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 September 30, 1997.March 31, 1998.
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
NONE
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 October 31, 1997April 30, 1998
Common stock, $1.00 par value 14,466,11321,711,598 shares
BLACK HILLS CORPORATION
I N D E X
Page
NumberNUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets- 2-3
September 30, 1997,3-4
March 31, 1998, December 31, 19961997
and September 30, 1996March 31, 1997
Consolidated Statements of Income- 45
Three Nine and Twelve Months
Ended September 30,March 31, 1998 and 1997 and 1996
Consolidated Statements of Cash Flows- 56
Three Nine and Twelve Months
Ended September 30,March 31, 1998 and 1997 and 1996
Consolidated Statements of Shareholders' Equity- 6
Three, Nine and Twelve Months Ended
September 30, 1997 and 1996
Notes to Consolidated Financial Statements 7-87-9
Item 2. Management's Discussion and Analysis of 9-1110-12
Financial Position and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 1213
Item 6. Exhibits and Reports on Form 8-K 1213
Signatures 1314
BLACK HILLS CORPORATION
Consolidated Balance Sheets
Unaudited Unaudited
September 30March 31 December 31 September 30March 31
1998 1997 1996 19961997
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 11,20020,793 $ 13,34016,774 $ 7,52917,831
Securities available for sale 14,579 11,458 10,68519,313 13,969 15,270
Receivables, net
Customers 43,696 12,961 12,17757,292 39,639 12,603
Other 3,471 2,727 8,3463,269 3,414 2,362
Materials, supplies, and fuel 8,219 7,861 7,4898,397 8,642 7,895
Prepaid expenses 1,125 2,650 2,422
82,290 50,997 48,6481,986 1,571 1,585
111,050 84,009 57,546
Property and investments:
Electric 485,787 479,237 477,040489,036 487,424 480,158
Coal mining 52,843 53,200 49,76353,039 52,804 53,388
Oil and gas 50,943 45,336 43,86153,043 52,412 46,344
Other 4,988 3,764 3,273
594,561 581,537 573,9376,299 5,666 4,549
601,417 598,306 584,439
Less accumulated depreciation
and depletion (193,764) (181,103) (180,713)(202,481) (197,179) (186,182)
Net property and
investments 400,797 400,434 393,224andinvestments 398,936 401,127 398,257
Other assets:
Federal income taxes 8,268 7,972 7,8038,020 8,061 8,013
Regulatory asset 3,626 3,176 3,0263,926 3,776 3,326
Other 12,645 4,775 8,632
24,539 15,923 19,46111,845 11,768 4,813
23,791 23,605 16,152
Total $507,626 $467,354 $461,333$533,777 $508,741 $471,955
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Balance Sheets
Unaudited Unaudited
September 30March 31 December 31 September 30March 31
1998 1997 1996 19961997
(in thousands)
LIABILITIES AND CAPITALIZATION
Current liabilities:
Current maturities of
long-term debt $ 1,330 $ 1,331 $ 1,534 $ 1,5341,310
Notes payable 1,528 143 1,34812 23 23
Accounts payable 36,048 7,332 6,09051,148 32,622 5,207
Accrued liabilities-
Taxes 8,837 8,633 6,82313,633 8,040 12,725
Interest 2,988 3,991 2,996
4,035 3,011
Other 7,103 6,438 7,117
57,843 28,115 25,9236,336 7,800 6,206
75,447 53,807 28,467
Deferred credits:
Federal income taxes 50,792 48,262 47,20753,605 53,010 49,254
Investment tax credits 4,139 4,516 4,6413,889 4,014 4,390
Reclamation costs 16,793 16,267 16,29316,840 16,664 16,446
Regulatory liability 6,277 6,692 6,9446,028 6,152 6,568
Other 6,327 5,636 5,667
84,328 81,373 80,7526,480 6,331 5,897
86,842 86,171 82,555
Capitalization:
Common stock equity-
Common stock 14,466 14,450 14,44621,712 21,705 14,457
Additional paid-in
capital 47,158 46,841 46,76340,143 39,995 46,973
Retained earnings 140,471 131,884 128,746146,799 143,703 135,339
Total common stock
equity 202,095 193,175 189,955208,654 205,403 196,769
Long-term debt 162,834 163,360 164,691 164,703
365,455 357,866 354,658164,164
371,488 368,763 360,933
Total $507,626 $467,354 $461,333$533,777 $508,741 $471,955
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30March 31 March 31
1998 1997 19961998 1997
1996 1997 1996
(in thousands)thousands, except per share amounts)
Operating revenues:
Electric $33,358 $31,073 $94,738 $88,357 $125,099 $17,532$ 31,990 $ 32,034 $126,452 $120,447
Coal mining 8,178 8,262 24,005 23,749 31,572 32,1287,924 8,125 30,878 31,372
Oil and gas 3,029 3,230 9,958 9,348 13,165 12,0073,186 3,719 12,762 13,543
Energy marketing 53,61787,956 - 53,617230,747 -
53,617 -
98,182 42,565 182,318 121,454 223,453 161,667131,056 43,878 400,839 165,362
Operating expenses:
Fuel and purchased power 62,557 9,034 80,840 25,780 89,254 35,09095,691 9,466 263,534 34,846
Operations and
maintenance 8,511 7,190 23,596 22,276 31,847 1,0868,244 7,353 32,423 30,247
Administrative and
general 2,936 2,301 7,478 6,239 9,523 8,7762,791 2,476 11,950 8,872
Depreciation, depletion,
and amortization 5,439 5,928 16,731 17,357 22,196 21,8176,139 5,579 22,851 22,967
Taxes, other than
income taxes 3,097 3,193 9,430 9,506 12,383 12,575
82,540 27,646 138,075 81,158 165,203 109,3443,218 3,298 11,906 12,599
116,083 28,172 342,664 109,531
Operating income (loss):
Electric 12,141 10,828 32,427 29,057 42,460 37,12912,315 11,208 45,718 39,711
Coal mining 3,198 3,304 9,731 9,604 12,362 12,5913,197 3,430 11,984 12,359
Oil and gas 494 787 2,276 1,635 3,619 2,603272 1,068 2,110 3,761
Energy marketing and other (191)(811) - (191)(1,637) -
(191) -
15,642 14,919 44,243 40,296 58,250 52,32314,973 15,706 58,175 55,831
Other income and (expense):
Interest expense (3,559) (3,489) (10,516) (10,419) (14,032) (14,078)(3,590) (3,479) (14,234) (13,954)
Investment income 585 400 1,412 982 1,805 1,398597 369 2,364 1,507
Allowance for funds used
during construction 44 111 152 360 141 38729 65 151 299
Other, net (197) 122 (409) 771 553 1,151
(3,127) (2,856) (9,361) (8,306) (11,533) (11,142)277 (183) 36 1,035
(2,687) (3,228) (11,683) (11,113)
Income before
income taxes 12,515 12,063 34,882 31,990 46,717 41,18112,286 12,478 46,492 44,718
Income taxes (3,871) (3,820) (10,898) (9,861) (14,600) (12,035)(3,742) (3,891) (14,176) (13,880)
Net income available
for common stock $ 8,6448,544 $ 8,243 $23,984 $22,129 $32,117 $29,1468,587 $ 32,316 $ 30,838
Earnings per share -
basic and diluted $ 0.39 $ 0.40 $ 1.49 $ 1.42
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 $2.0221,712 21,681 21,699 21,669
Dividends paid per
share of common stock $0.355 $0.345 $1.065 $1.035 $1.410 $1.370$ 0.25 $ 0.24 $ 0.96 $ 0.93
See accompanying notes to consolidated financial statements.
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Nine Months Twelve Months
September 30 September 30 September 30March 31 March 31
1998 1997 19961998 1997 1996 1997 1996
(in thousands)
Operating activities:
Net Income $ 8,6448,544 $ 8,243 $23,984 $22,129 $32,117 $29,1468,587 $32,316 $30,838
Principal non-cash items-
Depreciation, depletion,
and amortization 5,439 5,928 16,731 17,357 22,196 21,8176,139 5,579 22,851 22,967
Deferred income taxes
and investment tax credits net 37 208 865 1,122 1,775 1,473245 583 1,881 1,632
Allowance for other funds
used during construction(21) (70) (80) (227) (41) (247)
Increaseconstruction (18) (36) (81) (151)
(Increase) decrease in
receivables, inventories,
and other current assets(33,701) (3,422) (30,312) (4,608)(26,077) (5,850)assets (17,678) 1,754 (46,499) 2,210
Increase (decrease) in
other current liabilities 31,089 3,737 28,546 (4,809) 31,943 (993)21,652 696 46,971 2,140
Other, net (668) 1,656 (1,267) 2,028 (833) 4,553
10,819 16,280 38,467 32,992 61,080 49,899(673) (180) 147 2,041
18,211 16,983 57,586 61,677
Investing activities:
Available for sale
securities sold 3,880 2,341 19,789 35,518
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) -(3,018) (2,816) (21,597) (24,605)
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)(9,224) (6,153) (23,832) (37,323)
Energy marketing assets - - (7,232) -
(8,362) (6,628) (32,872) (26,410)
Financing activities:
Dividends paid (5,140) (4,985) (15,397)(14,945)(20,392)(19,777)(5,448) (5,132) (20,856) (20,083)
Common stock issued 98 126 333 429 415 561155 139 425 470
Net short-term borrowings 1,505 270 1,385 730 180 (3,055)(11) (120) (11) (900)
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)payments (526) (751) (1,310) (1,313)
(5,830) (5,864) (21,752) (21,826)
Increase (decrease) in
cash and cash
equivalents (3,004) 3,762 (2,140) (650) 3,671 (4,145)4,019 4,491 2,962 13,441
Cash and cash equivalents:
Beginning of period 14,204 3,76716,774 13,340 8,179 7,529 11,67417,831 4,390
End of period $11,200 $ 7,529 $11,200 $ 7,529 $11,200 $ 7,529$20,793 $17,831 $20,793 $17,831
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 4,5664,593 $ 4,524 $11,555 $11,495 $14,047 $14,0264,518 $14,242 $13,968
Income taxes $ 2,1402,000 $ 2,666 $ 8,640 $ 9,416 $11,840 $11,496- $13,840 $12,016
Assumption of Clovis
Point reclamation
liability $ - $ - $ - $ - $ 7,957 $ -
See accompanying notes to consolidated financial statements.
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)Report and Form 10-K)
(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 theseThese financial statements should be
read in conjunction with the financial statements and the notes thereto,
included in the Company's 19961997 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
Accounting methods historically employed require certain estimates
as of interim dates. The information furnished in the accompanying
financial statements reflects all adjustments which are, in the opinion
of management, necessary for a fair presentation of the September 30, 1997,March 31, 1998,
December 31, 19961997 and September 30, 1996,March 31, 1997, financial information and are of a
normal recurring nature. The results of operations for the three and
ninetwelve months ended September 30, 1997,March 31, 1998, are not necessarily indicative of the
results to be expected for the full year.
(2) NEW ACCOUNTING STANDARD
DuringCAPITAL STOCK
In January, 1998, the Board of Directors declared a 3-for-2 Common
Stock Split effected in the form of a stock dividend. The stock dividend
was paid March 1997,10, 1998 to shareholders of record on February 13, 1998.
The common stock share and per share information in the accompanying
consolidated financial statements and notes have been restated to reflect
the stock distribution.
(3) NET INCOME PER SHARE
The Company adopted the Financial Accounting Standards Board released(FASB)
Statement of Financial Accounting Standards No. 128 Earnings"Earnings Per Share, (SFAS 128)Share" in 1997 which requires the
disclosurepresentation of basic earnings per share and diluted earnings per share. Basic earnings per
share is computed by dividing net income available to common shareholders
by the weighted average number of common shares outstanding during each
year. Diluted earnings per share is computed under the treasury stock
method and is calculated to compute the dilutive effect of outstanding
stock options. A reconciliation of these amounts is as follows (in
thousands, except per share amounts):
Three Months Ended Twelve Months Ended
March 31 March 31
1998 1997 1998 1997
Net Income $ 8,544 $ 8,587 $32,316 $30,838
Weighted average common
shares outstanding:
Basic 21,712 21,681 21,699 21,669
Dilutive effect of
option plan 24 7 16 4
Diluted 21,736 21,688 21,715 21,673
Earnings per share
(Basic and Diluted): $0.39 $0.40 $1.49 $1.42
(4) COMPREHENSIVE INCOME
The Company mustadopted FASB Statement No. 130, "Reporting Comprehensive
Income", effective January 1, 1998. Statement No. 130 establishes
standards for reporting and display of comprehensive earnings and its
components in financial statements; however, the adoption of this
Statement had no impact on the Company's net earnings or shareholders'
equity. Statement No. 130 requires minimum pension liability
adjustments, unrealized gains or losses on the Company's available-for-
sale securities and foreign currency translation adjustments, which prior
to adoption were reported separately in shareholders' equity, to be
included in other comprehensive earnings. There were no material
differences between net earnings and comprehensive earnings for any
periods presented on the accompanying financial statements.
(5) ACCOUNTING PRONOUNCEMENTS
The FASB has issued two accounting pronouncements which the Company
will adopt SFAS 128 in the fourth quarter of 19971998. FASB Statement NO. 131
"Disclosures about Segments of an Enterprise and anticipates
itRelated Information"
requires that a publicly-held company report financial and descriptive
information about its operating segments in financial statements issued
to shareholders for interim and annual periods. The Statement also
required additional disclosures with respect to products and services,
geographic areas of operation, and major customers. The Company has
historically presented segment information in the consolidated financial
statements and related notes and as such does not expect adoption of the
disclosures requirements of this pronouncement will not have a material
impact on the resultsits financial statements.
FASB Statement No. 132 "Employers' Disclosures about Pensions and
Other Postretirement Benefits - an amendment of operationsFASB Statements No. 87,
88, and 106" requires revised disclosures about pension and other
postretirement benefit plans. The Company does not expect that adoption
of the Company.
(3) ENERGY MARKETING ASSET ACQUISITION
On July 25, 1997, Black Hills Corporation purchaseddisclosure requirements of this pronouncement will have a material
impact on its financial statements.
In March, 1998, the assetsAmerican Institute of Wickford Energy, a wholesale natural gasCertified Public Accounts
issued Statement of Position 98-1 ("SOP 98-1"), "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use." The
Statement is effective for fiscal years beginning after December 15,
1998. Earlier application is encouraged in fiscal years for which annual
financial statements have not been issued. The statement defines which
costs of computer software developed or obtained for internal use are
capital 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 paymentswhich costs 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 are 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 AGREEMENTexpense. The Company has entered into a Restated and Amended Power Sales
Agreement ("not yet determined
when they will adopt the new Statement. The Amended Agreement") with PacifiCorp. This agreement
restates and amendseffect of adoption is not
expected to materially affect 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, (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 reductionsCompany's financial position 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.result
operations.
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 that 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 providesprovide for interim borrowings and the opportunity for timing of
permanent financing. The Company had $1,505,000no balances outstanding under these
lines of credit on September
30, 1997.March 31, 1998. There are no compensating balance
requirements associated with these lines of credit.
In addition to the above lines of credit, WyodakBlack Hills Energy
Resources,
Development Corp. has guaranteed a $15,000,000 line of credit for
Enserco Energy, Inc. to use to guarantee letters of credit. At
September 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, WickfordMarch 31, 1998, Black
Hills Energy Resources has approximately $26$28 million of outstanding
letters 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. At March 31, 1998,
there were no balances outstanding on this line of credit.
RESULTS OF OPERATIONS
Black Hills Corporation is an energy company consisting of four
principal businesses: electric, coal mining, oil and gas production, and
crude oil and natural gas marketing.
Consolidated net income was $8,644,000$8,544,000 for the three months ended
$23,984,000 for the nine months ended and $32,117,000$32,316,000 for the twelve months ended September 30, 1997,March 31, 1998, representing
stable earnings and an increase of 5 percent, 8 percent and 10 percent, respectively. The increase
in earnings for the twelve months ended March 31, 1998 was primarily due
to increased sales volumes for the electric operations, resulting from
the salesales to Montana-Dakota Utilities, Sheridan, Wyoming load, which
commenced January 1, 1997, and increasedpartially offset by lower oil and natural gas
prices.commodity prices, mild weather and weak market conditions in the areas
served by the energy marketing companies. Consolidated revenues and fuel
and purchased power expense increased infor the three
nine and twelve months
ended March 31, 1998 primarily due to oil and natural gas purchases and
sales from the energy marketing acquisition.
operations.
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 30March 31 March 31
1998 1997 19961998 1997
1996 1997 1996
REVENUEREVENUES
Electric 34%25% 73% 52% 73% 56%32% 73%
Coal mining 6 19 8 19 13 20 14 20
Oil and gas 2 8 3 8
6 7 6 7
Energy marketing 5567 - 29 - 2457 -
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
INCOME/(LOSS)
Electric 71%75% 64% 66% 62% 64%71% 61%
Coal mining 27 3028 29 33 30 3428 31
Oil and gas 4 6 72 8 5 8 69
Energy marketing
and other (2) - (2) - (2)Other (5) (1) 100% 100% 100%(4) (1)
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 1996100%
Capital expenditures and depreciation, depletion, and amortization
by business segment were as follows (in thousands):
CAPITAL EXPENDITURES
(includes AFDC)
Electric $ 3,168 $ 3,866 $ 7,879 $ 8,665 $12,036 $14,420$2,162 $1,490 $13,254 $13,251
Coal mining 100 1,208 1,545 1,404 2,298 2,593245 205 1,546 1,988
Oil and gas 2,887 2,236 5,993 4,836 10,743 7,195630 1,126 6,699 9,439
Energy marketing 6,810 - 6,810 - 6,8107,232 -
Other 191 52 126 60 326 60
$13,156 $ 7,362 $22,353 $14,965 $32,213 $24,268
DEPRECIATION,
DEPLETION,(1) 31 179 78
$3,036 $2,852 $28,910 $24,756
Depreciation, Depletion,
AND AMORTIZATION
Electric $3,321 $ 4,092 $10,963 $11,896 $15,171 $15,285$3,797 $3,821 $14,584 $16,220
Coal mining 878 664 2,427 1,974 3,434 2,738855 761 3,282 3,079
Oil and gas 1,142 1,172 3,243 3,487 3,493 3,7941,342 997 4,606 3,668
Energy marketing 98145 - 98379 -
98 -
$5,439 $ 5,928 $16,731 $17,357 $22,196 $ 21,817$6,139 $5,579 $22,851 $22,967
ELECTRIC OPERATIONS
Electric revenue increased 7 percent for the three, nine and
twelve month periods ending September 30, 1997, primarily due to
strong growth in sales. Firm kilowatthour sales increased 11 percent
for the three month periodwere stable and increased 14 percent for the
nine and twelve month periods. This increase is directly related to
serving the Montana-Dakota Utilities, Sheridan, Wyoming Load.
Electric expenses remained relatively flat for the three, nine
and twelve months ended September 30, 1997. Fuel and purchased power
expense increased 7 percent year to date and 3 percent for the
quarter and twelve month period. The increase in fuel and
purchased power expense was directly related to the increase in
kilowatt-hour sales.
MINING OPERATIONS
Mining revenues decreased slightly5% for the three and
twelve month periods ending September 30,March 31, 1998. Firm kilowatthour sales
decreased 4 percent for the three month period due to milder weather and
the Homestake reorganization, and increased 8 percent for twelve month
periods due to serving the Montana-Dakota Utilities, Sheridan, Wyoming
Load beginning January 1, 1997. In January the Company's third largest
electric customer (5.6 percent of 1997 electric revenues), Homestake
Mining Company, implemented a reorganization plan which included a
temporary shutdown of its gold mine. The mine reopened in April 1998 with
a reduced workforce. In addition, our low-cost generation allowed the
Company to recapture a portion of the margin loss from Homestake in the
spot energy market.
Electric expenses decreased 8% and increased 3% for the three and
twelve months ended March 31, 1998 due to continued cost containment and
lower purchased power and fuel costs. For the twelve months ended March
31, 1998, such cost containment and lower purchased power and fuel costs
partially offset additional cost associated with serving the Sheridan,
Wyoming load.
MINING OPERATIONS
Mining earnings decreased 2% and 7% for the three and twelve month
periods ending March 31, 1998. Earnings decreased $398,000$658,000 for the
ninetwelve month period primarily as a result of a $500,000 gain from the sale and
retirement of property recognized in the firstfourth quarter of 1996. Tons of
coal sold were relatively flat compared to the prior year.
OIL AND GAS PRODUCTION OPERATIONS
Oil and gas earnings decreased $158,000$546,000 and $1,128,000 for the third quarter and
increased $459,000 and $778,000 for the nine 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 ninethree
and twelve month periods reflectsprimarily as a 14result of decreased commodity
prices. Oil and natural gas prices decreased 33 percent and 2428 percent,
increase in gas prices,respectively for the three month period and decreased 21 percent and 4
percent, respectively for the twelve month period ended March 31, 1998.
Production increased 7 percent and 2 percent for the three and twelve
month periods, respectively.
ENERGY MARKETING OPERATIONS
Energy marketing revenues and related fuel and purchased power
expenses represents the crude oil and natural gas purchases and sales of
WickfordBlack Hills Energy Marketing,Resources, Inc. which was acquired on July 25, 1997.
Crude oil and natural gas wholesale marketing operations are high-volume,
low margin operations. Mild weather in the East Coast and Midwest
markets served and high storage levels through the winter depressed
margins for the periods. Black Hills Energy Resources marketed 306,700
mmbtus and 14,900 barrels of oil per day for the three month period ended
March 31, 1998 and 258,900 mmbtus and 13,400 barrels of oil per day since
the Company acquired the assets in July 1997.
BLACK HILLS CORPORATION
Part II - Other Information
Item 1. LEGAL PROCEEDINGS
There are no legal proceedings to be reported on for the
quarter ending September 30, 1997.March 31, 1998.
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.None
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, SeniorROXANN R. BASHAM
Roxann R. Basham, Vice President-Finance
(Principal Financial Officer)
/S/ MARK T. THIES
Mark T. Thies, Controller
(Principal Accounting Officer)
Dated: November 13, 1997May 11, 1998