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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended January 31, 1997
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _____________________.
COMMISSION FILE NO.: 1-4488
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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.)
C/O BANKERS TRUST COMPANY 10008-0318
CORPORATE TRUST AND AGENCY GROUP (Zip Code)
P.O. BOX 318
CHURCH STREET STATION
NEW YORK, NEW YORK
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 250-6519
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
------------------- on which registered
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Units of Beneficial Interest in Mesabi Trust New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /x/
As of April 25, 1997, the aggregate market value of the Units of
Beneficial Interest held by non-affiliates of the registrant aggregated
approximately $58,401,045*. As of April 25, 1997, 13,120,010 Units of
Beneficial Interest were outstanding.
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* Includes approximately $67,950 representing the market value as of
April 25, 1997 of 15,100 Units the beneficial ownership of which is
disclaimed by affiliates (see Item 12 herein).
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Certain items in Parts I and II incorporate information by reference
from the Annual Report of the Trustees of Mesabi Trust to the Holders of
Certificates of Beneficial Interest for the fiscal year ended January 31, 1997,
which is annexed hereto and filed herewith as Exhibit 13.
PART I
ITEM 1. BUSINESS.
The information set forth on pages 7 through 11 of the Annual Report
of the Trustees of Mesabi Trust for the fiscal year ended January 31, 1997 is
incorporated herein by reference.
Mesabi Trust ("Mesabi Trust" or the "Trust") is a trust organized
pursuant to an Agreement of Trust under the laws of the State of New York in
1961. Mesabi Trust holds all of the interests formerly owned by Mesabi Iron
Company, including all of Mesabi Iron Company's right, title and interest in the
Amended Assignment of Peters Lease, Assignment of Cloquet Lease, beneficial
interest in the Mesabi Land Trust, and all other assets and property identified
in the Agreement of Trust. Under the Agreement of Trust, the Trustees are
specifically prohibited from entering into or engaging in any business. This
prohibition applies irrespective of whether the conduct of any such business
activities is deemed by the Trustees to be necessary or proper for the
preservation and protection of the Trust Estate.
Accordingly, the activities of the Trust in connection with the
administration of Trust assets are limited to the collection of income, the
payment of expenses and liabilities, the distribution of net income and the
protection and conservation of the assets held. Pursuant to a ruling from the
Internal Revenue Service, which was based on the terms of the Agreement of Trust
including the prohibition against entering into any business, the Trust is not
taxable as a corporation for Federal income tax purposes. The holders of the
Units of Beneficial Interest are considered as "owners" of the trust and the
Trust's income is taxable directly to the Unitholders.
The Trust has a term continuing twenty-one (21) years after the death
of the survivor of twenty-five (25) persons named in an exhibit to the Agreement
of Trust. The youngest person on such list is now 36 years of age.
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. Prior to August 17, 1989, the overriding
royalty was based on the quantity and iron content of pellets shipped by the
then lessee, Reserve Mining Company ("Reserve"), from Mesabi Trust lands.
Mesabi Trust did not receive any royalty income from May 1986 until July 1990
due to the filing of a Chapter 11 bankruptcy petition by Reserve and the
resulting suspension of Reserve's operations.
On August 17, 1989, Cyprus Northshore Mining Corporation ("Cyprus
NMC") purchased substantially all of Reserve's assets, including Reserve's
interest in the Mesabi Trust lands, and Mesabi Trust entered into agreements
(the "Amended Assignment Agreements") with Reserve's Chapter 11 Trustee and
Cyprus NMC, which modified the method of calculating overriding royalties
payable to Mesabi Trust and transferred the interest of Reserve in the Mesabi
Trust lands to Cyprus NMC. Pursuant to the Amended Assignment Agreements,
overriding royalties are determined by both the volume and selling price of iron
ore products shipped. During 1994, Cyprus NMC was sold by its parent
corporation to Cleveland-Cliffs Inc. as a wholly-owned subsidiary and renamed
Northshore Mining Corporation ("Northshore"). The smaller fee royalty for
Mesabi Land Trust is based on mine production of crude ore.
Mesabi Trust has no employees. Certain of the administrative
functions of Mesabi Trust are performed by Bankers Trust Company, the Corporate
Trustee. Mesabi Trust engages independent consultants to assist the Trustees in
monitoring, among other things, the amount and sales price of minerals shipped
by Northshore from Silver Bay, Minnesota, which forms the basis for the
computation of royalties payable to Mesabi Trust by Northshore.
ITEM 2. PROPERTIES.
The information set forth on page 7 of the Annual Report of the
Trustees of Mesabi Trust for the fiscal year ended January 31, 1997 is
incorporated herein by reference. The Peters Lease provides that each leasehold
estate will continue until the iron ore, taconite and other minerals or
materials thereon are exhausted. The duration of the Mesabi Lease is
coextensive with the term of the Peters Lease. The Cloquet Lease, which was
executed in 1916, has a term of 124 years. In the event Northshore decides to
terminate or surrender one or more of such leases, it must, before taking steps
to effect any such termination or surrender, give Mesabi Trust at least six
months' notice of its intention to do so and, at Mesabi Trust's request,
reassign all of such leases to Mesabi Trust (free and clear of liens, except
public highways), in consideration only of the assumption by Mesabi Trust of
Northshore's future obligations as lessee under such leases.
The Trustees have neither made nor caused to be made any surveys or
test drillings to ascertain the iron ore reserves on the Peters Lease Lands and
the Cloquet Lease Lands. However, initial surveys and test drillings made by
Mesabi Iron Company (upon the liquidation of which in 1961 Mesabi Trust derived
its interests) many years ago indicated accessible reserves of at least 1-1/2
billion tons of mineable raw material on these Lands capable of yielding
approximately 500 million tons of concentrated product. Based on the amount of
ore extracted, it is estimated that there currently remains more than one-half
such indicated reserves of concentrated product.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information set forth in the section titled "Certificates of
Beneficial Interest" on page 13 of the Annual Report of the Trustees of Mesabi
Trust for the fiscal year ended January 31, 1997 is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is incorporated by reference
from the section titled "Selected Financial Data" on page 2 and from the section
titled "Reserves and Distributions" on pages 12 and 13 of the Annual Report of
the Trustees of Mesabi Trust for the fiscal year ended January 31, 1997.
2
ITEM 7. TRUSTEES' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
The information required by this item is incorporated by reference
from pages 2 through 6 and the sections titled "Income and Expense" and
"Reserves and Distributions" on pages 11 through 13 of the Annual Report of the
Trustees of Mesabi Trust for the fiscal year ended January 31, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements, including the independent auditor's report
thereon, filed as a part of this report, are presented on pages F-1 through F-9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
There are no directors or executive officers of the registrant. The
Trust provides for a Corporate Trustee and four Individual Trustees. The
Trustees do not hold office for specific terms but continue in office until such
time as a Trustee resigns or is removed or, in the case of an Individual
Trustee, dies or becomes incapable of acting, or is adjudged to be bankrupt or
insolvent. In the case of the Corporate Trustee, a successor is also appointed
if a receiver of the Corporate Trustee or of its property is appointed, or if
any public officer takes charge or control of the Corporate Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation. A Trustee may be removed at any time, with or without cause, by
the holders of two-thirds in interest of the Trust Certificates then
outstanding.
The present Trustees of Mesabi Trust and their ages, their terms in
office as Trustees, and their business experience during the past five years are
set forth in the following table:
3
Name Age Trustee Business Experience
---- --- Since During Past Five Years
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Bankers Trust Company 1961
David J. Hoffman 61 1977 Mining geologist; Until January 1988,
President of Towne Mines Exploration Company,
Inc., a privately-held mining corporation
Richard G. Lareau 68 1990 Partner in the law firm of Oppenheimer Wolff
& Donnelly (since 1960); Director of Ceridian
Corporation (since 1971), Merrill Corporation
(since 1981), Nash Finch Company (since 1984)
and Northern Technologies International
Corporation (since 1980)
Ira A. Marshall, Jr. 74 1976 Private investor and self-employed petroleum
engineer; Until February 1986, Director and
Vice President of New American Fund, Inc., a
closed-end investment trust
Norman F. Sprague III 49 1981 Private investor, Orthopedic surgeon
ITEM 11. TRUSTEES' COMPENSATION.
Pursuant to an Amendment to the Agreement of Trust (the "Amendment")
dated October 25, 1982, each Individual Trustee receives annual compensation for
services as Trustee of $20,000, adjusted up or down (but not below $20,000) in
accordance with changes from the November 1981 level of 295.5 (the "1981
Escalation Level") in the All Commodities Producer Price Index (with 1967 = 100
as a base), which is published by the U.S. Department of Labor. The adjustment
is made at the end of each fiscal year and is calculated on the basis of the
proportion between (a) the level of such index for the November preceding the
end of such fiscal year and (b) the 1981 Escalation Level.
As also provided in the Amendment, Bankers Trust Company, as the
Corporate Trustee, receives annual compensation in an amount equal to the
greater of (i) $20,000, adjusted as provided in the preceding paragraph, or (ii)
one quarter of one percent (1/4 of 1%) of the Trust Moneys, exclusive of
proceeds of sale of any part of the Trust Estate (as such terms are defined in
the Trust Agreement), received by the Trustees and distributed to Trust
Certificate Holders. Additionally, each year the Corporate Trustee receives
$62,500 (or more, if unanimously approved by the Individual Trustees) to cover
clerical and administrative services to Mesabi Trust other than services
customarily performed by a registrar or transfer agent.
4
The following table sets forth the cash compensation paid to the
Trustees through January 31, 1997, for services in all capacities as Trustees to
Mesabi Trust during the fiscal year ended January 31, 1997.
CASH COMPENSATION TABLE
(A) (B) (C)
Name Capacity in Which Served Cash Compensation
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Bankers Trust Company Corporate Trustee $88,450*
David J. Hoffman Individual Trustee $25,948
Richard G. Lareau Individual Trustee $25,948
Ira A. Marshall, Jr. Individual Trustee $25,948
Norman F. Sprague III Individual Trustee $25,948
* Does not include $34,470 of fees and disbursements paid to Bankers Trust
Company as registrar and transfer agent of the Units.
5
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND THE TRUSTEES.
The following table sets forth information concerning each person
known to Mesabi Trust to own beneficially more than 5% of the Trust's Units
outstanding as of April 1, 1997. Such information has been obtained from Mesabi
Trust's records and a review of statements filed with Mesabi Trust pursuant to
Section 13(d) of the Securities Exchange Act of 1934 through April 1, 1997.
Name and Address Amount of Beneficial Percent of
of Beneficial Owner(s) Ownership of Units Class
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Norwest Corporation,
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
and
Norwest Bank Colorado, National
Association
1740 Broadway
Denver, CO 80274-8620 1,934,806 (1) 14.7%
Long-Term Investment Trust
(F.R.A., AT&T Master Pension
Trust),
The Northern Trust Company, as
Trustee of the Long-Term
Investment Trust
50 LaSalle Street
Chicago, IL 60675 1,305,000 (2) 9.95%
Appaloosa Management L.P.,
a Delaware Limited Partnership
and
David A. Tepper
51 JFK Parkway
Short Hills, New Jersey 07078 967,000 (3) 7.37%
(1) According to Amendment No. 16 to the Statement on Schedule 13G of
Norwest Corporation, and Norwest Colorado, Inc. and Norwest Bank
Colorado, National Association, each of which is a subsidiary of
Norwest Corporation, dated January 23, 1997, Norwest Corporation,
indirectly through its subsidiaries (i) has sole voting power
with respect to 1,698,806 Units, (ii) shares voting power with
respect to 1,000 Units, (iii) has sole dispositive power as to
1,930,306 Units, and (iv) shares dispositive power with respect
to 3,000 Units. Norwest Colorado, Inc. (indirectly through its
subsidiaries) has sole voting power with respect to 2,140,000
units and shared voting power with respect to 1,000 units and
sole dispositive power with respect to 2,281,500 of such units.
Norwest Bank Colorado, National Association, has sole voting
power with respect to 1,645,000 units, shared voting power with
respect to 1,000 units and sole dispositive power with respect to
1,880,000 of such Units. Includes 1,305,000 units held for the
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ATT, MCO Long-Term Investment Trust with respect to a portion of
whose assets Norwest Bank Colorado, Inc. acts as investment
advisor. See footnote (2) below.
(2) According to a Schedule 13G dated February 13, 1997, filed on
behalf of this person, such person has sole power to vote or to
direct the vote, and sole power to dispose or to direct the
disposition of, all such Units. As noted in footnote (1) above,
these Units are also reflected in the amounts shown for Norwest
Corporation and its subsidiaries.
(3) According to a Schedule 13D dated February 2, 1994 and March 8,
1994, filed by such persons, which indicates that each of such
persons has sole voting power and sole dispositive power with
respect to such shares. Appaloosa Management L.P. is general
partner of Appaloosa Investment Limited Partnership I. The
general partner of Appaloosa Management L.P. is Appaloosa
Partners, Inc., of which David Tepper is the sole shareholder and
President. Appaloosa Management L.P. acts as an investment
advisor to Appaloosa Investment Limited Partnership I, Chestnut
Investors III Inc. ("Chestnut") and Reliance Standard Life
Insurance Company ("Reliance"). Chestnut and Reliance are both
beneficially owned by Delphi Financial Group. Of the 967,000
Units reported, 751,608 are owned by Appaloosa Investment Limited
Partnership I, 6,865 are owned by Chestnut, and 208,527 are owned
by Reliance.
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The table below sets forth information as to the Units of Beneficial
Interest in Mesabi Trust beneficially owned as of April 25, 1997 by the Trustees
individually and as a group.
Name Amount of Beneficial Percent of
Ownership of Units Class
Bankers Trust Company 0* 0
David J. Hoffman 38,100** Less than 1%
Richard G. Lareau 5,000 Less than 1%
Ira A. Marshall, Jr. 104,000*** Less than 1%
Norman F. Sprague III 10,000 Less than 1%
All Trustees as a group 157,100 1.2%
* Bankers Trust Company holds, on behalf of various customers, Units in its
Fiduciary Department in so-called "directed" accounts. Bankers Trust
Company has no voting or investment power over, and thus no beneficial
interest in, such Units.
** These Units consist of (a) 23,000 Units owned by Mr. Hoffman and (b) 15,100
Units owned by Mr. Hoffman's wife, over which Mr. Hoffman does not have any
investment or voting power and as to which Mr. Hoffman disclaims any
beneficial ownership.
*** Includes 101,000 Units owned indirectly by Mr. Marshall through a trust.
Mr. Marshall is a trustee of this trust.
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ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS.
Mr. Richard G. Lareau, who became a Trustee on March 7, 1990, is a
senior partner in the law firm of Oppenheimer Wolff & Donnelly of Minneapolis,
Minnesota. That firm has been retained by Mesabi Trust since 1961 to act with
respect to matters of Minnesota law, and was retained in 1991 by the Trustees
other than Mr. Lareau to act as general corporate counsel.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
Page No.
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Financial Statements filed herewith:
Independent Auditor's Report F-1
Balance Sheets as of January 31, 1997 and 1996 F-2
Statements of Income for the years ended
January 31, 1997, 1996 and 1995 F-3
Statements of Unallocated Reserve and Trust Corpus
for the years ended January 31, 1997, 1996 and 1995 F-4
Statements of Cash Flows for the years ended
January 31, 1997, 1996 and 1995 F-5
Notes to Financial Statements F-6
Financial Statement Schedules Included:
None required.
Schedules other than those listed above have been omitted because they
are not applicable or the required information is included in the financial
statements or notes thereto.
Exhibits filed herewith or
incorporated by reference:
3 Agreement of Trust dated as of July 18, 1961(1)
3(a) Amendment to the Agreement of Trust
dated as of October 25, 1982 (2)
4 Instruments defining the rights of
Trust Certificate Holders (3)
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10(a) Peters Lease (4)
10(b) Amendment Assignment of Peters Lease (4)
10(c) Cloquet Lease (4)
10(d) Assignment of Cloquet Lease (4)
10(e) Modification of Lease and Consent to Assignment
dated as of October 22, 1982 (5)
10(f) Amendment of Assignment, Assumption and Further
Assignment of Peters Lease (6)
10(g) Amendment of Assignment, Assumption and Further
Assignments of Cloquet Lease (7)
13 Annual Report of the Trustees of Mesabi Trust for the
fiscal year ended January 31, 1997
(b) Reports on Form 8-K:
None
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(1) Incorporated by reference from Exhibit 3 to Mesabi Trust's Annual Report on
Form 10-K for the fiscal year ended January 31, 1987.
(2) Incorporated by reference from Exhibit 3(a) to Mesabi Trust's Annual Report
on Form 10-K for the fiscal year ended January 31, 1988.
(3) Incorporated by reference from Exhibit 4 to Mesabi Trust's Annual Report on
Form 10-K for the fiscal year ended January 31, 1987.
(4) Incorporated by reference from Exhibits 10(a) - 10(d) to Mesabi Trust's
Annual Report on Form 10-K for the fiscal year ended January 31, 1987.
(5) Incorporated by reference from Exhibit 10(e) to Mesabi Trust's Annual
Report on Form 10-K for the fiscal year ended January 31, 1988.
(6) Incorporated by reference from Exhibit A to Mesabi Trust's Report on Form
8-K dated August 17, 1989.
(7) Incorporated by reference from Exhibit B to Mesabi Trust's Report on Form
8-K dated August 17, 1989.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
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(Registrant)
By: Bankers Trust Company
Corporate Trustee
By: /s/ Mathew J. Seeley April 28, 1997
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Matthew J. Seeley
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Matthew J. Seeley April 28, 1997
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Matthew J. Seeley
Vice President
Bankers Trust Company
/s/ David J. Hoffman April 28, 1997
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David J. Hoffman
Individual Trustee
/s/ Richard G. Lareau April 28, 1997
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Richard G. Lareau
Individual Trustee
/s/ Ira A. Marshall, Jr. April 28, 1997
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Ira A. Marshall, Jr.
Individual Trustee
/s/ Norman F. Sprague III April 28, 1997
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Norman F. Sprague III
Individual Trustee
11