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, 1994.
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the transition period from _______________ to _______________.
Commission File Number 1-7978
Black Hills Corporation
Incorporated in South Dakota IRS Identification Number 46-0111677
625 Ninth Street
Rapid City, South Dakota 57709
Registrant's telephone number (605)-348-1700
NONE
Former name, former address, and former fiscal year if changed since
last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the last practicable date.
Class Outstanding at April 30, 1994
Common stock, $1.00 par value 14,311,336 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, 1994, December 31, 1993,
and March 31, 1993
Consolidated Statements of Income- 4-5
Three and Twelve Months
Ended March 31, 1994 and 1993
Consolidated Statements of Cash Flows- 6-7
Three and Twelve Months
Ended March 31, 1994 and 1993
Consolidated Statements of Shareholders' Equity- 8
Three and Twelve Months Ended
March 31, 1994 and 1993
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of 9-12
Financial Position and Consolidated
Statements of Earnings
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Signatures 14
<TABLE> BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
<CAPTION>
March 31 December 31 March 31
1994 1993 1993
(in thousands)
Assets
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 16,787 $ 7,866 $ 3,754
Short-term investments 26,225 24,217 16,771
Receivables-
Customers 10,931 12,415 9,516
Other 2,524 901 2,060
Materials, supplies,
and fuel 7,013 6,765 6,918
Prepaid expenses 1,409 1,638 1,538
64,889 53,802 40,557
Property and investments:
Electric 347,805 341,852 322,456
Coal mining 52,357 51,670 44,838
Oil and gas 32,993 32,371 29,907
Other 3,400 7,250 22,242
436,555 433,143 419,443
Less accumulated depreciation
and depletion (148,704) (144,492) (137,726)
Net property and
investments 287,851 288,651 281,717
Deferred charges:
Federal income taxes 7,317 7,271 8,647
Other 3,407 3,129 2,522
10,724 10,400 11,169
Total $363,464 $352,853 $333,443
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE> BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
<CAPTION>
March 31 December 31 March 31
1994 1993 1993
(in thousands)
Liabilities and Capitalization
<S> <C> <C> <C>
Current liabilities:
Current maturities of
long-term debt $ 2,090 $ 3,542 $ 4,297
Notes payable 21,668 11,768 7,184
Accounts payable 6,257 9,535 6,625
Accrued liabilities-
Income taxes 2,818 204 2,538
Other taxes 6,671 5,379 6,626
Interest 2,200 1,700 2,702
Fuel and purchased
power refunds 1,200 1,375 2,170
Other 6,085 6,023 5,748
48,989 39,526 37,890
Deferred credits:
Federal income taxes 36,581 36,705 37,129
Investment tax credits 5,901 6,027 3,041
Reclamation costs 7,441 7,290 6,813
Regulatory liability 6,912 6,912 8,159
Other 3,180 3,030 2,617
60,015 59,964 57,759
Capitalization:
Common stock equity-
Common stock 14,307 14,270 13,707
Additional paid-in
capital 44,184 43,420 30,414
Retained earnings 111,485 110,399 106,890
Total common stock equity 169,976 168,089 151,011
Long-term debt 84,484 85,274 86,783
254,460 253,363 237,794
Total $363,464 $352,853 $333,443
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE> BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
<CAPTION>
Three Months Twelve Months
March 31 March 31
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
Operating revenues:
Electric $25,870 $24,640 $ 99,385 $ 98,781
Coal mining 7,179 7,319 29,682 28,847
Oil and gas 2,611 2,416 11,591 9,628
35,660 34,375 140,658 137,256
Operating expenses:
Fuel and purchased
power 9,994 8,530 37,961 37,873
Operations &
maintenance 6,917 7,674 29,880 30,655
Administrative and
general 1,967 2,392 7,935 8,646
Depreciation, depletion
and amortization 4,493 3,405 17,139 13,884
Taxes, other than
income taxes 2,610 2,394 10,259 8,694
25,981 24,395 103,174 99,752
Operating income:
Electric 6,605 6,611 23,976 24,420
Coal mining 2,963 2,924 12,398 11,660
Oil and gas 111 445 1,110 1,424
9,679 9,980 37,484 37,504
Other (income) and
expense:
Interest expense 2,147 2,165 8,798 8,896
Investment income (347) (418) (1,668) (2,953)
Allowance for
funds used during
construction (360) (154) (935) (468)
Other 68 (133) (273) (1,283)
1,508 1,460 5,922 4,192
Income before income
taxes 8,171 8,520 31,562 33,312
Income taxes (2,371) (2,417) (8,920) (9,159)
Net income available
for common stock $ 5,800 $ 6,103 $ 22,642 $ 24,153
Weighted average common
shares outstanding 14,275 13,705 13,954 13,696
Earnings per share $ 0.41 $ 0.45 $ 1.62 $ 1.76
Dividends paid per share
of common stock $ 0.33 $ 0.32 $ 1.29 $ 1.25
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE> BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
<CAPTION>
Three Months Twelve Months
March 31 March 31
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
Cash flows provided from
(used for) operating
activities:
Net Income $ 5,800 $ 6,103 $22,642 $24,153
Principal non-cash items-
Depreciation, depletion,
and amortization 4,493 3,405 17,139 13,884
Deferred income taxes and
investment tax credits,
net 204 107 1,139 899
Allowance for other funds
used during construction (162) (61) (434) (124)
(Increase) decrease in
receivables, inventories,
and other current assets (158) 131 (1,845) (94)
Increase (decrease) in other
current liabilities 1,015 (369) (1,178) 5,685
Other, net (484) 613 3,155 19
10,708 9,929 40,618 44,422
Cash flows provided from
(used for) investment
activities:
Neil Simpson Unit #2
construction costs,
excluding allowance for
other funds used during
construction (4,302) (638) (16,339) (1,902)
Other property additions,
excluding allowance for
other funds used during
construction (3,437) (3,680) (27,039) (26,157)
Short-term investments
purchased (7,525) (8,118) (31,012) (28,486)
Short-term investments
sold 5,517 7,446 21,558 32,056
Proceeds from sale of
long-term investments 4,215 - 18,946 -
(5,532) (4,990) (33,886) (24,489)
Cash flows provided from
(used for) financing
activities:
Dividends paid (4,714) (4,386) (18,047) (17,122)
Common stock issued 801 136 14,370 553
Increase (decrease) in
short-term notes 9,900 (800) 14,484 1,200
Long-term debt retired (2,242) (1,902) (4,506) (3,959)
3,745 (6,952) 6,301 (19,328)
Increase (decrease) in
cash and cash equivalents 8,921 (2,013) 13,033 605
Cash and cash
equivalents:
Beginning of period 7,866 5,767 3,754 3,149
End of period $16,787 $ 3,754 $16,787 $ 3,754
Supplemental disclosure
of cash flow information
Cash paid during the
period for:
Interest $ 1,647 $ 1,630 $ 9,300 $ 9,086
Income taxes $ - $ 2,525 $ 7,825 $ 9,254
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE> BLACK HILLS CORPORATION
Statements of Shareholders' Equity
(unaudited)
<CAPTION>
Three Months Twelve Months
March 31 March 31
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
Common stock:
Beginning of period $ 14,270 $ 13,701 $ 13,707 $ 13,682
Issuance of $1 par
value shares 37 6 600 25
End of period 14,307 13,707 14,307 13,707
Additional paid-in
capital:
Beginning of period 43,420 30,284 30,414 29,886
Excess of proceeds
over par value of
stock issued 753 132 14,406 530
Expenses related to
issuance of stock 11 (2) (636) (2)
End of period 44,184 30,414 44,184 30,414
Retained earnings:
Beginning of period 110,399 105,173 106,890 99,859
Net income 5,800 6,103 22,642 24,153
Cash dividends on
common stock (4,714) (4,386) (18,047) (17,122)
End of period 111,485 106,890 111,485 106,890
Total shareholders'
equity $169,976 $151,011 $169,976 $151,011
/TABLE
<PAGE>
BLACK HILLS CORPORATION
Notes to Consolidated Financial Statements
(Reference is made to Notes to Consolidated Financial Statements
included in the Company's Annual Report)
(1) Management's Statement
The financial statements included herein have been prepared by Black
Hills Corporation (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations; however, the
Company believes that the footnotes adequately disclose the information
presented. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto, included in
the Company's 1993 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
Accounting methods historically employed require certain estimates as of
interim dates. The information furnished in the accompanying financial
statements reflects all adjustments which are, in the opinion of management,
necessary for a fair presentation of the March 31, 1994, December 31, 1993,
and March 31, 1993, financial information and are of a normal recurring
nature. The results of operations for the three months ended March 31, 1994,
are not necessarily indicative of the results to be expected for the full
year.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity, Capital Resources, and Commitments
In the past the Company has depended upon internally generated funds,
issuance of short and long-term debt, and sales of preferred and 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 $40,000,000 which
provides for interim borrowings and the opportunity for timing of permanent
financing. At March 31, 1994, the Company had borrowings of $21,600,000
outstanding under these lines of credit.
Additional long-term financing will be needed in 1994 and 1995 to finance
Neil Simpson Unit #2, an 80 MW coal-fired generating plant, located adjacent
to Wyodak Resources Development Corp.'s coal mine. The Company estimates
that approximately $87,000,000 of debt and $3,500,000 of additional equity
will need to be issued. The Company plans to raise the additional equity
through the Company's Employee Stock Purchase Plan and Dividend Reinvestment
Plan. These additional financings are expected to increase the debt
component of the Company's capital structure from 33 percent at March 31,
1994, to approximately 45 percent to 48 percent by 1996. Total construction
costs of the plant are estimated at $124,889,000. The Company has incurred
approximately $19,000,000 of costs related to the plant and such costs are
reflected in the Company's Balance Sheet at March 31, 1994. The plant will
be fueled by coal from the Wyodak mine, air cooled, and is expected to meet
all Clean Air Act requirements. Construction commenced at the plant site in
August 1993 and is scheduled to be completed by the end of 1995.
Results of Operations
Black Hills Corporation is an energy services company consisting of three
principal businesses: electric, coal mining, and oil and gas production.
Consolidated income was $5,800,000 for the three months ended and
$22,642,000 for the twelve months ended March 31, 1994, a decrease of
$303,000 and $1,511,000 for the three and twelve month periods, respectively.
The decrease in earnings for the first quarter was primarily due to a
$439,000 decrease in earnings from the oil and gas operations. The decrease
in earnings from the oil and gas operations was caused by increased depletion
expense resulting from an increase in production and lower oil prices.
The decrease in earnings for the twelve months ended March 31, 1994, was
due to an increase in depreciation, depletion, and interest expense resulting
from an increase in capital expenditures and low oil prices. Interest income
decreased due to a decrease in the amount of cash available for investments
and lower interest rates. The coal mining operations earnings included a
$1,400,000 pre-tax benefit recognized on the PacifiCorp Coal Settlement in
the second quarter of 1992.
Consolidated revenue and income from continuing operations provided by
the three businesses as a percentage of the total were as follows:
<TABLE>
<CAPTION> Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
Revenue
<S> <C> <C> <C> <C>
Electric 73% 72% 71% 72%
Coal mining 20 21 21 21
Oil and gas 7 7 8 7
100% 100% 100% 100%
Net Income
Electric 59% 53% 50% 49%
Coal mining 43 42 47 47
Oil and gas (2) 5 3 4
100% 100% 100% 100%
</TABLE>
Capital expenditures and depreciation, depletion, and amortization by
industry segment were as follows:
<TABLE>
<CAPTION> Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
Capital Expenditures
(includes AFDC)
Neil Simpson
Unit #2 $4,454 $ 638 $16,608 $ 1,902
Other electric 1,859 1,958 13,040 16,121
Coal mining 687 355 7,758 5,342
Oil and gas 901 1,428 6,406 4,818
$7,901 $4,379 $43,812 $28,183
Depreciation,
Depletion, and
Amortization
Electric $2,588 $2,438 $10,103 $ 9,644
Coal mining 573 460 2,065 1,575
Oil and gas 1,332 507 4,971 2,665
$4,493 $3,405 $17,139 $13,884
</TABLE>
The Wyodak Plant will be out of service for maintenance four to six weeks in
the second quarter of 1994. The Company estimates this will decrease 1994
coal sales by approximately 250,000 tons as compared to the prior year. The
Wyodak Plant was last out of service for maintenance in the fall of 1991.
Electric Operations
Electric revenue increased 5 percent and 0.6 percent for the three and
twelve months ended March 31, 1994, respectively, due to an increase in
purchased power costs flowed through to the electric customers offset by a
decrease in firm kilowatthour sales. Firm kilowatthour sales decreased one
percent in the first quarter and were relatively flat for the twelve month
period. The decrease in firm kilowatthour sales in the first quarter was
primarily related to milder winter weather. Degree days, a measure of
weather trends, were 4 percent below normal for the first quarter of 1994
compared to 8 percent above normal for the first quarter of 1993. Purchased
power expense was abnormally low in 1993 due to a refund received on the
Colstrip purchased power contract flowed back to customers in 1993.
Electric expenses increased 6.9 percent and 1.4 percent for the three and
twelve months ended March 31, 1994, compared to the same periods last year.
The increase in expenses was primarily due to the increase in purchased power
costs, depreciation, and property taxes.
Mining Operations
Mining revenue decreased 2 percent for the three months ended March 31,
1994, and increased 3 percent for the twelve months ended March 31, 1994,
compared to the same periods last year. Tons of coal sold decreased 7
percent and 2 percent for the three and twelve month periods compared to the
corresponding periods last year.
Mining operating expenses decreased 4 percent for the three month period
and increased 1 percent for the twelve months ended March 31, 1994. The
decrease in mining expenses in the first quarter was primarily due to the
decrease in tons of coal sold offset by an increase in depreciation expense.
Non-operating income decreased $336,000 and $1,869,000 for the three and
twelve months ended March 31, 1994. The Company recognized a $1,400,000 non-
cash pre-tax gain during the second quarter of 1992 related to the assumption
by PacifiCorp of certain liabilities relating to the existing coal handling
facilities. Non-operating income also decreased due to a decrease in
interest income attributable to lower interest rates.
Oil and Gas Production Operations
Oil and gas production revenue which represents less than 10 percent of
consolidated revenue increased 8 percent and 20 percent for the three and
twelve months ended March 31, 1994, directly related to an increase in
equivalent barrels of oil sold as a result of the Company's 1993 drilling
program offset by lower oil prices. Equivalent barrels of oil sold increased
60 percent for the three and twelve month periods. A decrease in the price
of oil offset the impact of increased production.
Operating expenses increased approximately 27 percent for the three and
twelve months ended March 31, 1994, primarily due to an increase in depletion
expense resulting from the increase in production and lower oil prices.
<PAGE>
BLACK HILLS CORPORATION
Part II - Other Information
Item 1. Legal Proceedings
There are no legal proceedings to be reported on as of the date of
this report.
<PAGE>
BLACK HILLS CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLACK HILLS CORPORATION
/s/ Dale E. Clement
Dale E. Clement, Senior Vice President-Finance
(Principal Financial Officer)
/s/ Gary R. Fish
Gary R. Fish, Controller
(Principal Accounting Officer)
Dated: May 13, 1994
