0000912057-95-007733.txt : 19950918 0000912057-95-007733.hdr.sgml : 19950918 ACCESSION NUMBER: 0000912057-95-007733 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19950912 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MESABI TRUST CENTRAL INDEX KEY: 0000065172 STANDARD INDUSTRIAL CLASSIFICATION: 6795 IRS NUMBER: 136022277 STATE OF INCORPORATION: NY FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04488 FILM NUMBER: 95573103 BUSINESS ADDRESS: STREET 1: P O BOX 318 CHURCH ST STATION STREET 2: C/O BANKERS TRUST CO CORP TRUST CITY: NEW YORK STATE: NY ZIP: 10015 BUSINESS PHONE: 2122506696 MAIL ADDRESS: STREET 1: C/O BANKERS TRUST COMPANY, CORPORATE STREET 2: P.O. BOX 318 CHURCH STREET STATION CITY: NEW YORK STATE: NY ZIP: 10015 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q /X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July 31, 1995 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 - 4488 MESABI TRUST (Exact name of registrant as specified in its charter) New York 13-6022277 ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) In care of Bankers Trust Company, Corporate Trust Division P.O. Box 318 Church Street Station New York, New York 10015 ---------------------------------- -------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 250-6519 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 ------ ------ At September 11, 1995, there were 13,120,010 Units of Beneficial Interest in Mesabi Trust outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements
THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, ----------------------- ---------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- A. Condensed Statements of Income Revenues: Royalty income $1,198,664 $ 929,801 $1,388,821 $1,139,526 Interest income 7,791 5,508 17,795 9,538 ---------- --------- ---------- ---------- $1,206,455 $ 935,309 $1,406,616 $1,149,064 Expenses 112,195 94,609 185,186 188,928 ---------- --------- ---------- ---------- Net income $1,094,260 $ 840,700 $1,221,430 $ 960,136 ---------- --------- ---------- ---------- ---------- --------- ---------- ---------- Weighted average number of units outstanding 13,120,010 13,120,010 13,120,010 13,120,010 Net income per unit $0.083404 $0.064078 $0.093097 $0.073181 Distributions declared per unit $0.065 $0.06 $0.065 $0.06
SEE NOTES TO FINANCIAL STATEMENTS. 2 B. Condensed Balance Sheets
July 31, 1995 January 31, 1995 ------------- ---------------- Assets: Cash $ 273 $1,442,627 U.S. Government securities, at cost (which approximates market) 1,392,696 366,650 Accrued revenue 456,746 177,924 Prepaid insurance 10,688 3,938 ---------- ---------- $1,860,403 $1,991,139 ---------- ---------- Fixed property, including intangibles, at nominal values: Amended Assignment of Peters Lease $ 1 $ 1 Assignment of Cloquet Lease 1 1 Certificate of beneficial interest for 13,120,010 units of Land Trust 1 1 ---------- ---------- $ 3 $ 3 ---------- ---------- $1,860,406 $1,991,142 ---------- ---------- ---------- ---------- Liabilities, Unallocated Reserve and Trust Corpus: Liabilities: Distribution payable $ 852,801 $1,312,001 Accrued expenses 20,906 41,566 ---------- ---------- $ 873,707 $1,353,567 Deferred income 142,709 162,214 Unallocated reserve 843,987 475,358 Trust Corpus 3 3 ---------- ---------- $1,860,406 $1,991,142 ---------- ---------- ---------- ----------
SEE NOTES TO FINANCIAL STATEMENTS. 3 C. Condensed Statements of Cash Flows
SIX MONTHS ENDED JULY 31, ---------------------------- 1995 1994 ----------- ----------- Cash flows from operating activities: Royalties received $ 1,102,291 $ 956,641 Interest received 5,998 9,537 Expenses paid (212,596) (219,269) ----------- ----------- Net cash provided by operating activities $ 895,693 $ 746,909 ----------- ----------- Cash flows from investing activities: Sales and redemptions of U.S. Government securities $ 2,194,614 $ 3,655,522 Purchases of U.S. Government securities (3,220,660) (3,820,576) ----------- ----------- Net cash (used in) investing activities $(1,026,046) $ (165,054) ----------- ----------- Cash flows from financing activities: Net cash (used in) financing activities, distributions to Unitholders $(1,312,001) $(1,312,001) ----------- ----------- Net (decrease) in cash $(1,442,354) $ (730,146) Cash, beginning of year 1,442,627 1,494,936 ----------- ----------- Cash, end of period $ 273 $ 764,790 ----------- ----------- ----------- ----------- Reconciliation of net income to net cash provided by operating activities: Net income $ 1,221,430 $ 960,136 (Increase) in accrued revenue (278,822) (191,292) (Increase) in prepaid insurance (6,750) (6,750) (Decrease) in accrued expenses (20,660) (23,592) (Decrease) increase in deferred income (19,505) 8,407 ----------- ----------- Net cash provided by operating activities $ 895,693 $ 746,909 ----------- ----------- ----------- -----------
SEE NOTES TO FINANCIAL STATEMENTS. 4 MESABI TRUST NOTES TO FINANCIAL STATEMENTS Note 1. The financial statements included herein have been prepared without audit (except for the balance sheet at January 31, 1995) in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Trustees, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the results of operations for the three and six months ended July 31, 1995 and 1994, (b) the financial position at July 31, 1995 and January 31, 1995, and (c) the cash flows for the six months ended July 31, 1995 and 1994 have been made. Note 2. Earnings per unit are based on weighted average number of units outstanding during the period (13,120,010 units). 5 Item 2. TRUSTEES' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Leasehold royalty income constitutes the principal source of revenue to Mesabi Trust. Royalty rates are determined by the terms of Mesabi Trust's leases and assignments of leases. Overriding royalties are determined by both the volume and selling price of iron ore pellets sold. Fee royalties payable to Mesabi Land Trust, a Minnesota land trust of which Mesabi Trust is the sole beneficiary ("Mesabi Land Trust"), are based on the amount of crude ore mined, which crude ore is used to produce iron ore pellets. Northshore Mining Corporation ("Northshore") is obligated as lessee to pay Mesabi Trust base overriding royalties, in varying amounts constituting a percentage of the gross proceeds of shipments from Silver Bay, Minnesota of pellets produced from Mesabi Trust lands or, to a limited extent, other lands, ranging from 2-1/2% of the gross proceeds for the first one million tons of pellets so shipped annually to 6% of the gross proceeds for all pellets shipped in excess of 4 million tons annually. In addition, Northshore is obligated to pay to Mesabi Trust royalty bonuses constituting a percentage of the gross proceeds of pellets shipped from Silver Bay, Minnesota for sale at prices above a threshold price (which is adjusted on an annual basis for inflation and deflation (but not below $30) and is approximately $35.77 for calendar year 1995), ranging from 1/2 of 1% of the gross proceeds on all tonnage shipped for sale at prices between the threshold price and $2.00 above the threshold price, to 3% of the gross proceeds on all tonnage shipped for sale at prices $10.00 or more above the threshold price. Generally, the obligation of Northshore to pay base overriding royalties and royalty bonuses with respect to the sale of pellets accrues upon the shipment of those pellets from Silver Bay. Northshore also is obligated to pay to Mesabi Trust a minimum advance royalty in equal quarterly installments, which is credited against certain base overriding royalties and royalty bonuses. The amount of advance royalties payable is subject to adjustment (but not below $500,000 per annum) for inflation and deflation and is approximately $596,246 for calendar year 1995. Northshore is obligated to make quarterly royalty payments in January, April, July and October of each year. In the case of base overriding royalties and royalty bonuses, these quarterly payments are to be made whether or not the related proceeds of sale have been received by Northshore by the time such payments become due. Due to a combination of factors, shipments from quarter to quarter or from year to year fluctuate greatly. These factors include the normal reduction of Great Lakes shipping activity during the winter months, and reduced pellet sales resulting from adverse economic conditions affecting the steel industry generally. COMPARISON OF THREE MONTHS ENDED JULY 31, 1995 AND JULY 31, 1994 Mesabi Trust's net income increased to $1,094,260 for the fiscal quarter ended July 31, 1995, as compared to net income of $840,700 for the fiscal quarter ended July 31, 1994. The primary reason for the increase was an increase in royalty income, due to increased pellet shipments in 1995 compared to the same period in 1994. Mesabi Trust's gross income for the fiscal quarter ended July 31, 1995 was $1,206,455, consisting of $336,844 in minimum advance royalty income, $786,965 in overriding royalty income, $74,855 in fee royalty income and $7,791 in interest income, as compared to gross income of $935,309 for the fiscal quarter ended July 31, 1994. Mesabi Trust's expenses for the fiscal quarter ended July 31, 1995 were $112,195, compared to expenses of $94,609 for the fiscal quarter ended July 31, 1994. 6 COMPARISON OF SIX MONTHS ENDED JULY 31, 1995 AND JULY 31, 1994 Mesabi Trust's gross income for the six months ended July 31, 1995 was $1,406,616, an increase of $257,552 from the gross income of $1,149,064 for the six months ended July 31, 1994. The increase was primarily due to an increase in the amount of pellets that were shipped. Interest income was higher in the 1995 period. Expenses of $185,186 for the six months ended July 31, 1995 decreased $3,742 from expenses of $188,928 for the six months ended July 31, 1994. The increased income and decreased expenses resulted in net income of $1,221,430 for the six months ended July 31, 1995, as compared to net income of $960,136 for the six months ended July 31, 1994. Mesabi Trust's Unallocated Reserve aggregated $843,987 at July 31, 1995, as compared with an Unallocated Reserve of $738,400 at July 31, 1994. The Trustees anticipate that the amount of the Unallocated Reserve will fluctuate from time to time, depending upon a number of factors, including but not limited to the income for a particular period, the amount and timing of distributions, uncertainty about future royalty income and the uncertainty of future expenses. The Trustees have been advised by Northshore that in 1995 total shipments should be approximately 3,850,000 - 3,900,000 tons, an increase from 1994. Mesabi Trust's portion of the total shipments is approximately 90% or 3,480,000 - 3,500,000 tons. The increase, in large part, is due to an iron ore expansion project (the reactivation of an idle pelletizing line) which was completed in June 1995. This expansion project could increase annual production capacity by about 500,000 tons in 1995 and up to 900,000 tons in 1996 depending upon iron ore market conditions. Production in 1995 will be lower than originally estimated due to a fire which required shutdown of one pelletizing line with a resulting loss of approximately 110,000 tons of production, and delay in reactivating the idle pelletizing line. The Trustees will continue to monitor the economic circumstances of the Trust in an effort to strike a responsible balance between future distributions to the Unitholders and the maintenance of adequate Trust reserves. 7 Part II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None. Item 2. CHANGES IN SECURITIES. None. Item 3. DEFAULTS UPON SENIOR SECURITIES. None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. Item 5. OTHER INFORMATION. None. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. 27.1 Financial Data Schedule............................Filed herewith 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. MESABI TRUST ----------------------------------- (Registrant) By BANKERS TRUST COMPANY Corporate Trustee Principal Administrative Officer and duly authorized signatory:* Date: September 12, 1995 By: /s/ MATTHEW J. SEELEY -------------------------------- Name: Matthew J. Seeley Title: Vice President * There are no directors or executive officers of the registrant. 9 EXHIBIT INDEX Item No. Description -------- ----------- 27.1 Financial Data Schedule.........................Filed herewith. 10 EX-27.1 2 EXHIBIT 27.1
5 This schedule contains summary financial information extracted from the Consolidated Statements of Earnings and the Consolidated Balance Sheet and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JAN-31-1995 FEB-01-1995 JUL-31-1995 0 1,393 0 0 0 1,860 0 0 1,860 874 0 0 0 0 0 1,860 1,389 1,407 0 185 0 0 0 1,221 0 1,221 0 0 0 1,221 0.093 0.093