Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Apr. 13, 2015 | Jul. 31, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | MESABI TRUST | ||
Entity Central Index Key | 65172 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Jan-15 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $243,333,174 | ||
Entity Common Stock, Shares Outstanding | 13,120,010 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Jan. 31, 2015 | Jan. 31, 2014 |
ASSETS | ||
CASH AND CASH EQUIVALENTS | $8,717,943 | $7,719,963 |
U.S. GOVERNMENT SECURITIES, at amortized cost (which approximates market) | 510,573 | 205,055 |
ACCRUED INCOME RECEIVABLE | 558,385 | 63,253 |
PREPAID EXPENSE | 54,957 | 54,950 |
CURRENT ASSETS | 9,841,858 | 8,043,221 |
U.S. GOVERNMENT SECURITIES, at amortized cost (which approximates market) | 255,759 | 510,573 |
Assignments of leased property | ||
Amended assignment of Peters Lease | 1 | 1 |
Assignment of Cloquet Leases | 1 | 1 |
Certificate of beneficial interest for 13,120,010 units of Land Trust | 1 | 1 |
TOTAL FIXED PROPERTY, including intangibles, at nominal values | 3 | 3 |
TOTAL ASSETS | 10,097,620 | 8,553,797 |
LIABILITIES, UNALLOCATED RESERVE AND TRUST CORPUS | ||
DISTRIBUTION PAYABLE | 8,396,806 | 7,478,406 |
ACCRUED EXPENSES | 89,687 | 91,294 |
TOTAL LIABILITIES | 8,486,493 | 7,569,700 |
UNALLOCATED RESERVE | 1,611,124 | 984,094 |
TRUST CORPUS | 3 | 3 |
TOTAL LIABILITIES, UNALLOCATED RESERVE AND TRUST CORPUS | $10,097,620 | $8,553,797 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) | Jan. 31, 2015 | Jan. 31, 2014 |
BALANCE SHEETS | ||
Certificate of beneficial interest of land trust, units | 13,120,010 | 13,120,010 |
STATEMENTS_OF_INCOME
STATEMENTS OF INCOME (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
REVENUES | |||
Royalties under amended lease agreements | $25,398,310 | $21,497,563 | $30,767,335 |
Royalties under Peters Lease fee | 672,736 | 545,028 | 794,146 |
Interest | 9,069 | 2,562 | 1,464 |
Total revenues | 26,080,115 | 22,045,153 | 31,562,945 |
EXPENSES | |||
Compensation of Trustees | 223,390 | 213,373 | 248,624 |
Corporate Trustee's administrative fees | 62,500 | 62,500 | 62,500 |
Professional fees and expenses: | |||
Legal | 452,248 | 306,564 | 214,629 |
Accounting | 125,377 | 106,699 | 116,563 |
Mining consultant and field representatives | 28,541 | 53,680 | 25,368 |
Insurance | 120,109 | 121,724 | 120,843 |
Annual stock exchange fee | 42,255 | 42,115 | 38,444 |
Transfer agent's and registrar's fees | 9,603 | 8,081 | 8,381 |
Other Trust expenses | 248,244 | 74,128 | 72,856 |
Total expenses | 1,312,267 | 988,864 | 908,208 |
NET INCOME | $24,767,848 | $21,056,289 | $30,654,737 |
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING | 13,120,010 | 13,120,010 | 13,120,010 |
NET INCOME PER UNIT (in dollars per unit) | $1.89 | $1.61 | $2.34 |
STATEMENTS_OF_UNALLOCATED_RESE
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS (Equity) (USD $) | Unallocated Reserve Number of Units | Unallocated Reserve | Trust Corpus | Total |
USD ($) | USD ($) | USD ($) | ||
BALANCE at Jan. 31, 2012 | $1,031,508 | $3 | ||
BALANCE (in units) at Jan. 31, 2012 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -852,801 | |||
BALANCE at May. 20, 2012 | ||||
BALANCE at Jan. 31, 2012 | 1,031,508 | 3 | ||
BALANCE (in units) at Jan. 31, 2012 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -8,396,806 | |||
BALANCE at Aug. 20, 2012 | ||||
BALANCE at Jan. 31, 2012 | 1,031,508 | 3 | ||
BALANCE (in units) at Jan. 31, 2012 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -14,825,611 | |||
BALANCE at Nov. 20, 2012 | ||||
BALANCE at Oct. 31, 2012 | ||||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution declared $.64, $.57, $.49 per unit for January 16, 2015, January 17, 2014, January 15, 2013 respectively and paid on February 20, 2015, 2014 and 2012, respectively | -6,428,805 | |||
BALANCE at Jan. 31, 2013 | 1,182,222 | 3 | ||
BALANCE (in units) at Jan. 31, 2013 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -1,049,601 | |||
BALANCE at May. 20, 2013 | ||||
BALANCE at Jan. 31, 2013 | 1,182,222 | 3 | ||
BALANCE (in units) at Jan. 31, 2013 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -6,035,205 | |||
BALANCE at Aug. 20, 2013 | ||||
BALANCE at Jan. 31, 2013 | 1,182,222 | 3 | ||
BALANCE (in units) at Jan. 31, 2013 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -6,691,205 | |||
BALANCE at Nov. 20, 2013 | ||||
BALANCE at Oct. 31, 2013 | ||||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Net income | 5,092,605 | |||
Distribution declared $.64, $.57, $.49 per unit for January 16, 2015, January 17, 2014, January 15, 2013 respectively and paid on February 20, 2015, 2014 and 2012, respectively | -7,478,406 | |||
BALANCE at Jan. 31, 2014 | 984,094 | 3 | 3 | |
BALANCE (in units) at Jan. 31, 2014 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -4,198,403 | |||
BALANCE at Aug. 20, 2014 | ||||
BALANCE at Jan. 31, 2014 | 984,094 | 3 | ||
BALANCE (in units) at Jan. 31, 2014 | 13,120,010 | |||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Distribution paid $.88, $.32, $.00, $.51, $.46, $.08, $1.13 , $.64, $.065, per unit for November 20, 2014, August 20, 2014, May 20, 2014, November 20, 2013, August 20, 2013, May 20, 2013, November 20, 2012, August 20, 2012, May 20, 2012, respectively | -11,545,609 | |||
BALANCE at Nov. 20, 2014 | ||||
BALANCE at Oct. 31, 2014 | ||||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | ||||
Net income | 5,674,482 | |||
Distribution declared $.64, $.57, $.49 per unit for January 16, 2015, January 17, 2014, January 15, 2013 respectively and paid on February 20, 2015, 2014 and 2012, respectively | -8,396,806 | |||
BALANCE at Jan. 31, 2015 | $1,611,124 | $3 | $3 | |
BALANCE (in units) at Jan. 31, 2015 | 13,120,010 |
STATEMENTS_OF_UNALLOCATED_RESE1
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS (Parenthetical) (USD $) | 3 Months Ended | ||||||||
Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Jan. 31, 2013 | Oct. 31, 2012 | Jul. 31, 2012 | |
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS | |||||||||
Distribution paid (in dollars per unit) | $0.88 | $0.32 | $0 | $0.51 | $0.46 | $0.08 | $1.13 | $0.64 | $0.07 |
Distributions declared per unit (in dollars per unit) | $0.64 | $0.57 | $0.49 |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
OPERATING ACTIVITIES | |||
Royalties received | $25,576,105 | $22,197,875 | $31,731,348 |
Interest received | 8,878 | 2,078 | 1,524 |
Expenses paid | -1,313,881 | -930,877 | -1,042,405 |
NET CASH FROM OPERATING ACTIVITIES | 24,271,102 | 21,269,076 | 30,690,467 |
INVESTING ACTIVITIES | |||
Maturities of U.S. Government securities | 205,056 | 438,875 | 35,000 |
Purchases of U.S. Government Securities | -255,760 | -510,633 | -205,054 |
NET CASH FROM (USED FOR) INVESTING ACTIVITIES | -50,704 | -71,758 | -170,054 |
FINANCING ACTIVITY | |||
Distributions to unitholders | -23,222,418 | -20,204,816 | -34,046,426 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 997,980 | 992,502 | -3,526,013 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 7,719,963 | 6,727,461 | 10,253,474 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 8,717,943 | 7,719,963 | 6,727,461 |
RECONCILIATION OF NET INCOME TO NET CASH FROM OPERATING ACTIVITIES | |||
Net income | 24,767,848 | 21,056,289 | 30,654,737 |
Decrease (increase) in accrued income receivable | -495,132 | 154,800 | 169,927 |
Decrease (increase) in prepaid expense | -7 | 1,623 | -2,806 |
Increase (decrease) in accrued expenses | -1,607 | 56,364 | -131,391 |
NET CASH FROM OPERATING ACTIVITIES | 24,271,102 | 21,269,076 | 30,690,467 |
NON CASH FINANCING ACTIVITY | |||
Distributions declared and payable | $8,396,806 | $7,478,406 | $6,428,805 |
NATURE_OF_BUSINESS_AND_ORGANIZ
NATURE OF BUSINESS AND ORGANIZATION | 12 Months Ended |
Jan. 31, 2015 | |
NATURE OF BUSINESS AND ORGANIZATION | |
NATURE OF BUSINESS AND ORGANIZATION | |
NOTE 1 - NATURE OF BUSINESS AND ORGANIZATION | |
Nature of Business | |
Mesabi Trust was created in 1961 upon the liquidation of Mesabi Iron Company. The sole purpose of the Trust, as set forth in the Agreement of Trust dated as of July 18, 1961, is to conserve and protect the Trust Estate and to collect and distribute the income and proceeds there from to the Trust’s certificate holders after the payment of, or provision for, expenses and liabilities. The Agreement of Trust prohibits the Trust from engaging in any business. In accordance with the Agreement of Trust, the Trust will terminate twenty-one years after the death of the survivor of twenty-five persons named in an exhibit to the Agreement of Trust, the youngest of whom was believed to be fifty-four years old as of October 1, 2014. | |
The lessee/operator of Mesabi Trust’s mineral interests is Northshore Mining Corporation (NMC), a subsidiary of Cliffs Natural Resources Inc. (Cliffs). Cliffs is among the world’s largest producers of iron ore products. Prior to September 30, 1994, the lessee/operator had been a subsidiary of Cyprus Amax Minerals Company and was named Cyprus Northshore Mining Corporation (Cyprus NMC). | |
Organization | |
The beneficial interest in Mesabi Trust is represented by 13,120,010 transferable units distributed on July 27, 1961 to shareholders of Mesabi Iron Company. | |
The Trust’s status as a grantor trust was confirmed by letter ruling addressed to Mesabi Iron Company from the Internal Revenue Service in 1961. As a grantor trust, Mesabi is exempt from Federal income taxes and its income is taxable directly to the Unitholders. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||
Jan. 31, 2015 | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Cash and Cash Equivalents | ||||
The Trust considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of January 31, 2015 and 2014, the Trust held $8,717,943 and $7,719,963, respectively, in a money market fund that invests primarily in obligations of the U.S. Treasury, which it considers to be cash and cash equivalents. | ||||
Investments | ||||
The Trust invests solely in U.S. Government securities. The Trustees determine the appropriate classifications of the securities at the time they are acquired and evaluate the appropriateness of such classifications as of each balance sheet date. | ||||
The U.S. Government securities are classified as held-to-maturity securities as the Trust has the positive intent and ability to hold to maturity and are therefore stated at amortized cost. | ||||
Revenue Recognition | ||||
Royalty income under the amended lease agreements with NMC is recognized as it is earned. Under such agreements, royalties are earned upon shipment from Silver Bay, Minnesota (NMC’s location), regardless of whether the actual sales proceeds for any shipment are received by NMC’s parent, Cliffs. The amount of base overriding royalties and royalty bonuses payable are determined on the volume of tonnage shipped from Silver Bay, Minnesota during each calendar quarter and the actual proceeds to Cliffs resulting from such shipments. | ||||
Royalty income includes accrued income receivable. Accrued income receivable represents royalty income earned but not yet received by the Trust under the royalty agreements described elsewhere in these notes. Accrued income receivable is calculated based on (i) shipments during the last month of Mesabi Trust’s fiscal year, if any, and (ii) net price adjustments resulting from the price adjustment mechanisms in the agreements between Cliffs and its customers that determine the final sales price of the shipments from Silver Bay, Minnesota. | ||||
Adjustments to royalty income may result from changes in final reconciliations of tonnage shipped by NMC with the final amounts received from NMC customers. Adjustments may also result from revisions to estimated prices previously used to record revenue for tonnage shipped. Pricing decreases may give rise to negative price adjustments which may be applied against future royalty income recognized by the Trust. | ||||
During the fourth quarter of fiscal 2015, negative price adjustments were recorded by Mesabi Trust as an offset to accrued income receivable due to price adjustment mechanisms in the agreements between Cliffs and its customers that determine the final sales price of the shipments from NMC with respect to certain shipments during calendar year 2013. As of January 31, 2015, the Trust recognized revenue related to approximately 702,400 tons of iron ore that were shipped by NMC as of December 31, 2014, but for which Cliffs has indicated that final pricing is not yet known. Pricing related to these tons is expected to be finalized in the first calendar quarter of 2016. | ||||
Royalty income under the Peters Lease fee agreement is also recognized quarterly as it is earned. Under such agreement, however, royalties are earned at the option of NMC either upon mining of crude ore from Peters Lease lands or upon shipment from Silver Bay of iron ore product produced from Peters Lease lands. | ||||
Fixed Property, Including Intangibles | ||||
The Trust’s fixed property, including intangibles, is recorded at nominal values and includes the following: | ||||
1. The entire beneficial interest as assignor in the Amended Peters Lease Assignment and the Amended Cloquet Lease Assignment covering taconite properties in Minnesota which are leased to NMC. | ||||
2.The entire beneficial interest in Mesabi Land Trust which owns a 20% fee interest in the lands subject to the Peters Lease and the entire fee interest in other properties in Minnesota. | ||||
Net Income Per Unit | ||||
Net income per unit is computed by dividing net income by the weighted average number of units outstanding. | ||||
Concentration of Credit Risk | ||||
Financial instruments which potentially subject the Trust to concentrations of credit risk consist primarily of cash that is maintained at an FDIC insured financial institution. At times during the year the Trust’s cash balance may exceed insured limits. | ||||
As further described in Note 1, NMC is the lessee/operator of the Mesabi Trust land. All royalty income earned by the Trust is received from NMC, and accordingly, substantially all of the accrued income receivable is also due from NMC. | ||||
Accounting Estimates | ||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Trustees to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Specifically, the accrued income receivable, deferred royalty revenue and related royalty revenue are significant estimates which are subject to change in the near term, and changes to these estimates could have a material effect on the Trust’s financial statements. | ||||
Subsequent Events | ||||
Material subsequent events are evaluated for recognition or disclosure in the accompanying financial statements. | ||||
Fair Value Measures | ||||
Valuation Hierarchy | ||||
GAAP establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. | ||||
· | Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||
· | Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |||
· | Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement. | |||
The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. | ||||
The carrying amounts of financial instruments approximated fair value as of January 31, 2015 and 2014, because of the relative short maturity of these instruments. | ||||
Recent Accounting Pronouncements | ||||
The Trust has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Trust’s financial condition or results of its operations. The Trust would like to draw further attention to the following issued pronouncement regarding the accounting for revenue from contracts with customers: | ||||
Revenue from Contracts with Customers | ||||
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. The Trust is evaluating the new standard, but do not expect this standard to have a material impact on our consolidated financial statements. | ||||
Various accounting standards and interpretations were issued during the fiscal year ended January 31, 2015. The Trust has evaluated the recently issued accounting pronouncements that are effective for the fiscal year ended January 31, 2015 and believe they will not have a material effect on the Trust’s financial position, results of operations or cash flows when adopted. | ||||
U_S_GOVERNMENT_SECURITIES
U. S. GOVERNMENT SECURITIES | 12 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
U. S. GOVERNMENT SECURITIES | ||||||||||||||
U. S. GOVERNMENT SECURITIES | ||||||||||||||
U.S. government securities at January 31, 2015 and 2014 are classified as held-to-maturity and mature as follows: | ||||||||||||||
2015 | 2014 | |||||||||||||
Carrying | Carrying | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||
Due within one year | $ | 510,573 | $ | 501,668 | $ | 205,055 | $ | 205,057 | ||||||
Due after one year | 255,759 | 255,487 | 510,573 | 507,996 | ||||||||||
$ | 766,332 | $ | 757,155 | $ | 715,628 | $ | 713,053 | |||||||
The fair value of U.S. government securities have been valued using level 1 inputs. | ||||||||||||||
ROYALTY_AGREEMENT
ROYALTY AGREEMENT | 12 Months Ended |
Jan. 31, 2015 | |
ROYALTY AGREEMENT | |
ROYALTY AGREEMENT | |
NOTE 4 - ROYALTY AGREEMENT | |
The current royalty rate schedule became effective on August 17, 1989, which was established pursuant to certain agreements (the “Amended Assignment Agreements”) the Trust entered into with Cyprus Northshore Mining Corporation (“Cyprus NMC”). Pursuant to the Amended Assignment Agreements, overriding royalties are determined by both the volume and selling price of iron ore products shipped. | |
Pursuant to the Amended Assignment Agreements, NMC is obligated to pay Mesabi Trust base overriding royalties, in varying amounts constituting a percentage of the gross proceeds of shipments, from Silver Bay, Minnesota, of iron ore product produced from Mesabi Trust lands or, to a limited extent, other lands. NMC is obligated to make payments of overriding royalties on product shipments within 30 days following the calendar quarter in which such shipments occur. NMC resumed mining operations and shipping product from Silver Bay in the second calendar quarter of 1990, and the first payment of overriding royalties was made in July 1990. | |
Royalty bonuses are payable on all iron ore products produced from Mesabi Ore shipped from Silver Bay during a calendar quarter and sold at prices above the Adjusted Threshold Price. The Adjusted Threshold Price was $51.55 per ton for calendar year 2013, $52.31 per ton for calendar year 2014, and will be $53.01 per ton for calendar year 2015. The Adjusted Threshold Price is subject to adjustment (but not below $30 per ton) for inflation and deflation and is determined each year on the basis of the change in the Gross Domestic Product Implicit Price Deflator, a broad based index of inflation and deflation published quarterly by the U.S. Department of Commerce. | |
NMC is obligated to pay to Mesabi Trust a minimum advance royalty of $500,000 per annum, subject to adjustment for inflation and deflation (but not below $500,000), which is credited against base overriding royalties and royalty bonuses. NMC is obligated to make quarterly payments of the minimum advance royalty in January, April, July and October of each year. For the calendar year ending December 31, 2015, the minimum advance royalty threshold is $883,875. The minimum annual advance royalty threshold was $872,156 and $859,429, for the calendar years ended December 31, 2014 and 2013, respectively. | |
UNALLOCATED_RESERVE_AND_DISTRI
UNALLOCATED RESERVE AND DISTRIBUTIONS | 12 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
UNALLOCATED RESERVE AND DISTRIBUTIONS | ||||||||
UNALLOCATED RESERVE AND DISTRIBUTIONS | ||||||||
NOTE 5 - UNALLOCATED RESERVE AND DISTRIBUTIONS | ||||||||
The Trustees have historically determined that the unallocated cash and U.S. Government securities portion of the Unallocated Reserve should be maintained at a prudent level, usually within the range of $500,000 to $1,000,000, to meet present or future liabilities of the Trust. Accordingly, although the actual amount of the Unallocated Reserve will fluctuate from time to time, and may increase or decrease from its current level, it is currently anticipated that future distributions will be highly dependent upon royalty payments received quarterly and the level of Trust expenses that the Trustees expect to occur in subsequent quarters. | ||||||||
As of January 31, 2015 and January 31, 2014, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve consisted of the following components: | ||||||||
January 31, 2015 | January 31, 2014 | |||||||
Cash and U.S. Government securities | $ | 9,484,275 | $ | 8,435,591 | ||||
Distribution payable | 8,396,806 | 7,478,406 | ||||||
Unallocated cash and U.S. Government securities | $ | 1,087,469 | $ | 957,185 | ||||
A reconciliation of the Trust’s Unallocated Reserve from January 31, 2014 to January 31, 2015 is as follows: | ||||||||
Unallocated Reserve, January 31, 2014 | $ | 984,094 | ||||||
Net income, twelve months ended January 31, 2015 | 24,767,848 | |||||||
Distributions declared | (24,140,818 | ) | ||||||
Unallocated Reserve, January 31, 2015 | $ | 1,611,124 | ||||||
The Trustees determine the level of distributions on a quarterly basis after receiving notification from NMC as to the amount of royalty income that will be received and after determination of any known or anticipated expenses, liabilities and obligations of the Trust. As a result of fluctuations in the accrued income receivable portion of the Unallocated Reserve, future distributions may vary depending upon the adjustments to royalty income, which are determined by NMC, and the level of Trust expenses that the Trustees anticipate occurring in subsequent quarters. | ||||||||
During the fiscal years ended January 31, 2015, 2014, and 2013, the Trustees distributed cash payments totaling $23,222,418 ($1.770 per Unit), $20,204,816 ($1.540 per Unit), and $34,046,426 ($2.595 per Unit), respectively. In addition, in January 2015 the Trustees declared a distribution of $0.64 per Unit of beneficial interest, which was paid in February 2015. | ||||||||
SUMMARY_OF_QUARTERLY_EARNINGS_
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | 12 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | ||||||||||||||
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | ||||||||||||||
NOTE 6 - SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | ||||||||||||||
The quarterly results of operations for the years ended January 31, 2014 and 2013 are presented below: | ||||||||||||||
2015 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenue | $ | 503,435 | $ | 7,860,360 | $ | 11,782,758 | $ | 5,933,562 | ||||||
Expenses | 366,217 | 443,818 | 243,152 | 259,080 | ||||||||||
Net income | $ | 137,218 | $ | 7,416,542 | $ | 11,539,606 | $ | 5,674,482 | ||||||
Net income per unit | $ | 0.010 | $ | 0.565 | $ | 0.880 | $ | 0.433 | ||||||
2014 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenue | $ | 2,528,807 | $ | 7,834,715 | $ | 6,347,628 | $ | 5,334,003 | ||||||
Expenses | 326,418 | 209,935 | 211,113 | 241,398 | ||||||||||
Net income | $ | 2,202,389 | $ | 7,624,780 | $ | 6,136,515 | $ | 5,092,605 | ||||||
Net income per unit | $ | 0.168 | $ | 0.581 | $ | 0.468 | $ | 0.388 | ||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||
Jan. 31, 2015 | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Cash and Cash Equivalents | ||||
Cash and Cash Equivalents | ||||
The Trust considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of January 31, 2015 and 2014, the Trust held $8,717,943 and $7,719,963, respectively, in a money market fund that invests primarily in obligations of the U.S. Treasury, which it considers to be cash and cash equivalents. | ||||
Investments | ||||
Investments | ||||
The Trust invests solely in U.S. Government securities. The Trustees determine the appropriate classifications of the securities at the time they are acquired and evaluate the appropriateness of such classifications as of each balance sheet date. | ||||
The U.S. Government securities are classified as held-to-maturity securities as the Trust has the positive intent and ability to hold to maturity and are therefore stated at amortized cost. | ||||
Revenue Recognition | ||||
Revenue Recognition | ||||
Royalty income under the amended lease agreements with NMC is recognized as it is earned. Under such agreements, royalties are earned upon shipment from Silver Bay, Minnesota (NMC’s location), regardless of whether the actual sales proceeds for any shipment are received by NMC’s parent, Cliffs. The amount of base overriding royalties and royalty bonuses payable are determined on the volume of tonnage shipped from Silver Bay, Minnesota during each calendar quarter and the actual proceeds to Cliffs resulting from such shipments. | ||||
Royalty income includes accrued income receivable. Accrued income receivable represents royalty income earned but not yet received by the Trust under the royalty agreements described elsewhere in these notes. Accrued income receivable is calculated based on (i) shipments during the last month of Mesabi Trust’s fiscal year, if any, and (ii) net price adjustments resulting from the price adjustment mechanisms in the agreements between Cliffs and its customers that determine the final sales price of the shipments from Silver Bay, Minnesota. | ||||
Adjustments to royalty income may result from changes in final reconciliations of tonnage shipped by NMC with the final amounts received from NMC customers. Adjustments may also result from revisions to estimated prices previously used to record revenue for tonnage shipped. Pricing decreases may give rise to negative price adjustments which may be applied against future royalty income recognized by the Trust. | ||||
During the fourth quarter of fiscal 2015, negative price adjustments were recorded by Mesabi Trust as an offset to accrued income receivable due to price adjustment mechanisms in the agreements between Cliffs and its customers that determine the final sales price of the shipments from NMC with respect to certain shipments during calendar year 2013. As of January 31, 2015, the Trust recognized revenue related to approximately 702,400 tons of iron ore that were shipped by NMC as of December 31, 2014, but for which Cliffs has indicated that final pricing is not yet known. Pricing related to these tons is expected to be finalized in the first calendar quarter of 2016. | ||||
Royalty income under the Peters Lease fee agreement is also recognized quarterly as it is earned. Under such agreement, however, royalties are earned at the option of NMC either upon mining of crude ore from Peters Lease lands or upon shipment from Silver Bay of iron ore product produced from Peters Lease lands. | ||||
Fixed Property, Including Intangibles | ||||
Fixed Property, Including Intangibles | ||||
The Trust’s fixed property, including intangibles, is recorded at nominal values and includes the following: | ||||
1. The entire beneficial interest as assignor in the Amended Peters Lease Assignment and the Amended Cloquet Lease Assignment covering taconite properties in Minnesota which are leased to NMC. | ||||
2.The entire beneficial interest in Mesabi Land Trust which owns a 20% fee interest in the lands subject to the Peters Lease and the entire fee interest in other properties in Minnesota. | ||||
Net Income Per Unit | ||||
Net Income Per Unit | ||||
Net income per unit is computed by dividing net income by the weighted average number of units outstanding. | ||||
Concentration of Credit Risk | ||||
Concentration of Credit Risk | ||||
Financial instruments which potentially subject the Trust to concentrations of credit risk consist primarily of cash that is maintained at an FDIC insured financial institution. At times during the year the Trust’s cash balance may exceed insured limits. | ||||
As further described in Note 1, NMC is the lessee/operator of the Mesabi Trust land. All royalty income earned by the Trust is received from NMC, and accordingly, substantially all of the accrued income receivable is also due from NMC. | ||||
Accounting Estimates | ||||
Accounting Estimates | ||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Trustees to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Specifically, the accrued income receivable, deferred royalty revenue and related royalty revenue are significant estimates which are subject to change in the near term, and changes to these estimates could have a material effect on the Trust’s financial statements. | ||||
Subsequent Events | ||||
Subsequent Events | ||||
Material subsequent events are evaluated for recognition or disclosure in the accompanying financial statements. | ||||
Fair Value Measures | ||||
Fair Value Measures | ||||
Valuation Hierarchy | ||||
GAAP establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. | ||||
· | Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||
· | Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |||
· | Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement. | |||
The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. | ||||
The carrying amounts of financial instruments approximated fair value as of January 31, 2015 and 2014, because of the relative short maturity of these instruments. | ||||
Recent Accounting Pronouncements | ||||
Recent Accounting Pronouncements | ||||
The Trust has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Trust’s financial condition or results of its operations. The Trust would like to draw further attention to the following issued pronouncement regarding the accounting for revenue from contracts with customers: | ||||
Revenue from Contracts with Customers | ||||
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. The Trust is evaluating the new standard, but do not expect this standard to have a material impact on our consolidated financial statements. | ||||
Various accounting standards and interpretations were issued during the fiscal year ended January 31, 2015. The Trust has evaluated the recently issued accounting pronouncements that are effective for the fiscal year ended January 31, 2015 and believe they will not have a material effect on the Trust’s financial position, results of operations or cash flows when adopted. | ||||
U_S_GOVERNMENT_SECURITIES_Tabl
U. S. GOVERNMENT SECURITIES (Tables) | 12 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
U. S. GOVERNMENT SECURITIES | ||||||||||||||
Schedule of U.S. government securities classified as held-to-maturity | ||||||||||||||
2015 | 2014 | |||||||||||||
Carrying | Carrying | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||
Due within one year | $ | 510,573 | $ | 501,668 | $ | 205,055 | $ | 205,057 | ||||||
Due after one year | 255,759 | 255,487 | 510,573 | 507,996 | ||||||||||
$ | 766,332 | $ | 757,155 | $ | 715,628 | $ | 713,053 | |||||||
UNALLOCATED_RESERVE_AND_DISTRI1
UNALLOCATED RESERVE AND DISTRIBUTIONS (Tables) | 12 Months Ended | |||||||
Jan. 31, 2015 | ||||||||
UNALLOCATED RESERVE AND DISTRIBUTIONS | ||||||||
Schedule of unallocated cash and U.S. Government securities portion of the Trust's Unallocated Reserve | ||||||||
January 31, 2015 | January 31, 2014 | |||||||
Cash and U.S. Government securities | $ | 9,484,275 | $ | 8,435,591 | ||||
Distribution payable | 8,396,806 | 7,478,406 | ||||||
Unallocated cash and U.S. Government securities | $ | 1,087,469 | $ | 957,185 | ||||
Schedule of reconciliation of Trust's Unallocated Reserve | ||||||||
Unallocated Reserve, January 31, 2014 | $ | 984,094 | ||||||
Net income, twelve months ended January 31, 2015 | 24,767,848 | |||||||
Distributions declared | (24,140,818 | ) | ||||||
Unallocated Reserve, January 31, 2015 | $ | 1,611,124 | ||||||
SUMMARY_OF_QUARTERLY_EARNINGS_1
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) (Tables) | 12 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | ||||||||||||||
Summary of quarterly results of operations | ||||||||||||||
2015 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenue | $ | 503,435 | $ | 7,860,360 | $ | 11,782,758 | $ | 5,933,562 | ||||||
Expenses | 366,217 | 443,818 | 243,152 | 259,080 | ||||||||||
Net income | $ | 137,218 | $ | 7,416,542 | $ | 11,539,606 | $ | 5,674,482 | ||||||
Net income per unit | $ | 0.010 | $ | 0.565 | $ | 0.880 | $ | 0.433 | ||||||
2014 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenue | $ | 2,528,807 | $ | 7,834,715 | $ | 6,347,628 | $ | 5,334,003 | ||||||
Expenses | 326,418 | 209,935 | 211,113 | 241,398 | ||||||||||
Net income | $ | 2,202,389 | $ | 7,624,780 | $ | 6,136,515 | $ | 5,092,605 | ||||||
Net income per unit | $ | 0.168 | $ | 0.581 | $ | 0.468 | $ | 0.388 | ||||||
NATURE_OF_BUSINESS_AND_ORGANIZ1
NATURE OF BUSINESS AND ORGANIZATION (Details) | 12 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
item | ||
NATURE OF BUSINESS AND ORGANIZATION | ||
Period of termination of the Trust after the death of the survivor of persons named in the exhibit | 21 years | |
Number of persons named in the exhibit to the Agreement of Trust | 25 | |
Age of the youngest survivor | 54 years | |
Beneficial interest in the Trust (in units) | 13,120,010 | 13,120,010 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
T | ||
Cash and Cash Equivalents | ||
Amount held by the Trust in a money market fund | $8,717,943 | $7,719,963 |
Revenue Recognition | ||
Quantity of iron ore shipped by NMC subject to price determination recognized in revenue (in tons) | 702,400 | |
Fixed Property, Including Intangibles | ||
Percentage of fee interest owned by Mesabi Land Trust in the lands subject to the Peters Lease | 20.00% |
U_S_GOVERNMENT_SECURITIES_Deta
U. S. GOVERNMENT SECURITIES (Details) (U.S. government securities, USD $) | Jan. 31, 2015 | Jan. 31, 2014 |
U.S. government securities | ||
Carrying Value | ||
Due within one year | $510,573 | $205,055 |
Due after one year | 255,759 | 510,573 |
Total | 766,332 | 715,628 |
Fair Value | ||
Due within one year | 501,668 | 205,057 |
Due after one year | 255,487 | 507,996 |
Total | $757,155 | $713,053 |
ROYALTY_AGREEMENT_Details
ROYALTY AGREEMENT (Details) (Cyprus NMC, USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
ROYALTY AGREEMENT | |||
Adjusted threshold price (in dollars per ton) | 53.01 | 52.31 | 51.55 |
Maximum | |||
ROYALTY AGREEMENT | |||
Obligation to make payments of overriding royalties on product shipments, period | 30 days | ||
Minimum | |||
ROYALTY AGREEMENT | |||
Adjusted threshold price subject to adjustment (in dollars per ton) | 30 | ||
Obligation to pay advance royalty subject to adjustment | $500,000 | ||
Advance royalty | $883,875 | $872,156 | $859,429 |
UNALLOCATED_RESERVE_AND_DISTRI2
UNALLOCATED RESERVE AND DISTRIBUTIONS (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
UNALLOCATED RESERVE AND DISTRIBUTIONS | |||||||||||
Cash and U.S. Government securities | $9,484,275 | $8,435,591 | $9,484,275 | $8,435,591 | |||||||
Distribution payable | 8,396,806 | 7,478,406 | 8,396,806 | 7,478,406 | |||||||
Unallocated cash and U.S. Government securities | 1,087,469 | 957,185 | 1,087,469 | 957,185 | |||||||
Reconciliation of unallocated reserve | |||||||||||
Unallocated Reserve at the beginning of the period | 984,094 | 984,094 | |||||||||
Net income, twelve months ended January 31, 2015 | 5,674,482 | 11,539,606 | 7,416,542 | 137,218 | 5,092,605 | 6,136,515 | 7,624,780 | 2,202,389 | 24,767,848 | 21,056,289 | 30,654,737 |
Distributions declared | -24,140,818 | ||||||||||
Unallocated Reserve at the end of the period | 1,611,124 | 984,094 | 1,611,124 | 984,094 | |||||||
Distributed cash payments | 23,222,418 | 20,204,816 | 34,046,426 | ||||||||
Distributed cash payments (in dollars per unit) | $1.77 | $1.54 | $2.60 | ||||||||
Distribution declared per unit of beneficial interest (in dollars per unit) | $0.64 | ||||||||||
Minimum | |||||||||||
UNALLOCATED RESERVE AND DISTRIBUTIONS | |||||||||||
Unallocated cash and U.S. Government securities | 500,000 | 500,000 | |||||||||
Maximum | |||||||||||
UNALLOCATED RESERVE AND DISTRIBUTIONS | |||||||||||
Unallocated cash and U.S. Government securities | $1,000,000 | $1,000,000 |
SUMMARY_OF_QUARTERLY_EARNINGS_2
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | |||||||||||
Revenue | $5,933,562 | $11,782,758 | $7,860,360 | $503,435 | $5,334,003 | $6,347,628 | $7,834,715 | $2,528,807 | $26,080,115 | $22,045,153 | $31,562,945 |
Expenses | 259,080 | 243,152 | 443,818 | 366,217 | 241,398 | 211,113 | 209,935 | 326,418 | |||
NET INCOME | $5,674,482 | $11,539,606 | $7,416,542 | $137,218 | $5,092,605 | $6,136,515 | $7,624,780 | $2,202,389 | $24,767,848 | $21,056,289 | $30,654,737 |
Net income per unit (in dollars per unit) | $0.43 | $0.88 | $0.56 | $0.01 | $0.39 | $0.47 | $0.58 | $0.17 | $1.89 | $1.61 | $2.34 |