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, 2000 and 1999
Commission File Number 333-52664
BLACK HILLS CORPORATION
401K RETIREMENT SAVINGS PLAN
BLACK HILLS CORPORATION
625 NINTH STREET
PO BOX 1400
RAPID CITY, SOUTH DAKOTA 57709
Black Hills Corporation
Retirement Savings Plan
Financial statements as of
December 31, 2000 and 1999
together with report of
independent public accountants
Index to financial statements and supplemental schedules Page
Report of independent public accountants 1
Statements of net assets available for benefits 2
Statements of changes in net assets available for benefits 3
Notes to financial statements 4
Schedule H, line 4i-- Schedule of Assets (Held At End of Year) 7
Schedule G, Part III-- Nonexempt Transactions 9
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, 2000
and 1999, and the related statements of changes in net assets available for
benefits for the years then ended December 31, 2000 and 1999. These financial
statements and the supplemental schedules referred to below 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, 2000 and 1999, and the
changes in net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States.
Our audits were performed 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. These 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,
June 1, 2001
1
Black Hills Corporation Retirement Savings Plan
Statements of net assets available for benefits
As of December 31
2000 1999
----------- ----------
CASH $ 7,995 $ 49,409
INVESTMENTS, at fair value:
Cash fund 45,729 -
Collective trusts 7,617,449 7,490,837
Mutual funds 10,727,912 9,909,127
Common stock 452,537 -
Black Hills Corporation common stock 11,958,351 5,668,478
Participant loans 813,350 819,385
Other - 249,511
---------- ----------
Total investments 31,615,328 24,137,338
CONTRIBUTIONS RECEIVABLE:
Employee 15,989 34,147
Employer 5,980 -
INVESTMENT TRANSACTIONS PENDING 3,543 19,951
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $31,648,835 $24,240,845
=========== ===========
The accompanying notes are an integral part of these statements.
2
Black Hills Corporation Retirement Savings Plan
Statements of changes in net assets available for benefits
For the years ended December 31
2000 1999
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year $24,240,845 $22,384,307
----------- -----------
INCREASES (DECREASES) DURING THE YEAR:
Participant contributions 3,905,269 1,367,450
Employer matching contribution 574,290 -
Investment interest and dividends 1,372,971 946,130
Net appreciation in fair value of investments 3,033,933 1,053,592
Net realized gain (loss) on sale of investments 363,713 (8,552)
Administrative expenses (2,750) (2,350)
Other 16,214 12,632
Distributions to participants (1,855,650) (1,512,364)
----------- -----------
Net increase in net assets 7,407,990 1,856,538
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $31,648,835 $24,240,845
=========== ===========
The accompanying notes are an integral part of these statements.
3
BLACK HILLS CORPORATION RETIREMENT SAVINGS PLAN
Notes to financial statements
December 31, 2000 and 1999
1 Description 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.
General
The Black Hills Corporation Retirement Savings Plan (the Plan) is a defined
contribution plan for eligible employees of Black Hills Power, Inc., the assumed
business name of the electric utility of Black Hills Corporation (the Company),
and certain subsidiary companies of Black Hills Corporation. The eligible
employees may have a percentage of their compensation withheld and contributed
to the Plan, subject to limitations, as defined. It is subject to the provisions
of the Employment Retirement Income Security Act of 1974. The Plan is designed
to comply with the provisions of Section 401(k) of the Internal Revenue Code
(the Code).
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.
Plan expenses
Administrative fees of approximately $60,800 and $17,100 were paid by the
Company in 2000 and 1999, respectively.
Eligibility and vesting
Employees are eligible to participate in the Plan on the first day of
employment.
Participants are immediately vested in the value of their pretax salary
reduction contributions. Participants vest 20 percent per year in matching
contributions until reaching five years of service. At that time, participants
are 100 percent vested in matching contributions. Participants also become fully
vested in employer contributions if their employment with the Company is
terminated due to retirement at or after attainment of age 65, total and
permanent disability, or death.
Contributions
The maximum percentage of compensation an employee may contribute to the Plan is
20 percent, with an annual maximum contribution of $10,500, as provided by the
Internal Revenue 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 or
individual investments as directed by the participant.
Effective January 1, 2000 (effective May 1, 2000 for employees represented by
the collectively bargained unit), the Plan was amended to include a
discretionary dollar-for-dollar Company matching contribution, up to a maximum
of 3 percent of an individual participant's compensation.
Rollover contributions
The Plan received $2,102,946 and $41,544 in rollover transfers from other
qualified plans in 2000 and 1999, respectively, which are included in
participant contributions on the statements of changes in net assets available
for benefits. In 2000 approximately $1.7 million of the rollover transfers came
from the acquisition of Indeck Capital, Inc., which was merged into Black Hills
Energy Capital, Inc.
4
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 vested 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 2000 and 1999, interest rates on outstanding participant
loans ranged from 8.75 percent to 10.50 percent and from 8.75 percent to 9.50
percent, respectively. Loans are prohibited for terminated employees.
Distributions to participants
Employee account balances are distributable upon retirement, disability, death,
termination from the Company or hardship. Upon the occurrence of one of these
events, a participant (or the participant's beneficiary in the case of death)
may receive his or her account balance as a lump-sum payment or installment
payments over a period of no more than 10 years.
Amendments and termination
The Company reserves the right to amend or terminate the Plan at any time. Upon
termination of the Plan participants become 100 percent vested, and all assets
will be distributed among the participants in accordance with plan provisions.
2 Summary of significant accounting policies
- -----------------------------------------------
Basis of accounting
The accompanying financial statements have been prepared using the accrual basis
of accounting.
Investment valuation and income recognition
Investments of the Plan are stated at fair value. Shares of registered
investment companies are valued at quoted market prices, which represent the net
asset value of shares held by the Plan at year-end. Realized gains and losses on
sales of investments represent the difference between the net proceeds from the
sale of investments and their market values at the beginning of the year or
original cost if purchased during the year. Unrealized appreciation or
depreciation of investments represents changes in the market value of
investments since the beginning of the year.
Purchases and sales of securities are reflected on a trade-date basis. Interest
income is recognized when earned. Dividend income is recorded on the ex-dividend
date.
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.
Reclassification
Certain 1999 numbers have been reclassified to conform to the 2000 presentation.
3 Investments
- ----------------
The investment options of the Plan at December 31, 2000 consist of deposits in
collective trusts of Merrill Lynch, mutual funds, common stock of the Company
and other investments as self-directed by participants. Units (shares) of the
various investment funds are valued daily at net asset value (which equals
market value). The investment options are participant directed and participants
may change their investment elections daily.
5
The following presents investments that represent 5 percent or more of the
Plan's net assets as of December 31:
2000 1999
---------- ----------
Merrill Lynch Retirement Preservation Trust $3,173,244 $2,889,423
Merrill Lynch Equity Index Trust 4,444,205 4,601,414
Managers International Equity Fund 2,490,145 2,865,676
Merrill Lynch Growth Fund 2,103,703 2,827,831
Davis New York Venture Fund 1,588,978 876,758
Black Hills Corporation common stock 11,958,351 5,668,478
Merrill Lynch Capital Fund * 1,069,605
*Under 5 percent.
4 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. The Plan sponsor is committed to taking all action necessary, if any,
to maintain the Plan's qualified status.
5 Party-in-interest transactions
- -----------------------------------
The Plan invests in Merrill Lynch funds and Black Hills Corporation stock. These
transactions qualify as exempt party-in-interest transactions.
6
BLack Hills Corporation Retirement Savings Plan
(Employer identification number: 46-0111677) (Plan number: 003)
Schedule H, line 4i-- Schedule of Assets (Held At End of Year)
As of December 31, 2000
Current
Description Cost value
- ----------------------------------------------- -------- -----------
CASH FUND:
Merrill Lynch Ready Assets* ** $ 45,729
Total cash fund 45,729
COLLECTIVE TRUSTS:
Merrill Lynch Retirement Preservation Trust* ** 3,173,244
Merrill Lynch Equity Index Trust* ** 4,444,205
Total collective trusts 7,617,449
MUTUAL FUNDS:
PIMCO Total Return Fund ** 871,652
Federated International Income Fund ** 7,699
Van Kampen Worldwide High Income Fund ** 11,633
Oppenheimer U.S. Government Fund ** 58,392
Merrill Lynch Capital Fund* ** 714,639
Managers International Equity Fund ** 2,490,145
Oppenheimer Global Fund ** 917,744
Davis New York Venture Fund ** 1,588,978
Merrill Lynch Growth Fund* ** 2,103,703
Alliance Quasar Fund ** 144,400
Davis Convertible Securities Fund ** 83,339
Van Kampen Real Estate Securities Fund ** 29,741
Merrill Lynch Pacific Fund* ** 43,990
Munder Framlington Healthcare Fund ** 409,455
Oppenheimer Gold and Special Minerals Fund ** 34,049
State Street Research Global Resources Fund ** 14,339
Pioneer Europe Fund ** 116,086
Seligman Communications and Information Fund ** 1,087,928
Total mutual funds 10,727,912
COMMON STOCK:
Black Hills Corporation Common Stock* ** 11,958,351
7
Current
Description Cost value
- ----------------------------------------------- -------- -----------
ADC Telecommunications Inc ** 5,437
AT&T Corp ** 17,250
Allnetsvcs Com Corp ** 73
America Online Inc ** 21,924
Apple Computer Inc ** 28,262
Avaya Inc ** 82
Charter Communications Inc ** 2,268
Cisco Systems Inc ** 5,737
Corning Inc ** 15,844
Compuware Corp ** 1,250
E Trade Group Inc ** 2,950
EMC Corporation ** 6,650
Echelon Corporation ** 9,637
Egghead.com Inc ** 335
Ericsn LM Tel ** 7,160
Exxon Mobil Corp ** 43,469
Ford Motor Co ** 35,156
Grey Wolf Inc ** 11,750
Global Marine Inc ** 14,187
Globalstar Telecom ** 90
Hollywood Media Corp ** 775
Intel Corp ** 19,540
Intl Business Mach ** 2,380
Intl Rectifier Corp ** 4,500
Knight Trading Group Inc ** 1,045
Ahold NV ** 9,847
Koninkligke Philips Electronics N.V. ** 10,875
LSI Logic Corp ** 1,367
Laser Vision Centers ** 487
Lucent Technologies Inc ** 18,900
Mkting Svcs Gp Inc ** 118
Medarex Inc ** 8,883
Micron Technology Inc ** 17,750
Navarre Corp ** 546
Nortel Networks Corp ** 6,412
Nokia Corp ** 13,050
Pfizer Inc ** 23,000
Philip Morris Cos Inc ** 22,000
Protein Ploymer Techs ** 27,484
RF Micro Devices Inc ** 1,371
Rite Aid Corp ** 1,187
Safeguard Scientifics ** 993
Southwest Airlines Co ** 10,662
Texas Instruments ** 7,106
Walmart Stores Inc ** 7,968
Worldcom Inc ** 4,780
-----------
Total common stock 12,410,888
PARTICIPANT LOANS, with interest rates ranging
from 8.75 percent to 10.50 percent* ** 813,350
-----------
Total investments $31,615,328
===========
*Denotes party in interest.
**Cost is not required for participant-directed accounts.
8
BLACK HILLS CORPORATION RETIREMENT SAVINGS PLAN
(Employer identification number: 46-0111677) (Plan number: 003)
Schedule G, Part III -- Nonexempt Transactions
For the year ended December 31, 2000
Relationship to
the Plan, employer Description of transactions, including Interest
Identity of or other party in maturity date, rate of interest, collateral, Amount incurred
party involved interest and par or maturity value loaned on loan
- ----------------------- ------------------ ------------------------------------------- ------ --------
Black Hills Corporation Sponsor Lending of moneys from the Plan to the $27 $4
employer (contributions not timely remitted
to the Plan), as follows: Deemed loan dated
February 9, 1999, maturity June 14, 2000,
deemed interest on the loan, 10 percent
9
EXHIBIT 23(b)
Consent of independent public accountants
As independent public accountants, we hereby consent to the incorporation of our
report dated June 1, 2001 included in this Form 11-K, into the Company's
previously filed Registration Statement (Form S-8 No. 333-61969).
Arthur Andersen
Minneapolis, Minnesota,
June 26, 2001