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, 1997.
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, 1997
Common stock, $1.00 par value 14,461,46414,466,113 shares
BLACK HILLS CORPORATION
I N D E X
Page
NUMBERNumber
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets- 2-3
JuneSeptember 30, 1997, December 31, 1996
and JuneSeptember 30, 1996
Consolidated Statements of Income- 4
Three, SixNine and Twelve Months
Ended JuneSeptember 30, 1997 and 1996
Consolidated Statements of Cash Flows- 5
Three, SixNine and Twelve Months
Ended JuneSeptember 30, 1997 and 1996
Consolidated Statements of Shareholders' Equity- 6
Three, SixNine and Twelve Months Ended
JuneSeptember 30, 1997 and 1996
Notes to Consolidated Financial Statements 77-8
Item 2. Management's Discussion and Analysis of 8-109-11
Financial Position and Consolidated
StatementsResults of EarningsOperations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 1112
Item 6. Exhibits and Reports on Form 8-K 1112
Signatures 1213
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
June 30 December 31 June 30
1997 1996 1996
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 14,204 $ 13,340 $ 3,767
Securities available for sale 18,211 11,458 10,598
Receivables, net
Customers 11,636 12,961 11,092
Other 2,652 2,727 7,637
Materials, supplies,
and fuel 7,834 7,861 7,508
Prepaid expenses 688 2,650 775
-------- -------- --------
55,225 50,997 41,377
-------- -------- --------
Property and investments:
Electric 493,372 479,237 473,295
Coal mining 52,838 53,200 44,668
Oil and gas 49,291 45,336 42,991
Other 4,301 3,764 3,664
-------- -------- --------
599,802 581,537 564,618
Less accumulated depreciation
and depletion (200,189) (181,103) (174,836)
-------- -------- --------
Net property and
investments 399,613 400,434 389,782
-------- -------- --------
Deferred charges:
Federal income taxes 8,110 7,972 7,620
Regulatory asset 3,476 3,176 2,876
Other 4,931 4,775 4,544
-------- -------- --------
16,517 15,923 15,040
-------- -------- --------
Total $471,355 $467,354 $446,199
======== ======== ========
BLACK HILLS CORPORATION
Consolidated Balance Sheets
Unaudited Unaudited
September 30 December 31 September 30
1997 1996 1996
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 11,200 $ 13,340 $ 7,529
Securities available for sale 14,579 11,458 10,685
Receivables, net
Customers 43,696 12,961 12,177
Other 3,471 2,727 8,346
Materials, supplies,
and fuel 8,219 7,861 7,489
Prepaid expenses 1,125 2,650 2,422
82,290 50,997 48,648
Property and investments:
Electric 485,787 479,237 477,040
Coal mining 52,843 53,200 49,763
Oil and gas 50,943 45,336 43,861
Other 4,988 3,764 3,273
594,561 581,537 573,937
Less accumulated depreciation
and depletion (193,764) (181,103) (180,713)
Net property and
investments 400,797 400,434 393,224
Other assets:
Federal income taxes 8,268 7,972 7,803
Regulatory asset 3,626 3,176 3,026
Other 12,645 4,775 8,632
24,539 15,923 19,461
Total $507,626 $467,354 $461,333
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
June 30 December 31 June 30
1997 1996 1996
(in thousands)
LIABILITIES AND CAPITALIZATION
Current liabilities:
Current maturities of
long-term debt $ 1,310 $ 1,534 $ 1,468
Notes payable 23 143 1,078
Accounts payable 5,397 7,332 3,714
Accrued liabilities-
Taxes 7,509 8,633 5,857
Interest 4,003 4,035 4,046
Other 6,986 6,438 5,687
-------- -------- --------
25,228 28,115 21,850
-------- -------- --------
Deferred credits:
Federal income taxes 49,995 48,262 46,873
Investment tax credits 4,265 4,516 4,767
Reclamation costs 16,614 16,267 8,314
Regulatory liability 6,485 6,692 6,998
Other 6,111 5,636 5,507
-------- -------- --------
83,470 81,373 72,459
-------- -------- --------
Capitalization:
Common stock equity-
Common stock 14,461 14,450 14,440
Additional paid-in
capital 47,065 46,841 46,643
Retained earnings 136,967 131,884 125,488
-------- -------- --------
Total common stock equity 198,493 193,175 186,571
Long-term debt 164,164 164,691 165,319
-------- -------- --------
362,657 357,866 351,890
-------- -------- --------
Total $471,355 $467,354 $446,199
======== ======== ========
BLACK HILLS CORPORATION
Consolidated Balance Sheets
Unaudited Unaudited
September 30 December 31 September 30
1997 1996 1996
(in thousands)
LIABILITIES AND CAPITALIZATION
Current liabilities:
Current maturities of
long-term debt $ 1,331 $ 1,534 $ 1,534
Notes payable 1,528 143 1,348
Accounts payable 36,048 7,332 6,090
Accrued liabilities-
Taxes 8,837 8,633 6,823
Interest 2,996 4,035 3,011
Other 7,103 6,438 7,117
57,843 28,115 25,923
Deferred credits:
Federal income taxes 50,792 48,262 47,207
Investment tax credits 4,139 4,516 4,641
Reclamation costs 16,793 16,267 16,293
Regulatory liability 6,277 6,692 6,944
Other 6,327 5,636 5,667
84,328 81,373 80,752
Capitalization:
Common stock equity-
Common stock 14,466 14,450 14,446
Additional paid-in
capital 47,158 46,841 46,763
Retained earnings 140,471 131,884 128,746
Total common stock
equity 202,095 193,175 189,955
Long-term debt 163,360 164,691 164,703
365,455 357,866 354,658
Total $507,626 $467,354 $461,333
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Six Months Twelve Months
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
(in thousands)
Operating revenues:
Electric $ 29,347 $26,978 $61,381 $57,283 $122,815 $116,054
Coal mining 7,703 7,418 15,828 15,486 31,657 30,620
Oil and gas 3,209 3,387 6,929 6,118 13,366 11,487
------- ------- ------- ------- ------- -------
40,259 37,783 84,138 78,887 167,838 158,161
------- ------- ------- ------- ------- -------
Operating expenses:
Fuel and purchased
power 8,816 7,931 18,282 16,745 35,731 36,241
Operations and
maintenance 7,524 7,635 15,086 15,084 30,734 30,569
Administrative and
general 2,264 1,843 4,542 3,940 8,682 8,909
Depreciation,
depletion,
and amortization 5,699 6,023 11,293 11,429 22,685 21,493
Taxes, other than
income taxes 3,062 3,155 6,334 6,313 12,480 11,932
------- ------- ------- ------- ------- -------
27,365 26,587 55,537 53,511 110,312 109,144
------- ------- ------- ------- ------- -------
Operating income:
Electric 9,078 7,642 20,286 18,229 41,146 35,281
Coal mining 3,103 2,994 6,533 6,299 12,468 11,954
Oil and gas 713 560 1,782 848 3,912 1,782
------- ------- ------- ------- ------- -------
12,894 11,196 28,601 25,376 57,526 49,017
------- ------- ------- ------- ------- -------
Other income and
(expense):
Interest expense (3,465) (3,462) (6,946) (6,930) (13,958)(14,113)
Investment income 459 346 829 583 1,620 1,292
Allowance for funds
used during
construction 43 134 109 250 209 1,290
Other, net (32) 127 (215) 650 883 1,774
------- ------- ------- ------- ------- -------
(2,995) (2,855) (6,223) (5,447) (11,246) (9,757)
------- ------- ------- ------- ------- -------
Income before income
taxes 9,899 8,341 22,378 19,929 46,280 39,260
Income taxes (3,137) (2,454) (7,028) (6,043) (14,565) (11,424)
------- ------- ------- ------- ------- -------
Net income
available for
common stock $ 6,762 $ 5,887 $15,350 $13,886 $31,715 $27,836
======= ======= ======= ======= ======= =======
Weighted average
common shares
outstanding 14,459 14,437 14,457 14,433 14,451 14,425
Earnings per share $0.47 $0.41 $1.06 $0.96 $2.20 $1.93
Dividends paid
per share of
common stock $0.355 $0.345 $0.710 $0.690 $1.400 $1.360
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30
1997 1996 1997 1996 1997 1996
(in thousands)
Operating revenues:
Electric $33,358 $31,073 $94,738 $88,357 $125,099 $17,532
Coal mining 8,178 8,262 24,005 23,749 31,572 32,128
Oil and gas 3,029 3,230 9,958 9,348 13,165 12,007
Energy
marketing 53,617 - 53,617 - 53,617 -
98,182 42,565 182,318 121,454 223,453 161,667
Operating expenses:
Fuel and purchased
power 62,557 9,034 80,840 25,780 89,254 35,090
Operations and
maintenance 8,511 7,190 23,596 22,276 31,847 1,086
Administrative and
general 2,936 2,301 7,478 6,239 9,523 8,776
Depreciation,
depletion, and
amortization 5,439 5,928 16,731 17,357 22,196 21,817
Taxes, other than
income taxes 3,097 3,193 9,430 9,506 12,383 12,575
82,540 27,646 138,075 81,158 165,203 109,344
Operating income (loss):
Electric 12,141 10,828 32,427 29,057 42,460 37,129
Coal mining 3,198 3,304 9,731 9,604 12,362 12,591
Oil and gas 494 787 2,276 1,635 3,619 2,603
Energy marketing
and other (191) - (191) - (191) -
15,642 14,919 44,243 40,296 58,250 52,323
Other income and
(expense):
Interest
expense (3,559) (3,489) (10,516) (10,419) (14,032) (14,078)
Investment income 585 400 1,412 982 1,805 1,398
Allowance for funds
used during
construction 44 111 152 360 141 387
Other, net (197) 122 (409) 771 553 1,151
(3,127) (2,856) (9,361) (8,306) (11,533) (11,142)
Income before income
taxes 12,515 12,063 34,882 31,990 46,717 41,181
Income taxes (3,871) (3,820) (10,898) (9,861) (14,600) (12,035)
Net income available
for common
stock $ 8,644 $ 8,243 $23,984 $22,129 $32,117 $29,146
Weighted average
common shares
outstanding 14,464 14,443 14,459 14,437 14,457 14,433
Earnings per
share $0.60 $0.57 1.66 $1.53 $2.22 $2.02
Dividends paid
per share of
common stock $0.355 $0.345 $1.065 $1.035 $1.410 $1.370
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Six Months Twelve Months
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
(in thousands)
Operating activities:
Net Income $ 6,762 $ 5,887 $15,350 $13,886 $31,715 $27,836
Principal non-cash items-
Depreciation, depletion,
and amortization 5,699 6,023 11,293 11,429 22,685 21,493
Deferred income taxes
and investment tax
credits, net 247 384 829 913 1,947 2,235
Allowance for other
funds used during
construction (23) (83) (58) (156) (90) (819)
(Increase) decrease in
receivables, inventories,
and other current
assets 1,635 (357) 3,389 (1,186) 4,202 (5,137)
Increase (decrease) in
other current
liabilities (3,240) (5,690) (2,544) (8,546) 4,590 (6,829)
Other, net 1,294 91 (440) 373 1,402 2,146
------- ------- ------- ------- ------- -------
12,374 6,255 27,819 16,713 66,451 40,925
------- ------- ------- ------- ------- -------
Investment activities:
Property additions,
excluding allowance for
other funds used during
construction (8,022) (5,041) (9,299) (7,447) (26,240)(26,243)
Available for sale
securities purchased (6,579) (233) (12,732) (9,905) (43,670)(20,799)
Available for sale
securities sold 3,638 3,100 5,979 6,111 36,057 20,464
------- ------- ------- ------- ------- -------
(10,963) (2,174) (16,052)(11,241) (33,853)(26,578)
------- ------- ------- ------- ------- -------
Financing activities:
Dividends paid (5,134) (4,982) (10,267) (9,960) (20,236)(19,623)
Common stock issued 96 123 235 303 443 575
Net short-term
borrowings - 155 (120) 460 (1,055) (2,490)
Long-term debt issued - - - - - 15,254
Long-term debt
retied - - (751) (687) (1,313) (8,863)
------- ------- ------- ------- ------- -------
(5,038) (4,704) (10,903) (9,884) (22,161)(15,147)
------- ------- ------- ------- ------- -------
Increase (decrease)
in cash and cash
equivalents (3,627) (623) 864 (4,412) 10,437 (800)
Cash and cash
equivalents:
Beginning of period 17,831 4,390 13,340 8,179 3,767 4,567
------- ------- ------- ------- ------- -------
End of period $14,204 $ 3,767 $14,204 $ 3,767 $14,204 $ 3,767
======= ======= ======= ======= ======= =======
Supplemental disclosure
of cash flow information
Cash paid during the
period for:
Interest $ 2,458 $ 2,426 $ 6,961 $ 6,973 $13,991 $13,709
Income taxes $ 6,500 $ 6,150 $ 6,500 $ 6,750 $12,366 $10,380
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30
1997 1996 1997 1996 1997 1996
(in thousands)
Operating activities:
Net Income $ 8,644 $ 8,243 $23,984 $22,129 $32,117 $29,146
Principal non-cash items-
Depreciation, depletion,
and amortization 5,439 5,928 16,731 17,357 22,196 21,817
Deferred income taxes
and investment tax
credits, net 37 208 865 1,122 1,775 1,473
Allowance for other funds
used during construction(21) (70) (80) (227) (41) (247)
Increase in receivables,
inventories, and
other current assets(33,701) (3,422) (30,312) (4,608)(26,077) (5,850)
Increase (decrease)
in other current
liabilities 31,089 3,737 28,546 (4,809) 31,943 (993)
Other, net (668) 1,656 (1,267) 2,028 (833) 4,553
10,819 16,280 38,467 32,992 61,080 49,899
Investing activities:
Property additions,
excluding allowance
for other funds used
during construction (6,325) (7,292) (15,463)(14,738)(25,362)(24,021)
Energy marketing asset
acquisition (6,810) - (6,810) - (6,810) -
Available for sale
securities purchased (8,132) (3,285) (20,864)(13,191)(48,517)(22,079)
Available for sale
securities sold 11,764 3,198 17,743 9,310 44,623 16,090
(9,503) (7,379) (25,394)(18,619)(36,066)(30,010)
Financing activities:
Dividends paid (5,140) (4,985) (15,397)(14,945)(20,392)(19,777)
Common stock issued 98 126 333 429 415 561
Net short-term
borrowings 1,505 270 1,385 730 180 (3,055)
Long-term debt issued - - - - - -
Long-term debt retired (783) (550) (1,534) (1,237) (1,546) (1,763)
(4,320) (5,139) (15,213)(15,023)(21,343)(24,034)
Increase (decrease)
in cash and cash
equivalents (3,004) 3,762 (2,140) (650) 3,671 (4,145)
Cash and cash equivalents:
Beginning of period 14,204 3,767 13,340 8,179 7,529 11,674
End of period $11,200 $ 7,529 $11,200 $ 7,529 $11,200 $ 7,529
Supplemental disclosure
of cash flow information
Cash paid during the
period for:
Interest $ 4,566 $ 4,524 $11,555 $11,495 $14,047 $14,026
Income taxes $ 2,140 $ 2,666 $ 8,640 $ 9,416 $11,840 $11,496
Assumption of Clovis
Point reclamation
liability in acquisition
of Clovis Point
properties $ - $ - $ - $ - $ 7,957 $ -
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Statements of Shareholders' Equity
(unaudited)
Three Months Six Months Twelve Months
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
(in thousands)
Common stock:
Beginning of
period $ 14,457 $ 14,434 $ 14,450 $ 14,425 $ 14,440 $ 14,409
Issuance of
$1 par value
shares 4 6 11 15 21 31
-------- -------- -------- -------- -------- --------
End of period 14,461 14,440 14,461 14,440 14,461 14,440
-------- -------- -------- -------- -------- --------
Additional paid-in
capital:
Beginning of
period 46,973 46,526 46,841 46,355 46,643 46,099
Net proceeds over
par value of
stock issued 92 117 224 288 422 544
-------- -------- -------- -------- -------- --------
End of period 47,065 46,643 47,065 46,643 47,065 46,643
-------- -------- -------- -------- -------- --------
Retained earnings:
Beginning of
period 135,339 124,583 131,884 121,562 125,488 117,275
Net income 6,762 5,887 15,350 13,886 31,715 27,836
Cash dividends on
common stock (5,134) (4,982) (10,267) (9,960) (20,236) (19,623)
-------- -------- -------- -------- -------- --------
End of period 136,967 125,488 136,967 125,488 136,967 125,488
-------- -------- -------- -------- -------- --------
Total shareholders'
equity $198,493 $186,571 $198,493 $186,571 $198,493 $186,571
======== ======== ======== ======== ======== ========
BLACK HILLS CORPORATION
Consolidated Statements of Shareholders' Equity
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30
1997 1996 1997 1996 1997 1996
(in thousands)
Common stock:
Beginning of period$14,461 $14,440 $14,450 $14,425 $14,446 $14,417
Issuance of $1 par
value shares 5 6 16 21 20 29
End of period 14,466 14,446 14,466 14,446 14,466 14,446
Additional paid-in
capital:
Beginning of period 47,065 46,643 46,841 46,355 46,763 46,231
Net proceeds over
par value of
stock issued 93 120 317 408 395 532
End of period 47,158 46,763 47,158 46,763 47,158 46,763
Retained earnings:
Beginning of period136,967 125,488 131,884 121,562 128,746 119,377
Net income 8,644 8,243 23,984 22,129 32,117 29,146
Cash dividends on
common stock (5,140) (4,985) (15,397) (14,945) (20,392) (19,777)
End of period 140,471 128,746 140,471 128,746 140,471 128,746
Total shareholders'
equity $202,095 $189,955 $202,095 $189,955 $202,095 $189,955
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 1996 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 JuneSeptember 30, 1997, December 31, 1996 and
JuneSeptember 30, 1996, financial information and are of a normal
recurring nature. The results of operations for the three and
sixnine months ended JuneSeptember 30, 1996,1997, are not necessarily
indicative of the results to be expected for the full year.
(2) NEW ACCOUNTING STANDARD
During March 1997, the Financial Accounting Standards Board
released Statement of Financial Accounting Standards No. 128,
Earnings Per Share, (SFAS 128) which requires the disclosure of
basic earnings per share and diluted earnings per share. The companyCompany
must adopt SFAS 128 in the fourth quarter of 1997 and anticipates
it will not have a material impact on the financial position or the results of operations
of the Company.
(3) SUBSEQUENT EVENTENERGY MARKETING ASSET ACQUISITION
On July 25, 1997, Black Hills Corporation purchased the assets
of Wickford Energy, a wholesale natural gas and crude oil marketing
company. The purchase agreement required fixed cash payments of
$7,000,000, subject to certain closing adjustments, at the closing
date and additionally allows for contingent payments up to
$1,600,000. The contingent payments are dependent on certain profit
thresholds of the acquired company. The acquisition will be
accounted for under the purchase method of accounting and as
such, the results of operations will beare included in the Company's
consolidated financials from July 25, 1997. Natural gas and crude
oil marketing operations are high-volume, low margin operations.
(4) RENEGOTIATED POWER SALES AGREEMENT
The Company has entered into a Restated and Amended Power Sales
Agreement ("The Amended Agreement") with PacifiCorp. This agreement
restates and amends the Purchased Power Agreement ("The Agreement")
that was entered into with PacifiCorp on December 31, 1983, which
obligated the Company to purchase 75 megawatts of power from
PacifiCorp based upon the costs of PacifiCorp's Colstrip Power
Plants. The Agreement was for a term of 40 years. The Amended
Agreement provides (i) that 25 megawatts of the contract capacity
amount and the charges therefor will be deleted, 5 megawatts each
year commencing in the year 2000, (ii) the Company shall pay no
levelized annual charges for Colstrip Plants' additions and
replacement which are completed after January 1, 1997, forward.(iii) that
commencing January 1, 1997, all fixed cost components of the
Variable Costs to be paid by the Company shall be based on an
assumption that the Colstrip Plants operated at an 80 percent load
factor, (iv) changes to the fixed cost formula using PacifiCorp's
initial investment in the Colstrip Power Plants and the Federal
Energy Regulatory Commission (FERC) approved capital structure, and
(v) unbundles the transmission charge to PacifiCorp's FERC filed
rates. The Amended Agreement is subject to FERC approval.
Future cost reductions or increases related to these amendments will
depend on PacifiCorp's future capital structure and cost of capital
and the cost of replacement power
starting in the year 2000.
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
$12,000,000, which provides for interim borrowings and the
opportunity for timing of permanent financing. The Company had
$500,000$1,505,000 outstanding under these lines of credit on JuneSeptember
30, 1997. There are no compensating balance requirements
associated with these lines of credit.
In addition to the above lines of credit, Wyodak Resources
Development Corp. has guaranteed a $15,000,000 line of credit for
Enserco Energy, Inc. to use to guarantee letters of credit. Enserco pays a .125%
facility fee on this line of credit. At
JuneSeptember 30, 1997, there were no balances outstanding on this line
of credit.
In addition to the above lines of credit, Wickford Energy
Marketing, Inc. has an uncommitted demand credit facility for up to
$65 million. This facility allows $50 million for a transactional
line of credit and $15 million overdraft line of credit. This
facility is used to support the issuance of letters of credit. At
September 30, 1997, Wickford has approximately $26 million of
outstanding letters of credit.
RESULTS OF OPERATIONS
Black Hills Corporation is an energy services company consisting of threefour
principal businesses: electric, coal mining, and oil and gas production.production,
and crude oil and natural gas marketing.
Consolidated net income was $6,762,000$8,644,000 for the three
months ended, $15,350,000$23,984,000 for the sixnine months ended and $31,715,000$32,117,000
for the twelve months ended JuneSeptember 30, 1997, an increase of 155
percent, 118 percent and 1410 percent, respectively. The increase in
earnings was primarily due to increased sales volumes for the
electric operations, resulting from the sale to Montana- DakotaMontana-Dakota
Utilities, Sheridan, Wyoming load, which commenced January 1,
1997, and the inclusion of Neil Simpson Unit
#2 (NS #2), an 80 MW coal-fired power plant which began commercial
operation on August 1, 1995, into the Company's rate base, and
increased oil and natural gas prices. Consolidated
revenuerevenues and income from continuing operations provided
byfuel and purchased power increased in the three,
businesses as a percentage ofnine and twelve months ended primarily due to oil and natural gas
purchases and sales from the total were as follows:
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
REVENUE
Electric 73% 71% 73% 73% 73% 74%
Coal mining 19 20 19 20 19 19
Oil and gas 8 9 8 7 8 7
--- --- --- --- --- ---
100% 100% 100% 100% 100% 100%
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
NET INCOME
Electric 62% 56% 63% 60% 62% 60%
Coal mining 33 38 31 36 30 35
Oil and gas 7 7 8 4 9 5
Other (2) (1) (2) - (1) -
--- --- --- --- --- ---
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
1997 1996 1997 1996 1997 1996
(in thousands)
CAPITAL EXPENDITURES
(includes AFDC)
Electric $4,666 $3,738 $4,711 $4,800 $12,734 $19,030
Coal mining 1,335 53 1,445 196 3,367 1,558
Oil and gas 1,981 1,327 3,107 2,599 10,093 6,468
Other 63 6 94 8 136 7
------ ------ ------ ----- ------ -------
$8,045 $5,124 $9,357 $7,603 $26,330 $27,063
DEPRECIATION,
DEPLETION, AND
AMORTIZATION
Electric $3,821 $4,099 $7,642 $7,803 $15,942 $14,442
Coal mining 787 647 1,549 1,310 3,220 2,947
Oil and gas 1,091 1,277 2,102 2,316 3,523 4,104
------ ------ ------ ------ ------- -------
$5,699 $6,023 $11,293 $11,429 $22,685 $21,493energy marketing acquisition.
Consolidated revenue and income from continuing operations provided
by the four 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
1997 1996 1997 1996 1997 1996
REVENUE
Electric 34% 73% 52% 73% 56% 73%
Coal mining 8 19 13 20 14 20
Oil and gas 3 8 6 7 6 7
Energy marketing 55 - 29 - 24 -
100% 100% 100% 100% 100% 100%
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
1997 1996 1997 1996 1997 1996
NET INCOME
Electric 71% 64% 66% 62% 64% 61%
Coal mining 27 30 29 33 30 34
Oil and gas 4 6 7 5 8 6
Energy marketing
and other (2) - (2) - (2) (1)
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
1997 1996 1997 1996 1997 1996
(in thousands)
CAPITAL EXPENDITURES
(includes AFDC)
Electric $ 3,168 $ 3,866 $ 7,879 $ 8,665 $12,036 $14,420
Coal mining 100 1,208 1,545 1,404 2,298 2,593
Oil and gas 2,887 2,236 5,993 4,836 10,743 7,195
Energy marketing 6,810 - 6,810 - 6,810 -
Other 191 52 126 60 326 60
$13,156 $ 7,362 $22,353 $14,965 $32,213 $24,268
DEPRECIATION,
DEPLETION, AND
AMORTIZATION
Electric $3,321 $ 4,092 $10,963 $11,896 $15,171 $15,285
Coal mining 878 664 2,427 1,974 3,434 2,738
Oil and gas 1,142 1,172 3,243 3,487 3,493 3,794
Energy marketing 98 - 98 - 98 -
$5,439 $ 5,928 $16,731 $17,357 $22,196 $ 21,817
ELECTRIC OPERATIONS
Electric revenue increased 28 percent, 16 percent and 177 percent for the three, sixnine and
twelve months ended Junemonth periods ending September 30, 1997, primarily due to
strong growth in sales. Firm kilowatthour sales increased 11 percent
for the three month period and increased 14 percent for the
threenine and six month periods and increased 9 percent for the twelve month periodperiods. This increase is directly related to
serving the Montana-Dakota Utilities, Sheridan, Wyoming Load.
Electric expenses remained relatively flat for the three, nine
and sixtwelve months ended JuneSeptember 30, 1997. Fuel and purchased power
expense increased 117 percent for the second quarter, 9 percent for the year to date and decreased slightly3 percent for the
quarter and twelve month period. The increase in fuel and
purchased power expense for the three and six month periods was directly related to the increase in
kilowatthourkilowatt-hour sales.
Non-operating income increased $191,000 and $211,000MINING OPERATIONS
Mining revenues decreased slightly for the three
and six month periods due to an increase in interest income from
marketable securities and decreased $453,000 for the twelve month
period due to a decrease in allowance for funds used during
construction (AFUDC). The decrease in AFUDC was a reflection of the
completion of construction on NS #2 and was offset by the increase in
electric revenues.
MINING OPERATIONS
Mining revenue increased 4 percent, 2 percent and 3 percent for the
three, six and twelve
month periods ending JuneSeptember 30, 1997, directly
related to an increase1997. Earnings decreased
$398,000 for the nine month period as a result of a $500,000
gain from the sale and retirement of property recognized in tonsthe
first quarter of 1996. Tons of coal sold of 3 percent, 2
percent and 7 percent, respectively. Mining expenses increased 4
percent, 3 percent and 1 percent for the three, six and twelve months
ended June 30, 1997. The increase in expense is relatedwere relatively flat
compared to the increase
in tons of coal sold.prior year.
OIL AND GAS PRODUCTION OPERATIONS
Oil and gas earnings increased $86,000decreased $158,000 for the secondthird quarter and
$617,000increased $459,000 and $1,406,000$778,000 for the sixnine and twelve month
periods. The decrease in oil and gas earnings for the third quarter
reflects a decrease in oil prices compared to the prior year. The
increase in earnings for the nine and twelve month periods
ending
June 30, 1997. The earnings increase is due to an increase in barrels
of oil equivalents sold and an increase in gas prices.
Operating expenses decreased 12 percent for the second quarter
due toreflects a decrease in production expense. Operating expenses increased
214 percent, and 724 percent for the six month and twelve month periods
compared to the same periods last year.
Depletion expense decreased 17 percent, 11 percent and 14 percent
for the three, six and twelve month periods directly due to the increase in gas prices,
respectively.
ENERGY MARKETING OPERATIONS
Energy marketing revenues and reserve values.
Nonoperating income decreased $190,000, $679,000related fuel and $556,000 forpurchased
power expenses represents the three, sixcrude oil and twelve month periods ending June 30, 1997 as a resultnatural gas purchases and
sales of a $500,000 gain recorded from the saleWickford Energy Marketing, Inc. which was acquired on July
25, 1997. Crude oil and retirement of property in
the first quarter of 1996 offset by increases in interest income on
marketable securities.natural gas wholesale marketing operations
are high-volume, low margin operations.
BLACK HILLS CORPORATION
Part II - Other Information
Item 1. LEGAL PROCEEDINGS
There are no legal proceedings to be reported on for
the
quarter ending JuneSeptember 30, 1997.
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 July 25, 1997,
reporting the purchase of the assets of Jomax Partners, L.P., as
successor to and survivor of Wickford Energy Marketing, L.C., and
Wickford Energy Marketing Canada Company.
The Registrant filed a Form 8-K on October 10, 1997,
reporting the restatement and amendment to its Purchased Power
Agreement with PacifiCorp.
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
/S/ MARK T. THIES
Mark T. Thies, Controller
(Principal Accounting Officer)
Dated: August 8,November 13, 1997