Published: August 05, 2010
Black Hills Corp. Reports Second Quarter Results and Reaffirms 2010 Earnings Guidance
RAPID CITY, S.D., Aug. 5 /PRNewswire-FirstCall/ -- Black Hills Corp. (NYSE: BKH) today announced second quarter 2010 financial results. Adjusted income from continuing operations and adjusted net income was $7.5 million or $0.19 per share, compared to $6.7 million or $0.18 per share for the same period in 2009 (this is a non-GAAP measure, see the accompanying schedule for the GAAP to non-GAAP adjustment reconciliation). On a GAAP basis, the company reported a loss from continuing operations and a net loss of $8.7 million or $0.22 per share for the second quarter of 2010, compared to income from continuing operations and net income of $24.6 million or $0.64 per share for the same period in 2009.
For the six months ended June 30, 2010, adjusted income from continuing operations and adjusted net income was $39.3 million or $1.01 per share, compared to $30.6 million or $0.79 per share for the same period in 2009 (this is a non-GAAP measure, see the accompanying schedule for the GAAP to non-GAAP adjustment reconciliation). On a GAAP basis, the company reported income from continuing operations and net income of $22.8 million or $0.58 per share for the six months ended June 30, 2010, compared to income from continuing operations of $50.2 million or $1.30 per share, and net income of $51.0 million or $1.32 per share for the same period in 2009.
"We had continued improvement in adjusted income from continuing operations this quarter, made significant progress on many of our strategic initiatives and completed financings providing additional liquidity for our growth projects," said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. "The completion of several rate cases, the sale of 23 percent ownership interest in Wygen III and the benefits of less restrictive covenants in the new Enserco credit facility improve cash flow and provide flexibility to help us optimize the amount and timing of potential debt and equity financings. With the recent approval of the air permit for our utility and IPP gas-fired generation projects in Colorado, full construction at the Pueblo airport site has begun. Although we hoped for stronger second quarter earnings and better natural gas prices, we reaffirm our 2010 earnings guidance range of $1.80 to $2.05 per share, excluding special items, as previously issued on Oct. 29, 2009."
Black Hills Corp. highlights for second quarter 2010 and other more recent events include:
Utilities
-- On April 1, 2010, Wygen III, a 110-megawatt coal-fired generation
facility near Gillette, Wyo., began commercial operations, three months
earlier and at a lower cost than originally anticipated.
-- On April 5, 2010, an agreement was reached with the Department of Energy
for smart grid funding through matching grants totaling $20.7 million
for electric utility subsidiaries, Black Hills Energy - Colorado
Electric, Black Hills Power and Cheyenne Light, Fuel & Power. The
matching funds, combined with investments from the Black Hills electric
utilities, enable the installation of an additional 149,000 smart meters
and related infrastructure investments. All three of the electric
utility subsidiaries began installing smart meters in June 2010, with
final meter installations expected to be completed in 2011.
-- On May 13, 2010, the Wyoming Public Service Commission approved a
settlement agreement for an increase in annual utility revenues of $3.1
million for Black Hills Power. New rates were effective on June 1, 2010,
for Black Hills Power Wyoming customers.
-- On June 8, 2010, Black Hills Energy - Iowa Gas filed for a $4.7 million
annual increase in utility revenues with the Iowa Utilities Board to
recover the cost of capital investments made in its Iowa natural gas
distribution systems incurred since December 2008 and other expense
increases. Interim rates reflecting an annual utility revenue increase
of $2.6 million were implemented June 18, 2010, and will be adjusted
once the IUB issues a final rate order.
-- On July 7, 2010, the South Dakota Public Utilities Commission approved a
settlement agreement for an increase in annual utility revenue of $15.2
million for Black Hills Power. New rates were effective on April 1,
2010, for Black Hills Power South Dakota customers.
-- On July 14, 2010, Black Hills Power sold a 23 percent ownership interest
in its Wygen III power generation facility to the Consolidated Wyoming
Municipalities Electric Power System Joint Powers Board for $62 million,
resulting in an estimated $5 million to $6 million gain on sale in third
quarter 2010. The JPB exists for the purpose of, among other things,
financing the City of Gillette's electrical system. The purchase
terminates the current power purchase agreement with the City of
Gillette and also initiates an operating cost sharing arrangement for
the life of the plant.
-- On July 22, 2010, Black Hills Energy - Colorado Electric and Black Hills
Colorado IPP received an air permit by the State of Colorado Department
of Public Health and Environment and immediately began construction on
two gas-fired power generation facilities that will serve Black Hills
Energy - Colorado Electric customers beginning Jan. 1, 2012. Before the
issuance of the air permit, major equipment was purchased, contracts
were awarded for water and gas line construction, a water supply
agreement was executed, and an annexation agreement was approved by the
City of Pueblo.
-- The 180-megawatt regulated utility project and related transmission
investments are expected to cost between $250 million and $260
million, $90 million of which was spent as of June 30, 2010.
-- The 200-megawatt non-regulated project will serve Black Hills Energy
- Colorado Electric utility customers through a 20-year power
purchase agreement and is expected to cost between $240 million and
$265 million, $61 million of which was spent as of June 30, 2010.
-- On Aug. 5, 2010, the Colorado Public Utilities Commission approved a
settlement agreement for an increase in annual utility revenue of $17.9
million for Black Hills Energy - Colorado Electric, based on a return on
equity of 10.5 percent and a capital structure of 52 percent equity. New
rates will be effective on Aug. 6, 2010 for Black Hills Energy -
Colorado Electric customers.
Non-regulated Energy
-- On May 12, 2010, Enserco completed a two-year, $250 million committed
stand-alone credit facility to replace its one-year, $300 million credit
facility. Improved covenants under the new facility allowed for a
reduction in capital investment in Enserco by the corporation of more
than $40 million.
-- On June 1, 2010, Enserco acquired a coal-marketing business, expanding
its commodity marketing strategies. During the second quarter,
unrealized and realized margins of $3.7 million were added to Enserco's
energy marketing portfolio as a result of the acquisition.
Corporate
-- On April 15, 2010, a new $500 million, unsecured corporate revolving
credit facility to be used for working capital needs and for general
corporate purposes was completed. The new facility has a three-year
term, expiring April 14, 2013, and includes a $100 million accordion
feature. The previous $525 million revolving credit facility due May 4,
2010, was terminated. The cost of borrowings under the new facility is
based on the company's credit rating and is currently at a spread of 275
basis points over LIBOR.
-- On July 16, 2010, a public offering of $200 million aggregate principal
amount of senior unsecured notes due July 15, 2020, was completed. The
notes are priced at par and carry an interest rate of 5.875 percent.
-- For the second quarter of 2010, a non-cash unrealized loss related to
certain interest rate swaps of $16.2 million after-tax was recognized.
Compared to the second quarter of 2009, GAAP income (loss) from continuing operations declined $33.2 million in the second quarter of 2010 reflecting the following:
Utilities - Second Quarter 2010
-- $2.7 million increase in electric utility earnings
-- $1.3 million decrease in gas utility earnings
Non-regulated Energy - Second Quarter 2010
-- $3.6 million increase in coal mining earnings
-- $0.1 million increase in oil and gas earnings
-- $1.1 million decrease in energy marketing earnings
-- $1.2 million decrease in power generation earnings
Corporate - Second Quarter 2010
-- $35.9 million decrease in corporate earnings (second quarter 2010
included a $16.2 million net non-cash unrealized loss and second quarter
2009 included a $20.6 million net non-cash unrealized gain)
USE OF NON-GAAP FINANCIAL MEASURE
Where noted in this news release, the company, in addition to presenting its earnings information in conformity with Generally Accepted Accounting Principles, has provided non-GAAP earnings data that reflect adjustments for special items as specified in the below GAAP to Non-GAAP adjustment reconciliation schedule. Adjusted income from continuing operations and adjusted net income are defined as income from continuing operations and net income, in each case adjusted for expenses and gains that are unusual, non-routine, non-recurring or special in a way that does not reflect the company's core operating performance. The company believes that non-GAAP financial measures are useful to investors because the items excluded are not indicative of the company's continuing operating results. Also, the company's management uses these non-GAAP financial measures as an indicator for planning and forecasting future periods. Adjusted income from continuing operations and adjusted net income have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of adjusted income from continuing operations and adjusted net income should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine or non-recurring.
GAAP TO NON-GAAP ADJUSTMENT RECONCILIATION
Three months ended June 30,
(In millions,
except per share
amounts) 2010 2009
(after-tax) Income EPS Income EPS
------ ---
(Loss) income from
continuing
operations (GAAP) $(8.7) $(0.22) $24.6 $0.64
Adjustments for
special items:
Unrealized (gain)
loss on interest
rate swaps 16.2 0.41 (20.6) (0.53)
Asset impairment -
ceiling test - - - -
Gain on partial
sale of Wygen I - - - -
Gain on sale of
Elkhorn, NE
assets - - - -
Improved effective
tax rate - - - -
BHE acquisition
facility fee - - 1.9 0.05
BHE integration
expenses - - 0.8 0.02
--- --- --- ----
Total special
items adjustment 16.2 0.41 (17.9) (0.46)
Income from
continuing
operations (Non-
GAAP) $7.5 $0.19 $6.7 $0.18
==== ===== ==== =====
Six months ended June 30,
(In millions, except per
share amounts) 2010 2009
(after-tax) Income EPS Income EPS
------ --- ------ ---
(Loss) income from
continuing operations
(GAAP) $22.8 $0.58 $50.2 $1.30
Adjustments for special
items:
Unrealized (gain) loss on
interest rate swaps 18.2 0.47 (30.2) (0.78)
Asset impairment -ceiling
test - - 27.8 0.72
Gain on partial sale of
Wygen I - - (16.9) (0.44)
Gain on sale of Elkhorn,
NE assets (1.7) (0.04) - -
Improved effective tax
rate - - (3.8) (0.10)
BHE acquisition facility
fee - - 1.9 0.05
BHE integration expenses - - 1.6 0.04
--- --- --- ----
Total special items
adjustment 16.5 0.43 (19.6) (0.51)
Income from continuing
operations (Non-GAAP) $39.3 $1.01 $30.6 $0.79
===== ===== ===== =====
DIVIDENDS
On July 28, 2010, our board of directors declared a quarterly dividend on common stock. Common shareholders of record at the close of business on Aug. 18, 2010, will receive $0.36 cents per share, equivalent to an annual dividend rate of $1.44, payable on Sept. 1, 2010.
CONFERENCE CALL AND WEBCAST
The company will host a live conference call and webcast at 11a.m. EDT on Friday, Aug. 6, 2010, to discuss the company's financial and operating performance.
Those interested in listening to the live broadcast from within the United States can call 866-700-7477. International callers can call 617-213-8840. All callers need to enter the pass code 23235101 when prompted. To access the live webcast and download a copy of the investor presentation, go to the Black Hills website at www.blackhillscorp.com and click "Webcast" in the "Investor Relations" section. The presentation will be posted on the website before the webcast. Listeners should allow at least five minutes for registering and accessing the presentation.
For those unable to listen to the live broadcast, a replay will be available on our website or by telephone through Friday, Aug. 13, 2010, at 888-286-8010 in the United States and at 617-801-6888 for international callers. The replay pass code is 97915743.
CONSOLIDATED FINANCIAL RESULTS
BLACK HILLS CORPORATION
(In thousands, except per share amounts)
Three months ended Six months ended
------------------ ----------------
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Revenues:
Utilities $222,611 $211,944 $614,417 $605,341
Non-regulated
Energy 48,680 45,405 99,206 89,951
$271,291 $257,349 $713,623 $695,292
======== ======== ======== ========
Net (loss)
income
Utilities $6,309 $4,983 $35,659 $31,566
Non-regulated
Energy (a) 4,193 2,818 11,244 (3,676)
Corporate (19,161) 16,780 (24,128) 22,316
------- ------ ------- ------
(Loss) income
from
continuing
operations (8,659) 24,581 22,775 50,206
Income from
discontinued
operations - - - 766
Net (loss)
income $(8,659) $24,581 $22,775 $50,972
======= ======= ======= =======
Weighted
average common
shares
outstanding:
Basic 38,902 38,598 38,875 38,554
Diluted 38,902 38,658 39,042 38,611
Earnings (loss)
per share:
Basic -
Continuing
operations $(0.22) $0.64 $0.59 $1.30
Discontinued
operations - - - 0.02
Total $(0.22) $0.64 $0.59 $1.32
====== ===== ===== =====
Diluted -
Continuing
operations $(0.22) $0.64 $0.58 $1.30
Discontinued
operations - - - 0.02
--- --- --- ----
Total $(0.22) $0.64 $0.58 $1.32
====== ===== ===== =====
(a) 2009 six months financial results includes a $27.8 million after-
tax ceiling test impairment at our Oil and Gas Segment and a $16.9
million after-tax gain on the sale of a 23.5% ownership interest in
the Wygen I power generation facility to MEAN.
BUSINESS UNIT PERFORMANCE SUMMARY
(Minor differences in comparative amounts may result due to rounding. All amounts are presented on an after-tax basis unless otherwise indicated.)
Utilities Group - Second Quarter 2010
Income from continuing operations from the Utilities group for the three months ending June 30, 2010, was $6.3 million, compared to $5.0 million in 2009. Business segment results were as follows:
Electric Utility segment income from continuing operations was $7.2
million for the second quarter of 2010 compared to $4.5 million in
-- 2009 as a result of:
Gross margin: Gross margin increased $6.3 million primarily due to an
increase of $3.8 million related to the impact of the Black Hills
Power rate case where interim rates went into effect April 1, 2010,
an increase of $0.8 million for updated transmission cost adjustment
at Colorado Electric, increased off-system sales margins of $0.7
million, and increased intercompany revenues of $0.7 million related
to a shared services agreement.
---------------------------------------------------------------------
Operating, general and administrative costs: Operating, general and
administrative costs increased $2.3 million primarily due to
additional costs associated with the operations of Wygen III, which
commenced commercial operations on April 1, 2010, increased labor and
employee benefits costs and increased intercompany costs related to a
shared services agreement.
----------------------------------------------------------------------
Depreciation and amortization: Depreciation and amortization increased
$0.6 million primarily due to the commencement of depreciation on the
Wygen III plant, which began commercial operations on April 1, 2010.
----------------------------------------------------------------------
Interest expense, net: Interest expense, net decreased $0.7 million
due to an increase of $1.2 million in AFUDC associated with the
borrowed funds for the construction at Colorado Electric partially
offset by higher interest expense of $0.8 million compared to the
same period in the prior year as a result of a change in debt
structure from short-term to longer-term debt.
-------------------------------------------------------------------
Other income: Other income decreased $1.0 million primarily due to
lower AFUDC-equity, which decreased upon the placement of Wygen III
into commercial operations on April 1, 2010.
--------------------------------------------------------------------
Income tax: Income tax expense increased $2.1 million primarily due to
an increase in earnings compared to the same period in the prior year
and a higher effective tax rate resulting from the lower benefit from
AFUDC-equity, which decreased upon the placement of Wygen III into
commercial operations on April 1, 2010.
----------------------------------------------------------------------
The Gas Utility segment loss from continuing operations was $0.9
million for the second quarter of 2010 compared to income from
continuing operations of $0.4 million in 2009, primarily as a
-- result of:
Gross margin: Gross margins increased $0.8 million primarily due to
increased interim rates at Iowa Gas and Nebraska Gas, and an approved
surcharge at Kansas Gas, which were effective subsequent to the
second quarter of 2009, partially offset by lower volumes.
----------------------------------------------------------------------
Operating, general and administrative costs: Operating, general and
administrative costs increased $1.2 million primarily due to
increases in labor and employee benefit costs.
-------------------------------------------------------------------
Depreciation and amortization: Depreciation and amortization decreased
$0.5 million primarily due to assets that became fully depreciated
during 2009.
----------------------------------------------------------------------
Interest expense, net: Interest expense, net increased $1.6 million
primarily resulting from the assignment of longer-term debt to
adjust the assigned capital structure.
-------------------------------------------------------------------
Other expense: Other expense was comparable to the same period in the
prior year.
---------------------------------------------------------------------
Income tax: The effective tax rate for the three months ended June 30,
2010, was comparable to the same period in the prior year.
----------------------------------------------------------------------
The following tables provide certain Utilities group operating statistics:
Three months Six months ended
ended June 30, June 30,
Electric
Utilities: 2010 2009 2010 2009
---- ---- ---- ----
Retail sales
-MWh 1,073,529 1,048,820 2,227,384 2,163,522
Contracted
wholesale
sales -MWh 120,258 143,248 288,723 311,927
Off-system
sales - MWh 436,572 399,429 911,661 819,262
1,630,359 1,591,497 3,427,768 3,294,711
--------- --------- --------- ---------
Total gas
sales -Dth 1,022,729 1,022,521 3,065,565 2,869,515
--------- --------- --------- ---------
Regulated
power plant
availability:
--------------
Coal-fired
plants * 90.0% 81.8% 91.3% 89.5%
Other plants 97.4% 92.6% 98.6% 96.0%
Total
availability 92.6% 86.0% 93.9% 92.0%
------------- ---- ---- ---- ----
* Results for the three and six months ended June 30, 2009, reflect
outages at Neil Simpson I and Neil Simpson II
Three months Six months ended
ended June 30, June 30,
-------------- ----------------
Gas
Utilities: 2010 2009 2010 2009
---- ---- ---- ----
Total gas
sales -Dth 7,575,755 8,992,054 33,717,145 32,827,672
Total
transport
volumes -
Dth 12,771,600 12,791,018 30,583,347 28,169,576
---------- ---------- ---------- ---------- ----------
Non-regulated Energy Group - Second Quarter 2010
Income from continuing operations from the Non-regulated Energy group for the three months ended June 30, 2010, was $4.2 million, compared to $2.8 million for the same period in 2009. Business segment results were as follows:
Coal Mining income from continuing operations was $3.1 million for
the second quarter of 2010, compared to a loss from continuing
-- operations of $0.5 million in 2009 as a result of:
Revenue: Revenue increased $1.0 million primarily due to higher
volumes as a result of sales to Wygen III which commenced commercial
operations on April 1, 2010 and a 4 percent increase in average
price, partially offset by the impact on sales volumes from customer
plant outages.
---------------------------------------------------------------------
Operating, general and administrative costs: Operating, general and
administrative costs decreased $1.2 million. During 2010, the company
received approval from the State of Wyoming's Department of
Environmental Quality for a revised post-mining topography plan. The
new plan includes a more efficient method of conducting final
reclamation of the mine site by re-assessing the handling of
overburden. Accordingly, overburden yards meeting backfill
requirements were modified in the three months ended June 30, 2010.
This resulted in a reduction to overburden removal costs of
approximately $1.3 million. Operating costs also decreased due to
lower mining taxes. Cubic yards of overburden moved increased 8
percent.
----------------------------------------------------------------------
Depreciation, depletion and amortization: Depreciation, depletion and
amortization was comparable to the same period in the prior year.
---------------------------------------------------------------------
Interest income, net: Interest income, net increased $0.3 million
primarily due to increased advances to affiliates at higher interest
rates.
---------------------------------------------------------------------
Other income: Other income was comparable to the same period in the
prior year.
-------------------------------------------------------------------
Income tax: Income tax expense increased $0.6 million primarily due to
higher pre-tax earnings during the second quarter of 2010. During
the second quarter of 2009, the income tax provision was impacted by
percentage depletion.
----------------------------------------------------------------------
Oil and Gas income from continuing operations was $0.2 million for
the second quarter of 2010, compared to $0.1 million in 2009 as a
-- result of:
Revenue: Revenue increased $0.5 million primarily due to a 10 percent
increase in the average hedged price of natural gas and a 54 percent
increase in the average hedged price of oil, partially offset by a 12
percent decline in oil volumes, an 11 percent decline in gas volumes
and a $0.8 million charge for the reallocation of certain net
revenues associated with reversionary ownership. The production
variance was largely driven by natural declines from producing
properties reflecting reduced capital deployment during 2010 and
2009.
----------------------------------------------------------------------
Operating, general and administrative costs: Operating, general and
administrative costs were comparable to the same period in the prior
year.
---------------------------------------------------------------------
Depreciation, depletion and amortization: Depreciation, depletion and
amortization increased $0.4 million due to a higher depletion rate
partially offset by lower volumes.
---------------------------------------------------------------------
Interest expense, net: Interest expense, net was comparable to the
same period in the prior year.
------------------------------------------------------------------
Other income: Other income was comparable to the same period in the
prior year.
-------------------------------------------------------------------
Income tax: Income taxes in the second quarter of 2010 and 2009
reflect an adjustment for depletion rates.
---------------------------------------------------------------
Energy Marketing income from continuing operations was $1.3 million
for the second quarter of 2010, compared to income from continuing
-- operations of $2.4 million in 2009 as a result of:
Revenue and gross margin: Revenue and gross margin increased $0.8
million primarily driven by unrealized gains on our portfolio of coal
marketing contracts acquired on June 1, 2010. The contracts we
acquired included a significant "long" coal position. An increase in
the market price of coal during June 2010, combined with this "long"
position drove the unrealized coal marketing margins during the
period. The benefit from coal marketing was supplemented by strong
results from increased crude oil volumes marketed partially offset by
lower margins from decreased gas marketing volumes.
----------------------------------------------------------------------
Operating, general and administrative costs: Operating, general and
administrative costs increased $1.3 million primarily due to higher
provision for compensation expense and increased bank fees as a
result of higher letters of credit outstanding.
--------------------------------------------------------------------
Depreciation and amortization: Depreciation and amortization was
comparable to the same period in the prior year.
----------------------------------------------------------------
Interest expense, net: Interest expense, net increased $0.4 million
due to increased amortization of financing costs related to the
Enserco credit facility and decreased interest income on lower cash
balances.
--------------------------------------------------------------------
Other income: Other income was comparable to the same period in the
prior year.
-------------------------------------------------------------------
Income tax: The effective tax rate for the three months ended June 30,
2010, is comparable to the effective tax rate for the three months
ended June 30, 2009.
----------------------------------------------------------------------
Power Generation loss from continuing operations was $0.4 million
for the second quarter of 2010, compared to income from continuing
-- operations of $0.8 million in 2009 as a result of:
Revenue: Revenue decreased $0.3 million primarily due to a major
overhaul and forced outage at Wygen I.
----------------------------------------------------------------
Cost of Sales: Cost of sales increased $0.5 million primarily due to
the purchase of replacement power due to a major overhaul and forced
outage at Wygen I.
---------------------------------------------------------------------
Operating, general and administrative costs: Operating, general and
administrative costs increased $0.7 million primarily due to
maintenance costs as a result of an extended outage at Wygen I.
-------------------------------------------------------------------
Depreciation and amortization: Depreciation and amortization were
comparable to the same period in the prior year.
-----------------------------------------------------------------
Interest expense, net: Interest expense, net decreased $0.7 million
primarily due to a decrease in debt from an intercompany debt
restructuring, partially offset by interest expense related to the
2009 $120 million project financing at Black Hills Wyoming.
-------------------------------------------------------------------
Other income: Other income was comparable to the same period in the
prior year.
-------------------------------------------------------------------
Income tax: The effective tax rate for the three months ended June 30,
2010, is comparable to the effective tax rate for the three months
ended June 30, 2009.
----------------------------------------------------------------------
The following tables contain certain Non-regulated Energy operating statistics:
Three Six
months months
ended ended
June 30, June 30,
2010 2009 2010 2009
---- ---- ---- ----
Coal
Mining: (in thousands)
Tons of
coal sold 1,459 1,363 2,851 2,870
Overburden
yards 3,752 3,473 7,323 6,635
Three months Six months
ended June 30, ended June 30,
2010 2009 2010 2009
---- ---- ---- ----
Oil and Gas:
Mcf
equivalent
sales 2,863,236 3,229,000 5,521,758 6,514,300
Three months Six months
ended June 30, ended June 30,
2010 2009 2010 2009
---- ---- ---- ----
Energy Marketing:
Average daily
quantities -
Natural gas
physical -MMBtus 1,348,887 1,582,900 1,549,913 1,916,000
Crude oil physical
-barrels 20,935 11,846 17,203 11,456
Coal - tons (a) 27,972 - 27,972 -
(a) Represents the activity from the coal marketing business acquired
on June 1, 2010
Three
months Six months
ended ended
June 30, June 30,
2010 2009 2010 2009
---- ---- ---- ----
Power Generation:
Contracted fleet power
plant availability -
Coal-fired plants * 98.9% 92.4% 99.5% 94.0%
Other plants 100.0% 98.5% 100.0% 98.3%
Total availability 99.3% 94.9% 99.7% 95.7%
* Contracted availability during the three months ended June 30, 2010
was not impacted by plant outage at Wygen I as a result of providing
replacement power as allowed under contract provision.
Corporate - Second Quarter 2010
Loss for the three months ended June 30, 2010, was $19.2 million compared to earnings of $16.8 million for the same period in 2009. Results for the second quarter of 2010 reflect a $16.2 million unrealized mark-to-market non-cash loss related to interest rate swaps no longer designated as hedges for accounting purposes and a $0.9 million decrease in net interest expense compared to the second quarter of 2009, which included a $20.6 million unrealized mark-to-market non-cash gain related to interest rate swaps.
ABOUT BLACK HILLS CORP.
Black Hills Corp. -- a diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice -- is based in Rapid City, S.D., with corporate offices in Denver and Omaha, Neb. The company serves 763,300 natural gas and electric utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company's non-regulated businesses generate wholesale electricity, produce natural gas, oil and coal, and market energy. Black Hills employees partner to produce results that improve life with energy.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release includes "forward-looking statements" as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, the risk factors described in Item 1A of Part I of our 2009 Annual Report on Form 10-K filed with the SEC, and other reports that we file with the SEC from time to time, and the following:
-- Our ability to obtain adequate cost recovery for our utility operations
through regulatory proceedings and receive favorable rulings in periodic
applications to recover costs for fuel, transmission and purchased power
in our regulated utilities and the timing in which the new rates would
go into effect;
-- Our ability to receive regulatory approval to recover in rate base our
expenditures for new generation facilities or other utility
infrastructure;
-- Our ability to complete the construction, start up and operation of
power generation facilities in a cost-effective and timely manner;
-- The accounting treatment and earnings impact associated with interest
rate swaps;
-- The timing, volatility and extent of changes in energy and commodity
prices, supply or volume, the cost and availability of transportation of
commodities, changes in interest rates or foreign exchange rates and the
demand for our services, any of which can affect our earnings, financial
liquidity and the underlying value of our assets, including the
possibility that we may be required to take future impairment charges
under the SEC's full cost ceiling test for natural gas and oil reserves;
-- Our ability to successfully integrate and profitably operate any recent
and future acquisitions;
-- The timing and extent of scheduled and unscheduled outages of our power
generating facilities;
-- Our ability to successfully complete labor negotiations with four of the
six unions with whom we have collective bargaining agreements and for
which we are currently in, or soon to be in, contract renewal
negotiations;
-- Our ability to provide accurate estimates of proved oil and gas reserves
and future production and associated costs;
-- The extent of our success in connecting natural gas supplies to
gathering, processing and pipeline systems;
-- Capital market conditions and market uncertainties related to interest
rates, which may affect our ability to raise capital on favorable terms;
-- Changes in or compliance with laws and regulations, particularly those
related to financial reform legislation, taxation, power generation,
safety, protection of the environment and energy marketing;
-- Weather and other natural phenomena;
-- The effect of accounting policies issued periodically by accounting
standard-setting policies;
-- Macro- and micro-economic changes in the economy and energy industry,
including the impact of (i) consolidation and changes in competition and
(ii) general economic and political conditions, including tax rates or
policies and inflation rates; and
-- Other factors discussed from time to time in our filings with the SEC.
New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time-to-time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Black Hills Corp.
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