Otter Tail Corp
For the period ended Dec 31, 2023. Filed Feb 14, 2024.
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FY2023 · Filed Feb 14, 2024
OTTR$79.77-0.1%Stored close · as of Nov 10, 2026
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Item 15. Exhibits and Financial Statement Schedules
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
|---|
- Financial Statements
| Page | |
|---|---|
| Report of Independent Registered Public Accounting Firm | 40 |
| Consolidated Balance Sheets | 42 |
| Consolidated Statements of Income | 43 |
| Consolidated Statements of Comprehensive Income | 44 |
| Consolidated Statements of Shareholders’ Equity | 45 |
| Consolidated Statements of Cash Flows | 46 |
| Notes to Consolidated Financial Statements | 47 |
- Financial Statement Schedules
Schedule I - Condensed Financial Information of Registrant
Schedule II - Valuation and Qualifying Accounts and Reserves
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
| December 31, | ||
|---|---|---|
| (in thousands) | 2023 | 2022 |
| Assets | ||
| Current Assets | ||
| Cash and Cash Equivalents | $228,137 | $119,246 |
| Accounts Receivable from Subsidiaries | 2,555 | 3,278 |
| Interest Receivable from Subsidiaries | 117 | 117 |
| Other | 977 | 1,045 |
| Total Current Assets | 231,786 | 123,686 |
| Investments in Subsidiaries | 1,725,584 | 1,463,998 |
| Notes Receivable from Subsidiaries | 78,900 | 78,900 |
| Deferred Income Taxes | 65,244 | 64,802 |
| Other Assets | 50,795 | 43,779 |
| Total Assets | $2,152,309 | $1,775,165 |
| Liabilities and Stockholders' Equity | ||
| Current Liabilities | ||
| Accounts Payable to Subsidiaries | $7 | $7 |
| Notes Payable to Subsidiaries | 568,672 | 420,363 |
| Other | 15,320 | 15,994 |
| Total Current Liabilities | 583,999 | 436,364 |
| Other Noncurrent Liabilities | 45,455 | 41,686 |
| Commitments and Contingencies | ||
| Capitalization | ||
| Long-Term Debt | 79,849 | 79,798 |
| Common Stockholders' Equity | 1,443,006 | 1,217,317 |
| Total Capitalization | 1,522,855 | 1,297,115 |
| Total Liabilities and Stockholders' Equity | $2,152,309 | $1,775,165 |
CONDENSED STATEMENTS OF INCOME
| Years Ended December 31, | |||
|---|---|---|---|
| (in thousands) | 2023 | 2022 | 2021 |
| Income | |||
| Equity Income in Earnings of Subsidiaries | $294,467 | $296,833 | $188,375 |
| Interest Income from Subsidiaries | 2,898 | 3,382 | 2,826 |
| Other Income | 10,496 | 466 | 1,290 |
| Total Income | 307,861 | 300,681 | 192,491 |
| Expense | |||
| Nonelectric Selling, General, and Administrative Expenses | 12,816 | 17,269 | 14,825 |
| Interest Expense | 3,813 | 4,066 | 4,727 |
| Interest Expense from Subsidiaries | 6 | 5 | 3 |
| Nonservice Cost Components of Postretirement Benefits | 1,063 | 1,023 | 1,097 |
| Total Expense | 17,698 | 22,363 | 20,652 |
| Income Before Income Taxes | 290,163 | 278,318 | 171,839 |
| Income Tax Benefit | 4,028 | 5,866 | 4,930 |
| Net Income | $294,191 | $284,184 | $176,769 |
CONDENSED STATEMENTS OF CASH FLOWS
| Years Ended December 31, | |||
|---|---|---|---|
| (in thousands) | 2023 | 2022 | 2021 |
| Cash Flows from Operating Activities | |||
| Net Cash Provided by Operating Activities | $77,139 | $28,807 | $60,695 |
| Cash Flows from Investing Activities | |||
| Investment in Subsidiaries | (40,000) | (50,000) | — |
| Debt Repaid by Subsidiaries | — | — | 169 |
| Other, net | (68) | (1,695) | (884) |
| Net Cash Used in Investing Activities | (40,068) | (51,695) | (715) |
| Cash Flows from Financing Activities | |||
| Net (Repayments) Borrowings on Short-Term Debt | — | (22,637) | (42,529) |
| Borrowings from Subsidiaries | 148,308 | 236,926 | 49,085 |
| Proceeds from Issuance of Common Stock | — | — | 696 |
| Payments for Shares Withheld for Employee Tax Obligations | (3,088) | (2,942) | (1,507) |
| Payments for Retirement of Long-Term Debt | — | — | (169) |
| Dividends Paid | (73,061) | (68,755) | (64,864) |
| Other, net | (339) | (461) | (689) |
| Net Cash Provided by (Used in) Financing Activities | 71,820 | 142,131 | (59,977) |
| Net Change in Cash and Cash Equivalents | 108,891 | 119,243 | 3 |
| Cash and Cash Equivalents at Beginning of Period | 119,246 | 3 | — |
| Cash and Cash Equivalents at End of Period | $228,137 | $119,246 | $3 |
NOTES TO CONDENSED FINANCIAL STATEMENTS
Incorporated by Reference
OTC’s consolidated statements of comprehensive income and common shareholders’ equity in Part II, Item 8 are incorporated by reference.
Basis of Presentation
The condensed financial information of OTC is presented to comply with Rule 12-04 of Regulation S-X. The unconsolidated condensed financial statements do not reflect all of the information and notes normally included with financial statements prepared in accordance with generally accepted accounting principles. Therefore, these condensed financial statements should be read with the consolidated financial statements and related notes included in this report on Form 10-K.
OTC’s investments in subsidiaries are presented under the equity method of accounting. Under this method, the assets and liabilities of subsidiaries are not consolidated. The investments in net assets of the subsidiaries are recorded in the balance sheets. The income from operations of the subsidiaries is reported on a net basis as equity income in earnings of subsidiaries.
Related Party Transactions
Outstanding receivables from and payables to OTC's subsidiaries as of December 31, 2023 and 2022 are as follows:
| (in thousands) | AccountsReceivable | InterestReceivable | Long-TermNotesReceivable | AccountsPayable | CurrentNotesPayable |
|---|---|---|---|---|---|
| Otter Tail Power Company | $2,415 | $— | $— | $7 | $— |
| Northern Pipe Products, Inc. | — | 7 | 5,000 | — | 56,917 |
| Vinyltech Corporation | 14 | 17 | 11,500 | — | 98,016 |
| BTD Manufacturing, Inc. | — | 78 | 52,000 | — | 6,291 |
| T.O. Plastics, Inc. | 36 | 15 | 10,400 | — | 980 |
| Varistar Corporation | — | — | — | — | 406,468 |
| Otter Tail Assurance Limited | 90 | — | — | — | — |
| $2,555 | $117 | $78,900 | $7 | $568,672 | |
| Otter Tail Power Company | $3,016 | $— | $— | $7 | $— |
| Northern Pipe Products, Inc. | — | 7 | 5,000 | — | 77,182 |
| Vinyltech Corporation | — | 18 | 11,500 | — | 90,425 |
| BTD Manufacturing, Inc. | — | 77 | 52,000 | — | 693 |
| T.O. Plastics, Inc. | 20 | 15 | 10,400 | — | 5,855 |
| Varistar Corporation | — | — | — | — | 246,208 |
| Otter Tail Assurance Limited | 242 | — | — | — | — |
| $3,278 | $117 | $78,900 | $7 | $420,363 |
Dividends
Dividends paid to OTC (the Parent) from its subsidiaries were as follows:
| (in thousands) | 2023 | 2022 | 2021 |
|---|---|---|---|
| Cash Dividends Paid to Parent by Subsidiaries | $72,982 | $68,680 | $64,790 |
See OTC’s notes to consolidated financial statements in Part II, Item 8 for other disclosures.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Below is a summary of activity within valuation and qualifying accounts for the years ended December 31, 2023, 2022 and 2021:
| (in thousands) | Balance, January 1 | Charged to Cost and Expenses | Deductions 1, 2 | Balance, December 31 |
|---|---|---|---|---|
| Allowance for Credit Losses | ||||
| 2023 | $1,648 | $2,014 | $(1,140) | $2,522 |
| 2022 | 1,836 | 909 | (1,097) | 1,648 |
| 2021 | 3,215 | 93 | (1,472) | 1,836 |
| Deferred Tax Asset Valuation Allowance | ||||
| 2023 | $— | $— | $— | $— |
| 2022 | — | — | — | — |
| 2021 | 800 | — | (800) | — |
| 1Amounts under Allowance for Credit Losses reflect deductions to the allowance for amounts written-off, net of recoveries. | ||||
| 2Amounts under Deferred Tax Asset Valuation Allowance reflect a release of a valuation allowance based on current expectations of the realizability of the associated deferred tax asset. | ||||
- Exhibits
The following Exhibits are filed as part of, or incorporated by reference into, this report.
| No. | Description |
| 3.1 | Third Restated Articles of Incorporation, dated April 12, 2021. |
| 3.2 | Restated Bylaws, dated April 12, 2021. |
| 4.1 | Description of Securities |
| 10.1.0 | Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein. |
| 10.1.1 | First Amendment, dated as of December 14, 2007, to Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein. |
| 10.1.2 | Second Amendment, dated as of September 11, 2008, to Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein. |
| 10.1.3 | Third Amendment, dated as of June 26, 2009, to Note Purchase Agreement dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein. |
| 10.2 | Note Purchase Agreement dated as of August 14, 2013 between Otter Tail Power Company and the Purchasers named therein. |
| 10.3 | Note Purchase Agreement dated as of September 23, 2016 between Otter Tail Corporation and the Purchasers named therein. |
| 10.4 | Note Purchase Agreement dated as of November 14, 2017 between Otter Tail Power Company and the Purchasers named therein. |
| 10.5 | Note Purchase Agreement dated as of September 12, 2019 between Otter Tail Power Company and the Purchasers named therein. |
| 10.6 | Note Purchase Agreement dated as of June 10, 2021 between Otter Tail Power Company and the Purchasers named therein. |
| 10.7 | Fifth Amended and Restated Credit Agreement, dated as of October 31, 2022, by and between Otter Tail Corporation, as Borrower, and the banks named therein, with U.S. Bank National Association, as Administrative Agent. |
| 10.8 | Fourth Amended and Restated Credit Agreement, dated as of October 31, 2022, by and between Otter Tail Power Company, as Borrower, and the banks named therein, with U.S. Bank Nation Association, as Administration Agent. |
| 10.9.0 | Agreement for Sharing Ownership of Generating Plant by and between the Company, Montana-Dakota Utilities Co., and Northwestern Public Service Company (dated as of January 7, 1970). Previously filed as Exhibit 10-F in Form 10-K for the year ended December 31, 1989. |
| 10.9.1 | Letter of Intent for purchase of share of Big Stone Plant from Northwestern Public Service Company (dated as of May 8, 1984). Previously filed as Exhibit 10-F-1 in Form 10-K for the year ended December 31, 1989. |
| 10.9.2 | Supplemental Agreement No. 1 to Agreement for Sharing Ownership of Big Stone Plant (dated as of July 1, 1983). Previously filed as Exhibit 10-F-2 in Form 10-K for the year ended December 31, 1991. |
| 10.9.3 | Supplemental Agreement No. 2 to Agreement for Sharing Ownership of Big Stone Plant (dated as of March 1, 1985). Previously filed as Exhibit 10-F-3 in Form 10-K for the year ended December 31, 1991. |
| 10.9.4 | Supplemental Agreement No. 3 to Agreement for Sharing Ownership of Big Stone Plant (dated as of March 31, 1986). Previously filed as Exhibit 10-F-4 in Form 10-K for the year ended December 31, 1991. |
| 10.9.5 | Supplemental Agreement No. 4 to Agreement for Sharing Ownership of Big Stone Plant (dated as of April 24, 2003). |
| 10.9.6 | Amendment I to Letter of Intent dated May 8, 1984, for purchase of share of Big Stone Plant. Previously filed as Exhibit 10-F-5 in Form 10-K for the year ended December 31, 1992. |
| 10.10 | Big Stone South–Ellendale Project Ownership Agreement dated as of June 12, 2015 between Otter Tail Power Company, a wholly owned subsidiary of Otter Tail Corporation, and Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc.** |
| 10.11.0 | Agreement for Sharing Ownership of Coyote Station Generating Unit No. 1 by and between the Company, Minnkota Power Cooperative, Inc., Montana-Dakota Utilities Co., Northwestern Public Service Company and Minnesota Power & Light Company (dated as of July 1, 1977). Previously filed as Exhibit 5-H in filing 2-61043. |
| 10.11.1 | Supplemental Agreement No. One, dated as of November 30, 1978, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. Previously filed as Exhibit 10-H-1 in Form 10-K for the year ended December 31, 1989. |
| 10.11.2 | Supplemental Agreement No. Two, dated as of March 1, 1981, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1 and Amendment No. 2 dated March 1, 1981, to Coyote Plant Coal Agreement. Previously filed as Exhibit 10-H-2 in Form 10-K for the year ended December 31, 1989. |
| 10.11.3 | Amendment, dated as of July 29, 1983, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. Previously filed as Exhibit 10-H-3 in Form 10-K for the year ended December 31, 1989. |
| 10.11.4 | Agreement, dated as of September 5, 1985, containing Amendment No. 3 to Agreement for Sharing Ownership of Coyote Generating Unit No. 1, dated as of July 1, 1977, and Amendment No. 5 to Coyote Plant Coal Agreement, dated as of January 1, 1978. Previously filed as Exhibit 10-H-4 in Form 10-K for the year ended December 31, 1992. |
| 10.11.5 | Amendment, dated as of June 14, 2001, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. |
| 10.11.6 | Amendment, dated as of April 24, 2003, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. |
| 10.12.0 | Lignite Sales Agreement between Coyote Creek Mining Company, L.L.C. and Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., Northwestern Corporation, dated as of October 10, 2012.** |
| 10.12.1 | First Amendment to Lignite Sales Agreement dated as of January 30, 2014 among Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., NorthWestern Corporation and Coyote Creek Mining Company, L.L.C. |
| 10.12.2 | Second Amendment to Lignite Sales Agreement dated as of March 16, 2015 among Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., NorthWestern Corporation and Coyote Creek Mining Company, L.L.C. |
| 10.13.0 | Deferred Compensation Plan for Directors (2003 Restatement).* |
| No. | Description |
| 10.13.1 | First Amendment of Deferred Compensation Plan for Directors (2003 Restatement), as Amended.* |
| 10.13.2 | Second Amendment of Deferred Compensation Plan for Directors (2003 Restatement), as Amended.* |
| 10.14 | Executive Survivor and Supplemental Retirement Plan (2020 Restatement).* |
| 10.15 | Nonqualified Retirement Plan (2021 Restatement).* |
| 10.16 | 1999 Employee Stock Purchase Plan, As Amended (2016). |
| 10.17 | 2014 Stock Incentive Plan |
| 10.18 | 2023 Executive Annual Incentive Plan.* |
| 10.19 | Otter Tail Corporation Executive Restoration Plus Plan, 2020 Restatement.* |
| 10.20 | Summary of Non-Employee Director Compensation (2023).* |
| 10.21 | Change in Control Severance Agreement, Chuck MacFarlane, dated February 24, 2012.* |
| 10.22 | Change in Control Severance Agreement, Timothy Rogelstad, dated April 14, 2014.* |
| 10.23 | Change in Control Severance Agreement, Paul Knutson, dated December 17, 2012.* |
| 10.24 | Change in Control Severance Agreement, John Abbott, dated April 13, 2015.* |
| 10.25 | Change in Control Severance Agreement, Todd Wahlund, dated January 1, 2024.* |
| 10.26 | Change in Control Severance Agreement, Jennifer Smestad, dated January 1, 2018.* |
| 10.27 | Form of Change in Control Severance Agreement (2023)* |
| 10.28 | Otter Tail Corporation Executive Severance Plan (2024).* |
| 10.29 | Form of 2023 Restricted Stock Award Agreements for Directors |
| 10.30 | 2023 Stock Incentive Plan |
| 10.31 | Form of 2023 Executive Performance Share Award Agreement (Executives) |
| 10.32 | Form of 2023 Restricted Stock Unit Award Agreement (Executives) |
| 10.33 | Consulting Agreement, Kevin G. Moug, dated January 8, 2024* |
| 21 | Subsidiaries of Registrant. |
| 23 | Consent of Deloitte & Touche LLP. |
| 24 | Power of Attorney. |
| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 97 | Incentive Compensation Recovery Policy |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Management contract, compensatory plan or arrangement required to be filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
**Confidential information has been omitted from this Exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2.
The Company hereby undertakes to furnish copies of any of the omitted schedules and exhibits to the Securities and Exchange Commission upon request.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining the rights of holders of certain long-term debt of the Company are not filed, and in lieu thereof, the Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.