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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: March 31, 2000
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
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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 Identification No.)
incorporation or organization)
1201 TD Tower, 10088 - 102 Avenue
Edmonton, Alberta, Canada T5J 2Z1
- -------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code/Postal Code)
Registrants' telephone number, including area code: (780) 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:
<TABLE>
<CAPTION>
Title of each Class Date Number Outstanding
- --------------------------- ------------------- ---------------------
<S> <C> <C>
Common Shares, no par value April 17, 2000 200,000
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
INDEX
Page No.
PART I: FINANCIAL STATEMENTS
Item 1. Financial Statements
Chieftain International Funding Corp.
Consolidated Condensed Balance Sheet -
March 31, 2000 and December 31, 1999 3
Consolidated Condensed Statement of Income and Retained Earnings -
Three months ended March 31, 2000 and 1999 4
Consolidated Condensed Statement of Cash Flows
Three months ended March 31, 2000 and 1999 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Signatures 8
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
(a subsidiary of Chieftain International (U.S.) Inc.)
BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31 December 31
2000 1999
- ---------------------------------------------------------------------------------------------------------------------
(US$)
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 86,858 $ 147,982
Due from affiliated companies 5,675,001 5,392,730
----------------------------------
5,761,859 5,540,712
Investment in preferred shares of Chieftain International
(U.S.) Inc. at cost 78,500,000 78,500,000
----------------------------------
$84,261,859 $84,040,712
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued $ 5,305 $ 5,305
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 2,000 2,000
200,000 common shares
Additional paid in capital 14,998,000 14,998,000
Retained earnings 5,853,651 5,632,504
----------------------------------
20,853,651 20,632,504
----------------------------------
$84,261,859 $84,040,712
==================================
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Three months ended
March 31
2000 1999
- ----------------------------------------------------------------------------------------
(US$)
(unaudited)
<S> <C> <C>
Revenue:
Dividends $ 1,422,813 $ 1,422,813
Interest 70,892 46,976
----------------------------------
1,493,705 1,469,789
Expense:
General and administrative 18,022 8,293
----------------------------------
Income before income taxes and
dividends on preferred shares 1,475,683 1,461,496
Income tax expense - (Note 3) 19,000 14,000
----------------------------------
Net income before dividends on preferred shares 1,456,683 1,447,496
Dividends on preferred shares (1,235,536) (1,235,536)
----------------------------------
Net income applicable to common shares 221,147 211,960
Retained earnings, beginning of period 5,632,504 4,784,505
----------------------------------
Retained earnings, end of period $ 5,853,651 $ 4,996,465
==================================
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended March 31 2000 1999
- -------------------------------------------------------------------------------
(US$)
(unaudited)
<S> <C> <C>
Operating activities:
Net income applicable to common shares $ 221,147 $ 211,960
Change in non-cash working capital -
Current liabilities -- (2,778)
------------------------------
221,147 209,182
Investing activity:
Advances to affiliated companies (282,271) (287,557)
------------------------------
Change in cash (61,124) (78,375)
Beginning cash 147,982 121,495
------------------------------
Ending cash $ 86,858 $ 43,120
=============================
</TABLE>
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CHIEFTAIN INTERNATIONAL FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000 and 1999
(unaudited)
1. Basis of Presentation:
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 March 31, 2000 and December 31, 1999
and the results of operations and cash flows for the three months ended
March 31, 2000 and 1999. Certain information and notes normally included in
Funding Corp.'s financial statements prepared in accordance with Canadian
generally accepted accounting principles have been condensed or omitted for
interim reporting pursuant to the rules and regulations of the Securities
and Exchange Commission. These financial statements should be read in
conjunction with the financial statements and the notes thereto included in
Funding Corp.'s Annual Report on Form 10-K for the year ended December 31,
1999.
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make informed judgements and
estimates. Actual results may differ from those estimates.
The results of operations and cash flows for the three month period ended
March 31, 2000 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. and its parent company file corporate income tax returns on a
consolidated basis. As a result, income taxes payable have been offset by
the parent company's tax losses and are reflected in the amount due from
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 - Three months ended March 31, 2000 and 1999
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
$1,422,813 for each of the first three months of 2000 and 1999.
Interest earned on short-term notes for the first three months of 2000 was
$70,892, a 51% increase from the amount earned in the comparable 1999 period.
Such increase resulted from a 21% increase in average investment yield and a 24%
increase in the average amount invested compared to the 1999 first three 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 $221,147 for the first three months
of 2000 compared with $209,182 for the 1999 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 March 31, 2000 and 1999 were $86,858 and $43,120, respectively.
Information Regarding Forward Looking Financial Statements
This 10-Q contains forward-looking statements that are subject to risk factors
associated with the Company's business. The Company believes that the
expectations reflected in these statements are reasonable, but may be affected
by a variety of factors affecting the Company's business.
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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/ STANLEY A. MILNER
- ----------------------------------------------------
Stanley A. Milner, A.O.E., LL.D.
President and Chief Executive Officer
Principal Executive and Financial Officer
Dated: April 17, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 2000 BALANCE SHEET AND THE STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE
THREE MONTHS ENDED MARCH 31, 2000 INCLUDED IN THE COMPANY'S MARCH 31, 2000 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 86,858
<SECURITIES> 0
<RECEIVABLES> 5,675,001<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,761,859
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 84,261,859<F2>
<CURRENT-LIABILITIES> 5,305
<BONDS> 0
0
2,726,700
<COMMON> 2,000
<OTHER-SE> 81,527,854<F3>
<TOTAL-LIABILITY-AND-EQUITY> 84,261,859
<SALES> 0
<TOTAL-REVENUES> 1,493,705<F4>
<CGS> 0
<TOTAL-COSTS> 18,022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,475,683
<INCOME-TAX> 19,000
<INCOME-CONTINUING> 1,456,683
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,456,683
<EPS-BASIC> 1.11
<EPS-DILUTED> 1.11
<FN>
<F1>Receivables are due from affiliated companies.
<F2>An investment in preferred shares of Chieftain International (U.S.) Inc., at
cost of $78,500,000 has been included in total assets.
<F3>Additional paid-in capital of $14,998,000 (attributable to common stock) and
$60,676,203 (attributable to preferred stock) has been added to retained
earnings of $5,853,651 in calculating other stockholder's equity.
<F4>Revenues are earned exclusively from transactions with parent company.
</FN>
</TABLE>
