UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-6027
KAVILCO INCORPORATED
(Exact name of registrant as specified in charter)
600 University Street, Suite 3010
Seattle, Washington 98101-1129
(Address of principal executive offices) (Zip code)
Registrants telephone number, including area code: (206) 624-6166
Date of fiscal year end: December 31, 2011
Date of reporting period: September 30, 2011
ITEM 1. | SCHEDULE OF INVESTMENTS. |
Kavilco Incorporated
Schedule of Investments
For period ended September 30, 2011 (unaudited)
Principal Amount or Shares |
Fair Value |
||||
INVESTMENTS IN SECURITIES - 83.8% |
|||||
U.S. Corporate Obligations - 81.7 % |
|||||
Chemical Industry - 6.0% |
|||||
The Dow Chemical Company, 5.900%, due February 15, 2015 | 610,000 | $ | 673,373 | ||
E.I. DuPont de Nemour, 5.250%, due December 15, 2016 | 1,519,000 | 1,743,736 | |||
Total Chemical Industry |
2,417,109 | ||||
Communications - 12.8% |
|||||
Comcast Corp., 10.625%, due July 15, 2012 | 1,338,000 | 1,430,523 | |||
AT&T, 5.100%, due September 15, 2014 | 1,250,000 |
1,372,750 |
|||
CBS Corporation, 4.625%, due May 15, 2018 | 2,000,000 | 2,140,480 | |||
Deutsche Telekom Int. Fin., 6.000%, due July 8, 2019 | 250,000 | 288,857 | |||
Total Communications |
5,232,610 | ||||
Consumer, Cyclical - 10.6% | |||||
Dayton Hudson, 8.600%, due January 15, 2012 | 100,000 |
102,186 |
|||
Home Depot Inc., 5.250%, due December 16, 2013 | 1,000,000 |
1,087,460 | |||
Safeway Inc., 5.625%, due August 15, 2014 | 1,229,000 |
1,351,077 |
|||
Target Corp., 5.875%, due July 15, 2016 | 1,000,000 |
1,188,350 | |||
Avon Products, 6.500%, due March 1, 2019 | 500,000 |
597,885 | |||
Total Consumer, Cyclical |
4,326,958 | ||||
Consumer, Non-cyclical - 5.0% | |||||
Coca Cola Enterprises, 8.500%, due February 1, 2012 | 700,000 |
717,626 |
|||
McDonald's Corp., 5.300%, due March 15, 2017 | 500,000 |
578,060 |
|||
Kraft Foods Inc., 6.500%, due August 11, 2017 | 250,000 |
296,645 |
|||
Yum! Brands Inc., 5.300%, due September 15, 2019 | 355,000 |
400,870 |
|||
Total Consumer, Non-cyclical |
1,993,201 | ||||
Diversified Company Industry - 5.5% | |||||
TYCO Intl Group, 6.000%, due November 15, 2013 | 1,245,000 | 1,363,051 | |||
Fortune Brands Inc., 6.375%, due June 15, 2014 | 500,000 | 553,680 | |||
ITT Corp., 6.125%, due May 1, 2019 | 250,000 | 320,550 | |||
Total Diversified Company Industry |
2,237,281 | ||||
Energy - 14.0% | |||||
Kinder Morgan Energy Partners, 5.625%, due February 15, 2015 | 500,000 | 554,010 | |||
PPL Energy Supply LLC, 5.700%, due October 15, 2015 | 80,000 | 86,720 | |||
Plains All American Pipeline, 6.125%, due January 15, 2017 | 1,345,000 |
1,513,851 |
|||
XTO Energy Inc., 6.250%, due August 1, 2017 | 1,000,000 |
1,229,490 |
|||
Kinder Morgan Energy Partners, 5.950%, due February 15, 2018 | 460,000 | 523,526 | |||
Transocean Inc., 7.375%, due April 15, 2018 | 1,350,000 |
1,544,602 | |||
Hess Corporation, 8.125%, due February 15, 2019 | 199,000 |
256,494 | |||
Total Energy |
5,708,693 | ||||
Financial - 2.1% | |||||
Boeing Capital Corp., 6.500%, due February 15, 2012 | 500,000 | 510,480 |
|||
American Express Credit Co., 5.300%, due December 2, 2015 | 117,000 | 129,235 |
|||
General Electric Capital Corp., 5.625%, due September 15, 2017 | 215,000 | 235,842 |
|||
Total Financial |
875,557 | ||||
Paper & Forest Products Industry - 1.4% | |||||
International Paper, 9.375%, due May 15, 2019 | 500,000 | 611,170 |
|||
Technology - 8.7% | |||||
Xerox Corporation, 5.500%, due May 15, 2012 | 2,000,000 | 2,055,360 |
|||
Cisco Systems Inc., 5.500%, due February 22, 2016 | 960,000 | 1,106,851 |
|||
Oracle Corp., 5.000%, due July 18, 2019 | 250,000 | 288,520 |
|||
Adobe Systems Inc., 4.750%, due February 1, 2020 | 100,000 | 105,057 |
|||
Total Technology |
3,555,788 | ||||
Transportation - 6.8% | |||||
CSX Corp., 5.500%, due August 1, 2013 | 964,000 | 1,033,871 | |||
Union Pacific Corp., 4.875%, due January 15, 2015 | 1,000,000 | 1,098,830 | |||
FedEx Corp., 8.000%, due January 15, 2019 | 500,000 | 652,485 |
|||
Total Transportation |
2,785,186 | ||||
Utilities - 8.8% | |||||
Dominion Resources Inc., 5.000%, due March 15, 2013 | 1,000,000 | 1,057,150 |
|||
Potomac Electric Power, 4.650%, due April 15, 2014 | 600,000 | 640,260 |
|||
American Electric Power, 5.250%, due June 1, 2015 | 50,000 | 55,423 |
|||
Southern Power Company, 4.875%, due July 15, 2015 | 1,250,000 | 1,363,512 |
|||
Southwestern Electric Power Co., 5.550%, due January 15, 2017 | 174,000 | 191,943 |
|||
Metropolitan Edison, 7.700%, due January 15, 2019 | 250,000 | 316,412 |
|||
Total Utilities |
3,624,700 | ||||
Total U.S. Corporate Obligations (cost $30,834,210) |
33,368,253 | ||||
U.S. Common Stock - 1.8% | |||||
Communications - 0.4% | |||||
AT&T | 2,400 | 68,448 | |||
CenturyLink Inc. | 800 | 26,496 | |||
Frontier Communications Corp. | 192 | 1,173 | |||
Verizon Communications Inc. | 2,000 | 73,600 | |||
Total Communications |
169,717 | ||||
Computer Software & Services - 0.2% | |||||
Microsoft Corp. | 3,640 | 90,600 | |||
Consumer, Non-cyclical - 0.2% | |||||
Kraft Foods Inc. | 1,500 | 50,370 | |||
Unilever PLC | 800 | 24,952 | |||
Total Consumer, Non-cyclical |
75,322 | ||||
Drug Industry - 0.1% | |||||
Merck & Co. Inc. | 1,500 | 49,050 | |||
Sanofi-Aventis-ADR | 600 | 19,680 | |||
Total Drug Industry |
68,730 | ||||
Exchange Traded Funds - 0.1% | |||||
iShares Investment Grade Corp. Bonds | 200 | 22,462 | |||
SPDR Gold Trust | 50 | 7,903 | |||
Total Exchange Traded Funds |
30,365 | ||||
Natural Gas (Diversified) - 0.1% | |||||
ONEOK Inc. | 600 | 39,624 | |||
Petroleum Industry - less than 1% | |||||
Royal Dutch Shell PLC | 400 | 24,608 | |||
Real Estate Investment Trust - 0.2% | |||||
AvalonBay Communities | 400 | 45,620 | |||
Ventas Inc. | 600 | 29,640 | |||
Total Real Estate Investment Trust |
75,260 | ||||
Utilities - 0.4% | |||||
Consolidated Edison Inc. | 600 | 34,212 | |||
Duke Energy Corp. | 700 | 13,993 | |||
NSTAR | 600 | 26,886 | |||
Progress Energy Inc. | 600 | 31,032 | |||
Scana Corp. | 700 | 28,315 | |||
Southern Company | 600 | 25,422 | |||
Total Utilities |
159,860 | ||||
Total Common Stock (cost $545,981) |
734,086 | ||||
Publicly Traded Partnerships - 0.3% | |||||
Oil/Gas Distribution - 0.3% | |||||
Buckeye Partners LP | 500 | 31,255 | |||
Energy Transfer Partners LP | 600 | 24,606 | |||
Kinder Morgan Energy Partners | 500 | 34,190 | |||
Plains All American Pipeline | 400 | 23,568 | |||
|
113,619 | ||||
Total Publicly Traded Partnerships (cost $85,478) |
113,619 | ||||
Total Investments in Securities (identified cost $31,465,669) |
$ | 34,215,958 | |||
FINANCIAL ACCOUNTING STANDARDS NO. 157 |
The Company adopted the provisions of the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), effective January 1, 2008. In accordance with FAS 157, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data from sources independent of the Company. Unobservable inputs reflect the Company’s own assumption about the assumptions that market participants would use in pricing the asset or liability developed on the best information available in the circumstance.
The fair value hierarchy is categorized into three levels based on the inputs as follows
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 - Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment spreads, credit risk, yield curves, default rates and similar data.
Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Company's own assumptions about the assumption a market participant would use in valuing the asset or liability, and would be based on the best information available.
The following table presents information about the Company’s assets measured at fair value as of September 30, 2011:
Level 1 |
Level 2 |
Level 3 |
Balance as of September 30, 2011 |
|||||||||
ASSETS |
||||||||||||
Investments |
||||||||||||
U.S. corporate obligations |
$ | - |
$ | 33,368,253 | $ | - |
$ | 33,368,253 | ||||
Common stock |
734,086 | - |
- |
734,086 | ||||||||
Publicly traded partnerships |
113,619 | - |
- |
113,619 | ||||||||
|
$ | 847,705 | $ | 33,368,253 | $ | - |
$ | 34,215,958 | ||||
ITEM 2. | CONTROLS AND PROCEDURES. |
(a) The registrants President/Chief Executive Officer and Chief Financial Officer have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrants internal controls over financial reporting that occurred during the third fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
ITEM 3. | EXHIBITS. |
The following exhibits are attached to this Form N-Q:
EXHIBIT NO. |
DESCRIPTION OF EXHIBIT | |
3 (a) (1) |
Certification of President/Chief Executive Officer | |
3 (a) (2) |
Certification of Chief Financial Officer |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): Kavilco Incorporated | ||
By: |
/s/ Louis A. Thompson | |
Louis A. Thompson | ||
President/Chief Executive Officer |
Date: November 1, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: |
/s/ Scott Burns | |
Scott Burns | ||
Chief Financial Officer | ||
Date: November 1, 2011 |
Exhibit 3 (a) (1)
CERTIFICATIONS
I, Louis A. Thompson, certify that:
1. I have reviewed this report on Form N-Q of Kavilco Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed to the registrants auditors and the registrant's board of directors acting as the audit committee (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
/s/ Louis A. Thompson |
Louis A. Thompson |
President/Chief Executive Officer |
Date: November 1, 2011
Exhibit 3 (a) (2)
CERTIFICATIONS
I, Scott Burns, certify that:
1. I have reviewed this report on Form N-Q of Kavilco Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed to the registrants auditors and the registrant's board of directors acting as the audit committee (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
/s/ Scott Burns |
Scott Burns |
Chief Financial Officer |
Date: November 1, 2011