10-Q 1 o05579e10-q.txt FORM 10-Q 1 Page 1 of 8 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, 2001 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 (I.R.S. Employer of incorporation or organization) Identification No.) 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: Title of each Class Date Number Outstanding --------------------------- -------------- ------------------ Common Shares, no par value April 30, 2001 200,000 2 Page 2 of 8 CHIEFTAIN INTERNATIONAL FUNDING CORP. INDEX Page No. PART I: FINANCIAL STATEMENTS Item 1. Financial Statements Chieftain International Funding Corp. Balance Sheet - March 31, 2001 and December 31, 2000 3 Statement of Income and Retained Earnings - Three months ended March 31, 2001 and 2000 4 Statement of Cash Flows Three months ended March 31, 2001 and 2000 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Signatures 8 3 Page 3 of 8 CHIEFTAIN INTERNATIONAL FUNDING CORP. (a subsidiary of Chieftain International (U.S.) Inc.) BALANCE SHEET

4 Page 4 of 8 CHIEFTAIN INTERNATIONAL FUNDING CORP. STATEMENT OF INCOME AND RETAINED EARNINGS

5 Page 5 of 8 CHIEFTAIN INTERNATIONAL FUNDING CORP. STATEMENT OF CASH FLOWS

6 Page 6 of 8 CHIEFTAIN INTERNATIONAL FUNDING CORP. NOTES TO FINANCIAL STATEMENTS March 31, 2001 and 2000 (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, 2001 and December 31, 2000 and the results of operations and cash flows for the three months ended March 31, 2001 and 2000. 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, 2000. 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, 2001 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. 7 Page 7 of 8 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, 2001 and 2000 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 2001 and 2000. Interest earned on short-term notes for the first three months of 2001 was $148,314, a 109% increase from the amount earned in the comparable 2000 period. Such increase resulted from increases in average investment yield and in the average amount invested compared to the 2000 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 $272,642 for the first three months of 2001 compared with $221,147 for the 2000 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, 2001 and 2000 were $183,533 and $86,858, respectively. Outlook On March 8, 2001, the Board of Directors of Chieftain International, Inc. ("Chieftain"), Funding Corp.'s ultimate parent company, announced that it had authorized CIBC World Markets, Inc., Chieftain's financial adviser, to examine strategic alternatives to enhance shareholder value, including a possible merger or sale of Chieftain. As part of this process, data rooms have been opened in Dallas and Edmonton. 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. 8 Page 8 of 8 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 30, 2001

CHIEFTAIN INTERNATIONAL FUNDING CORP 10-Q