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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, 1997
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)
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<S> <C>
Nevada 98-0127391
- ----------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
__________________________________________
Registrants' 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:
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<S> <C> <C>
Title of each Class Date Number Outstanding
--------------------------- ----------------- ------------------
Common Shares, no par value July 30, 1997 200,000
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
INDEX
Page No.
PART I: FINANCIAL STATEMENTS
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Item 1. Financial Statements
Chieftain International Funding Corp.
Consolidated Condensed Balance Sheet -
June 30, 1997 and December 31, 1996 3
Consolidated Condensed Statement of Income -
Six months ended June 30, 1997 and 1996 and
Three months ended June 30, 1997 and 1996 4
Consolidated Condensed Statement of Changes in Financial Position -
Six months ended June 30, 1997 and 1996 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
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<CAPTION>
JUNE 30 December 31
1997 1996
- ---------------------------------------------------------------------------------------------------
(U.S.$)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 103,229 $ 80,857
Due from affiliated companies 3,410,755 3,029,427
--------------------------------------
3,513,984 3,110,284
Investment in preferred shares of Chieftain International
(U.S.) Inc. at cost 78,500,000 78,500,000
--------------------------------------
$ 82,013,984 $ 81,610,284
======================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued $ - $ 4,100
Preferred shares issued (Note 2) 63,402,903 63,402,903
Common shareholder's equity:
Share capital
Authorized
10,000,000 common shares, par value $0.01 each
Issued
200,000 common shares 2,000 2,000
Additional paid in capital 14,998,000 14,998,000
Retained earnings 3,611,081 3,203,281
--------------------------------------
18,611,081 18,203,281
--------------------------------------
$ 82,013,984 $ 81,610,284
======================================
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Six months ended June 30 Three months ended June 30
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(U.S.$)
Revenue
Dividends $ 2,845,625 $ 2,845,625 $ 1,422,812 $ 1,422,813
Interest 82,362 62,120 42,710 31,726
------------------------------------- ------------------------------------
2,927,987 2,907,745 1,465,522 1,454,538
Expense:
General and administrative 30,413 27,910 13,755 11,765
------------------------------------- ------------------------------------
Income before income taxes
and dividends on preferred
shares 2,897,574 2,879,835 1,451,767 1,442,773
Income taxes (Note 3) 18,702 11,974 10,424 6,987
------------------------------------- ------------------------------------
Net income before dividends
on preferred shares 2,878,872 2,867,861 1,441,343 1,435,786
Dividends on preferred shares (2,471,072) (2,471,072) (1,235,536) (1,235,536)
------------------------------------- ------------------------------------
Net income applicable to
common shares, for the
period 407,800 396,789 205,807 200,250
Retained earnings,
beginning of period 3,203,281 2,397,584 3,405,274 2,594,123
------------------------------------- ------------------------------------
Retained earnings,
end of period $ 3,611,081 $ 2,794,373 $ 3,611,081 $ 2,794,373
===================================== ====================================
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF CHANGES IN FINANCIAL POSITION
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<CAPTION>
Six months ended June 30 1997 1996
- ------------------------------------------------------------------------
(U.S.$)
<S> <C> <C>
Operating activities:
Net income applicable to common shares $ 407,800 $ 396,789
Changes in non-cash working capital -
Dividend receivable -- 1,422,813
Current liabilities (4,100) (1,239,611)
------------ --------------
403,700 579,991
Investing activities:
Advances to affiliated companies (381,328) (613,023)
------------ --------------
Change in cash 22,372 (33,032)
Beginning cash 80,857 96,248
------------ --------------
Ending cash $ 103,229 $ 63,216
============ ==============
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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, 1997 and December 31, 1996
and the results of operations and changes in financial position for the
six months ended June 30, 1997 and 1996.
The results of operations and changes in financial position for the six
month period ended June 30, 1997 are not necessarily indicative of the
results to be expected for the full year.
2. Preferred Shares:
The Articles of Funding Corp. authorize the issuance of a maximum of
10,000,000 preferred shares with a par value of $1.00 each.
In 1992, Funding Corp. sold 2,726,700 shares of $1.8125 convertible
redeemable preferred stock at $25.00 per share through an underwritten
public offering in the United States. Proceeds of the issuance of
preferred shares, net of offering costs of $4.7 million, were $63.4
million.
3. 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 utilization of the parent company's operating loss.
The tax benefit relating to loss utilization has been deducted from the
amount owing by 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, 1997 and 1996
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 1997 and 1996.
Interest earned on short-term notes for the first six months of 1997 was
$82,362, a 93% increase from the amount earned in the comparable 1996 period.
Such increase resulted from a 2% decrease in average investment yield and a 36%
increase in the average amount invested compared to the 1996 first six 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 decreased to $403,700 for the first six months
of 1997 compared with $579,991 for the 1996 comparable period. Funds not
required for current working capital were invested in short-term notes issued
and payable by the parent company.
Cash balances at June 30, 1997 and 1996 were $103,229 and $63,216,
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/ E. L. Hahn
_________________________________________________
Senior Vice President, Finance and Treasurer
(Principal Financial Officer)
Dated: August 5, 1997
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1997 BALANCE SHEET AND THE STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE SIX
MONTHS ENDED JUNE 30, 1997 INCLUDED IN THE COMPANY'S JUNE 30, 1997 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 103,229
<SECURITIES> 0
<RECEIVABLES> 3,410,755<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,513,984
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 82,013,984<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 2,000
0
2,726,700
<OTHER-SE> 79,285,284<F3>
<TOTAL-LIABILITY-AND-EQUITY> 82,013,984
<SALES> 0
<TOTAL-REVENUES> 2,927,987<F4>
<CGS> 0
<TOTAL-COSTS> 30,413
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,897,574
<INCOME-TAX> 18,702
<INCOME-CONTINUING> 2,878,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,878,872
<EPS-PRIMARY> 2.04
<EPS-DILUTED> 2.04
<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>
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