-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UAJwr8F6AKd69DB4VQT4I/e+hPEwMqvlqsANDHZjZweTj7KPATEV+moFpR5G8lKo 819OcPPk+KqlS2NA3UiDYA== 0000897101-97-001092.txt : 19971022 0000897101-97-001092.hdr.sgml : 19971022 ACCESSION NUMBER: 0000897101-97-001092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971021 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT NORTHERN IRON ORE PROPERTIES CENTRAL INDEX KEY: 0000043410 STANDARD INDUSTRIAL CLASSIFICATION: MINERAL ROYALTY TRADERS [6795] IRS NUMBER: 410788355 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00701 FILM NUMBER: 97698500 BUSINESS ADDRESS: STREET 1: W 1290 FIRST NATIONAL BANK BLDG STREET 2: 332 MINNESOTA ST CITY: SAINT PAUL STATE: MN ZIP: 55101-1361 BUSINESS PHONE: 6122242385 MAIL ADDRESS: STREET 1: W 1290 FIRST NATIONAL BANK BLDG STREET 2: 332 MINNESOTA STREET CITY: ST PAUL STATE: MN ZIP: 55101-1361 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 - For the Period Ended SEPTEMBER 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 1-701 GREAT NORTHERN IRON ORE PROPERTIES - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Minnesota 41-0788355 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) W-1290 First National Bank Building 332 Minnesota Street Saint Paul, Minnesota 55101-1361 - -------------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) (612) 224-2385 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 periods 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 ____ Number of shares of beneficial interest outstanding on September 30, 1997: 1,500,000 PART I. FINANCIAL INFORMATION GREAT NORTHERN IRON ORE PROPERTIES CONDENSED BALANCE SHEETS
September 30 December 31 1997 1996 ----------- ----------- (Unaudited) (Note) ASSETS CURRENT ASSETS Cash and cash equivalents $ 418,944 $ 448,008 United States Treasury securities 3,114,388 3,394,514 Royalties receivable 2,717,000 2,649,880 Prepaid expenses 19,859 3,180 ----------- ----------- TOTAL CURRENT ASSETS 6,270,191 6,495,582 NONCURRENT ASSETS United States Treasury Notes 4,956,418 5,124,451 Prepaid pension expense 266,609 254,726 ----------- ----------- 5,223,027 5,379,177 PROPERTIES Mineral lands 37,915,036 37,838,536 Less allowances for depletion and amortization 32,858,341 32,737,201 ----------- ----------- 5,056,695 5,101,335 Building and equipment--at cost, less allowances for accumulated depreciation (9/30/97 - $140,546; 12/31/96 - $127,730) 113,385 90,555 ----------- ----------- 5,170,080 5,191,890 ----------- ----------- $16,663,298 $17,066,649 =========== =========== LIABILITIES AND BENEFICIARIES' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 93,885 $ 105,256 Distributions 2,330,000 2,630,000 ----------- ----------- TOTAL CURRENT LIABILITIES 2,423,885 2,735,256 BENEFICIARIES' EQUITY, including certificate holders' equity, represented by 1,500,000 shares of beneficial interest authorized and outstanding, and reversionary interest 14,239,413 14,331,393 ----------- ----------- $16,663,298 $17,066,649 =========== ===========
Note: The balance sheet at December 31, 1996 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed financial statements. GREAT NORTHERN IRON ORE PROPERTIES CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended ------------------------------- ------------------------------ September 30 September 30 ------------------------------- ------------------------------ 1997 1996 1997 1996 ------------ ----------- ----------- ----------- Income: Royalties $ 2,806,135 $ 3,158,644 $ 7,369,425 $ 7,178,723 Interest and other income 130,789 133,314 453,765 412,763 ------------ ----------- ----------- ----------- 2,936,924 3,291,958 7,823,190 7,591,486 Costs and expenses 385,091 374,279 1,165,170 1,172,053 ------------ ----------- ----------- ----------- NET INCOME $ 2,551,833 $ 2,917,679 $ 6,658,020 $ 6,419,433 ============ =========== =========== =========== Average shares outstanding 1,500,000 1,500,000 1,500,000 1,500,000 NET INCOME PER SHARE $ 1.70 $ 1.95 $ 4.44 $ 4.28 ============ =========== =========== =========== Distributions declared per share $ 1.50 (1) $ 1.60 (2) $ 4.50 (3) $ 4.10 (4) Distributions paid per share $ 1.50 (5) $ 1.15 (6) $ 4.70 (7) $ 3.90 (8) (1) $1.50 declared 9/15/97 payable 10/31/97 (2) $1.60 declared 9/16/96 paid 10/31/96 (3) $1.50 declared 3/17/97 plus $1.50 declared 6/16/97 plus $1.50 declared 9/15/97 paid 4/30/97 paid 7/31/97 payable 10/31/97 (4) $1.35 declared 3/18/96 plus $1.15 declared 6/17/96 plus $1.60 declared 9/16/96 paid 4/30/96 paid 7/31/96 paid 10/31/96 (5) $1.50 declared 6/16/97 paid 7/31/97 (6) $1.15 declared 6/17/96 paid 7/31/96 (7) $1.70 declared 12/16/96 plus $1.50 declared 3/17/97 plus $1.50 declared 6/16/97 paid 1/31/97 paid 4/30/97 paid 7/31/97 (8) $1.40 declared 12/14/95 plus $1.35 declared 3/18/96 plus $1.15 declared 6/17/96 paid 1/31/96 paid 4/30/96 paid 7/31/96
See notes to condensed financial statements. GREAT NORTHERN IRON ORE PROPERTIES CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended ------------------------ September 30 ------------------------ 1997 1996 ---------- ---------- Cash flows from operating activities: Cash received from royalties and rents $7,285,200 $6,403,171 Cash paid to suppliers and employees -1,069,203 -1,089,553 Interest received 392,529 448,916 ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 6,608,526 5,762,534 Cash flows from investing activities: U.S. Treasury securities purchased -1,950,000 -3,499,297 U.S. Treasury securities matured 2,400,000 3,611,172 Net expenditures for equipment -37,590 -27,004 ---------- ---------- NET CASH PROVIDED BY INVESTING ACTIVITIES 412,410 84,871 Cash flows from financing activities: Distributions paid -7,050,000 -5,850,000 ---------- ---------- NET CASH USED IN FINANCING ACTIVITIES -7,050,000 -5,850,000 ---------- ---------- Net decrease in cash and cash equivalents -29,064 -2,595 Cash and cash equivalents at beginning of year 448,008 262,525 ---------- ---------- CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $ 418,944 $ 259,930 ========== ========== See notes to condensed financial statements. GREAT NORTHERN IRON ORE PROPERTIES NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Periods of Three and Nine Months ended September 30, 1997 and September 30, 1996 Note A - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods stated above are not necessarily indicative of the results that may be expected for each respective full year. For further information, refer to the financial statements and footnotes included in the Great Northern Iron Ore Properties ("Trust") Annual Report on Form 10-K for the year ended December 31, 1996. Note B - BENEFICIARIES' EQUITY Pursuant to the Court Order of November 29, 1982, the Trustees were directed to create and maintain an account designated as "Principal Charges." This account constitutes a first and prior lien between the certificate holders and the reversioner, and reflects an allocation of beneficiaries' equity between the certificate holders and the reversioner. The balance in this account consists of attorneys' fees and expenses of counsel for adverse parties pursuant to Court Order in connection with litigation commenced in 1972 relating to the Trustees' powers and duties under the Trust Instrument and the cost of surface lands acquired in accordance with provisions of a lease with United States Steel Corporation, net of an allowance to amortize the cost of the land based on actual shipments of taconite and net of a credit for disposition of tangible assets. Following is an analysis of this account as of September 30, 1997: Attorneys' fees and expenses ...................................... $ 1,024,834 Cost of surface lands ............................................. 5,041,294 Shipment credits (cumulative) ..................................... -521,169 Asset disposition credits ......................................... -18,500 ----------- Principal Charges account ......................................... $ 5,526,459 =========== Upon termination of the Trust, the Trustees shall either sell tangible assets or obtain a loan with tangible assets as security to provide monies for distribution to the certificate holders in the amount of the Principal Charges account balance. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Periods of Three and Nine Months ended September 30, 1997 and September 30, 1996 The Trust owns interest in 12,033 acres on the Mesabi Iron Range Formation in northern Minnesota, most of which are under lease to major iron ore producing companies. Due to the Trustees' election pursuant to Section 646 of the Tax Reform Act of 1986, as amended, commencing with year 1989 the Trust is not subject to federal and Minnesota corporate income taxes. The Trust is now a grantor trust. The terms of the Great Northern Iron Ore Properties Trust Agreement, created December 7, 1906, state that the Trust shall continue for twenty years after the death of the last surviving of eighteen named in the Trust Agreement. The last survivor of these eighteen named in the Trust Agreement died April 6, 1995. According to the terms of the Trust Agreement, the Trust now terminates twenty years from April 6, 1995. At that time, all monies remaining in the hands of the Trustees (after paying and providing for all expenses and obligations of the Trust) shall be distributed ratably among the certificate holders, while all property other than monies shall be conveyed and transferred to the reversioner. Results of Operations: Royalty income increased $190,702 during the first nine months of 1997, as compared to the same period in 1996, due mainly to increased net advance royalties and an overall improved average royalty rate. Royalty income decreased $352,509 during the third quarter of 1997, as compared to the third quarter of 1996, due mainly to reduced taconite production from Trust lands. Interest and other income increased $41,002 during the first nine months of 1997 compared to the first nine months of 1996 primarily due to the sale of stockpile material and a slightly improved return on a greater amount of funds available for investment. At their meeting held on September 15, 1997, the Trustees declared a third quarter distribution of $1.50 per share, amounting to $2,250,000 payable October 31, 1997 to certificate holders of record at the close of business on September 30, 1997. The Trustees have now declared three quarterly distributions in 1997. The first, in the amount of $1.50 per share, was paid on April 30, 1997 to certificate holders of record on March 31, 1997; the second, in the amount of $1.50 per share, was paid on July 31, 1997 to certificate holders of record on June 30, 1997; and the third, that being the current distribution. The first, second and third quarter 1996 distributions were $1.35, $1.15 and $1.60 per share, respectively. The Trustees intend to continue quarterly distributions and set the record date as of the last business day of each quarter. The next distribution will be paid in late January 1998 to certificate holders of record on December 31, 1997. A mining agreement dated January 1, 1959 with United States Steel Corporation provides that one-half of annual earned royalty income, after satisfaction of minimum royalty payments, shall be applied to reimburse the lessee for its cost of acquisition of surface lands overlying the leased mineral deposits, which surface lands are then conveyed to the Trustees. There are surface lands yet to be purchased, the costs of which are yet unknown and will not be known until the actual purchases are made. Liquidity: In the interest of preservation of principal of Court-approved reserves and guided by the restrictive provisions of Section 646 of the Tax Reform Act of 1986, as amended, monies are invested primarily in U.S. Treasury securities with maturity dates not to exceed three years and, along with cash flows from operations, are deemed adequate to meet currently foreseeable liquidity needs. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - (27) Financial Data Schedule (only filed electronically via EDGAR) (b) Reports on Form 8-K - None 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. GREAT NORTHERN IRON ORE PROPERTIES (Registrant) Date October 17, 1997 By /s/ Harry L. Holtz --------------------------------------- ---------------------------------- Harry L. Holtz President of the Trustees Chief Executive Officer Date October 17, 1997 By /s/ Thomas A. Janochoski --------------------------------------- ---------------------------------- Thomas A. Janochoski Vice President and Secretary Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GREAT NORTHERN IRON ORE PROPERTIES BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 SEP-30-1997 418,944 8,070,806 2,717,000 0 0 6,270,191 38,168,967 32,998,887 16,663,298 2,423,885 0 0 0 0 14,239,413 16,663,298 7,369,425 7,823,190 0 0 1,165,170 0 0 6,658,020 0 6,658,020 0 0 0 6,658,020 4.44 0
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