Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JuneSeptember 30, 1994.
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the transition period from _______________ to _______________.
Commission File Number 1-7978
Black Hills Corporation
Incorporated in South Dakota IRS Identification Number 46-0111677
625 Ninth Street
Rapid City, South Dakota 57709
Registrant's telephone number (605)-348-1700
NONE
Former name, former address, and former fiscal year if changed since
last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the last practicable date.
Class Outstanding at JulyOctober 31, 1994
Common stock, $1.00 par value 14,347,30214,382,228 shares
BLACK HILLS CORPORATION
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets- 2-3
JuneSeptember 30, 1994, December 31, 1993,
and JuneSeptember 30, 1993
Consolidated Statements of Income- 4
Three, Six,Nine, and Twelve Months
Ended JuneSeptember 30, 1994 and 1993
Consolidated Statements of Cash Flows- 5-65
Three, Six,Nine, and Twelve Months
Ended JuneSeptember 30, 1994 and 1993
Consolidated Statements of Shareholders' Equity- 76
Three, Six,Nine, and Twelve Months Ended
JuneSeptember 30, 1994 and 1993
Notes to Consolidated Financial Statements 87
Item 2. Management's Discussion and Analysis of 8-127-11
Financial Position and Consolidated
Statements of Earnings
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of
Security-Holders 13
Item 5. Other Information 1312
Item 6. Exhibits and Reports on Form 8-K 1312
Signatures 1413
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
JuneSeptember 30 December 31 JuneSeptember 30
1994 1993 1993
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 13,4766,819 $ 7,866 $ 1,0682,962
Short-term investments 23,10129,325 24,217 15,38511,973
Receivables-
Customers 12,30611,911 12,415 9,98110,588
Other 2,0522,546 901 1,9092,221
Materials, supplies,
and fuel 6,7266,527 6,765 6,6766,438
Prepaid expenses 1,1601,469 1,638 1,351
58,8211,783
58,597 53,802 36,37035,965
Property and investments:
Electric 365,614391,809 341,852 327,401330,723
Coal mining 52,15751,708 51,670 45,40346,022
Oil and gas 35,52737,316 32,371 31,30033,806
Other 2,7002,506 7,250 22,243
455,99822,396
483,339 433,143 426,347432,947
Less accumulated depreciation
and depletion (152,551)(153,196) (144,492) (141,060)(143,096)
Net property and
investments 303,447330,143 288,651 285,287289,851
Deferred charges:
Federal income taxes 7,3147,448 7,271 7,8277,986
Other 3,7554,505 3,129 3,426
11,0693,592
11,953 10,400 11,25311,578
Total $373,337$400,693 $352,853 $332,910
/TABLE$337,394
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
September 30 December 31 September 30
1994 1993 1993
(in thousands)
Liabilities and Capitalization
Current liabilities:
Current maturities of
long-term debt $ 2,144 $ 3,542 $ 3,542
Notes payable 7,493 11,768 13,819
Accounts payable 10,185 9,535 5,156
Accrued liabilities-
Income taxes 660 204 1,250
Other taxes 5,456 5,379 5,173
Interest 2,487 1,700 2,478
Fuel and purchased
power refunds 750 1,375 1,325
Other 6,689 6,023 6,303
35,864 39,526 39,046
Deferred credits:
Federal income taxes 38,549 36,705 38,416
Investment tax credits 5,648 6,027 2,788
Reclamation costs 7,713 7,290 7,129
Regulatory liability 6,912 6,912 8,159
Other 3,626 3,030 2,871
62,448 59,964 59,363
Capitalization:
Common stock equity-
Common stock 14,382 14,270 13,715
Additional paid-in
capital 45,662 43,420 30,608
Retained earnings 113,387 110,399 108,698
Total common stock equity 173,431 168,089 153,021
Long-term debt 128,950 85,274 85,964
302,381 253,363 238,985
Total $400,693 $352,853 $337,394
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(in thousands)
Operating revenues:
Electric $27,734 $25,596 $79,574 $73,090 $104,638 $98,918
Coal mining 7,664 7,578 20,197 21,963 28,056 29,147
Oil and gas 3,191 3,130 8,969 8,550 11,816 10,886
38,589 36,304 108,740 103,603 144,510 138,951
Operating expenses:
Fuel and purchased
power 10,121 9,611 31,835 27,106 41,491 37,252
Operations and
maintenance 7,638 7,808 21,507 23,383 29,045 31,371
Administrative and
general 2,297 2,221 5,815 6,613 7,451 8,547
Depreciation,
depletion,
and amortization 4,441 4,155 13,327 11,542 17,837 15,167
Taxes, other than
income taxes 2,745 2,422 7,721 7,099 10,223 8,889
27,242 26,217 80,205 75,743 106,047 101,226
Operating income:
Electric 7,544 6,457 19,205 17,547 25,641 24,358
Coal mining 3,280 3,177 8,209 8,905 11,664 11,896
Oil and gas 523 453 1,121 1,408 1,158 1,471
11,347 10,087 28,535 27,860 38,463 37,725
Other (income) and
expense:
Interest expense 2,718 2,230 7,195 6,641 9,372 8,823
Investment income (393) (452) (1,114) (1,302) (1,550) (2,246)
Allowance for funds
used during
construction (1,049) (139) (2,125) (357) (2,497) (504)
Other (137) (92) (167) (390) (250) (297)
1,139 1,547 3,789 4,592 5,075 5,776
Income before income
taxes 10,208 8,540 24,746 23,268 33,388 31,949
Income taxes (3,229) (2,529) (7,586) (6,580) (9,970) (9,068)
Net income available
for common stock $ 6,979 $ 6,011 $17,160 $16,688 $23,418 $22,881
Weighted average common
shares outstanding 14,360 13,713 14,323 13,709 14,271 13,706
Earnings per share $0.49 $0.44 $1.20 $1.22 $1.64 $1.67
Dividends paid per
share of common stock $0.33 $0.32 $0.99 $0.96 $1.31 $1.27
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(in thousands)
Cash flows provided
from (used for)
operating activities:
Net Income $ 6,979 $ 6,011 $17,160 $16,688 $23,418 $22,881
Principal non-cash items-
Depreciation, depletion,
and amortization 4,441 4,155 13,327 11,542 17,837 15,167
Deferred income taxes
and investment tax
credits, net 732 188 1,385 340 2,087 814
Allowance for other funds
used during construction (538) (82) (1,101) (180) (1,254) (168)
(Increase) decrease in
receivables, inventories,
and other current assets (210) (1,113) (734) (867) (1,423) 809
Increase (decrease) in
other current
liabilities 3,792 2,896 2,011 (5,093) 4,542 (3,558)
Other, net 762 676 (388) 1,711 2,150 2,978
15,958 12,731 31,660 24,141 47,357 38,923
Cash flows provided from
(used for) investment
activities:
Neil Simpson Unit #2
construction costs,
excluding allowance for
other funds used during
construction (24,226) (1,749) (42,314) (3,156) (51,829) (4,034)
Other property additions,
excluding allowance for
other funds used during
construction (7,250) (6,858) (16,738) (17,451) (26,573) (26,876)
Short-term investments
purchased (12,555) (3,456) (27,581) (14,538) (44,647) (21,817)
Short-term investments
sold 6,331 6,868 22,472 18,664 27,295 27,844
Proceeds from sale of
long-term investments 203 - 5,269 - 20,000 -
(37,497) (5,195) (58,892) (16,481) (75,754) (24,883)
Cash flows provided from
(used for) financing
activities:
Dividends paid (4,736) (4,389) (14,172) (13,162) (18,729) (17,410)
Common stock issued 758 98 2,354 338 15,721 468
Increase (decrease) in
short-term notes (25,668) (799) (4,275) 5,835 (6,326) 8,085
Long-term debt issued 45,795 - 45,795 - 45,795 -
Long-term debt retired (1,267) (552) (3,517) (3,476) (4,207) (5,021)
14,882 (5,642) 26,185 (10,465) 32,254 (13,878)
Increase (decrease)
in cash and cash
equivalents (6,657) 1,894 (1,047) (2,805) 3,857 162
Cash and cash
equivalents:
Beginning of period 13,476 1,068 7,866 5,767 2,962 2,800
End of period $ 6,819 $ 2,962 $ 6,819 $ 2,962 $ 6,819 $ 2,962
Supplemental disclosure
of cash flow information
Cash paid during the
period for:
Interest $ 1,822 $ 1,512 $ 6,410 $ 6,330 $ 8,949 $ 9,228
Income taxes $ 1,500 $ 1,425 $ 5,525 $ 5,675 $ 8,025 $ 8,325
BLACK HILLS CORPORATION
Statements of Shareholders' Equity
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(in thousands)
Common stock:
Beginning of period $ 14,345 $ 13,711 $ 14,270 $ 13,701 $ 13,715 $ 13,695
Issuance of $1 par
value shares 37 4 112 14 667 20
End of period 14,382 13,715 14,382 13,715 14,382 13,715
Additional paid-in
capital:
Beginning of period 44,941 30,514 43,420 30,284 30,608 30,160
Excess of proceeds
over par value of
stock issued 763 94 2,251 326 15,711 450
Expenses related to
issuance of stock (42) - (9) (2) (657) (2)
End of period 45,662 30,608 45,662 30,608 45,662 30,608
Retained earnings:
Beginning of period 111,144 107,076 110,399 105,172 108,698 103,227
Net income 6,979 6,011 17,160 16,688 23,418 22,881
Cash dividends on
common stock (4,736) (4,389) (14,172) (13,162) (18,729) (17,410)
End of period 113,387 108,698 113,387 108,698 113,387 108,698
Total shareholders'
equity $173,431 $153,021 $173,431 $153,021 $173,431 $153,021
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
June 30 December 31 June 30
1994 1993 1993
(in thousands)
Liabilities and Capitalization
Current liabilities:
Current maturities of
long-term debt $ 2,089 $ 3,542 $ 3,492
Notes payable 33,161 11,768 14,618
Accounts payable 7,746 9,535 3,861
Accrued liabilities-
Income taxes 48 204 774
Other taxes 5,289 5,379 5,122
Interest 1,589 1,700 1,760
Fuel and purchased
power refunds 975 1,375 1,475
Other 6,788 6,023 5,797
57,685 39,526 36,899
Deferred credits:
Federal income taxes 37,154 36,705 34,001
Investment tax credits 5,774 6,027 6,280
Reclamation costs 7,550 7,290 6,981
Regulatory liability 6,912 6,912 8,159
Other 3,355 3,030 2,723
60,745 59,964 58,144
Capitalization:
Common stock equity-
Common stock 14,345 14,270 13,711
Additional paid-in
capital 44,941 43,420 30,514
Retained earnings 111,144 110,399 107,076
Total common stock equity 170,430 168,089 151,301
Long-term debt 84,477 85,274 86,566
254,907 253,363 237,867
Total $373,337 $352,853 $332,910
/TABLEBLACK HILLS CORPORATION
Notes to Consolidated Financial Statements
(Reference is made to Notes to Consolidated Financial Statements
included in the Company's Annual Report)
(1) Management's Statement
The financial statements included herein have been prepared by Black
Hills Corporation (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations; however, the
Company believes that the footnotes adequately disclose the information
presented. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto, included in
the Company's 1993 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
Accounting methods historically employed require certain estimates as of
interim dates. The information furnished in the accompanying financial
statements reflects all adjustments which are, in the opinion of management,
necessary for a fair presentation of the September 30, 1994,
December 31, 1993, and September 30, 1993, financial information and are of
a normal recurring nature. The results of operations for the three and nine
months ended September 30, 1994, are not necessarily indicative of the
results to be expected for the full year.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity, Capital Resources, and Commitments
In the past the Company has depended upon internally generated funds,
issuance of short and long-term debt, and sales of common stock to finance
its activities. It is expected future activities will also be financed by
the most appropriate mix of these various sources of funds.
The Company currently has bank lines of credit totaling $65,000,000
which provides for interim borrowings and the opportunity for timing of
permanent financing. At September 30, 1994, the Company had borrowings of
$7,450,000 outstanding under these lines of credit. There are no
compensating balance requirements associated with these lines of credit. The
Company pays a 0.125% facility fee on $25,000,000 of the existing lines.
The Company completed the refinancing of the $12,200,000 City of
Gillette Pollution Control Revenue Bonds during the third quarter. In 1992
the Company entered into a forward refunding on the $12,200,000,
10.5 percent, City of Gillette Pollution Control Revenue Bonds. The new
bonds were issued in July 1994 at 7.5 percent.
The Company filed a Form S-3, shelf registration for $100,000,000 first
mortgage bonds, with the Securities and Exchange Commission on June 28, 1994.
The registration statement became effective on July 13, 1994. The Company
issued $45,000,000 of bonds under this filing on September 1, 1994. The
bonds have a 30 year life and carry an 8.3 percent interest rate. The bonds
were used to finance Neil Simpson Unit #2, an 80 MW coal fired generating
plant, located adjacent to Wyodak Resources Development Corp's coal mine.
The Company also issued $3,000,000, City of Gillette, Campbell County,
Wyoming, Environmental Improvement Revenue Bonds on June 15, 1994. The
proceeds from the issue are held in a project fund to be disbursed to the
Company periodically to reimburse expenditures on certain facilities under
construction on Neil Simpson Unit #2. The bonds carry a variable rate of
interest which is currently set weekly. These additional financings have
increased the debt component of the Company's capital structure from
33 percent at June 30, 1994, to approximately 43 percent at
September 30, 1994.
Additional long-term financing will be needed in 1994 and 1995 to
finance Neil Simpson Unit #2. The Company estimates that an additional
$30,000,000 to $40,000,000 of debt will need to be issued for the new plant.
Total construction costs of the plant are estimated to be less than
$125,000,000. The Company has incurred approximately $58,000,000 of costs
related to the plant and such costs are reflected in the Company's Balance
Sheet at September 30, 1994. The plant will be fueled by coal from the
Wyodak mine, air cooled, and is expected to meet all Clean Air Act
requirements. Construction commenced at the plant site in August 1993 and is
scheduled to be completed by the end of 1995.
Results of Operations
Black Hills Corporation is an energy services company consisting of
three principal businesses: electric, coal mining, and oil and gas
production.
Consolidated income was $6,979,000 for the three months ended,
$17,160,000 for the nine months ended, and $23,418,000 for the twelve months
ended September 30, 1994, an increase of $968,000, $472,000, and $537,000 for
the three, nine, and twelve month periods, respectively. Although
consolidated net income increased for all three periods presented, earnings
per share decreased for the nine and twelve months ended September 30, 1994
due to a four percent increase in the average shares outstanding.
The increase in consolidated net income for the three periods presented
was primarily due to an increase in firm kilowatt-hour sales and allowance
for funds used during construction offset by a decrease in coal sales caused
by the Wyodak Plant maintenance overhaul in the second quarter of 1994.
Consolidated revenue and income from continuing operations provided by
the three businesses as a percentage of the total were as follows:
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
Revenue
Electric 72% 70% 73% 71% 72% 71%
Coal mining 20 21 19 21 20 21
Oil and gas 8 9 8 8 8 8
100% 100% 100% 100% 100% 100%
Net Income
Electric 57% 50% 56% 48% 55% 50%
Coal mining 37 45 41 46 42 46
Oil and gas 6 5 3 6 3 4
100% 100% 100% 100% 100% 100%
Capital expenditures and depreciation, depletion, and amortization by
industry segment were as follows:
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(in thousands)
Capital Expenditures
(includes AFDC)
Neil Simpson
Unit #2 $24,668 $1,777 $43,217 $ 3,184 $52,825 $ 4,063
Other electric 4,868 3,760 10,360 10,511 12,989 17,916
Coal mining 22 633 509 1,747 6,186 2,365
Oil and gas 2,456 2,519 6,068 5,345 7,656 6,734
$32,014 $8,689 $60,154 $20,787 $79,656 $31,078
Depreciation,
Depletion, and
Amortization
Electric $2,564 $2,516 $7,710 $7,447 $10,216 $ 9,855
Coal mining 577 460 1,710 1,378 2,285 1,702
Oil and gas 1,300 1,179 3,907 2,717 5,336 3,610
$4,441 $4,155 $13,327 $11,542 $17,837 $15,167
Electric Operations
Electric revenue increased 8 percent, 9 percent, and 6 percent for the
three, nine, and twelve months ended September 30, 1994, respectively, due to
an increase in purchased power costs flowed through to the electric customers
and an increase in firm kilowatt-hour sales. Firm kilowatt-hour sales
increased ten percent in the third quarter and four percent for the nine and
twelve month periods. Cooling degree days, which is a measure of weather
trends, were 158 percent more in the third quarter compared to last year and
12 percent above normal. Purchased power expense was abnormally low for the
nine and twelve months ended September, 1993 due to a refund received on the
Colstrip purchased power contract which was flowed back to customers in 1993.
Electric expenses increased 5 percent, 9 percent, and 6 percent for the
three, nine, and twelve months ended September 30, 1994, compared to the same
periods last year. The increase in expenses was primarily due to the
increase in purchased power costs, depreciation, and property taxes offset by
a decrease in administrative and general expenses.
Non-operating income increased for the three, nine, and twelve months
ended September 30, 1994, primarily due to the allowance for funds used
during construction recorded on the Neil Simpson Unit #2 construction
project. Allowance for funds used during construction increased $910,000,
$1,768,000, and $1,993,000 for the three, nine, and twelve months ended
September 30, 1994 while interest expense increased $523,000, $665,000, and
$676,000, respectively.
Mining Operations
Mining revenue increased one percent for the three months ended and
decreased 8 percent and 4 percent for the nine and twelve month periods ended
September 30, 1994, compared to the same periods last year. Tons of coal
sold increased one percent for the three month period and decreased 11
percent and 9 percent for the nine and twelve month periods,
respectively. The Wyodak Plant was out of service for 35 days for
maintenance during the second quarter thereby reducing the tons of coal sold
significantly.
Mining operating expenses were relatively flat for the three month
period and decreased 8 percent and 5 percent for the nine and twelve
month periods ended September 30, 1994, primarily due to the decrease in tons
of coal sold offset by an increase in depreciation expense.
Non-operating income decreased $30,000, $166,000, and $200,000 for the
three, nine, and twelve months ended September 30, 1994, primarily due to a
decrease in interest income attributable to lower interest rates.
Oil and Gas Production Operations
Oil and gas production revenue which represents less than 10 percent of
consolidated revenue increased 2 percent, 5 percent, and 9 percent for the
three, nine, and twelve months ended September 30, 1994, directly related to
an increase in equivalent barrels of oil sold as a result of the Company's
1993 and 1994 drilling program offset by lower oil prices. Equivalent
barrels of oil sold increased 8 percent, 25 percent, and 34 percent for the
three, nine, and twelve month periods. A decrease in the price of oil offset
the impact of increased production.
Operating expenses were relatively flat for the three month period and
increased approximately 10 percent and 13 percent for the nine and twelve
months ended September 30, 1994, primarily due to an increase in depletion
expense resulting from the increase in production and lower oil prices.
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Six Months Twelve Months
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
(in thousands)
Operating revenues:
Electric $25,969 $22,854 $51,840 $47,494 $102,500 $98,545
Coal mining 5,354 7,065 12,533 14,384 27,971 29,194
Oil and gas 3,168 3,005 5,779 5,421 11,754 10,265
34,491 32,924 70,152 67,299 142,225 138,004
Operating expenses:
Fuel and purchased
power 11,720 8,965 21,714 17,494 40,840 37,650
Operations and
maintenance 6,949 7,903 13,868 15,577 29,090 31,018
Administrative and
general 1,553 1,999 3,519 4,392 7,434 8,437
Depreciation,
depletion,
and amortization 4,392 3,982 8,886 7,386 17,550 14,493
Taxes, other than
income taxes 2,366 2,282 4,976 4,675 10,110 8,718
26,980 25,131 52,963 49,524 105,024 100,316
Operating income:
Electric 5,057 4,479 11,661 11,090 24,554 24,421
Coal mining 1,966 2,804 4,929 5,729 11,560 11,744
Oil and gas 488 510 599 956 1,087 1,523
7,511 7,793 17,189 17,775 37,201 37,688
Other (income) and
expense:
Interest expense 2,331 2,246 4,477 4,411 8,883 9,009
Investment income (382) (430) (727) (848) (1,619) (2,658)
Allowance for funds
used during
construction (716) (65) (1,076) (218) (1,587) (432)
Other (91) (168) (22) (299) (195) (308)
1,142 1,583 2,652 3,046 5,482 5,611
Income before income
taxes 6,369 6,210 14,537 14,729 31,719 32,077
Income taxes (1,986) (1,635) (4,356) (4,051) (9,270) (8,931)
Net income available
for common stock $ 4,383 $ 4,575 $10,181 $10,678 $22,449 $23,146
Weighted average common
shares outstanding 14,324 13,709 14,305 13,707 14,107 13,701
Earnings per share $0.31 $0.33 $0.71 $0.78 $1.59 $1.69
Dividends paid per
share of common stock $0.33 $0.32 $0.66 $0.64 $1.30 $1.26
/TABLE
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Six Months Twelve Months
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
(in thousands)
Cash flows provided
from (used for)
operating activities:
Net Income $ 4,383 $ 4,575 $10,181 $10,678 $22,449 $23,146
Principal non-cash items-
Depreciation, depletion,
and amortization 4,392 3,982 8,886 7,386 17,550 14,493
Deferred income taxes
and investment tax
credits, net 450 45 653 151 1,544 916
Allowance for other funds
used during construction (401) (37) (563) (99) (797) (110)
(Increase) decrease in
receivables, inventories,
and other current assets (366) 115 (524) 246 (2,326) (299)
Increase (decrease) in
other current
liabilities (2,796) (7,620) (1,781) (7,989) 3,646 591
Other, net (306) 421 (1,150) 1,037 2,064 2,528
5,356 1,481 15,702 11,410 44,130 41,265
Cash flows provided from
(used for) investment
activities:
Neil Simpson Unit #2
construction costs,
excluding allowance for
other funds used during
construction (14,125) (769) (18,088) (1,407) (29,356) (2,587)
Other property additions,
excluding allowance for
other funds used during
construction (6,073) (6,913) (9,489) (10,592) (26,178) (26,540)
Short-term investments
purchased (7,500) (2,964) (15,025) (11,082) (35,548) (25,541)
Short-term investments
sold 10,624 4,350 16,141 11,796 27,832 30,156
Proceeds from sale of
long-term investments 851 - 5,066 - 19,797 -
(16,223) (6,296) (21,395) (11,285) (43,453) (24,512)
Cash flows provided from
(used for) financing
activities:
Dividends paid (4,724) (4,387) (9,436) (8,774) (18,381) (17,266)
Common stock issued 795 104 1,596 240 15,061 514
Increase (decrease) in
short-term notes 11,493 7,434 21,393 6,634 18,543 4,734
Long-term debt retired (8) (1,022) (2,250) (2,924) (3,492) (4,973)
7,556 2,129 11,303 (4,824) 11,731 (16,991)
Increase (decrease)
in cash and cash
equivalents (3,311) (2,686) 5,610 (4,699) 12,408 (238)
Cash and cash
equivalents:
Beginning of period 16,787 3,754 7,866 5,767 1,068 1,306
End of period $13,476 $ 1,068 $13,476 $ 1,068 $13,476 $ 1,068
Supplemental disclosure
of cash flow information
Cash paid during the
period for:
Interest $ 2,492 $ 3,188 $ 4,588 $ 4,818 $ 8,777 $ 9,089
Income taxes $ 4,025 $ 4,075 $ 4,025 $ 4,250 $ 7,950 $ 7,329
/TABLE
BLACK HILLS CORPORATION
Statements of Shareholders' Equity
(unaudited)
Three Months Six Months Twelve Months
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
(in thousands)
Common stock:
Beginning of period $ 14,307 $ 13,707 $ 14,270 $ 13,701 $ 13,711 $ 13,689
Issuance of $1 par
value shares 38 4 75 10 634 22
End of period 14,345 13,711 14,345 13,711 14,345 13,711
Additional paid-in
capital:
Beginning of period 44,184 30,414 43,420 30,284 30,514 30,022
Excess of proceeds
over par value of
stock issued 736 100 1,488 232 15,042 494
Expenses related to
issuance of stock 21 - 33 (2) (615) (2)
End of period 44,941 30,514 44,941 30,514 44,941 30,514
Retained earnings:
Beginning of period 111,485 106,888 110,399 105,172 107,076 101,196
Net income 4,383 4,575 10,181 10,678 22,449 23,146
Cash dividends on
common stock (4,724) (4,387) (9,436) (8,774) (18,381) (17,266)
End of period 111,144 107,076 111,144 107,076 111,144 107,076
Total shareholders'
equity $170,430 $151,301 $170,430 $151,301 $170,430 $151,301
See accompanying notes to consolidated financial statements.
/TABLE
BLACK HILLS CORPORATION
Notes to Consolidated Financial Statements
(Reference is made to Notes to Consolidated Financial Statements
included in the Company's Annual Report)
(1) Management's Statement
The financial statements included herein have been prepared by Black
Hills Corporation (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations; however, the
Company believes that the footnotes adequately disclose the information
presented. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto, included in
the Company's 1993 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
Accounting methods historically employed require certain estimates as of
interim dates. The information furnished in the accompanying financial
statements reflects all adjustments which are, in the opinion of management,
necessary for a fair presentation of the June 30, 1994, December 31, 1993,
and June 30, 1993, financial information and are of a normal recurring
nature. The results of operations for the three and six months ended June
30, 1994, are not necessarily indicative of the results to be expected for
the full year.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity, Capital Resources, and Commitments
In the past the Company has depended upon internally generated funds,
issuance of short and long-term debt, and sales of common stock to finance
its activities. It is expected future activities will also be financed by
the most appropriate mix of these various sources of funds.
The Company currently has bank lines of credit totaling $65,000,000
which provides for interim borrowings and the opportunity for timing of
permanent financing. At June 30, 1994, the Company had borrowings of
$33,050,000 outstanding under these lines of credit. There are no
compensating balance requirements associated with these lines of credit. The
Company pays a 0.125% facility fee on $50,000,000 of the existing lines.
Additional long-term financing will be needed in 1994 and 1995 to
finance Neil Simpson Unit #2, an 80 MW coal-fired generating plant, located
adjacent to Wyodak Resources Development Corp.'s coal mine. The Company
estimates that approximately $87,000,000 of debt and $3,500,000 of additional
equity will need to be issued for the new plant.
The Company filed a Form S-3, shelf registration for $100,000,000 first
mortgage bonds, with the Securities and Exchange Commission on June 28, 1994.
The registration statement became effective on July 13, 1994. The Company
has not issued any bonds from this filing as of the date of this report,
however they intend to in 1994 and 1995. The bonds will be used to finance
Neil Simpson Unit #2 and to possibly refund some existing bonds. The Company
also issued $3,000,000, City of Gillette, Campbell County, Wyoming,
Environmental Improvement Revenue Bonds on June 15, 1994. The proceeds from
the issue are currently held in a project fund to be disbursed to the Company
periodically to reimburse expenditures on certain facilities under
construction on Neil Simpson Unit #2. The bonds carry a variable rate of
interest which is currently set weekly. The Company plans to raise the
additional equity through the Company's Employee Stock Purchase Plan and
Dividend Reinvestment Plan. These additional financings are expected to
increase the debt component of the Company's capital structure from 33
percent at June 30, 1994, to approximately 45 percent to 48 percent by 1996.
Total construction costs of the plant are estimated at $124,889,000.
The Company has incurred approximately $33,300,000 of costs related to the
plant and such costs are reflected in the Company's Balance Sheet at June 30,
1994. The plant will be fueled by coal from the Wyodak mine, air cooled, and
is expected to meet all Clean Air Act requirements. Construction commenced
at the plant site in August 1993 and is scheduled to be completed by the end
of 1995.
Results of Operations
Black Hills Corporation is an energy services company consisting of
three principal businesses: electric, coal mining, and oil and gas
production.
Consolidated income was $4,383,000 for the three months ended,
$10,181,000 for the six months ended, and $22,449,000 for the twelve months
ended June 30, 1994, a decrease of $192,000, $497,000, and $697,000 for the
three, six, and twelve month periods, respectively.
The decrease in earnings for the second quarter was primarily due to a
$671,000 decrease in earnings from the coal mining operations. The Wyodak
Plant was out of service for 35 days for maintenance during the second
quarter thereby reducing the tons of coal sold by approximately 200,000 tons.
Earnings from the electric operations increased $474,000 due to an increase
in firm kilowatthour sales and allowance for funds used during construction.
The earnings from the oil and gas operations were relatively flat for the
quarter.
The decrease in earnings for the six and twelve months ended June 30,
1994, was due to the Wyodak Plant maintenance overhaul and an increase in
depreciation, depletion, and interest expense resulting from an increase in
capital expenditures and low oil prices. Interest income decreased due to a
decrease in the amount of cash available for investments.
Consolidated revenue and income from continuing operations provided by
the three businesses as a percentage of the total were as follows:
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
Revenue
Electric 75% 69% 74% 71% 72% 72%
Coal mining 16 22 18 21 20 21
Oil and gas 9 9 8 8 8 7
100% 100% 100% 100% 100% 100%
Net Income
Electric 49% 37% 55% 46% 53% 50%
Coal mining 43 55 43 48 44 46
Oil and gas 8 8 2 6 3 4
100% 100% 100% 100% 100% 100%
Capital expenditures and depreciation, depletion, and amortization by
industry segment were as follows:
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
(in thousands)
Capital Expenditures
(includes AFDC)
Neil Simpson
Unit #2 $14,434 $ 769 $18,549 $ 1,407 $29,935 $ 2,587
Other electric 3,654 4,792 5,491 6,750 11,881 17,639
Coal mining (201) 760 487 1,115 6,797 4,893
Oil and gas 2,711 1,398 3,612 2,826 7,718 4,118
$20,598 $7,719 $28,139 $12,098 $56,331 $29,237
Depreciation,
Depletion, and
Amortization
Electric $2,557 $2,493 $5,146 $4,930 $10,167 $ 9,756
Coal mining 560 457 1,133 918 2,168 1,615
Oil and gas 1,275 1,032 2,607 1,538 5,215 3,122
$4,392 $3,982 $8,886 $7,386 $17,550 $14,493
Electric Operations
Electric revenue increasedBLACK HILLS CORPORATION
Part II - Other Information
Item 1. Legal Proceedings
There are no legal proceedings to be reported on for the quarter
ended September 30, 1994.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
The Registrant filed a Form 8-K on August 16, 1994,
announcing the formation of a new subsidiary named WYGEN, an exempt wholesale
generator.
The Registrant filed a Form 8-K on September 2, 1994,
reporting the issuance and sale of $45,000,000 First Mortgage Bonds,
Series AB, 8.3 percent, due September 1, 2024 under a Registration Statement
on Form S-3 (Registration No. 33-54329).
The Registrant filed a Form 8-K on September 12, 1994,
reporting the Company entered into a Power Integration Agreement with
Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc. The
Agreement provides that for a period of 10 years commencing January 1, 1997,
the Company will supply all electric power and energy required by MDU for its
electric service area in and around Sheridan, Wyoming.
BLACK HILLS CORPORATION
Signatures
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.
BLACK HILLS CORPORATION
/s/ Dale E. Clement
Dale E. Clement, Senior Vice President-Finance
(Principal Financial Officer)
/s/ Gary R. Fish
Gary R. Fish, Controller
(Principal Accounting Officer)
Dated: November 14, percent, 9 percent, and 4 percent for the
three, six, and twelve months ended June 30, 1994, respectively, due to an
increase in purchased power costs flowed through to the electric customers
and an increase in firm kilowatthour sales. Firm kilowatthour sales
increased two percent in the second quarter and one percent for the six and
twelve month periods. Purchased power expense was abnormally low in 1993 due
to a refund received on the Colstrip purchased power contract which was
flowed back to customers in 1993.
Electric expenses increased 14 percent, 10 percent, and 5 percent for
the three, six, and twelve months ended June 30, 1994, compared to the same
periods last year. The increase in expenses was primarily due to the
increase in purchased power costs, depreciation, and property taxes offset by
a decrease in operations, maintenance, and administrative and general
expenses.
Non-operating income increased for the three, six, and twelve months
ended June 30, 1994, primarily due to the allowance for funds used during
construction recorded on the Neil Simpson Unit #2 construction project.
Mining Operations
Mining revenue decreased 24 percent, 13 percent, and 4 percent for the
three, six, and twelve month periods ended June 30, 1994, compared to the
same periods last year. Tons of coal sold decreased 28 percent, 17 percent,
and 9 percent for the three, six, and twelve month periods, respectively.
The Wyodak Plant was out of service for 35 days for maintenance during the
second quarter thereby reducing the tons of coal sold significantly.
Mining operating expenses decreased 21 percent, 13 percent, and 6
percent for the three, six, and twelve month periods ended June 30, 1994,
primarily due to the decrease in tons of coal sold.
Non-operating income decreased $38,000, $339,000, and $817,000 for the
three, six, and twelve months ended June 30, 1994, primarily due to a
decrease in interest income attributable to lower interest rates.
Oil and Gas Production Operations
Oil and gas production revenue which represents less than 10 percent of
consolidated revenue increased 5 percent, 6 percent, and 15 percent for the
three, six, and twelve months ended June 30, 1994, directly related to an
increase in equivalent barrels of oil sold as a result of the Company's 1993
and 1994 drilling program offset by lower oil prices. Equivalent barrels of
oil sold increased 29 percent, 38 percent, and 54 percent for the three, six,
and twelve month periods. A decrease in the price of oil offset the impact
of increased production.
Operating expenses increased approximately 7 percent, 16 percent, and 22
percent for the three, six, and twelve months ended June 30, 1994, primarily
due to an increase in depletion expense resulting from the increase in
production and lower oil prices.
BLACK HILLS CORPORATION
Part II - Other Information
Item 1. Legal Proceedings
There are no legal proceedings to be reported on for the quarter
ended June 30, 1994.
Item 4. Submission of Matters to a Vote of Security-Holders
This item was reported on Form 8-K filed June 7, 1994.
Item 5. Other Information
The registrant had the City of Gillette, Wyoming, issue
$3,000,000 of environmental improvement revenue bonds dated as of June 15,
1994. Pursuant to the terms of a Loan Agreement, dated June 1, 1994, the
Registrant is obligated to make payments at such times and in such amounts as
shall be required to pay the principal of, premium, if any, and interest on
the bonds. The proceeds of the issue are deposited in a project fund to be
disbursed to the Registrant periodically to reimburse it for the cost to
finance certain facilities under construction on Neil Simpson Unit #2, an 80
MW coal fired power plant, currently under construction near Gillette in
Campbell County, Wyoming. The total proceeds of $3,000,000 were in the
project fund on June 30, 1994.
The Registrant also filed a Form S-3, shelf registration for
$100,000,000 first mortgage bonds, with the Securities and Exchange
Commission on June 28, 1994. The registration statement became effective on
July 13, 1994. The Company has not issued any bonds from this filing as of
the date of this report, however they intend to in 1994 and 1995. The bonds
will be used to finance Neil Simpson Unit #2 and to possibly refund some
existing bonds.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
The Registrant filed a Form 8-K on June 7, 1994, reporting
the items voted on at the Annual Meeting of Shareholders.
BLACK HILLS CORPORATION
Signatures
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.
BLACK HILLS CORPORATION
/s/ Dale E. Clement
Dale E. Clement, Senior Vice President-Finance
(Principal Financial Officer)
/s/ Gary R. Fish
Gary R. Fish, Controller
(Principal Accounting Officer)
Dated: August 12, 1994