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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: September 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.
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(Exact name of registrant as specified in its charter)
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<S> <C>
Nevada 98-0127391
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Title of each Class Date Number Outstanding
- ----------------------------- ------------------ ------------------
<S> <C> <C>
Common Shares, no par value October 31, 1996 200,000
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
INDEX
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<CAPTION>
PAGE NO.
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<S> <C>
PART I: FINANCIAL STATEMENTS
Item 1. Financial Statements
Chieftain International Funding Corp.
Consolidated Condensed Balance Sheet -
September 30, 1996 and December 31, 1995 3
Consolidated Condensed Statement of Income -
Nine Months ended September 30, 1996 and 1995 and
Three Months ended September 30, 1996 and 1995 4
Consolidated Condensed Statement of Changes
in Financial Position -
Nine Months ended September 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
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
(A SUBSIDIARY OF CHIEFTAIN INTERNATIONAL (U.S.) INC.)
BALANCE SHEET
(U.S. $)
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<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and short-term deposits $ 253,213 $ 96,248
Declared dividends receivable -- 1,422,813
Due from affiliated companies 2,649,487 2,021,037
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2,902,700 3,540,098
Investment in preferred shares of
Chieftain International (U.S.) Inc., at cost 78,500,000 78,500,000
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$81,402,700 $82,040,098
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued $ -- $ 4,075
Declared dividends payable -- 1,235,536
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-- 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 2,999,797 2,397,584
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81,402,700 80,800,487
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$81,402,700 $82,040,098
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF INCOME AND RETAINED EARNINGS
(U.S. $)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenue:
Dividends $ 4,268,438 $ 4,268,438 $ 1,422,813 $ 1,422,813
Interest 97,314 71,625 35,194 26,364
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4,365,752 4,340,063 1,458,007 1,449,159
Expense:
General and administrative 35,186 30,496 7,276 6,619
----------- ---------- ----------- -----------
Income before income taxes 4,330,566 4,309,576 1,450,731 1,442,540
Current income taxes (Note 2) 21,745 14,395 9,771 6,904
----------- ---------- ----------- -----------
Net income for the period 4,308,821 4,295,172 1,440,960 1,435,636
Retained earnings,
beginning of period 2,397,584 1,592,048 2,794,373 1,980,512
Dividends (3,706,608) (3,706,608) (1,235,536) (1,235,536)
----------- ---------- ----------- -----------
Retained earnings,
end of period $ 2,999,797 $ 2,180,612 $ 2,999,797 $ 2,180,612
=========== =========== =========== ===========
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF CHANGES IN FINANCIAL POSITION
(U.S. $)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income for the period $ 4,308,821 $ 4,295,172
Changes in non-cash working capital -
Declared dividends receivable 1,422,813 (1,422,813)
Current liabilities (1,239,611) 1,200,892
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4,492,023 4,073,251
Dividends (3,706,608) (3,706,608)
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Cash provided by operating activities 785,415 366,643
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INVESTING ACTIVITIES:
Advances to affiliated companies (628,450) (357,258)
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Cash used in investing activities (628,450) (357,258)
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Change in cash and equivalents 156,965 9,385
Beginning cash and equivalents 96,248 42,652
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Ending cash and equivalents $ 253,213 $ 52,037
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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 September 30,
1996 and December 31, 1995 and the results of operations and changes
in financial position for the nine months ended September 30, 1996 and
1995.
The results of operations and changes in financial position for the
nine month period ended September 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 - Nine months ended September 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
$4,268,438 for each of the first nine month periods of 1996 and 1995.
Interest earned on short-term notes for the first nine months of 1996 was
$97,314, a 36% increase from the amount earned in the comparable 1995 period.
Such increase resulted from a 9% decrease in average investment yield and a 48%
increase in the average amount invested compared to the 1995 first nine months.
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 $785,415 for the first nine months
of 1996 compared with $366,643 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 September 30, 1996 and 1995 were $253,213 and $52,037,
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.
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(Registrant)
/s/ EDWARD L. HAHN
- ---------------------------------------------
Senior Vice President, Finance and Treasurer
(Principal Financial Officer)
Dated: November 9, 1996
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1996 BALANCE SHEET AND THE STATEMENT OF INCOME AND RETAINED
EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 INCLUDED IN THE COMPANY'S
SEPTEMBER 30, 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 253,213
<SECURITIES> 0
<RECEIVABLES> 2,649,487<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,902,700
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 81,402,700<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
2,726,700
<COMMON> 2,000
<OTHER-SE> 78,674,000<F3>
<TOTAL-LIABILITY-AND-EQUITY> 81,402,700
<SALES> 0
<TOTAL-REVENUES> 4,365,752<F4>
<CGS> 0
<TOTAL-COSTS> 35,186
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,330,566
<INCOME-TAX> 21,745
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,308,821
<EPS-PRIMARY> 3.01
<EPS-DILUTED> 3.01
<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 if $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>
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