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decline in production, which was expected to continue as of the
valuation dates.
For the 6 months ending June 30, 1994, Belle Fourche’s
revenues declined from approximately $8.8 million (for 6 months
ending June 30, 1993) to $7.3 million. Likewise, net income was
lower than for the same 6-month period in 1993.
Belle Fourche’s fixed assets increased steadily from $57.6
million in 1988 to $78.6 million in 1993. In 1992, Belle Fourche
paid approximately $16 million to purchase a smaller crude oil
common carrier system (the Thunderbird pipeline) located near its
preexisting pipelines.
During the period 1988 through 1993, Belle Fourche carried
long-term debt to shareholders, which rose most sharply from 1991
($1.3 million) to 1992 ($18 million). Shareholder debt was
$17,115,350 as of December 31, 1993. However, the corporation
repaid $1.2 million of the debt in May 1994, resulting in
shareholder debt of $15,915,350 on May 31, 1994, and June 30,
1994. Interest on shareholder debt was calculated based on the
greater of a Colorado bank’s prime rate or the short-term
applicable Federal rate. The interest rate for 1994 ranged from
6 to 6.75 percent.
During the period 1988 through 1993, Belle Fourche
distributed total cash or other property worth over $36 million
to its shareholders, with average total distributions of over $5
million annually. On average, these distributions exceeded the
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