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 March 31,June 30, 1995.
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 April 30,July 31, 1995
Common stock, $1.00 par value 14,399,49914,408,754 shares
BLACK HILLS CORPORATION
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets- 2-3
March 31,June 30, 1995, December 31, 1994,
and March 31,June 30, 1994
Consolidated Statements of Income- 4
Three, Six, and Twelve Months
Ended March 31,June 30, 1995 and 1994
Consolidated Statements of Cash Flows- 5-65
Three, Six, and Twelve Months
Ended March 31,June 30, 1995 and 1994
Consolidated Statements of Shareholders' Equity- 76
Three, Six, and Twelve Months Ended
March 31,June 30, 1995 and 1994
Notes to Consolidated Financial Statements 87
Item 2. Management's Discussion and Analysis of 8-107-10
Financial Position and Consolidated
Statements of Earnings
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
March 31June 30 December 31 March 31June 30
1995 1994 1994
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 4,1644,567 $ 12,174 $ 16,787
Short-term investments 18,22513,476
Securities available for sale 10,263 24,134 26,22523,101
Receivables-
Customers 12,66110,537 12,409 10,93112,306
Other 2,5222,446 4,045 2,5242,052
Materials, supplies,
and fuel 7,5527,619 7,139 7,0136,726
Prepaid expenses 1,2861,273 1,564 1,4091,160
-------- -------- --------
46,41036,705 61,465 64,88958,821
-------- -------- --------
Property and investments:
Electric 442,671455,399 425,690 347,805365,614
Coal mining 51,06151,139 52,267 52,35752,157
Oil and gas 36,02237,072 38,842 32,99335,527
Other 3,2543,312 2,785 3,4002,700
-------- -------- --------
533,008546,922 519,584 436,555455,998
Less accumulated depreciation
and depletion (158,442)(162,764) (156,046) (148,704)(152,551)
-------- -------- --------
Net property and
investments 374,566384,158 363,538 287,851303,447
-------- -------- --------
Deferred charges:
Federal income taxes 7,6797,678 7,505 7,3177,314
Other 4,9045,060 4,369 3,4073,755
-------- -------- --------
12,58312,738 11,874 10,72411,069
-------- -------- --------
Total $433,559$433,601 $436,877 $363,464$373,337
======== ======== ========
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
March 31June 30 December 31 March 31June 30
1995 1994 1994
(in thousands)
Liabilities and Capitalization
Current liabilities:
Current maturities of
long-term debt $ 2,0422,034 $ 2,144 $ 2,0902,089
Notes payable 2,2183,568 37,018 21,66833,161
Accounts payable 9,1318,642 12,018 6,2577,746
Accrued liabilities-
Income taxes 2,604469 572 2,81848
Other taxes 6,9645,771 5,759 6,6715,289
Interest 2,8333,642 2,795 2,2001,589
Fuel and purchased
power refunds 1,1751,325 1,025 1,200975
Other 6,4036,284 7,101 6,0856,788
-------- -------- -------
33,370--------
31,735 68,432 48,98957,685
-------- -------- ---------------
Deferred credits:
Federal income taxes 40,95541,385 39,953 36,58137,154
Investment tax credits 5,3965,270 5,521 5,9015,774
Reclamation costs 7,7617,928 7,618 7,4417,550
Regulatory liability 6,6936,699 6,925 6,912
Other 4,2064,439 4,093 3,1803,355
-------- -------- -------
65,011--------
65,721 64,110 60,01560,745
-------- -------- ---------------
Capitalization:
Common stock equity-
Common stock 14,40014,409 14,386 14,30714,345
Additional paid-in
capital 45,95146,099 45,740 44,18444,941
Retained earnings 116,459117,275 115,284 111,485111,144
-------- -------- --------
Total common stock equity 176,810177,783 175,410 169,976170,430
Long-term debt 158,368158,362 128,925 84,48484,477
-------- -------- --------
335,178336,145 304,335 254,460254,907
-------- -------- --------
Total $433,559$433,601 $436,877 $363,464$373,337
======== ======== ========
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Six Months Twelve Months
March 31 March 31June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating revenues:
Electric $26,023 $25,870 $104,909 $ 99,385$23,990 $25,969 $50,013 $51,840 $102,929 $102,500
Coal mining 6,939 7,179 28,353 29,6827,797 5,354 14,736 12,533 30,797 27,971
Oil and gas 2,977 2,611 12,419 11,5912,816 3,168 5,794 5,779 12,068 11,754
------- ------- -------- --------
35,939 35,660 145,681 140,658
------- ------- -------- --------------- -------
34,603 34,491 70,543 70,152 145,794 142,225
------- ------- ------- ------- ------- -------
Operating expenses:
Fuel and purchased
power 10,027 9,994 42,002 37,9619,743 11,720 19,770 21,714 40,025 40,840
Operations &and
maintenance 6,306 6,917 28,092 29,8806,540 6,949 12,870 13,868 27,705 29,090
Administrative and
general 2,704 1,967 8,657 7,9351,799 1,553 4,478 3,519 8,881 7,434
Depreciation,
depletion,
and amortization 4,747 4,493 17,930 17,1394,900 4,392 9,648 8,886 18,437 17,550
Taxes, other than
income taxes 2,652 2,610 10,422 10,2592,719 2,366 5,372 4,976 10,775 10,110
------- ------- ------- ------- 26,436 25,981 107,103 103,174------- -------
25,701 26,980 52,138 52,963 105,823 105,024
------- ------- ------- ------- ------- -------
Operating income:
Electric 6,245 6,605 24,717 23,9764,946 5,057 11,190 11,661 24,606 24,554
Coal mining 2,918 2,963 11,776 12,3983,537 1,966 6,456 4,929 13,348 11,560
Oil and gas 340 111 2,085 1,110419 488 759 599 2,017 1,087
------- ------- ------- ------- 9,503 9,679 38,578 37,484------- -------
8,902 7,511 18,405 17,189 39,971 37,201
------- ------- ------- ------- ------- -------
Other (income) and
expense:
Interest expense 3,566 2,147 11,758 8,7983,448 2,331 7,015 4,477 12,875 8,883
Investment income (400) (347) (1,684) (1,668)(261) (382) (661) (727) (1,571) (1,619)
Allowance for funds
used during
construction (2,296) (360) (5,919) (935)(2,530) (716) (4,826) (1,076) (7,732) (1,587)
Other (69) 68 (308) (273)(50) (91) (120) (22) (260) (195)
------- ------- ------- ------- 801 1,508 3,847 5,922------- -------
607 1,142 1,408 2,652 3,312 5,482
------- ------- ------- ------- ------- -------
Income before income
taxes 8,702 8,171 34,731 31,5628,295 6,369 16,997 14,537 36,659 31,719
Income taxes (2,703) (2,371) (10,726) (8,920)(2,653) (1,986) (5,355) (4,356) (11,394) (9,270)
------- ------- -------- --------------- ------- ------- -------
Net income available
for common stock $ 5,9995,642 $ 5,800 $ 24,005 $ 22,6424,383 $11,642 $10,181 $25,265 $22,449
======= ======= ======== =============== ======= ======= =======
Weighted average common
shares outstanding 14,395 14,275 14,366 13,954
======= ======= ======== ========14,405 14,324 14,400 14,305 14,386 14,107
Earnings per share $ 0.42 $ 0.41 $ 1.67 $ 1.62
======= ======= ======== ========$0.39 $0.31 $0.81 $0.71 $1.76 $1.59
Dividends paid per
share of common stock $ 0.335 $ 0.330 $ 1.325 $ 1.290
======= ======= ======== ========
See accompanying notes to consolidated financial statements.$0.335 $0.330 $0.670 $0.660 $1.330 $1.300
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Six Months Twelve Months
March 31 March 31June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating activities:
Net Income $ 5,9995,642 $ 5,800 $24,005 $22,6424,383 $11,642 $10,181 $25,265 $22,449
Principal non-cash items-
Depreciation, depletion,
and amortization 4,747 4,493 17,930 17,1394,900 4,392 9,648 8,886 18,437 17,550
Deferred income taxes
and investment tax
credits, net 469 204 2,737 1,139179 450 522 653 2,088 1,544
Allowance for other funds
used during construction (1,419) (162) (3,610) (434)(1,564) (401) (2,982) (563) (4,791) (797)
(Increase) decrease in
receivables, inventories,
and other current assets 1,137 (158) (2,144) (1,845)2,146 (366) 3,283 (524) 369 (2,326)
Increase (decrease) in
other current
liabilities (161) 1,015 3,879 (1,178)(2,977) (2,796) (3,138) (1,781) 3,698 3,646
Other, net 1,714 (484) 8,295 3,155242 (306) 2,081 (1,150) 9,222 2,064
------- ------- ------- ------- 12,486 10,708 51,092 40,618------- -------
8,568 5,356 21,056 15,702 54,288 44,130
------- ------- ------- ------- ------- -------
Investment activities:
Neil Simpson Unit #2
construction costs,
excluding allowance for
other funds used during
construction (13,567) (4,302) (81,558) (16,339)(8,188)(14,125) (21,756) (18,088) (75,622) (29,356)
Other property additions,
excluding allowance for
other funds used during
construction (3,091) (3,437) (28,426) (27,039)
Short-term investments(4,606) (6,073) (7,697) (9,489) (26,941) (26,178)
Securities available
for sale purchased (7,835) (7,525) (41,419) (31,012)
Short-term investments(599) (7,500) (8,434) (15,025) (35,332) (35,548)
Securities available
for sale sold 13,744 5,517 49,419 21,5588,561 10,624 22,305 16,141 48,170 27,832
Proceeds from sale of
long-term investments - 851 311 4,215 1,054 18,9465,066 203 19,797
------- ------ -------- ------- (10,438) (5,532) (100,930) (33,886)
------- ------ --------------- ------- -------
(4,832)(16,223) (15,271) (21,395) (89,522) (43,453)
------- ------- ------- ------- ------- -------
Financing activities:
Dividends paid (4,824) (4,714) (19,031) (18,047)(4,826) (4,724) (9,651) (9,436) (19,134) (18,381)
Common stock issued 225 801 1,860 14,370157 795 382 1,596 1,222 15,061
Net short-term borrowings (34,800) 9,900 (19,450) 14,4841,350 11,493 (33,450) 21,393 (29,593) 18,543
Long-term debt issued 31,650 - 77,445- 31,644 - 77,439 -
Long-term debt retired (2,309) (2,242)(14) (8) (2,317) (2,250) (3,609) (4,506)
------- ------(3,492)
------- ------- (10,058) 3,745 37,215 6,301
------- ------------- ------- -------
(3,333) 7,556 (13,392) 11,303 26,325 11,731
------- ------- ------- ------- ------- -------
Increase (decrease)
in cash and cash
equivalents (8,010) 8,921 (12,623) 13,033403 (3,311) (7,607) 5,610 (8,909) 12,408
Cash and cash
equivalents:
Beginning of period 4,164 16,787 12,174 7,866 16,787 3,75413,476 1,068
------- ------- ------- ------- ------- -------
End of period $ 4,164 $16,7874,567 $13,476 $ 4,164 $16,7874,567 $13,476 $ 4,567 $13,476
======= ======= ======= ======= ======= =======
Supplemental disclosure
of cash flow information
Cash paid during the
period for:
Interest $ 3,5272,639 $ 1,647 $11,1252,942 $ 9,3006,168 $ 4,588 $10,822 $ 8,777
Income taxes $ 2,2201,925 $ -4,025 $ 9,5104,145 $ 7,825
See accompanying notes to consolidated financial statements.4,025 $ 7,410 $ 7,950
BLACK HILLS CORPORATION
Statements of Shareholders' Equity
(unaudited)
Three Months Six Months Twelve Months
March 31 March 31June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Common stock:
Beginning of period $ 14,400 $ 14,307 $ 14,386 $ 14,270 $ 14,30714,345 $ 13,70713,711
Issuance of $1 par
value shares 14 37 93 6009 38 23 75 64 634
-------- -------- -------- -------- -------- --------
End of period 14,400 14,307 14,400 14,30714,409 14,345 14,409 14,345 14,409 14,345
-------- -------- -------- -------- -------- --------
Additional paid-in
capital:
Beginning of period 45,951 44,184 45,740 43,420 44,184 30,41444,941 30,514
Excess of proceeds
over par value of
stock issued 211 753 1,811 14,406149 736 361 1,488 1,224 15,042
Expenses related to
issuance of stock - 11 (44) (636)(1) 21 (2) 33 (66) (615)
-------- -------- -------- ------- -------- --------
End of period 46,099 44,941 46,099 44,941 46,099 44,941
-------- -------- -------- ------- -------- --------
Retained earnings:
Beginning of period 116,459 111,485 115,284 110,399 111,144 107,076
Net income 5,642 4,383 11,642 10,181 25,265 22,449
Cash dividends on
common stock (4,826) (4,724) (9,651) (9,436) (19,134) (18,381)
-------- -------- -------- -------- -------- --------
End of period 45,951 44,184 45,951 44,184117,275 111,144 117,275 111,144 117,275 111,144
-------- -------- -------- --------
Retained earnings:
Beginning of period 115,284 110,399 111,485 106,890
Net income 5,999 5,800 24,005 22,642
Cash dividends on
common stock (4,824) (4,714) (19,031) (18,047)
-------- -------- -------- --------
End of period 116,459 111,485 116,459 111,485 -------- -------- -------- --------
Total shareholders'
equity $176,810 $169,976 $176,810 $169,976$177,783 $170,430 $177,783 $170,430 $177,783 $170,430
======== ======== ======== ======== ======== ========
See accompanying notes to consolidated financial statements.
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 1994 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement
imposes stricter criteria for regulatory assets by requiring that such assets
be probable of future recovery at each balance sheet date. The Company
anticipates adopting this standard on January 1, 1996, and does not expect
that adoption will have a material impact on the financial position or
results of operations of the Company based on the current regulatory
structure in which the Company operates.
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 March 31,June 30, 1995, December 31, 1994,
and March 31,June 30, 1994, financial information and are of a normal recurring
nature. The results of operations for the three and six months ended March 31,June
30, 1995, 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 $45,000,000$41,000,000
which provides for interim borrowings and the opportunity for timing of
permanent financing. At March 31,June 30, 1995, the Company had borrowings of
$2,175,000$3,525,000 outstanding under these lines of credit. There are no
compensating balance requirements associated with these lines of credit.
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,
and
$30,000,000 of bonds on February 3, 1995 and $15,000,000 on July 14, 1995.
The $30,000,000 bond issue has a 15 year life, and carries an 8.06 percent
interest rate. Therate, and the bondholders have a one-time option to cause the
Company to redeem the bonds.bonds on February 1, 2002. The $15,000,000 bond issue
has a 7 year life and carries a 6.50 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.'sCorp's coal mine. Management believes that thisThis
issue will complete the long-term debt financing associated with Neil
Simpson Unit #2. The remaining expenditures
related to the project will be financed by existing cash balances, short-term
investments, and short-term lines of credit.
Construction of the Plant is proceeding ahead of schedule and costs
incurred to date are under the initial project budget. Total construction
costs of the plant are estimated to be approximately $121,000,000. The
Company has incurred approximately $104,000,000$113,000,000 of costs related to the plantPlant
and such costs are reflected in the Company's Balance Sheet at March 31,June 30, 1995.
The plant will be fueled by coal fromOn June 30, 1995, the Wyodak mine, air cooled, and
is expected to meet all Clean Air Act requirements. Construction commenced
at the plant siteCompany was authorized a 6.76 percent overall
increase in August 1993 and is scheduledits electric rates to be completed bycharged to its South Dakota customers
beginning August 1, 1995. Based on test year ended September 30, 1994,
this increase would result in additional annual revenues from South Dakota
customers of approximately $5,725,000. The settlement also stated that
unless a specified extraordinary event occurs, the Company will not file for
an increase in rates or invoke any fuel and purchased power automatic
adjustment tariff to take effect during a freeze period ending January 1,
2000. (For further information see the Company's Form 8-K dated June 30,
1995.)
The Company and the City of Gillette, Wyoming, the Company's only firm
power wholesale customer, representing approximately 7 percent of the
Company's total electric sales have agreed to a new contract providing for
rate increases commencing September 1, 1995.1995, as reported in the 1994 Form
10-K Annual Report to Shareholders. The Company filed applications withGillette contract is subject to
approval by the South Dakota Public Utilities
Commission andFederal Energy Regulatory Commission.
Action by the Wyoming Public Service Commission duringis pending on the
first quarterCompany's application for a rate increase for the Company's Wyoming retail
customers, representing approximately 7 percent of 1995, requesting authority to increase rates approximately 9.96% when Neil
Simpson Unit #2 begins commercial operation, scheduled to occurthe Company's total
electric sales. The Company expects final resolution of the Wyoming
application before September 1, 1995. Rate hearings have been scheduled for July 17-19 in South Dakota and
August 14-15 in Wyoming. See the Company's 1994 Annual Report on Form 10-K
for more information on the Rate Applications.
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 $5,999,000$5,642,000 for the three months ended,
$11,642,000 for the six months ended, and $24,005,000$25,265,000 for the twelve months
ended March 31,June 30, 1995, an increase of $199,000$1,259,000, $1,461,000, and $1,363,000$2,816,000
for the three, six, and twelve month periods, respectively.
The 29 percent increase in consolidated net income for the firstsecond
quarter was primarily due tothe result of a $365,000$627,000 increase in electric earnings and a
$698,000 increase in coal mining earnings offset by a $66,000 decrease in
earnings from the oil and gas operations. The increase in earningsEarnings increased 14 percent for
the six month period and 13 percent for the twelve month period waswith all
three industry segments contributing to the result of increased electric and oil and gas earnings caused by increased
electric sales and an increase in oil and gas production.increase.
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
March 31 March 31June 30 June 30 June 30
1995 1994 1995 1994 Revenue1995 1994
Revenue
Electric 73% 73%69% 75% 71% 74% 71% 72% 71%
Coal mining 1923 16 21 18 21 20 19 21
Oil and gas 8 7 9 8 8 8 8
--- --- --- --- --- ---
100% 100% 100% 100% 100% 100%
=== === === === === ===
Net Income
Electric 56% 59%50% 49% 53% 50%55% 53% 53%
Coal mining 4045 43 43 43 41 4744
Oil and gas 5 8 4 (2)2 6 3
--- --- --- --- --- ---
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
March 31 March 31June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Capital Expenditures
(includes AFDC)
Neil Simpson
Unit #2 $14,942 $4,454 $ 84,808 $16,6089,690 $14,434 $24,632 $18,549 $ 80,064 $29,935
Other electric 2,039 1,859 14,391 13,0403,560 3,654 5,600 5,491 14,297 11,881
Coal mining 103 687 5,326 7,75881 (201) 183 487 5,608 6,797
Oil and gas 993 901 9,069 6,4061,027 2,711 2,020 3,612 7,385 7,718
------- ------------- ------- ------- -------- -------
$18,077 $7,901 $113,594 $43,812$14,358 $20,598 $32,435 $28,139 $107,354 $56,331
======= ============= ======= ======= ======== =======
Depreciation,
Depletion, and
Amortization
Electric $2,644 $2,588 $10,370 $10,103$2,661 $2,557 $ 5,305 $ 5,146 $10,473 $10,167
Coal mining 906 573 2,836 2,0651,090 560 1,997 1,133 3,366 2,168
Oil and gas 1,197 1,332 4,724 4,9711,149 1,275 2,346 2,607 4,598 5,215
------ ------ ------- ------- $4,747 $4,493 $17,930 $17,139------- -------
$4,900 $4,392 $ 9,648 $ 8,886 $18,437 $17,550
====== ====== ======= ======= ======= =======
Electric Operations
Electric revenue increased 0.6decreased 8 percent and 64 percent for the three and six
months ended and increased 0.4 percent for the twelve months ended March 31, 1995, respectively. RevenueJune 30,
1995. Electric revenue for the three and six month period was relatively flat dueperiods decreased as a
result of a decrease in fuel and purchased power expense that is passed on to
flatthe customer through the automatic fuel and purchased power adjustment clause
offset by a 2.3 percent and 1.1 percent increase in firm kilowatthour sales.
The flat
kilowatthour sales wereWyodak Plant was down for maintenance during the result of mild weather. Degree days, which is a
measure of weather trends were 10 percent below normal for the firstsecond quarter of 1995 and 9 percent below last year. The1994
causing an increase in electricpurchased power costs. Electric revenue for the
twelve month period was theincreased as a result of a 33.1 percent increase in firm
kilowatthour salessales.
Electric expenses decreased 9 percent and an increase in purchased power expense. Purchased
power expense was abnormally low3 percent for the three and
six months ended and increased 0.5 percent for the twelve months ended March 1994 due
to a refund received on the Colstrip purchased power contract which was
flowed back to customers in 1993.
Electric expenses increased 3 percent and 6 percent for the three and
twelve months ended March 31,June
30, 1995, compared to the same periods last year. The increasedecrease in expenses
was primarily due to a decrease in purchased power costs offset by an
increase in administrative and general expenses for both periods and an increase in purchased power cost
for the twelve month period.expenses.
Non-operating income increased for the three, six, and twelve months
ended March 31,June 30, 1995, 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 $1,936,000$1,814,000,
$3,750,000, and $4,984,000$6,145,000 for the three, six, and twelve months ended March 31,June
30, 1995, while interest expense increased $1,392,000$1,118,000, $2,510,000, and
$3,052,000,$4,041,000, respectively.
Mining Operations
Mining revenue decreased 3increased 46 percent, 18 percent, and 410 percent for the
three, six, and twelve month periods ended March 31,June 30, 1995, compared to the
same periods last year. Tons of coal sold decreased 6increased 49 percent, 18 percent,
and 79 percent for the three, six, and twelve month periods, respectively.
The Wyodak Plant was out of service for maintenance for 13 days during the first quarter of 1995 and 35 days during the
second quarter of 1994 thereby reducing the tons of coal sold significantly.
Mining operating expenses decreased 6increased 24 percent, 7 percent, and 5 percent
for the three, six, and twelve month periods ended March 31,June 30, 1995, primarily
due to the decreaseincrease in tons of coal sold offset byand an increase in depreciation
expense.
Non-operating income increased $256,000 and $226,000 for the three and
twelve months ended March 31, 1995.
Oil and Gas Production Operations
Oil and gas production revenue which represents less than 10 percent of
consolidated revenue increased 14 percent and 7decreased 11 percent for the three months ended and
increased 0.3 percent and 3 percent for the six and twelve months ended March 31,June
30, 1995, directly related to a decrease in gas prices offset by an increase
in equivalent barrels of oil sold as a result of the Company's 1993 and 1994
drilling program, along with an increase in oil prices.
Equivalent barrels
of oil sold increased 31 percent and 29 percent for the three and twelve
month periods.
Operating expenses increaseddecreased 11 percent, 3 percent, and 6 percent for
the three, six, and twelve month period and
decreased 1 percent for the twelve monthsperiods ended March 31,June 30, 1995, due to the
increase in production offset by lower
depletion expense.
BLACK HILLS CORPORATION
Part II - Other Information
Item 1. Legal Proceedings
The Company and PacifiCorp have reached agreement in principle
to settle a claim filed a complaint withby the Company on May 2, 1995 against PacifiCorp
before the Federal Energy Regulatory Commission seeking refunds related(FERC). In the filing the
Company alleged that since 1987 PacifiCorp has overcharged the Company for
electric capacity delivered under the Power Sales Agreement, dated
December 31, 1983 (Agreement). The settlement will result in a reduction
in electric capacity costs paid by the Company to alleged overbillings by PacifiCorp under a 40the
Agreement commencing July 1, 1995 of approximately $490,000 each year contractand
continuing for the remaining 23 years during which capacity payments are
due. In addition the Company and PacifiCorp will enter into contracts
under which (i) the Company will sell to PacifiCorp any excess nonfirm
energy generated by the Company from September 1, 1995 through December 31,
2000; (ii) the Company will be granted an option to be exercised every
6 months for 10 years to purchase from PacifiCorp up to 60 MW of power.peaking
capacity; and (iii) the Company will have an option to be exercised from
time to time during a five-year period ending December 31, 2000 to bank
energy with PacifiCorp with the right to draw on the banked energy during
scheduled and forced outages of the Wyodak and Neil Simpson Unit #2 electric
generating plants. The complaint requests
a refund of approximately $3,936,000 plus interest of $1,630,000 related to
prior periods and a 2.5% reduction of future costs or $492,000 per year forCompany believes the settlement will have some
favorable impact on earnings during the next 24five years, underbut the contract. The overbillings relate to income tax
benefitsextent of
the benefit will depend on general business conditions, including the
Company's electric load and market value of nonfirm energy during that
the Company alleges havefive-year period. A definitive settlement agreement has not been properly reflected indrafted,
and any such agreement is subject to approval or acceptance by the calculation of contract costs. This matter will not impact the earnings of
the Company because the Company is obligated, if successful, to return any
refunds related to this complaint to its customers under existing fuel and
purchase power adjustment tariffs.FERC.
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 February 3,June 1, 1995, reporting
the items voted on at the Annual Meeting of Shareholders.
The Registrant filed a Form 8-K on June 30, 1995, reporting
the settlement reached on the South Dakota rate case.
The Registrant filed a Form 8-K on July 17, 1995, reporting
the issuance and sale of $30,000,000$15,000,000 First Mortgage Bonds, Series AC, 8.06AD, 6.50
percent, due February 1, 2010July 15, 2002, under a Registration Statement on Form S-3
(Registration No. 33-54329).
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-FinanceRoxann R. Basham
Roxann R. Basham, Secretary and Treasurer
(Principal Financial Officer)
/s/Gary R. Fish
Gary R. Fish, Controller
(Principal Accounting Officer)
Dated: May 10,August 11, 1995