Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 31, 2017 | Sep. 06, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | MESABI TRUST | |
Entity Central Index Key | 65,172 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 13,120,010 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
REVENUES | ||||
Royalty income | $ 13,347,355 | $ 2,608,619 | $ 16,997,566 | $ 2,608,619 |
Interest | 7,273 | 1,017 | 13,815 | 2,696 |
Total revenues | 13,354,628 | 2,609,636 | 17,011,381 | 2,611,315 |
EXPENSES | ||||
Expenses | 240,493 | 189,389 | 535,539 | 621,320 |
Net income | $ 13,114,135 | $ 2,420,247 | $ 16,475,842 | $ 1,989,995 |
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING | 13,120,010 | 13,120,010 | 13,120,010 | 13,120,010 |
Net income per unit (Note 2) (in dollars per unit) | $ 0.9996 | $ 0.1845 | $ 1.2558 | $ 0.1517 |
Distributions declared per unit (Note 3) (in dollars per unit) | $ 0.1600 | $ 0.2000 | $ 0.7100 | $ 0.4000 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jul. 31, 2017 | Jan. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 10,797,128 | $ 13,695,168 |
U.S. Government securities, current, at amortized cost (which approximates market) | 2,366,816 | 456,058 |
Accrued income receivable | 6,220,864 | 45,045 |
Prepaid expenses | 139,785 | 53,608 |
Current assets | 19,524,593 | 14,249,879 |
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 | 3 | 3 |
Total assets | 19,524,596 | 14,249,882 |
LIABILITIES, UNALLOCATED RESERVE AND TRUST CORPUS | ||
Distribution payable | 2,099,202 | 1,836,801 |
Accrued expenses | 59,287 | 108,193 |
Deferred royalty revenue | 2,099,415 | |
Total liabilities | 2,158,489 | 4,044,409 |
Unallocated reserve | 17,366,104 | 10,205,470 |
Trust corpus | 3 | 3 |
Total liabilities, unallocated reserve and trust corpus | $ 19,524,596 | $ 14,249,882 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - shares | Jul. 31, 2017 | Jan. 31, 2017 |
Condensed Balance Sheets | ||
Certificate of beneficial interest of Land Trust, units | 13,120,010 | 13,120,010 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Operating activities | ||
Royalties received | $ 8,723,576 | $ 2,030,521 |
Interest received | 12,571 | 3,450 |
Expenses paid | (670,622) | (719,935) |
Net cash from operating activities | 8,065,525 | 1,314,036 |
Investing activities | ||
Maturities of U.S. Government securities | 82,628 | 5,690,347 |
Purchases of U.S. Government securities | (1,993,386) | |
Net cash (used for) from investing activities | (1,910,758) | 5,690,347 |
Financing activity | ||
Distributions to unitholders | (9,052,807) | (3,280,003) |
Net change in cash and cash equivalents | (2,898,040) | 3,724,380 |
Cash and cash equivalents, beginning of year | 13,695,168 | 2,587,165 |
Cash and cash equivalents, end of period | 10,797,128 | 6,311,545 |
Reconciliation of net income to net cash from operating activities | ||
Net income | 16,475,842 | 1,989,995 |
Decrease (increase) in accrued income receivable | (6,175,819) | (516,111) |
Decrease (increase) in prepaid expense | (86,177) | (79,607) |
Increase (decrease) in accrued expenses | (48,906) | (80,241) |
Increase in deferred royalty revenue | (2,099,415) | |
Net cash from operating activities | 8,065,525 | 1,314,036 |
Non cash financing activity | ||
Distributions declared and payable | $ 2,099,202 | $ 2,624,002 |
NATURE OF BUSINESS AND ORGANIZA
NATURE OF BUSINESS AND ORGANIZATION | 6 Months Ended |
Jul. 31, 2017 | |
NATURE OF BUSINESS AND ORGANIZATION | |
NATURE OF BUSINESS AND ORGANIZATION | Note 1. The financial statements included herein have been prepared without audit (except for the balance sheet at January 31, 2017) 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 accounting principles generally accepted in the United States 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, 2017 and 2016, (b) the financial position at July 31, 2017 and (c) the cash flows for the six months ended July 31, 2017 and 2016, have been made. For further information, refer to the financial statements and footnotes included in Mesabi Trust’s Annual Report on Form 10-K for the year ended January 31, 2017. |
NET INCOME PER UNIT
NET INCOME PER UNIT | 6 Months Ended |
Jul. 31, 2017 | |
NET INCOME PER UNIT | |
NET INCOME PER UNIT | Note 2. Net income per unit includes accrued income receivable. For the three months ended July 31, 2017, the Trust recorded $6,220,864 of accrued income receivable as reflected on the Condensed Balance Sheet as of July 31, 2017 (unaudited). Accrued income receivable is accounted for and reported for the Trust’s second fiscal quarter based on shipments during the month of July, even though such accrued income receivable is not available for distribution to the holders of Certificates of Beneficial Interest in Mesabi Trust (“Unitholders”) until the applicable royalties are actually received by the Trust. Accrued income receivable also includes accruals for anticipated pricing adjustments, which can be positive or negative. Net income per unit is based on 13,120,010 units outstanding during the period. |
DIVIDEND AND DISTRIBUTION
DIVIDEND AND DISTRIBUTION | 6 Months Ended |
Jul. 31, 2017 | |
DIVIDEND AND DISTRIBUTION | |
DIVIDEND AND DISTRIBUTION | Note 3. The Trustees determine whether to declare a distribution each year in April, July, October and January. The Trust’s financial statements are prepared on an accrual basis and present the Trust’s results of operations based on each of the Trust’s fiscal quarters, which end one month after the close of each calendar quarter. Because (i) distributions, if any, are declared by the Trustees based on, among other considerations, the amount of royalties actually paid to the Trust through the end of each calendar quarter prior to April, July, October and January of each year, the Trustees’ evaluation of known and projected Trust expenses in the current and future quarters, the then-current level of Unallocated Reserve and general economic conditions, and (ii) the Trust’s Net Income is calculated as of the end of each fiscal quarter, the distributions declared by the Trust are not equivalent to the Trust’s Net Income during the periods reported in this quarterly report on Form 10-Q. |
ROYALTY AGREEMENT, UNALLOCATED
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS | 6 Months Ended |
Jul. 31, 2017 | |
UNALLOCATED RESERVE AND DISTRIBUTIONS | |
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS | Note 4. On July 27, 2017, the Trustees received the quarterly royalty report of iron ore product shipments from Silver Bay, Minnesota during the quarter ended June 30, 2017 from Cleveland-Cliffs Inc., formerly known as Cliffs Natural Resources Inc. (“Cleveland-Cliffs”), the parent company of Northshore Mining Company (“Northshore”). On July 14, 2017, the Trustees declared a distribution of sixteen cents ($0.16) per Unit of Beneficial Interest payable on August 20, 2017 to Mesabi Trust Unitholders of record at the close of business on July 30, 2017. Each quarter, as authorized by the Agreement of Trust, the Trustees evaluate all relevant factors including all costs, expenses, obligations, and present and future liabilities of the Trust (whether fixed or contingent) in determining the prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry and current economic conditions. Pursuant to the Agreement of Trust, the Trustees make decisions about cash distributions to Unitholders based on the royalty payments it receives from Northshore when received, rather than as royalty income is recorded in accordance with the Trust’s revenue recognition policy. Refer to Note 3 for further information. As of July 31, 2017 and January 31, 2017, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components: July 31, 2017 (unaudited) January 31, 2017 Cash and U.S. Government securities $ 13,163,944 $ 14,151,226 Distribution payable (2,099,202) (1,836,801) Unallocated cash and U.S. $ 11,064,742 $ 12,314,425 A reconciliation of the Trust’s Unallocated Reserve from January 31, 2017 to July 31, 2017 is as follows: Unallocated Reserve, January 31, 2017 $ 10,205,470 Net income 16,475,842 Distributions declared (9,315,208) Unallocated Reserve, July 31, 2017 $ 17,366,104 |
UNALLOCATED RESERVE AND DISTRIB
UNALLOCATED RESERVE AND DISTRIBUTIONS (Tables) | 6 Months Ended |
Jul. 31, 2017 | |
UNALLOCATED RESERVE AND DISTRIBUTIONS | |
Schedule of unallocated cash and U.S. Government securities portion of the Trust's Unallocated Reserve | July 31, 2017 (unaudited) January 31, 2017 Cash and U.S. Government securities $ 13,163,944 $ 14,151,226 Distribution payable (2,099,202) (1,836,801) Unallocated cash and U.S. $ 11,064,742 $ 12,314,425 |
Schedule of reconciliation of Trust's Unallocated Reserve | Unallocated Reserve, January 31, 2017 $ 10,205,470 Net income 16,475,842 Distributions declared (9,315,208) Unallocated Reserve, July 31, 2017 $ 17,366,104 |
NET INCOME PER UNIT (Details)
NET INCOME PER UNIT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jan. 31, 2017 | |
NET INCOME PER UNIT | |||||
Accrued income receivable | $ 6,220,864 | $ 6,220,864 | $ 45,045 | ||
Number of units outstanding | 13,120,010 | 13,120,010 | 13,120,010 | 13,120,010 |
DIVIDEND AND DISTRIBUTION (Deta
DIVIDEND AND DISTRIBUTION (Details) | 6 Months Ended |
Jul. 31, 2017 | |
DIVIDEND AND DISTRIBUTION | |
Period after the close of each calendar quarter when the fiscal quarter ends | 1 month |
UNALLOCATED RESERVE AND DISTR13
UNALLOCATED RESERVE AND DISTRIBUTIONS (Details) - USD ($) | Jul. 14, 2017 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jan. 31, 2017 |
UNALLOCATED RESERVE AND DISTRIBUTIONS | ||||||
Distribution declared or paid (in dollars per unit) | $ 0.16 | $ 0.1600 | $ 0.2000 | $ 0.7100 | $ 0.4000 | |
Unallocated Cash and Securities portion of Unallocated Reserve | ||||||
Cash and U.S. Government securities | $ 13,163,944 | $ 13,163,944 | $ 14,151,226 | |||
Distribution payable | (2,099,202) | (2,099,202) | (1,836,801) | |||
Unallocated cash and U.S. Government securities | 11,064,742 | 11,064,742 | $ 12,314,425 | |||
Reconciliation of Trust's Unallocated Reserve | ||||||
Unallocated Reserve at the beginning of the period | 10,205,470 | |||||
Net income | 13,114,135 | $ 2,420,247 | 16,475,842 | $ 1,989,995 | ||
Distributions declared | (9,315,208) | |||||
Unallocated Reserve at the end of the period | $ 17,366,104 | $ 17,366,104 |