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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
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For the fiscal years ended December 31, 2001 and 2000
Commission File Number 001-31303
BLACK HILLS CORPORATION
RETIREMENT SAVINGS PLAN
BLACK HILLS CORPORATION
625 NINTH STREET
PO BOX 1400
RAPID CITY, SOUTH DAKOTA 57709
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Black Hills Corporation
Retirement Savings Plan
Financial statements as of
December 31, 2001 and 2000
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 10
Report of independent public accountants
To the Trustee 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, 2001
and 2000, and the related statements of changes in net assets available for
benefits for the years then ended. 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, 2001 and 2000, 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 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. 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,
April 25, 2002
1
Black Hills Corporation Retirement Savings Plan
Statements of net assets available for benefits
As of December 31
2001 2000
---- ----
CASH $ 6,546 $ 7,995
INVESTMENTS, at fair value: 29,205,700 31,615,328
CONTRIBUTIONS RECEIVABLE:
Employee 20,346 15,989
Employer 8,502 5,980
INVESTMENT TRANSACTIONS PENDING 46,500 3,543
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 29,287,594 $ 31,648,835
============ ============
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
2001 2000
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year $ 31,648,835 $ 24,240,845
------------- -------------
INCREASES (DECREASES) DURING THE YEAR:
Participant contributions 2,771,292 3,905,269
Employer matching contributions 933,233 574,290
Investment interest and dividends 694,891 1,372,971
Net appreciation (depreciation) in fair value of investments (5,150,125) 3,050,147
Net realized gain on sale of investments 132,449 363,713
Administrative expenses (4,350) (2,750)
Distributions to participants (1,738,631) (1,855,650)
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Net increase (decrease) in net assets (2,361,241) 7,407,990
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NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 29,287,594 $ 31,648,835
============= =============
The accompanying notes are an integral part of these statements.
3
BLACK HILLS CORPORATION RETIREMENT SAVINGS PLAN
Notes to financial statements
December 31, 2001 and 2000
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 Corporation and certain
subsidiary companies of Black Hills Corporation (the Company). The eligible
employees may have a percentage of their compensation withheld and contributed
to the Plan, subject to limitations, as defined. The Plan is subject to the
provisions of the Employment Retirement Income Security Act of 1974 and 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 Plan is
administered by the Black Hills Corporation Benefits Committee (the Committee).
The Committee is the trustee of the Plan.
Plan expenses
Administrative fees of approximately $51,700 and $60,800 were paid by the
Company in 2001 and 2000.
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 employer
matching contributions until reaching five years of service. At that time,
participants are 100 percent vested in employer matching contributions.
Participants also become fully vested in employer matching 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.
Forfeitures from participant's who have terminated from the Plan prior to
attaining 100 percent vesting rights are used to reduce the Company's annual
matching contributions.
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
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 28 investment options or individual investments
as directed by the participant.
Effective January 1, 2000 (May 1, 2000 for employees covered by a collective
bargaining agreement), 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 $382,579 and $2,102,946 in rollover transfers from other
qualified plans in 2001 and 2000, 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 participants who were formerly employed by Indeck Capital, Inc., which was
merged into Black Hills Energy Capital, Inc in 2000.
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 2001 and 2000, interest rates on outstanding participant
loans ranged from 5.75 percent to 10.50 percent and from 8.75 percent to 10.50
percent. 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 historical cost. Unrealized appreciation or
depreciation of investments represents changes in the market value of
investments.
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 2000 amounts have been reclassified to conform to the 2001 presentation.
These reclassifications had no effect on net assets available for benefits or
the net increase in net assets available for benefits as previously reported.
3 Investments
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The investment options of the Plan at December 31, 2001 include 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:
2001 2000
---- ----
Merrill Lynch Retirement Preservation Trust $ 4,136,646 $ 3,173,244
Merrill Lynch Equity Index Trust 1 3,865,916 4,444,205
Managers International Equity Fund 1,865,202 2,490,145
Merrill Lynch Growth Fund * 2,103,703
Davis New York Venture Fund 1,898,412 1,588,978
Black Hills Corporation common stock 9,044,297 11,958,351
*Under 5 percent.
4 Tax status
- ---------------
The Plan obtained its latest determination letter on October 9, 2001, 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.
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 Risks and uncertainties
- ----------------------------
The Plan provides for investment in a variety of investment funds. Investments
in general are exposed to various risks, such as interest rate, credit and
overall market volatility risk. Due to the level of risk associated with certain
investments, it is reasonably possible that changes in the values of the
investments will occur in the near term and that such changes could materially
affect participants' account balances and the amounts reported in the statements
of net assets available for benefits.
6
Black Hills Corporation Retirement Savings Plan
(Employer identification number: 46-0458824) (Plan number: 003)
Schedule H, line 4i-- Schedule of Assets (Held At End of Year)
As of December 31, 2001
Description Cost** Current value
- -------------------------------------------------------------------------------- ---------------- ---------------
CASH FUND:
Merrill Lynch Ready Assets* $ 25,454
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Total cash fund 25,454
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COLLECTIVE TRUSTS:
Merrill Lynch Equity Index Trust 1* 3,865,916
Merrill Lynch Retirement Preservation Trust* 4,136,646
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Total collective trusts 8,002,562
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MUTUAL FUNDS:
Merrill Lynch Growth Fund* 1,390,695
Merrill Lynch Pacific Fund* 31,706
PIMCO Total Return Fund 1,455,429
PIMCO Mid-Cap Growth Fund 54,353
Munder Framlington Health Care Fund 361,615
Van Kampen Worldwide High Income Fund 11,506
Oppenheimer Gold & Special Minerals Fund 36,549
Seligman Communications Fund 1,343,600
Oppenheimer Global Fund 909,160
Alliance Quasar Fund 54,105
Oppenheimer US Government Fund 144,090
State Street Research Global Fund 33,913
Franklin Balance Sheet Fund 143,077
Pioneer Europe Fund 57,036
Federated International Income Fund 10,728
Massachusetts Investors Growth Fund 95,056
Davis New York Venture Fund 1,898,412
Managers International Equity Fund 1,865,202
Davis Series Convertible Securities Fund 89,430
Vam Kampen Real Estate Securities Fund 145,517
Merrill Lynch Capital Fund* 690,626
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Total mutual funds 10,821,805
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COMMON STOCK:
Black Hills Corp.* 9,044,297
Self-Direct Accounts:
Abbott Labs 3,345
ADC Telecommunctns Inc. 1,380
Allcopiers Corp. 1
AOL Time Warner Inc. 20,223
Apple Computer Inc. 41,610
Ariba Inc. 1,392
AT&T Wireless Services 4,613
AT&T Corp. 18,140
7
Description Cost** Current value
- -------------------------------------------------------------------------------- ---------------- ---------------
COMMON STOCK (continued):
Avista Corp. $ 1,989
Calpine Corp. 1,763
Cendant Corp. 5,883
Charter Commncatns Inc A 1,643
Check Point Software Tech 2,991
Cisco Systems Inc. 42,558
Corning Inc. 2,676
Cypress Semicndtr PV1CTS 9,965
E Trade Group Inc. 4,100
Echelon Corporation EL 8,496
EMC Corporation Mass 8,064
Ericsn LM TEL SEK10B ADR 3,340
Exxon Mobil Corp. 39,300
Fuelcell Energy Inc. 3,881
Globalsantafe Corp. 9,468
Globalstar Telecom 178
Grey Wolf Inc. 5,940
Hollywood Media Corp. FLA 1,318
Intel Corp. 20,443
Intl Rectifier Corp. 5,232
Knight Trading Group Inc. 826
Koninkl Phil E NY SH NEW 8,733
Laser Vision Centers 621
LSI Logic Corp. 1,262
Lucent Technologies Inc. 9,450
Marketing Svcs Gp In New 50
Mcdata Corp. CL A DEL 73
Medarex Inc. 3,915
Micron Technology Inc. 15,500
Motorola Inc. 5,257
Navarre Corp. 545
Nokia Corp. 17,171
Nortel Networks Corp. New 1,492
Pfizer Inc. Del 19,925
Philip Morris Cos Inc. 22,925
PMC Sierra Inc. 14,882
Protein Polymer Techs 17,382
Qlogic Corp. 4,451
RF Micro Devices Inc. 961
Rite Aid Corporation 2,530
Safeguard Scientifics 525
Scientific Atlanta 2,394
Southwest Airlns Co. 10,662
8
Description Cost** Current value
- -------------------------------------------------------------------------------- ---------------- ---------------
COMMON STOCK (continued):
Texas Instruments $ 4,200
Wal Mart Stores Inc. 8,632
Worldcom Inc-MCI Group 88
Worldcom Inc-WORLDCOM GR 4,083
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Total common stock 9,492,764
PARTICIPANT LOANS, with interest rates ranging from 5.75% to 10.50%* 863,115
---------------
Total investments $ 29,205,700
===============
*Denotes party in interest.
**Cost is not required for participant-directed accounts.
9
Black Hills Corporation Retirement Savings Plan
(Employer identification number: 46-0458824) (Plan number: 003)
Schedule G, Part III -- Nonexempt Transactions
For the year ended December 31, 2001
Relationship to
the Plan, Description of transactions, including Interest
Identity of employer or other maturity date, rate of interest, Amount incurred
party involved party in interest collateral, and par or maturity value loaned on loan
- ----------------------- ----------------- -------------------------------------- ----------- ------------
Black Hills Corporation Sponsor Lending of moneys from the Plan to the $ 974 $ -
employer (contributions not timely
remitted to the Plan), as follows:
Deemed loans dated 1/22/01 and
6/21/01, with respective maturities
of 2/21/01 and 6/26/01.
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the 401K
Retirement Savings Plan Committee has duly caused this Annual Report to be
signed on its behalf by the undersigned hereunto duly authorized.
Black Hills Corporation
401K Retirement Savings Plan
Date: May 14, 2002 By /s/ Roxann R. Basham
---------------------------------------
Roxann R. Basham
Exhibit 23 Consent of independent public accountants As independent public accountants, we hereby consent to the incorporation by reference of our report dated April 25, 2002 included in this Form 11-K, into the Company's previously filed Registration Statement File Numbers 33-71130, 33-63059, 333-17451, 333-61969, 333-82787, 333-30272, and 333-63264. Arthur Andersen Minneapolis, Minnesota, May 9, 2002
Exhibit 99.1
Black Hills Corporation
625 Ninth Street
Rapid City, SD 57701
LETTER TO COMMISSION PURSUANT TO TEMPORARY NOTE 3T
May 9, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Pursuant to Temporary Note 3T to Article 3 of Regulation S-X, Black
Hills Corporation has obtained a letter of representation from Arthur Andersen
LLP stating that the December 31, 2001 audit was subject to their quality
control system for the U.S. accounting and auditing practice to provide
reasonable assurance that the engagement was conducted in compliance with
professional standards, that there was appropriate continuity of Arthur Andersen
LLP personnel working on the audit and availability of national office
consultation to conduct the relevant portions of the audit. Availability of
personnel at foreign affiliates of Arthur Andersen is not relevant to this
audit.
Very truly yours,
Black Hills Corporation
/s/ Mark T. Thies
Mark T. Thies
Senior Vice President and
Chief Financial Officer