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, 1996.
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
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 April 30, 1996
Common stock, $1.00 par value 14,433,821 shares
<PAGE>
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, 1996, December 31, 1995,
and March 31, 1995
Consolidated Statements of Income- 4
Three, and Twelve Months
Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows- 5
Three and Twelve Months
Ended March 31, 1996 and 1995
Consolidated Statements of Shareholders' Equity- 6
Three and Twelve Months Ended
March 31, 1996 and 1995
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Position and Consolidated
Statements of Earnings 7-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
March 31 December 31 March 31
1996 1995 1995
-------- ----------- --------
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 4,390 $ 8,179 $ 4,164
Securities available
for sale 13,465 6,804 18,225
Receivables, net
Customers 13,059 13,339 12,661
Other 4,767 3,825 2,522
Materials, supplies,
and fuel 7,822 7,415 7,552
Prepaid expenses 1,007 1,247 1,286
-------- -------- --------
44,510 40,809 46,410
-------- -------- --------
Property and investments:
Electric 470,078 469,135 442,671
Coal mining 44,616 44,473 51,061
Oil and gas 41,824 40,704 36,022
Other 3,644 3,330 3,254
-------- -------- --------
560,162 557,642 533,008
Less accumulated depreciation
and depletion (169,758) (164,383) (158,442)
-------- -------- --------
Net property and
investments 390,404 393,259 374,566
-------- -------- --------
Deferred charges:
Federal income taxes 7,573 7,543 7,679
Regulatory asset 2,726 2,576 709
Other 4,588 4,643 4,904
-------- -------- --------
14,887 14,762 13,292
-------- -------- --------
Total $449,801 $448,830 $434,268
======== ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
March 31 December 31 March 31
1996 1995 1995
-------- ----------- --------
(in thousands)
LIABILITIES AND CAPITALIZATION
Current liabilities:
Current maturities of
long-term debt $ 1,468 $ 1,405 $ 2,042
Notes payable 923 618 2,218
Accounts payable 4,991 9,737 9,131
Accrued liabilities-
Taxes 10,849 7,046 9,568
Interest 3,010 4,089 2,833
Other 6,144 6,978 7,578
-------- -------- --------
27,385 29,873 33,370
-------- -------- --------
Deferred credits:
Federal income taxes 46,110 45,290 40,955
Investment tax credits 4,893 5,018 5,396
Reclamation costs 8,153 7,974 7,761
Regulatory liability 7,054 7,111 7,402
Other 5,343 5,153 4,206
-------- -------- --------
71,553 70,546 65,720
-------- -------- --------
Capitalization:
Common stock equity-
Common stock 14,434 14,425 14,400
Additional paid-in
capital 46,526 46,355 45,951
Retained earnings 124,584 121,562 116,459
-------- -------- --------
185,544 182,342 176,810
Long-term debt 165,319 166,069 158,368
-------- -------- --------
350,863 348,411 335,178
-------- -------- --------
Total $449,801 $448,830 $434,268
======== ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
Three Months Twelve Months
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Operating revenues:
Electric $30,305 $26,023 $113,065 $104,909
Coal mining 8,068 6,939 31,000 28,353
Oil and gas 2,731 2,977 10,917 12,419
------- ------- -------- --------
41,104 35,939 154,982 145,681
------- ------- -------- --------
Operating expenses:
Fuel and purchased
power 8,814 10,027 38,053 42,002
Operations &
maintenance 7,448 6,306 29,458 28,092
Administrative and
general 2,096 2,704 8,863 8,657
Depreciation, depletion
and amortization 5,406 4,747 20,342 17,930
Taxes, other than
income taxes 3,158 2,652 11,496 10,422
------- ------- -------- --------
26,922 26,436 108,212 107,103
------- ------- -------- --------
Operating income:
Electric 10,587 6,245 32,584 24,717
Coal mining 3,306 2,918 12,544 11,776
Oil and gas 289 340 1,642 2,085
------- ------ ------- -------
14,182 9,503 46,770 38,578
------- ------ ------- -------
Other income and
(expense):
Interest expense (3,468) (3,566) (14,098) (11,758)
Investment income 236 400 1,206 1,684
Allowance for
funds used during
construction 116 2,296 3,686 5,919
Other, net 526 69 1,654 308
------- ------- ------- -------
(2,590) (801) (7,552) (3,847)
------- ------- ------- -------
Income before income
taxes 11,592 8,702 39,218 34,731
Income taxes (3,591) (2,703) (11,623) (10,726)
------- ------- -------- --------
Net income available
for common stock $ 8,001 $ 5,999 $ 27,595 $ 24,005
======= ======= ======== ========
Weighted average common
shares outstanding 14,429 14,395 14,417 14,366
======= ======= ======== ========
Earnings per share $ 0.55 $ 0.42 $ 1.91 $ 1.67
======= ======= ======== ========
Dividends paid per share
of common stock $ 0.345 $ 0.335 $ 1.350 $ 1.325
======= ======= ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
Three Months Twelve Months
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Operating activities:
Net Income $ 8,001 $ 5,999 $27,595 $24,005
Principal non-cash items-
Depreciation, depletion,
and amortization 5,406 4,747 20,342 17,930
Deferred income taxes and
investment tax credits 614 469 2,731 2,737
Allowance for other funds
used during construction (73) (1,419) (2,299) (3,610)
(Increase) decrease in
receivables, inventories,
and other current assets (829) 1,137 (2,634) (2,144)
Increase (decrease) in other
current liabilities (2,856) (161) (4,116) 3,879
Other, net 196 1,714 1,637 8,295
------- ------- ------- -------
10,459 12,486 43,256 51,092
------- ------- ------- -------
Investment activities:
Property additions,
excluding allowance for
other funds used during
construction (2,406) (16,658) (34,011) (109,984)
Available for sale
securities purchased (9,673) (7,835) (21,165) (41,419)
Available for sale
securities sold 3,012 14,055 25,925 50,473
------- -------- -------- ---------
(9,067) (10,438) (29,251) (100,930)
------- -------- -------- ---------
Financing activities:
Dividends paid (4,979) (4,824) (19,470) (19,031)
Common stock issued 180 225 609 1,860
Net short-term borrowings 305 (34,800) (1,295) (19,450)
Long-term debt issued - 31,650 15,254 77,445
Long-term debt retired (687) (2,309) (8,877) (3,609)
------- -------- -------- -------
(5,181) (10,058) (13,779) 37,215
------- -------- -------- -------
Increase (decrease) in
cash and cash equivalents (3,789) (8,010) 226 (12,623)
Cash and cash equivalents:
Beginning of period 8,179 12,174 4,164 16,787
------- ------- ------- -------
End of period $ 4,390 $ 4,164 $ 4,390 $ 4,164
======= ======= ======= =======
Supplemental disclosure
of cash flow information:
Cash paid during the
period for-
Interest $ 4,547 $ 3,527 $13,921 $11,125
Income taxes $ 600 $ 2,220 $ 6,155 $ 9,510
See accompanying notes to consolidated financial statements.
<PAGE>
BLACK HILLS CORPORATION
Statements of Shareholders' Equity
(unaudited)
Three Months Twelve Months
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Common stock:
Beginning of period $ 14,425 $ 14,386 $ 14,400 $ 14,307
Issuance of $1 par
value shares 9 14 34 93
-------- -------- -------- --------
End of period 14,434 14,400 14,434 14,400
-------- -------- -------- --------
Additional paid-in
capital:
Beginning of period 46,355 45,740 45,951 44,184
Net proceeds over par
value of stock issued 171 211 575 1,767
-------- -------- -------- --------
End of period 46,526 45,951 46,526 45,951
-------- -------- -------- --------
Retained earnings:
Beginning of period 121,562 115,284 116,459 111,485
Net income 8,001 5,999 27,595 24,005
Dividend paid (4,979) (4,824) (19,470) (19,031)
-------- -------- -------- --------
End of period 124,584 116,459 124,584 116,459
-------- -------- -------- --------
Total shareholders'
equity $185,544 $176,810 $185,544 $176,810
======== ======== ======== ========
<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 1995 Annual Report and 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, 1996, December 31, 1995, and
March 31, 1995 financial information and are of a normal recurring nature. The
results of operations for the three months ended March 31, 1996, are not
necessarily indicative of the results to be expected for the full year.
(2) JOINT DEVELOPMENT AGREEMENT
WYGEN, Inc., a subsidiary of the Company recently entered into a joint
development agreement with Calpine Corporation, a national electric power
company headquartered in San Jose, California. The joint plan is to secure
appropriate sales agreements and to develop the WYGEN Plant, an 80 MW mine-
mouth, coal fired, electric generating plant, to be constructed at the Wyodak
mine. The electricity will be marketed by Calpine's power marketing
subsidiary, Calpine Power Services Company, to customers throughout the West.
Construction of the WYGEN Plant will not commence and WYGEN will not incur
substantial costs unless long-term power sale contracts are obtained,
justifying the construction.
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.
<PAGE>
The Company currently has bank lines of credit totaling $36,000,000 which
provides for interim borrowings and the opportunity for timing of permanent
financing. The Company had no borrowings outstanding under these lines of
credit at March 31, 1996. There are no compensating balance requirements
associated with these lines of credit.
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 net income was $8,001,000 for the first quarter and
$27,595,000 for the twelve months ended March 31, 1996, an increase of
$2,002,000 and $3,590,000, respectively.
The increase in earnings for both the three and twelve months ending March
31, 1996, was the result of increased sales volume for both the electric and
coal mining operations. Consolidated revenue increased 14 percent and
6 percent for the three month and twelve month periods while consolidated
operating expenses increased 2 percent and 1 percent, respectively, for the
same periods. Earnings from the electric operations increased $1,708,000 and
$3,459,000 for the three and twelve month periods, respectively. This increase
was the result of strong growth in sales and earnings associated with the
inclusion of Neil Simpson Unit #2 (NS #2) in the Company's rate base. NS #2 is
an 80 MW coal-fired power plant which began commercial operation on August 1,
1995.
Coal mining earnings increased $290,000 and $187,000 for the three and
twelve months, respectively. This increase was the result of an increase in
coal sales of 24 percent for the quarter and 12 percent for the twelve months
ended March 31, 1996. The increase in tons of coal sold was the result of
sales of coal to NS #2 and the Wyodak Plant being in service for the entire
quarter. The Wyodak Plant was down for 13 days of unscheduled maintenance
during the first quarter of 1995.
Consolidated revenue and income from continuing operations provided by the
three businesses as a percentage of the total were as follows:
Three Months Ended Twelve Months Ended
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
REVENUE
Electric 74% 73% 73% 72%
Coal mining 20 19 20 19
Oil and gas 6 8 7 9
--- --- --- ---
100% 100% 100% 100%
=== === === ===
<PAGE>
Three Months Ended Twelve Months Ended
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
Net Income
Electric 64% 56% 59% 53%
Coal mining 34 40 36 41
Oil and gas 2 4 5 6
--- --- --- ---
100% 100% 100% 100%
=== === === ===
Capital expenditures and depreciation, depletion, and amortization by
industry segment were as follows:
Three Months Ended Twelve Months Ended
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
CAPITAL EXPENDITURES
(includes AFDC)
Electric $ 1,061 $16,981 $28,541 $ 99,199
Coal mining 143 103 1,584 4,855
Oil and gas 1,272 993 6,168 9,069
Other 3 - 17 471
------- ------- ------- --------
$ 2,479 $18,077 $36,310 $113,594
======= ======= ======= ========
DEPRECIATION,
DEPLETION, AND
AMORTIZATION
Electric $3,705 $2,644 $13,004 $10,370
Coal mining 663 906 3,362 2,836
Oil and gas 1,038 1,197 3,976 4,724
------ ------ ------- -------
$5,406 $4,747 $20,342 $17,930
====== ====== ======= =======
ELECTRIC OPERATIONS
Electric revenues increased 16 percent and 8 percent for the three and
twelve months ended March 31, 1996 due to a strong growth in sales and the
inclusion of NS #2 in the Company's rate base. Firm kilowatthour sales
increased 6 percent for the quarter and 2 percent for the twelve month period.
A 12 percent increase in residential sales in the first quarter reflected an
extremely cold winter. Degree days, which is a measure of weather trends were
14 percent above normal for the first quarter of 1996 and 27 percent above last
year.
Electric expenses overall remained relatively flat for both the three and
twelve month periods. Purchased power expense decreased 24 percent and 18
percent, respectively, while both depreciation and production expense increased
as a result of the commercial operation of NS #2.
<PAGE>
Non-operating income decreased for both the 3 months and 12 months ended
March 31, 1996 due to a $2.2 million decrease in AFUDC for both periods
reflecting the completion of NS #2 construction. Interest expense decreased 2
percent for the quarter and increased 20 percent for the twelve month period.
MINING OPERATIONS
Mining revenues increased 16 percent for the quarter and 9 percent for the
12 months ended March 31, 1996. Revenues increased as a result of a 24 percent
and 12 percent increase in tons of coal sold, respectively. This is a
reflection of the sale of coal to NS #2 and the Wyodak Plant being in service
for the entire first quarter of 1996. Mining expenses increased 21 percent for
the quarter and 12 percent for the 12 month period as a result of the increase
in tons of coal sold.
OIL AND GAS PRODUCTION OPERATIONS
Oil and gas production revenue which represents less than 10 percent of
consolidated revenue decreased 8 percent and 12 percent for the three and
twelve months ended March 31, 1996, directly related to a decrease in
equivalent barrels of oil sold.
Operating expenses decreased 7 percent for the three month period and
decreased 11 percent for the twelve month period ended March 31, 1996.
BLACK HILLS CORPORATION
Part II - Other Information
Item 1. LEGAL PROCEEDINGS
There are no legal proceedings to be reported on for the quarter ending
March 31, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS
None
b. REPORTS ON FORM 8-K
None
<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 10, 1996
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