SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 28, 1998
BLACK HILLS CORPORATION
State of South Dakota File Number 1-7978 IRS Number 46-0111677
625 Ninth Street
Rapid City, South Dakota 57709
Registrant's telephone number (605) 348-1700
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Item 5. OTHER INFORMATION
The Registrant through Black Hills FiberCom, will build a
telecommunications fiber optic network to serve the growing needs of
Rapid City and the Northern Black Hills of South Dakota.
"This network will allow us to offer telecommunications, cable and
data services in the Black Hills which typically have been
accessible only in more densely-populated areas," said Dan Landguth,
President and CEO of Black Hills Corporation. "We're excited to be
making what we think is the most significant investment in the
infrastructure of the Black Hills area since the Interstate highway
system was built nearly 40 years ago and we are ready to start
building immediately."
The newly formed company will invest approximately $40,000,000 over
the next three years in state-of-the-art technology that will offer
local and long distance telephone service, expanded cable television
service, Internet access, and high-speed data and video services.
Construction is targeted to begin in the fourth quarter of this year
and will take two to three years to build out the complete fiber
optics system. The Company plans to market the telecommunications
services to schools, hospitals, cities, economic development groups,
and business and residential customers.
"Black Hills FiberCom grew from Black Hills Corporation's study of
its internal need for reliable and advanced telecommunications
services," said Landguth. "In talking with area communications
users, including individuals, businesses, school systems, local
governments, and economic development groups in Rapid City and the
Northern Black Hills, we were advised that the current
telecommunications infrastructure inhibits their efforts to employ
current technology. We are pleased to be able to make this
investment in technology to help bring the Black Hills to a state of
readiness for the next millennium and at the same time bring another
revenue stream to the Company. For our customers, Black Hills
FiberCom will mean more convenience, better service and access to
advanced telecommunication products and services. For the Company
and our shareholders, it will mean additional revenue per customer,
increased market share, enhanced customer loyalty and another
earnings stream for the future."
Black Hills FiberCom will experience operating losses over the next
two to four years as it develops and constructs its network
infrastructure, builds its customer base and internal staffing, and
develops its systems. Management believes Black Hills FiberCom's
operating losses will be offset by growth in the Company's other
business segments and overall the Company should have stable or
slight growth during this start up phase.
"Building a Fiber Optic System is similar to building the Neil
Simpson 2 power plant," said Landguth. "The Company will experience
a high capital investment which will increase interest and
depreciation expense during the construction phase, however once the
project is completed and marketing successful, it will offer great
benefits to our shareholders. A major difference with this project
is the Company needs to build its customer base which may take a few
years to do. "Management believes that the Company goal of
achieving an average 6% growth in earnings over the next five years
is an attainable goal with this new business venture. Black Hills
FiberCom's assets and net income will comprise less than 10% of
consolidated assets and earnings.
Black Hills FiberCom is partnering with an international
telecommunications firm, GLA International, of St. Louis, Missouri,
to build a 500-mile hybrid fiber coaxial network in Rapid City and
the Northern Black Hills. "As pioneers in fiber optic
communications, the people at GLA International have the expertise
to work with us on all phases of this project," said Landguth. "GLA
was the firm that developed the fiber networks for Brooks Fiber
Properties which was recently purchased by WorldCom. They assisted
Brooks Fiber in the build-out of over 20 major cities in the last
few years and will bring a wealth of experience and perspective to
this project."
The fiber optic link will enable customers to receive telephone,
cable television, Internet, and high-speed data and video services
all through one cable coming into their businesses and homes. The
network is designed to provide greater reliability because there
will be redundancy built into the system. Compared with the present
telecommunications network in the Black Hills, connections to homes
initially will have 4 to 700 times greater capacity; connections to
schools and businesses will have from 65 to 1750 times greater
capacity.
The above information includes forward-looking statements that are
subject to certain risks, uncertainties and assumptions. Although
management believes that its expectations are based on reasonable
assumptions, it can give no assurances that its goals will be
achieved. Actual results may differ materially from management's
expectations as a result of a variety of factors including, but not
necessarily limited to, technological changes, regulation, market
conditions and marketing success, general economic conditions, and a
changing competitive environment.
Black Hills Corporation (HTTP://WWW.BLACKHILLSCORP.COM) is an energy
and communications company that supplies electric utility service to
a 9,300 square-mile area in western South Dakota, northeastern
Wyoming, and southeastern Montana; engages in the mining and sale of
coal from its mine located near Gillette, Wyoming; produces,
explores, and operates oil and gas interests located in the Rocky
Mountain region, Texas, and California; markets natural gas,
electricity, and related services to customers in the Rocky Mountain
region, Midwest and East Coast markets; and develops and markets
internally generated computer software.
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 hereunto duly authorized.
BLACK HILLS CORPORATION
By /S/ ROXANN R. BASHAM
Roxann R. Basham, Vice President -
Finance and Secretary/Treasurer
Dated: September 28, 1998
