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