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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to__________________
Commission file number: 33-51630
CHIEFTAIN INTERNATIONAL FUNDING CORP.
(Exact name of registrant as specified in its charter)
Nevada 98-0127391
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
_____________________________
Registrant's telephone number, including area code: (403) 425-1950
Not Applicable
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Title of each Class Date Number Outstanding
Common Shares, no par value July 31, 1996 200,000
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I: FINANCIAL STATEMENTS
--------------------
<S> <C>
Item 1. Financial Statements
------ --------------------
Chieftain International Funding Corp.
-------------------------------------
Consolidated Condensed Balance Sheet -
June 30, 1996 and December 31, 1995 3
Consolidated Condensed Statement of Income -
Six Months ended June 30, 1996 and 1995 and
Three Months ended June 30, 1996 and 1995 4
Consolidated Condensed Statement of Changes
in Financial Position -
Six Months ended June 30, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
------
Financial Condition and Results of Operations 7
---------------------------------------------
Signatures 7
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
(A SUBSIDIARY OF CHIEFTAIN INTERNATIONAL (U.S.) INC.)
BALANCE SHEET
(U.S. $)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term deposits $ 63,216 $ 96,248
Dividend receivable -- 1,422,813
Due from affiliated companies 2,634,060 2,021,037
---------- ----------
2,697,276 3,540,098
Investment in preferred shares of
Chieftain International (U.S.) Inc.,
at cost 78,500,000 78,500,000
---------- ----------
$81,197,276 $82,040,098
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued $ -- $ 4,075
Dividend payable -- 1,235,536
---------- ---------
-- 1,239,611
Shareholders' equity:
Share capital
Authorized
10,000,000 preferred shares, par value $1.00 each
10,000,000 common shares, par value $0.01 each
Issued
2,726,700 preferred shares 2,726,700 2,726,700
200,000 common shares 2,000 2,000
Additional paid in capital 75,674,203 75,674,203
Retained earnings 2,794,373 2,397,584
---------- ----------
81,197,276 80,800,487
---------- ----------
$81,197,276 $82,040,098
========== ==========
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF INCOME AND RETAINED EARNINGS
(U.S. $)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30 JUNE 30
1996 1995 1996 1995
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Revenue:
Dividends $ 2,845,625 $ 2,845,625 $ 1,422,812 $ 1,422,812
Interest 62,120 45,279 31,726 24,125
---------- ---------- ---------- ----------
2,907,745 2,890,904 1,454,538 1,446,937
Expense:
General and administrative 27,910 23,877 11,765 8,623
---------- ---------- ---------- ----------
Income before income taxes 2,879,835 2,867,027 1,442,773 1,438,314
Current income taxes (Note 2) 11,974 7,491 6,987 5,426
---------- --------- ---------- ----------
Net income for the period 2,867,861 2,859,536 1,435,786 1,432,888
Retained earnings,
beginning of period 2,397,584 1,592,048 2,594,123 1,783,160
Dividends (2,471,072) (2,471,072) (1,235,536) (1,235,536)
---------- ---------- ---------- ---------
Retained earnings,
end of period $ 2,794,373 $ 1,980,512 $ 2,794,373 $ 1,980,512
========== ========== ========== ==========
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF CHANGES IN FINANCIAL POSITION
(U.S. $)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1996 1995
--------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income for the period $2,867,861 $2,859,536
Changes in non-cash working capital -
Dividend receivable 1,422,813 --
Current liabilities (1,239,611) (5,100)
---------- ----------
3,051,063 2,854,436
Dividends (2,471,072) (2,471,072)
---------- ----------
Cash provided by operating activities 579,991 383,364
---------- ----------
INVESTING ACTIVITIES:
Advances from affiliated companies (613,023) (372,407)
---------- ----------
Cash used in investing activities (613,023) (372,407)
---------- ----------
Change in cash and equivalents (33,032) 10,957
Beginning cash and equivalents 96,248 42,652
---------- ----------
Ending cash and equivalents $ 63,216 $ 53,609
========== ==========
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS
1. In the opinion of Chieftain International Funding Corp. ("Funding
Corp."), the accompanying unaudited financial statements contain all
adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as at June 30, 1996
and December 31, 1995 and the results of operations and changes in
financial position for the six months ended June 30, 1996 and 1995.
The results of operations and changes in financial position for the
six month period ended June 30, 1996 are not necessarily indicative of
the results to be expected for the full year.
2. Income taxes:
Funding Corp. follows the tax allocation method of accounting for the
tax effect of all timing differences between taxable income and
accounting income.
Funding Corp. and its parent file their corporate income tax return on
a consolidated basis. As a result, the current taxes payable will be
offset by utilizing the parent company's operating loss.
The tax benefit relating to loss utilization has been added to the
amount owing to the parent company.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Chieftain International Funding Corp., a special purpose subsidiary of
Chieftain International (U.S.) Inc., was formed in 1992 for the primary purpose
of financing the U.S. business operations of its parent.
Analysis of Operating Results - Six months ended June 30, 1996 and 1995
Funding Corp.'s income is derived from dividends on preferred shares and
interest on short-term notes, all of which are issued by its parent company,
Chieftain International (U.S.) Inc.
Dividends received on 3,140,000 redeemable Class B preferred shares amounted to
$2,845,625 for each of the first six months of 1996 and 1995.
Interest earned on short-term notes for the six months of 1996 was $62,120, a
37% increase from the amount earned in the comparable 1995 period. Such
increase resulted from a 50% increase in the average amount invested compared
to the 1995 first six months, offset by a 9% decrease in average investment
yield. Future dividend income is expected to remain constant while interest
income should increase, subject to rate fluctuations, reflecting increases in
short-term investment amounts.
Income taxes are calculated on interest income less general and administrative
costs. Dividends received from the parent are tax exempt.
Capital Resources and Liquidity
Funding Corp. is dependent upon the dividend income from its investment in
preferred shares of its parent company to provide funds for payment of
dividends on its publicly-held preferred shares.
Funds provided from operations increased to $579,991 for the first six months
of 1996 compared with $383,364 for the 1995 period. Funds not required for
current working capital purposes were invested in short-term notes issued and
payable by the parent company.
Cash balances at June 30, 1996 and 1995 were $63,216 and $53,609, respectively.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chieftain International Funding Corp.
(Registrant)
/s/ EDWARD L. HAHN.
- -----------------------------------
Edward L. Hahn
Senior Vice President, Finance and Treasurer
(Principal Financial Officer)
Dated: August 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1996 BALANCE SHEET AND THE STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE SIX
MONTHS ENDED JUNE 30, 1996 INCLUDED IN THE COMPANY'S JUNE 30, 1996 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 63,216
<SECURITIES> 0
<RECEIVABLES> 2,634,060<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,697,276
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 81,197,276<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
2,726,700
<COMMON> 2,000
<OTHER-SE> 78,468,576<F3>
<TOTAL-LIABILITY-AND-EQUITY> 81,197,276
<SALES> 0
<TOTAL-REVENUES> 2,907,745<F4>
<CGS> 0
<TOTAL-COSTS> 27,910
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,879,835
<INCOME-TAX> 11,974
<INCOME-CONTINUING> 2,867,861
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,867,861
<EPS-PRIMARY> 1.98
<EPS-DILUTED> 1.98
<FN>
<F1>RECEIVABLES ARE DUE FROM AFFILIATED COMPANIES.
<F2>INVESTMENT IN PREFERRED SHARES OF CHIEFTAIN INTERNATIONAL (U.S.) INC., AT COST,
IS $78,500,000.
<F3>ADDITIONAL PAID-IN CAPITAL OF $14,998,000 (ATTRIBUTABLE TO COMMON STOCK) AND
$60,676,203 (ATTRIBUTABLE TO PREFERRED STOCK) HAS BEEN INCLUDED IN OTHER
STOCKHOLDERS' EQUITY.
<F4>REVENUES ARE EARNED EXCLUSIVELY FROM TRANSACTIONS WITH PARENT COMPANY.
</FN>
</TABLE>
