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, 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
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, 1997
Common stock, $1.00 par value 14,456,834 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, 1997, December 31, 1996,
and March 31, 1996
Consolidated Statements of Income- 4
Three and Twelve Months
Ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows- 5
Three and Twelve Months
Ended March 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity- 6
Three and Twelve Months Ended
March 31, 1997 and 1996
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>
<TABLE>
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
<CAPTION>
March 31 December 31 March 31
1997 1996 1996
(in thousands)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 17,831 $ 13,340 $ 4,390
Securities available
for sale 15,270 11,458 13,465
Receivables, net
Customers 12,603 12,961 13,059
Other 2,362 2,727 4,767
Materials, supplies,
and fuel 7,895 7,861 7,822
Prepaid expenses 1,585 2,650 1,007
------- ------- -------
57,546 50,997 44,510
------- ------- -------
Property and investments:
Electric 480,158 479,237 470,078
Coal mining 53,388 53,200 44,616
Oil and gas 46,344 45,336 41,824
Other 4,549 3,764 3,644
------- ------- -------
584,439 581,537 560,162
Less accumulated depreciation
and depletion (186,182) (181,103) (169,758)
-------- -------- --------
Net property and
investments 398,257 400,434 390,404
-------- -------- --------
Deferred charges:
Federal income taxes 8,013 7,972 7,573
Regulatory asset 3,326 3,176 2,726
Other 4,813 4,775 4,588
-------- -------- --------
16,152 15,923 14,887
-------- -------- --------
Total $471,955 $467,354 $449,801
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BLACK HILLS CORPORATION
Consolidated Balance Sheets
(unaudited)
<CAPTION>
March 31 December 31 March 31
1997 1996 1996
(in thousands)
LIABILITIES AND CAPITALIZATION
<S> <C> <C> <C>
Current liabilities:
Current maturities of
long-term debt $ 1,310 $ 1,534 $ 1,468
Notes payable 23 143 923
Accounts payable 5,207 7,332 4,991
Accrued liabilities-
Taxes 12,725 8,633 10,849
Interest 2,996 4,035 3,010
Other 6,206 6,438 6,144
-------- -------- --------
28,467 28,115 27,385
-------- -------- --------
Deferred credits:
Federal income taxes 49,254 48,262 46,110
Investment tax credits 4,390 4,516 4,893
Reclamation costs 16,446 16,267 8,153
Regulatory liability 6,568 6,692 7,054
Other 5,897 5,636 5,343
-------- -------- --------
82,555 81,373 71,553
-------- -------- --------
Capitalization:
Common stock equity-
Common stock 14,457 14,450 14,434
Additional paid-in
capital 46,973 46,841 46,526
Retained earnings 135,339 131,884 124,584
--------- -------- --------
196,769 193,175 185,544
Long-term debt 164,164 164,691 165,319
--------- -------- --------
360,933 357,866 350,863
--------- -------- --------
Total $471,955 $467,354 $449,801
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BLACK HILLS CORPORATION
Consolidated Statements of Income
(unaudited)
<CAPTION>
Three Months Twelve Months
March 31 March 31
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating revenues:
Electric $32,034 $30,305 $120,447 $113,065
Coal mining 8,125 8,068 31,372 31,000
Oil and gas 3,719 2,731 13,543 10,917
------- ------- -------- --------
43,878 41,104 165,362 154,982
------- ------- -------- --------
Operating expenses:
Fuel and purchased
power 9,466 8,814 34,846 38,053
Operations &
maintenance 7,353 7,448 30,247 29,458
Administrative and
general 2,476 2,096 8,872 8,863
Depreciation, depletion
and amortization 5,579 5,406 22,967 20,342
Taxes, other than
income taxes 3,298 3,158 12,599 11,496
------- ------- -------- --------
28,172 26,922 109,531 108,212
------- ------- -------- --------
Operating income:
Electric 11,208 10,587 39,711 32,584
Coal mining 3,430 3,306 12,359 12,544
Oil and gas 1,068 289 3,761 1,642
------- ------- ------- --------
15,706 14,182 55,831 46,770
------- ------- ------- --------
Other income and
(expense):
Interest expense (3,479) (3,468) (13,954) (14,098)
Investment income 369 236 1,507 1,206
Allowance for
funds used during
construction 65 116 299 3,686
Other, net (183) 526 1,035 1,654
------- ------- ------- --------
(3,228) (2,590) (11,113) (7,552)
------- ------- ------- --------
Income before income
taxes 12,478 11,592 44,718 39,218
Income taxes (3,891) (3,591) (13,880) (11,623)
------- ------- -------- --------
Net income available
for common stock $8,587 $ 8,001 $ 30,838 $ 27,595
====== ======= ======== ========
Weighted average common
shares outstanding 14,454 14,429 14,446 14,417
====== ======= ======== ========
Earnings per share $ 0.59 $ 0.55 $ 2.13 $ 1.91
======= ======= ======== ========
Dividends paid per share
of common stock $ 0.355 $ 0.345 $ 1.390 $ 1.350
======= ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BLACK HILLS CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
<CAPTION>
Three Months Twelve Months
March 31 March 31
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating activities:
Net Income $ 8,587 $ 8,001 $30,838 $27,595
Principal non-cash items-
Depreciation, depletion,
and amortization 5,579 5,406 22,967 20,342
Deferred income taxes and
investment tax credits 583 614 1,632 2,731
Allowance for other funds
used during construction (36) (73) (151) (2,299)
(Increase) decrease in
receivables, inventories,
and other current assets 1,754 (829) 2,210 (2,634)
Increase (decrease) in other
current liabilities 696 (2,856) 2,140 (4,116)
Other, net (180) 196 2,041 1,637
------- ------- ------- -------
16,983 10,459 61,677 43,256
------- ------- ------- -------
Investment activities:
Property additions,
excluding allowance for
other funds used during
construction (2,816) (2,406) (24,605) (34,011)
Available for sale
securities purchased (6,153) (9,673) (37,323) (21,165)
Available for sale
securities sold 2,341 3,012 35,518 25,925
------- ------ ------- --------
(6,628) (9,067) (26,410) (29,251)
------- ------ ------- --------
Financing activities:
Dividends paid (5,132) (4,979) (20,083) (19,470)
Common stock issued 139 180 470 609
Net short-term borrowings (120) 305 (900) (1,295)
Long-term debt issued - - - 15,254
Long-term debt retired (751) (687) (1,313) (8,877)
------- ------- ------- --------
(5,864) (5,181) (21,826) (13,779)
------- ------- ------- --------
Increase (decrease)
in cash and cash
equivalents 4,491 (3,789) 13,441 226
Cash and cash equivalents:
Beginning of period 13,340 8,179 4,390 4,164
------- ------- ------- -------
End of period $17,831 $ 4,390 $17,831 $ 4,390
======= ======= ======= =======
Supplemental disclosure
of cash flow information:
Cash paid during the
period for-
Interest $ 4,518 $ 4,547 $13,968 $13,921
Income taxes $ - $ 600 $12,016 $ 6,155
Assumption of reclamation
liability in acquisition
of Clovis Point
properties $ - $ - $7,957 $
- -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BLACK HILLS CORPORATION
Statements of Shareholders' Equity
(unaudited)
<CAPTION>
Three Months Twelve Months
March 31 March 31
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Common stock:
Beginning of period $ 14,450 $ 14,425 $ 14,434 $ 14,400
Issuance of $1 par
value shares 7 9 23 34
-------- -------- -------- --------
End of period 14,457 14,434 14,457 14,434
-------- -------- -------- --------
Additional paid-in
capital:
Beginning of period 46,841 46,355 46,526 45,951
Net proceeds over par
value of stock issued 132 171 447 575
-------- -------- -------- --------
End of period 46,973 46,526 46,973 46,526
-------- -------- -------- --------
Retained earnings:
Beginning of period 131,884 121,562 124,584 116,459
Net income 8,587 8,001 30,838 27,595
Dividend paid (5,132) (4,979) (20,083) (19,470)
-------- -------- -------- --------
End of period 135,339 124,584 135,339 124,584
-------- -------- -------- --------
Total shareholders'
equity $196,769 $185,544 $196,769 $185,544
======== ======== ======== ========
</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 1996 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, 1997, December 31, 1996, and March
31, 1996 financial information and are of a normal recurring
nature. The results of operations for the three months ended
March 31, 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 Company 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.
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 no
borrowings outstanding under these lines of credit at March
31, 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 March
31, 1997, there were no balances outstanding on this line 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 $8,587,000 for the first
quarter and $30,838,000 for the twelve months ended March 31,
1997, an increase of $586,000 and $3,243,000, respectively.
The increase in earnings for both the three and twelve months
ending March 31, 1997, was due to strong sales growth in
the electric operations and increased oil and gas prices.
Consolidated revenue increased 7 percent for both the three
month and twelve month periods while consolidated operating
expenses increased 5 percent and 1 percent, respectively, for the
same periods.
Earnings from the electric operations increased $391,000 and
$2,447,000 for the three and twelve month periods, respectively.
This increase was the result of strong growth in sales,
including the sale to Montana Dakota Utilities, which commenced
January 1, 1997, 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.
Oil and gas earnings increased $530,000 for the first quarter
and $1,435,000 for the twelve month period as a result of increased
commodity prices and an increase in oil and gas production.
<PAGE>
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
1997 1996 1997 1996
REVENUE
<S> <C> <C> <C> <C>
Electric 73% 74% 73% 73%
Coal mining 19 20 19 20
Oil and gas 8 6 8 7
---- ---- ---- ----
100% 100% 100% 100%
==== ==== ==== ====
Three Months Ended Twelve Months Ended
March 31 March 31
1997 1996 1997 1996
NET INCOME
<S> <C> <C> <C> <C>
Electric 64% 64% 61% 59%
Coal mining 29 34 31 36
Oil and gas 8 2 9 5
Other (1) - (1) -
---- ---- ---- ----
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
1997 1996 1997 1996
(in thousands)
CAPITAL EXPENDITURES
(includes AFDC)
<S> <C> <C> <C> <C>
Electric $ 1,490 $ 1,061 $13,251 $ 28,541
Coal mining 205 143 1,988 1,584
Oil and gas 1,126 1,272 9,439 6,168
Other 31 3 78 17
------- ------- ------- --------
$ 2,852 $ 2,479 $24,756 $ 36,310
======= ======= ======= ========
DEPRECIATION,
DEPLETION, AND
AMORTIZATION
<S> <C> <C> <C> <C>
Electric $3,821 $3,705 $16,220 $13,004
Coal mining 761 663 3,079 3,362
Oil and gas 997 1,038 3,668 3,976
------ ------ ------- -------
$5,579 $5,406 $22,967 $20,342
====== ====== ======= =======
</TABLE>
ELECTRIC OPERATIONS
Electric revenues increased 6 percent and 7 percent for the
three and twelve months ended March 31, 1997. The increase in
electric revenues was primarily due to a 14 percent and 6 percent
increase, respectively, in firm kilowatthour sales directly
related to serving the Montana-Dakota Utilities, Sheridan,
Wyoming, load which commenced January 1, 1997, offset by
mild weather conditions. Degree days, which is a measure of
weather trends were 1 percent below normal for the first quarter of
1997 and 13 percent below last year.
Electric expenses increased 6 percent for the three month
period ending March 31, 1997, and remained relatively flat for the
twelve month period. The increase for the three month period was
primarily due to a 14 percent increase in purchased power costs
related to serving the Montana-Dakota Utilities' Sheridan,
Wyoming load.
The electric earnings increase for the twelve month period was
a result of the addition of the Sheridan, Wyoming, load and the
earnings associated with Neil Simpson Unit #2. This earnings
increase was offset by a 25 percent increase in depreciation
expense directly related to the depreciation on Neil Simpson
Unit #2 and the accelerated depreciation on the Kirk Plant. The
Kirk Plant was placed in cold reserve in August 1995 and was
fully depreciated in the fourth quarter of 1996.
MINING OPERATIONS
Coal mining earnings decreased $251,000 for the first quarter
and $344,000 for the twelve month period reflecting a decrease in
non-operating income. A $500,000 gain from the sale and retirement
of property was recognized in the first quarter of 1996.
Coal mining revenues increased slightly for both periods related
to a slight increase in tons of coal sold.
OIL AND GAS PRODUCTION OPERATIONS
Oil and gas earnings increased $530,000 the first quarter and
$1,435,000 for the twelve month period as a result of increased
commodity prices and an increase in oil and gas production
while revenue increased 36 percent and 24 percent, respectively.
Commodity prices increased 24 percent and 14 percent for the
three month and twelve month periods ending March 31, 1997,
and production increased 21 percent and 10 percent, respectively.
Operating expenses increased 18 percent for the three month
period and increased 4 percent for the twelve month period ended
March 31, 1997 directly related to the increase in production.
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, 1997.
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/ ROXANN R. BASHAM
Roxann R. Basham, Corporate Secretary/Treasurer
/S/ MARK T. THIES
Mark T. Thies, Controller
(Principal Accounting Officer)
Dated: May 9, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 335,864,000
<OTHER-PROPERTY-AND-INVEST> 62,393,000
<TOTAL-CURRENT-ASSETS> 57,546,000
<TOTAL-DEFERRED-CHARGES> 16,152,000
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 471,955,000
<COMMON> 14,457,000
<CAPITAL-SURPLUS-PAID-IN> 46,973,000
<RETAINED-EARNINGS> 135,339,000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 196,769,000
0
0
<LONG-TERM-DEBT-NET> 164,164,000
<SHORT-TERM-NOTES> 23,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,310,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 109,689,000
<TOT-CAPITALIZATION-AND-LIAB> 471,955,000
<GROSS-OPERATING-REVENUE> 43,878,000
<INCOME-TAX-EXPENSE> 3,891,000
<OTHER-OPERATING-EXPENSES> 28,172,000
<TOTAL-OPERATING-EXPENSES> 32,063,000
<OPERATING-INCOME-LOSS> 11,815,000
<OTHER-INCOME-NET> 251,000
<INCOME-BEFORE-INTEREST-EXPEN> 12,066,000
<TOTAL-INTEREST-EXPENSE> 3,479,000
<NET-INCOME> 8,587,000
0
<EARNINGS-AVAILABLE-FOR-COMM> 8,587,000
<COMMON-STOCK-DIVIDENDS> 5,132,000
<TOTAL-INTEREST-ON-BONDS> 3,360,000
<CASH-FLOW-OPERATIONS> 16,983,000
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
