SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal years ended December 31, 1999 and 1998
Commission File Number 001-07978
BLACK HILLS CORPORATION
401K RETIREMENT SAVINGS PLAN
BLACK HILLS CORPORATION
625 NINTH STREET
PO BOX 1400
RAPID CITY, SOUTH DAKOTA 57709
<PAGE>
Black Hills Corporation
Retirement Savings Plan
Financial statements as of
December 31, 1999 and 1998
together with report of
independent public accountants
<PAGE>
Index to financial statements and supplemental schedules Page
Report of independent public accountants 1
Statements of net assets available for benefits 2
Statement of changes in net assets available for benefits 3
Notes to financial statements 4
Schedule of assets held for investment purposes 8
Schedule of nonexempt transactions 9
<PAGE>
Report of independent public accountants
To the Trustees of
Black Hills Corporation Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Black Hills Corporation Retirement Savings Plan as of December 31, 1999
and 1998, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1999. These financial statements and
the supplemental schedules are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
supplemental schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
supplemental schedules are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and supplemental schedules. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Black Hills
Corporation Retirement Savings Plan as of December 31, 1999 and 1998, and the
changes in net assets available for benefits for the year ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes and nonexempt transactions are presented for purposes of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Minneapolis, Minnesota,
May 26, 2000
<PAGE>
Black Hills Corporation Retirement Savings Plan
Statement of net assets available for benefits
As of December 31
1999 1998
---- ----
INVESTMENTS, at market value (Note 2):
Collective trusts $ 7,490,837 $ 6,360,968
Mutual funds 9,909,127 7,829,119
Employer common stock 5,668,478 7,210,038
Self-directed accounts 249,511 92,234
Other 69,360
PARTICIPANT LOANS 819,385 820,244
CONTRIBUTIONS RECEIVABLE:
Participant contributions receivable 3,321 5,446
Participant contributions--loan payments in-transit 30,826 66,258
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $24,240,845 $22,384,307
=========== ===========
The accompanying notes are an integral part of this statement.
<PAGE>
Black Hills Corporation Retirement Savings Plan
Statement of changes in net assets available for benefits
For the year ended December 31, 1999
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year $22,384,307
-----------
INCREASES (DECREASES) DURING THE YEAR:
Participant contributions 1,367,450
Investment interest and dividends 946,130
Net appreciation in market value of investments 1,053,592
Net realized loss on sale of investments (8,552)
Interfund transfers, net -
Administrative expenses (2,350)
Other 12,632
Distributions to participants (1,512,364)
-----------
Net increase (decrease) in net assets 1,856,538
-----------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $24,240,845
===========
The accompanying notes are an integral part of this statement.
<PAGE>
BLACK HILLS CORPORATION RETIREMENT SAVINGS PLAN
Notes to financial statements
December 31, 1999 and 1998
1 Description of the Plan
----------------------------
General
The Black Hills Corporation Retirement Savings Plan (the Plan) is a defined
contribution plan for eligible employees of Black Hills Power and Light Company,
the assumed business name of the electric utility of Black Hills Corporation
(the Company); Wyodak Resources Development Corp. (WRDC), a wholly owned
subsidiary of the Company; Black Hills Exploration and Production, a wholly
owned subsidiary of WRDC; and Black Hills Energy Resources, Inc., Varifuel,
Inc., Black Hills FiberCom, Inc., Daksoft, Inc. and Black Hills Coal Network,
Inc. (all wholly owned subsidiaries of Black Hills Capital Group, Inc., a wholly
owned subsidiary of WRDC). The eligible employees may have a percentage of their
compensation withheld and contributed to the Plan, subject to limitations, as
defined. The Plan is designed to comply with the provisions of Section 401(k) of
the Internal Revenue Code (the Code).
The Company utilizes the Merrill Lynch special prototype defined contribution
plan and Merrill Lynch serves as the asset custodian and record keeper. The
Black Hills Corporation Benefits Committee (the Committee) is the trustee of the
Plan, and the Company's risk manager serves as the administrator of the Plan.
The following is not a comprehensive description of the Plan and, therefore,
does not include all situations and limitations covered by the Plan.
Participants should refer to the plan agreement for more complete information.
Eligibility
Employees are eligible to participate in the Plan on the first day of
employment.
Contributions
The maximum percentage of compensation an employee may contribute to the Plan is
20 percent, with an annual maximum contribution of $10,000, as provided by the
Code. There is no limit to the number of times participants may change their
contribution percentages. Amounts contributed are invested at the discretion of
plan participants in any of the 22 investment options described in Note 2.
All participant contributions made and any earnings therefrom are fully vested
to the participant at all times.
Plan amendments
Effective January 1, 2000, the Plan was amended to include a Company matching
contribution, up to a maximum of 3 percent. The Company match will vest after
five years of service, and the Company shall give credit for prior years of
service.
Rollover contributions
The Plan received $41,544 in rollover transfers from other qualified plans in
1999, which are included in participant contributions on the statement of
changes in net assets available for benefits.
Participant loans
The Plan contains a loan provision which allows participants to borrow up to a
maximum equal to the lesser of $50,000 or 50 percent of their account balances
at an interest rate of 1 percent over the prime interest rate and to repay the
loan through payroll deductions, with a maximum repayment period of five years.
During 1999, interest rates on outstanding participant loans ranged from 8.75
percent to 9.5 percent. Loans are prohibited for terminated employees.
Amendments and termination
The Company reserves the right to amend or terminate the Plan at any time. Upon
termination of the Plan, all assets will be distributed among the participants
in accordance with plan provisions.
<PAGE>
2 Summary of significant accounting policies
-----------------------------------------------
Basis of accounting
The accompanying financial statements have been prepared using the accrual basis
of accounting.
Investments
The investment options of the Plan at December 31, 1999 consist of deposits in
collective trusts of Merrill Lynch, mutual funds, common stock of the Company
and self-directed accounts. Units (shares) of the various investment funds are
valued daily at net asset value (which equals market value).
The investment options are participant directed. Participants may change their
investment elections daily.
The investment options are grouped as follows:
Collective trusts
Merrill Lynch Retirement Preservation Trust--This trust seeks to provide
preservation of capital liquidity and current income at levels that are
typically higher than money market funds. The trust is a collective trust
which invests primarily in guaranteed investment contracts (the investments
are neither insured nor guaranteed by the United States government).
Merrill Lynch Equity Index Trust--This trust seeks to provide investment
results that, before expenses, replicate the total return of the Standard &
Poor's 500 Composite Stock Price Index. The fund is a collective trust in
which most of the assets will be comprised of all, or nearly all, of the
500 stocks in the index in weightings closely aligned with those of the
index.
Mutual funds
PIMCO Total Return Fund--This fund seeks to provide maximum total return,
consistent with preservation of capital and prudent investment management,
and invests primarily in an intermediate-term portfolio of investment-grade
bonds.
Federated International Income Fund--This fund seeks to provide current
income; capital growth is a secondary objective. The fund invests at least
65 percent of assets in high-quality, foreign currency-denominated debt
securities.
Van Kampen Worldwide High Income Fund (formerly the Morgan Stanley
Worldwide High Income Fund)--This fund seeks to provide high current income
consistent with relative stability of principal and potential for capital
appreciation, and invests primarily in higher-yielding emerging market
fixed-income securities of issues throughout the world.
Oppenheimer U.S. Government Fund--This fund seeks current income and
preservation of capital and normally invests at least 80 percent of assets
in U.S. government securities and related repurchase agreements.
Merrill Lynch Capital Fund--This fund seeks the highest total investment
return consistent with product risk, primarily through a fully managed
investment policy that permits management of the fund to vary investment in
equity, debt and convertible securities based on its evaluation of changes
in economic and market trends. The fund may invest up to 25 percent of its
assets in foreign securities.
Managers International Equity Fund--This fund seeks to achieve long-term
capital appreciation through a diversified portfolio of equity securities
of non-U.S. companies. The fund generally invests in companies having
medium and large capitalizations.
Oppenheimer Global Fund--This fund seeks capital appreciation by investing
primarily in common stocks and convertible securities issued by U.S. and
foreign companies.
Davis New York Venture Fund--This fund seeks growth of capital by investing
primarily in common stock of U.S. companies with market capitalizations of
at least $5 billion.
Merrill Lynch Growth Fund--This fund seeks growth of capital and,
secondarily, income by investing in common stock, preferred stock and
convertible securities.
Alliance Quasar Fund--This fund seeks growth of capital by investing in
equity securities that offer the possibility of above-average earnings
growth and currently emphasizes investment in companies having small levels
of capitalization.
Davis Convertible Securities Fund--This fund seeks growth and income by
investing in common and convertible stocks of U.S. companies.
Van Kampen Real Estate Securities Fund--This fund seeks long-term growth of
capital, with current income as a secondary objective, and invests
primarily in securities of the real estate industry, including common
stocks and real estate investment trusts.
Merrill Lynch Pacific Fund--This fund seeks long-term capital appreciation
and normally invests at least 80 percent of assets in equities issued by
companies domiciled in far-eastern or western pacific countries.
Munder Framlington Healthcare Fund--This fund seeks long-term capital
appreciation by investing primarily in equity securities of issuers for
whom at least 50 percent of sales, profits or net assets arise from health
services or medical technology activities.
Oppenheimer Gold and Special Minerals Fund--This fund seeks capital
appreciation by normally investing between 80 percent and 100 percent of
assets in mining securities and metals investments.
State Street Research Global Resources Fund--This fund seeks to provide
long-term growth of capital by normally investing at least 65 percent of
total assets in securities of energy and natural resources companies, as
well as utilities. The fund invests primarily in stocks, including foreign
stocks.
Pioneer Europe Fund--This fund seeks long-term growth of capital by
investing primarily in equity securities of European issuers.
Seligman Communications and Information Fund--This fund seeks capital
appreciation by normally investing at least 80 percent of assets in common
stocks issued by companies that operate in the communication, information
and related industries.
Black Hills Corporation common stock
Participants may elect to invest a portion of their contributions in the
Company's common stock.
Self-directed accounts
Participants may elect to invest a portion or all of their account in a
self-directed brokerage account with Merrill Lynch. The self-directed
account allows participants to purchase and hold investments that are not
part of the Plan's regular investment menu. Investment options are subject
to qualified plan restrictions as specified by the Code.
Plan expenses
Administrative fees of $17,100 were paid by the Company in 1999.
Use of estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of net assets available for
benefits at the date of the financial statements and the reported amount of
changes in net assets available for benefits during the reporting period.
Ultimate results could differ from those estimates.
Recently issued accounting pronouncement
In September 1999, the Accounting Standards Executive Committee issued Statement
of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution
Plan Investments and Other Disclosure Matters," which eliminates the requirement
for a defined contribution plan to report and disclose participant-directed
investment programs. Accordingly, the 1998 financial statements have been
reclassified to present information on a comparative basis.
<PAGE>
Investments
The following presents investments that represent 5 percent or more of the
Plan's net assets as of December 31:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Merrill Lynch Retirement Preservation Trust, 2,889,423 and 2,719,480
shares, respectively $2,889,423 $2,729,500
Merrill Lynch Equity Index Trust, 45,468 and 43,272 shares, respectively 4,601,414 3,631,468
Merrill Lynch Capital Fund, 33,415 and 34,842 shares, respectively 1,069,605 1,197,186
Managers International Equity Fund, 48,819 and 54,294 shares, respectively 2,865,676 2,652,256
Merrill Lynch Growth Fund, 103,659 and 115,330 shares, respectively 2,827,831 2,474,980
Black Hills Corporation common stock, 255,486 and 273,366 shares, respectively 5,668,478 7,210,038
</TABLE>
3 Tax status
---------------
The Plan obtained its latest determination letter on June 19, 1991, in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Code. The Plan has been
amended since receiving the determination letter; however, the plan
administrator and the Plan's legal counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Code.
<PAGE>
Black Hills Corporation Retirement Savings Plan
(Employer identification number: 46-0111677) (Plan number: 003)
Schedule of assets held for investment purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Number
of shares
units Description Cost** Market value
------------- ---------------------------------------------- ----------- ------------
<S> <C> <C> <C>
COLLECTIVE TRUSTS:
2,889,423 Merrill Lynch Retirement Preservation Trust $ 2,889,423
45,468 Merrill Lynch Equity Index Trust 4,601,414
----------- ------------
Total collective trusts 7,490,837
----------- ------------
MUTUAL FUNDS:
80,974 PIMCO Total Return Fund 801,648
161 Federated International Income Fund 1,543
516 Van Kampen Worldwide High Income Fund 5,339
5,140 Oppenheimer U.S. Government Fund 46,517
33,415 Merrill Lynch Capital Fund 1,069,605
48,819 Managers International Equity Fund 2,865,676
2,214 Oppenheimer Global Fund 138,491
30,485 Davis New York Venture Fund 876,758
103,659 Merrill Lynch Growth Fund 2,827,831
2,859 Alliance Quasar Fund 80,748
2,606 Davis Convertible Securities Fund 65,691
1,226 Van Kampen Real Estate Securities Fund 13,285
1,008 Merrill Lynch Pacific Fund 33,314
1,614 Munder Framlington Healthcare Fund 26,079
759 Oppenheimer Gold and Special Minerals Fund 7,942
701 State Street Research Global Resources Fund 7,993
2,717 Pioneer Europe Fund 103,148
19,842 Seligman Communications and Information Fund 937,519
----------- ------------
Total mutual funds 9,909,127
255,486 BLACK HILLS CORPORATION COMMON STOCK* 5,668,478
SELF-DIRECTED ACCOUNTS 249,511
OTHER 69,360
PARTICIPANT LOANS 819,385
----------- ------------
Total investments $24,206,698
=========== ============
</TABLE>
*Denotes party in interest.
**Cost is not required for participant-directed accounts.
<PAGE>
Black Hills Corporation Retirement Savings Plan
(Employer identification number: 46-0111677) (Plan number: 003)
Schedule of nonexempt transactions
For the year ended December 31, 1999
<TABLE>
<CAPTION>
Relationship to the Interest
Identity of Plan, employer or Description of transactions, including maturity date, Amount incurred
party involved other party in interest rate of interest, collateral, and par or maturity value loaned on loan
----------------------- ----------------------- ------------------------------------------------------- ------ --------
<S> <C> <C> <C> <C>
Black Hills Corporation Sponsor Lending of moneys from the Plan to the employer
(contributions not timely remitted to the Plan),
as follows: $6,419 $1,496
Deemed loan dated March 15, 1998, maturity
September 30, 1999, deemed interest on the loan,
14.6 percent
Black Hills Corporation Sponsor Lending of moneys from the Plan to the employer
(contributions not timely remitted to the Plan),
as follows: 5,446 27
Deemed loan dated January 22, 1999, maturity
February 9, 1999, deemed interest on the loan,
10 percent
Black Hills Corporation Sponsor Lending of moneys from the Plan to the employer
(contributions not timely remitted to the Plan),
as follows: 27 4
Deemed loan dated February 9, 1999, maturity
June 14, 2000, deemed interest on the loan,
10 percent
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated May 26, 2000 included in this Form 11-K, into the Company's
previously filed Registration Statement (Form S-8 No. 333-61969).
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
June 26, 2000
