	984,441		$	986,423

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