<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR FISCAL YEAR ENDED JANUARY 31, 1996, OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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.)
C/O BANKERS TRUST COMPANY
CORPORATE TRUST AND AGENCY GROUP
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
------------------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ---------------------------------------------------- --------------------------
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, 1996, the aggregate market value of the Units of Beneficial
Interest held by non-affiliates of the registrant aggregated approximately
$52,419,640*. As of April 25, 1996, 13,120,010 Units of Beneficial Interest were
outstanding.
- ------------------------
*Includes approximately $60,400 representing the market value as of April 25,
1996 of 15,100 Units the beneficial ownership of which is disclaimed by
affiliates (see Item 12 herein).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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, 1996, which is
annexed hereto and filed herewith as Exhibit 13.
PART I
ITEM 1. BUSINESS.
The information set forth on pages 6 through 9 of the Annual Report of the
Trustees of Mesabi Trust for the fiscal year ended January 31, 1996 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, namely
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 the 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
and based on 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 35 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 for
sale. 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.
1
<PAGE>
ITEM 2. PROPERTIES.
The information set forth on page 6 of the Annual Report of the Trustees of
Mesabi Trust for the fiscal year ended January 31, 1996 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.
In connection with the 1986 filing of a Chapter 11 bankruptcy petition by
Reserve, the Mesabi Trustees commenced various actions and filed proofs of claim
against Reserve and various entities related to Reserve. All of such actions and
proofs of claims have been finally resolved at this time. During 1995, the
Mesabi Trustees were advised that Armco Steel Company L.P. had completed the
purchase of sufficient tonnage of taconite pellets to complete its obligations
under a pellet purchase agreement, effectively completing Armco's obligations
under a Tolling Agreement which dismisses all claims Mesabi Trust might have had
against Armco.
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 11 of the Annual Report of the Trustees of Mesabi Trust for
the fiscal year ended January 31, 1996 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 1 and from the section titled
"Reserves and Distributions" on page 10 of the Annual Report of the Trustees of
Mesabi Trust for the fiscal year ended January 31, 1996.
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 5 and the sections titled "Income and Expense" and "Reserves and
Distributions" on pages 9 and 10 of the Annual Report of the Trustees of Mesabi
Trust for the fiscal year ended January 31, 1996.
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-8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
2
<PAGE>
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:
<TABLE>
<CAPTION>
TRUSTEE BUSINESS EXPERIENCE
NAME AGE SINCE DURING PAST FIVE YEARS
- -------------------------- --- ------- --------------------------------------
<S> <C> <C> <C>
Bankers Trust Company -- 1961 --
David J. Hoffman 60 1977 Mining geologist; Until January 1988,
President of Towne Mines Exploration
Company, Inc., a privately-held mining
corporation
Richard G. Lareau 67 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 Instruments
Corporation (since 1980)
Ira A. Marshall, Jr. 73 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 48 1981 Private investor; Orthopedic surgeon
</TABLE>
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.
3
<PAGE>
The following table sets forth the cash compensation paid to the Trustees
through January 31, 1996, for services in all capacities as Trustees to Mesabi
Trust during the fiscal year ended January 31, 1996.
CASH COMPENSATION TABLE
<TABLE>
<CAPTION>
(C)
(A) (B) CASH
NAME CAPACITY IN WHICH SERVED COMPENSATION
- -------------------------- ------------------------------ --------------
<S> <C> <C>
Bankers Trust Company Corporate Trustee $ 88,882*
David J. Hoffman Individual Trustee $ 26,381
Richard G. Lareau Individual Trustee $ 26,381
Ira A. Marshall, Jr. Individual Trustee $ 26,381
Norman F. Sprague III Individual Trustee $ 26,381
</TABLE>
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*Does not include $30,228 of fees and disbursements paid to Bankers Trust
Company as transfer agent of the Units.
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, 1996. 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, 1996.
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER(S) OWNERSHIP OF UNITS CLASS
- ------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Norwest Corporation, 2,390,880(1) 18.2%
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026 and
Norwest Bank Colorado, National Association
1740 Broadway
Denver, CO 80274-8620 and
Norwest Colorado, Inc.
1740 Broadway
Denver, CO 80274-8677
AT&T Master Pension Trust, 1,305,000(2) 9.95%
The Northern Trust Company, as
Trustee of the AT&T Master Pension Trust
50 LaSalle Street
Chicago, IL 60675
Appaloosa Management L.P., 967,000(3) 7.37%
a Delaware Limited Partnership and
David A. Tepper
51 JFK Parkway
Short Hills, New Jersey 07078
</TABLE>
- ------------------------
(1) According to Amendment No. 15 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
February 6, 1996, Norwest Corporation, indirectly through its subsidiaries
(i) has sole voting power with respect to 2,248,380 Units, (ii) shares
voting power with respect to 1,000 Units, (iii) has sole dispositive power
as to 2,386,880 Units, and
4
<PAGE>
(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 2,140,000 units, shared voting power with respect to 1,000 units
and sole dispositive power with respect to 2,281,500 of such Units. Includes
1,305,000 units held for the AT&T Master Pension Plan 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 8, 1996, 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 ("Delphi").
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.
The table below sets forth information as to the Units of Beneficial
Interest in Mesabi Trust beneficially owned as of April 25, 1996 by the Trustees
individually and as a group.
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP OF UNITS CLASS
- -------------------------- ------------------- ----------------
<S> <C> <C>
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 1.1%
</TABLE>
- ------------------------
*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 104,000 Units owned indirectly by Mr. Marshall through a trust. Mr.
Marshall is sole trustee of this trust.
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.
5
<PAGE>
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.
--------
Financial Statements filed herewith:
Independent Auditor's Report.................................. F-1
Balance Sheets as of January 31, 1996 and 1995................ F-2
Statements of Income for the years ended January 31, 1996,
1995 and 1994................................................ F-3
Statements of Unallocated Reserve and Trust Corpus for the
years ended January 31, 1996, 1995 and 1994.................. F-4
Statements of Cash Flows for the years ended January 31, 1996,
1995 and 1994................................................ 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:
<TABLE>
<S> <C>
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)
10(a) Peters Lease (4)
10(b) Amended 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, 1996
(b) Reports on Form 8-K:
None.
</TABLE>
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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.
6
<PAGE>
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
- ----------------------------------------
(REGISTRANT)
By: Bankers Trust Company
Corporate Trustee
By:
-----------------------------------
Matthew J. Seeley April 26, 1996
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.
- ----------------------------------------
Matthew J. Seeley April 26, 1996
VICE PRESIDENT
BANKERS TRUST COMPANY
- ----------------------------------------
David J. Hoffman April 26, 1996
INDIVIDUAL TRUSTEE
- ----------------------------------------
Richard G. Lareau April 26, 1996
INDIVIDUAL TRUSTEE
- ----------------------------------------
Ira A. Marshall, Jr. April 26, 1996
INDIVIDUAL TRUSTEE
- ----------------------------------------
Norman F. Sprague III April 26, 1996
INDIVIDUAL TRUSTEE
7
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Trustees
Mesabi Trust
New York, New York
We have audited the accompanying balance sheets of Mesabi Trust as of
January 31, 1996 and 1995, and the related statements of income, unallocated
reserve and trust corpus and cash flows for each of the three years in the
period ended January 31, 1996. These financial statements are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Mesabi Trust as of January
31, 1996 and 1995, and the results of its operations and its cash flows for each
of the three years in the period ended January 31, 1996, in conformity with
generally accepted accounting principles.
McGLADREY & PULLEN, LLP
New York, New York
April 23, 1996
F-1
<PAGE>
MESABI TRUST
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JANUARY 31,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash.............................................. $ 9,183 $ 1,442,627
U.S. Government securities, at amortized cost
(which approximates market)...................... 2,145,588 366,650
Accrued income.................................... 127,419 177,924
Prepaid insurance................................. 3,938 3,938
------------- -------------
$ 2,286,128 $ 1,991,139
------------- -------------
Fixed property, including intangibles, at nominal
values:
Assignments of leased property:
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
------------- -------------
$ 2,286,131 $ 1,991,142
------------- -------------
------------- -------------
LIABILITIES, UNALLOCATED RESERVE AND TRUST CORPUS
Liabilities:
Distribution payable............................ $ 1,574,401 $ 1,312,001
Accrued expenses................................ 55,979 41,566
------------- -------------
$ 1,630,380 $ 1,353,567
Deferred income................................... 114,345 162,214
Unallocated reserve............................... 541,403 475,358
Trust Corpus...................................... 3 3
------------- -------------
$ 2,286,131 $ 1,991,142
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
MESABI TRUST
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
-------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
REVENUE
Royalties under amended lease agreements............................. $ 3,742,921 $ 3,246,252 $ 3,410,244
Royalties under Peters Lease fee..................................... 276,908 219,726 219,208
Interest............................................................. 41,399 19,373 14,902
------------- ------------- -------------
Total revenue.................................................... $ 4,061,228 $ 3,485,351 $ 3,644,354
------------- ------------- -------------
------------- ------------- -------------
EXPENSES
Compensation of Trustees............................................. $ 131,906 $ 123,057 $ 120,424
Corporate Trustee's administrative fees.............................. 62,500 62,500 62,500
Professional fees and expenses:
Legal and accounting............................................... 46,956 59,792 67,476
Mining consultant and field representatives........................ 12,558 11,768 11,270
Transfer agent's and registrar's fees................................ 33,178 53,039 44,026
Other Trust expenses................................................. 100,082 116,499 94,345
------------- ------------- -------------
Total expenses................................................... $ 387,180 $ 426,655 $ 400,041
------------- ------------- -------------
Net income........................................................... $ 3,674,048 $ 3,058,696 $ 3,244,313
------------- ------------- -------------
------------- ------------- -------------
Weighted average number of units outstanding......................... 13,120,010 13,120,010 13,120,010
------------- ------------- -------------
------------- ------------- -------------
Net income per unit.................................................. $ .28 $ .23 $ .25
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
MESABI TRUST
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS
YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
UNALLOCATED RESERVE
-------------------------------
NUMBER OF TRUST
UNITS AMOUNT CORPUS
---------- ----------- ------
<S> <C> <C> <C>
Balance, January 31, 1993......................................... 13,120,010 $ 863,555 $3
Net income...................................................... -- 3,244,313 --
Distribution paid May 19, 1993, $.02 per unit................... -- (262,400) --
Distribution paid August 19, 1993, $.05 per unit................ -- (656,001) --
Distribution paid November 19, 1993, $.10 per unit.............. -- (1,312,001) --
Distribution declared January 20, 1994, paid February 18, 1994,
$.10 per unit.................................................. -- (1,312,001) --
--
---------- -----------
Balance, January 31, 1994......................................... 13,120,010 $ 565,465 $3
Net income...................................................... -- 3,058,696 --
Distribution paid August 19, 1994, $.06 per unit................ -- (787,201) --
Distribution paid November 18, 1994, $.08 per unit.............. -- (1,049,601) --
Distribution declared January 19, 1995, paid February 17, 1995,
$.10 per unit.................................................. -- (1,312,001) --
--
---------- -----------
Balance, January 31, 1995......................................... 13,120,010 $ 475,358 $3
Net income...................................................... -- 3,674,048 --
Distribution paid August 18, 1995, $.065 per unit............... -- (852,801) --
Distribution paid November 20, 1995, $.09 per unit.............. -- (1,180,801) --
Distribution declared January 17, 1996, paid February 20, 1996,
$.12 per unit.................................................. -- (1,574,401) --
--
---------- -----------
Balance, January 31, 1996......................................... 13,120,010 $ 541,403 $3
--
--
---------- -----------
---------- -----------
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
MESABI TRUST
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
----------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Royalties received.............................................. $ 4,036,713 $ 3,402,234 $ 3,739,902
Interest received............................................... 27,151 19,373 15,437
Expenses paid................................................... (372,767) (422,544) (376,399)
-------------- -------------- --------------
Net cash provided by operating activities..................... $ 3,691,097 $ 2,999,063 $ 3,378,940
-------------- -------------- --------------
Cash flows from investing activities:
Sales and redemptions of U.S. Government securities............. $ 4,883,677 $ 6,579,629 $ 7,074,564
Purchases of U.S. Government securities......................... (6,662,615) (6,482,198) (6,770,142)
-------------- -------------- --------------
Net cash (used in) provided by investing activities........... $ (1,778,938) $ 97,431 $ 304,422
-------------- -------------- --------------
Cash flows from financing activities:
Net cash (used in) financing activities, distributions to
unitholders.................................................. $ (3,345,603) $ (3,148,803) $ (2,886,403)
-------------- -------------- --------------
Net increase (decrease) in cash................................... $ (1,433,444) $ (52,309) $ 796,959
Cash, beginning of year........................................... 1,442,627 1,494,936 697,977
-------------- -------------- --------------
Cash, end of year................................................. $ 9,183 $ 1,442,627 $ 1,494,936
-------------- -------------- --------------
-------------- -------------- --------------
Reconciliation of net income to net cash provided by operating
activities:
Net income...................................................... $ 3,674,048 $ 3,058,696 $ 3,244,313
Decrease (increase) in accrued income........................... 50,505 (108,484) (6,489)
Increase in accrued expenses.................................... 14,413 4,111 23,642
(Decrease) increase in deferred income.......................... (47,869) 44,740 117,474
-------------- -------------- --------------
Net cash provided by operating activities..................... $ 3,691,097 $ 2,999,063 $ 3,378,940
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
MESABI TRUST
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
NOTE 1. -- NATURE OF BUSINESS, ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 therefrom 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.
The lessee/operator of Mesabi Trust's mineral interests is Northshore Mining
Corporation (NMC), a subsidiary of Cleveland-Cliffs Inc. (CCI). CCI 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.
A summary of Mesabi Trust's significant accounting policies follows:
CASH
The Trust's cash is on deposit at one financial institution. Subsequent to
January 31, 1995, a substantial portion of the cash balance was utilized for
distributions to Unitholders.
INVESTMENTS
The Trust invests solely in U.S. Government securities. Management
determines the appropriate classifications of the securities at the time they
are acquired and evaluates 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
stated at amortized cost.
REVENUE RECOGNITION
Royalty income under the amended lease agreements with NMC (Cyprus NMC
through September 30, 1994) is recognized as it is earned. Under such
agreements, royalties are earned upon shipment, regardless of whether the actual
sales proceeds for any shipment are received by NMC.
Royalty income under the Peters Lease fee agreement also is recognized as it
is earned. Under such agreement, however, royalties are earned (at the option of
NMC (Cyprus NMC through September 30, 1994)) either upon mining of crude ore
from Peters Lease lands or upon shipment 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 (Cyprus NMC through
September 30, 1994).
F-6
<PAGE>
MESABI TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
NOTE 1. -- NATURE OF BUSINESS, ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(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.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments including cash, U.S.
government securities, distributions payable and accrued expenses approximated
fair value as of January 31, 1996 and 1995 because of the relative short
maturity of these instruments.
NOTE 2. -- U.S. GOVERNMENT SECURITIES
The amortized cost approximates market value as of January 31, 1996 and
1995. The securities are classified as held-to-maturity and mature as follows:
<TABLE>
<CAPTION>
JANUARY 31, JANUARY 31,
1996 1995
------------- -----------
<S> <C> <C>
Due within one year.......................... $ 1,951,548 $ 366,650
Due after one year through three years....... 194,040 --
------------- -----------
$ 2,145,588 $ 366,650
------------- -----------
------------- -----------
</TABLE>
NOTE 3. -- UNALLOCATED RESERVE
Leasehold royalty income constitutes the principal source of revenue to
Mesabi Trust. Prior to August 17, 1989, royalties were based on the quantity and
iron content of pellets shipped by the then lessee, Reserve Mining Company
("Reserve"), from Mesabi Trust properties. From May 1986 until July 1990,
however, Mesabi Trust did not have any royalty income, due principally to the
filing of a Chapter 11 bankruptcy petition by Reserve and the suspension of
Reserve's operations in 1986.
On August 17, 1989, Cyprus NMC purchased substantially all of Reserve's
assets, including Reserve's interest in the Mesabi Trust lands, and Mesabi Trust
entered into agreements with Reserve's Chapter 11 Trustee and Cyprus NMC, which
modified the method of calculating royalties payable to Mesabi Trust and
transferred the interest of Reserve in the Mesabi Trust lands to Cyprus NMC.
Royalties are now determined by both the volume and selling price of iron ore
pellets and other products sold.
On September 30, 1994, Cyprus Amax Minerals Company sold its iron ore
operations, including Cyprus NMC, to Cleveland-Cliffs Inc. (CCI). CCI renamed
the operation Northshore Mining Corporation (NMC). CCI is among the world's
largest producers of iron ore products.
Pursuant to the amended assignment agreements, NMC (Cyprus NMC through
September 30, 1994) 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 (Cyprus NMC through September 30,
1994) is obligated to make payments of overriding royalties on product shipments
F-7
<PAGE>
MESABI TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
NOTE 3. -- UNALLOCATED RESERVE (CONTINUED)
within 30 days following the calendar quarter in which such shipments occur. NMC
(Cyprus NMC through September 30, 1994) 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.
NMC (Cyprus NMC through September 30, 1994) also 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 (Cyprus NMC
through September 30, 1994) 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, 1996, the minimum advance royalty is
$610,335. The minimum annual advance royalty was $596,246; $585,917; and
$571,833 for the calendar years ended December 31, 1995; 1994; and 1993,
respectively.
The unallocated reserve aggregated $541,403 at January 31, 1996, as compared
with an unallocated reserve of $475,358 and $565,465 at January 31, 1995 and
1994, respectively. During the fiscal years ended January 31, 1996, 1995 and
1994, the Trustees distributed cash payments totalling $3,345,603 (or $.255 per
Unit); $3,148,803 (or $.24 per Unit) and $2,886,403 (or $.22 per unit),
respectively, of beneficial interest in Mesabi Trust. In addition, in January
1996 the Trustees declared a distribution of $.12 per unit of beneficial
interest which was paid in February 1996.
NOTE 4. -- SUMMARY OF QUARTERLY EARNINGS (UNAUDITED)
The quarterly results of operations for the two years ended January 31, 1996
are presented below:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31, 1996
---------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue..................................... $ 200,161 $ 1,206,455 $ 1,428,637 $ 1,225,975
Expenses.................................... 72,991 112,195 82,109 119,885
------------ ------------- ------------- -------------
Net income.................................. $ 127,170 $ 1,094,260 $ 1,346,528 $ 1,106,090
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
Net income per unit......................... $ 0.009693 $ 0.083404 $ 0.102631 $ 0.084306
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
<CAPTION>
YEAR ENDED JANUARY 31, 1995
---------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue..................................... $ 213,755 $ 935,309 $ 1,341,896 $ 994,391
Expenses.................................... 94,319 94,609 102,228 135,499
------------ ------------- ------------- -------------
Net income.................................. $ 119,436 $ 840,700 $ 1,239,668 $ 858,892
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
Net income per unit......................... $ 0.009103 $ 0.064078 $ 0.094487 $ 0.065464
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
</TABLE>
F-8
<PAGE>
EXHIBIT 13
ANNUAL REPORT
OF THE TRUSTEES OF
MESABI TRUST
FOR THE YEAR ENDED JANUARY 31, 1996
ADDRESS
Mesabi Trust
c/o Bankers Trust Company
Corporate Trust and Agency Group
P.O. Box 318
Church Street Station
New York, NY 10015
Telephone - (212) 250-6519
COUNSEL
Oppenheimer Wolff & Donnelly, General Counsel
TRANSFER AGENT
Bankers Trust Company
REGISTRAR
Chemical Bank
Mesabi Trust will provide, upon the written request of any certificate
holder addressed to the Trustees at the above address and without charge to such
certificate holder, a copy of Mesabi Trust's Annual Report on Form 10-K for the
fiscal year ended January 31, 1996 as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
FORWARD-LOOKING INFORMATION
Certain statements contained in this document are forward-looking, including
specifically those statements estimating 1996 production or shipments. All such
forward-looking statements are based on input from the lessee/operator. The
Trust has no control over the operations and activities of the lessee/operator
except within the framework of current agreements. Actual results could differ
materially from those indicated in such statements. For important factors that
could cause actual results to differ materially, see "Important Factors
Affecting Mesabi Trust," below.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31 1996 1995 1994 1993 1992
- --------------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Royalty and interest income.................. $ 4,061,228 $ 3,485,351 $ 3,644,354 $ 1,443,837 $ 1,850,411
Trust expenses............................... 387,180 426,655 400,041 384,773 304,115
------------- ------------- ------------- ------------- -------------
Net income (a)............................... $ 3,674,048 $ 3,058,696 $ 3,244,313 $ 1,059,064 $ 1,546,296
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Net income per Unit (b)...................... $ .28 $ .23 $ .25 $ .08 $ .12
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Distributions declared per Unit (b)(c)....... $ .275 $ .24 $ .27 $ .10 $ .14
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
<CAPTION>
AT JANUARY 31,
- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Assets................................. $ 2,286,131 $ 1,991,142 $ 2,032,398 $ 1,533,372 $ 1,523,818
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
- ------------------------
(a) The Trust, as a grantor trust, is exempt from federal and state income
taxes.
(b) Based on 13,120,010 Units of Beneficial Interest outstanding during all
years.
1
<PAGE>
(c) During the fiscal year ended January 31, 1996, the Trustees distributed
$.255 per Unit (including
$.10 per Unit declared in fiscal 1995 and distributed in February 1995) and
declared an additional distribution of $.12 per Unit, payable in February
1996. During the fiscal year ended January 31, 1995, the Trustees
distributed $.24 per Unit (including $.10 per Unit declared in fiscal 1994
and distributed in February 1994) and declared an additional distribution of
$.10 per Unit, payable in February 1995. During the fiscal year ended
January 31, 1994, the Trustees distributed $.22 per Unit (including $.05 per
Unit declared in fiscal 1993 and distributed in February 1993) and declared
an additional distribution of $.10 per Unit, payable in February 1994.
During the fiscal year ended January 31, 1993, the Trustees distributed $.08
per Unit (including the $.03 per Unit declared in fiscal 1992 and
distributed in February 1992) and declared an additional distribution of
$.05 per Unit, payable in February 1993. During the fiscal year ended
January 31, 1992, the Trustees distributed $.16 per Unit (including the $.05
per Unit declared in fiscal 1991 and distributed in February 1991) and
declared an additional distribution of $.03 per Unit, payable in February
1992. See "Reserves and Distributions" on page 10 of this Annual Report.
------------------------
TRUSTEES' DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS
GENERAL
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, namely
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 the 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
and based on 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 35 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, royalties were 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. In connection with such purchase, Mesabi Trust,
Reserve's Chapter 11 Trustee and Cyprus NMC entered into the Amendment of
Assignment, Assumption and Further Assignment of Peters Lease (the "Amended
Peters Lease Assignment"), the Amendment of Assignment, Assumption and Further
Assignment of Cloquet Lease (the "Amended Cloquet Lease Assignment") and the
Assumption and Assignment of
2
<PAGE>
Mesabi Lease (together with the Amended Peters Lease Assignment and the Amended
Cloquet Lease Assignment, the "Amended Assignment Agreements"). The Amended
Assignment Agreements 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. Under the Amended Assignment Agreements, overriding
royalties are determined by both the volume and selling price of iron ore
products sold. Fee royalties payable to Mesabi Land Trust, a Minnesota land
trust of which Mesabi Trust is the sole beneficiary ("Mesabi Land Trust"),
remain based on the amount of crude ore mined, which crude ore is used to
produce iron ore pellets and other products. In 1994, Cyprus NMC was sold by its
parent corporation to Cleveland-Cliffs, Inc. as a wholly-owned subsidiary and
renamed Northshore Mining Corporation ("Northshore").
Pursuant to the Amended Assignment Agreements, Northshore 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 products produced from Mesabi Trust lands, and to a limited extent other
lands, ranging from 2 1/2% of the gross proceeds for the first one million tons
of iron ore products so shipped annually to 6% of the gross proceeds for all
iron ore products 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 product 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 was $35.77 for calendar year
1995 and is $36.62 for calendar year 1996), 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. No royalty
bonus has been paid under the Amended Assignment Agreements for several years.
Generally, the obligation of Northshore to pay base overriding royalties and
royalty bonuses with respect to the sale of iron ore products accrues upon the
shipment of those products from Silver Bay. Northshore also is obligated to pay
to Mesabi Trust a minimum advance royalty in equal quarterly installments, which
are 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 was $596,246 for calendar
year 1995 and is $610,335 for calendar year 1996. 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.
Under the relevant documents, Northshore may mine and ship iron ore products
from lands other than Mesabi Trust lands. To encourage the use of iron ore
products from Mesabi Trust lands, Mesabi Trust receives royalties on stated
percentages of iron ore shipped from Silver Bay, whether or not the iron ore
products are from Mesabi Trust lands. Mesabi Trust receives royalties at the
greater of (i) the aggregate quantity of iron ore products shipped that were
from Mesabi Trust lands, and (ii) a portion of the aggregate quantity of all
iron ore products shipped that were from any lands, such portion being 90% of
the first four million tons shipped during such year, 85% of the next two
million tons shipped during such year, and 25% of all tonnage shipped during
such year in excess of six million tons.
The Trustees have been advised by Northshore that Northshore currently
estimates its calendar year 1996 shipments to be approximately 4.2 million tons,
an increase from 1995 shipments of approximately 3.6 million tons. The increase,
in large part, is due to the full year impact of an iron ore expansion project
(the reactivation of a previously idle pelletizing line) which was completed in
mid-June 1995. In addition, Northshore has advised that it currently anticipates
that a higher percentage of its calendar year 1996 shipments will be of iron ore
products from Mesabi Trust lands than during the past several years. During
calendar years 1995, 1994 and 1993, the percentage of shipments of iron
3
<PAGE>
ore products from Mesabi Trust lands have been approximately 90.6%, 88.3%, and
87.8 %, respectively, of total shipments. For calendar year 1996, Northshore has
advised that it currently anticipates that the percentage of iron ore products
it ships that will be from Mesabi Trust lands could be 98% or more.
IMPORTANT FACTORS AFFECTING MESABI TRUST
Under the Agreement of Trust, the activities of the Trust 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. The
Trustees are specifically prohibited from entering into or engaging in any
business. This prohibition applies irrespective of whether the conduct of
business activities is deemed by the Trustees to be necessary or proper for the
preservation and protection of the Trust Estate.
Accordingly, the income of the Trust is highly dependent upon the activities
and operations of its assignee, Northshore, and the terms and conditions of the
Amended Assignment Agreements. The Trust and the Trustees have no control over
the operations and activities of Northshore except within the framework of
current agreements.
Due to winter weather, and the increasing royalty percentages based on
tonnage shipped in a calendar year, results for a particular calendar quarter
are typically not indicative of results for future quarters or the year as a
whole. Factors which can impact the results of the Trust in any quarter or year
include:
1. SHIPPING CONDITIONS IN THE GREAT LAKES. Shipping activity by
Northshore is dependent upon when the Great Lakes shipping lanes freeze for
the winter months (typically in January) and when they re-open in the spring
(typically late-March or April). Base overriding royalties to Mesabi Trust
are based on shipments made in a calendar quarter. If there is little or no
shipping activity in the first calendar quarter, the Trust only receives the
minimum royalty for that period.
2. OPERATIONS OF NORTHSHORE. Since the primary portion of the Trust's
revenues are from the shipments of iron ore product by Northshore,
Northshore's processing and shipping activities directly impact the Trust's
revenues in any quarter or year. Shipments by Northshore are impacted by a
myriad of factors, including economic conditions in the iron ore industry,
pricing by competitors, long-term customer contracts or arrangements by
Northshore or its competitors, availability of ore boats, production at
Northshore's mining operations, and production at the pelletizing/processing
facility. If any pelletizing line becomes idle for any reason, production
(and shipments) could be adversely impacted.
3. INCREASING ROYALTIES. As described elsewhere, the royalty
percentage paid to the Trust increases as the aggregate tonnage of iron ore
products shipped in any calendar year increases. Assuming a consistent sales
price per ton throughout a calendar year, shipments of iron ore product
later in the year generate a higher royalty to the Trust.
4. PERCENTAGE OF MESABI TRUST ORE. As described elsewhere, Northshore
has the ability to process and ship iron ore product from lands other than
Mesabi Trust lands. In certain circumstances, the Trust may be entitled to
royalties on those other shipments, but not in all cases.
In general, the Trust will receive higher royalties (assuming all other
factors are equal) if a higher percentage of shipments are from Mesabi Trust
lands. For calendar year 1996, Northshore has advised the Trustees that 98%
or more of shipments will come from Mesabi Trust lands. This compares to
percentages of 90.6%, 88.3% and 87.8% in calendar years 1995, 1994, and
1993, respectively.
COMPARISON OF FISCAL YEARS ENDED JANUARY 31, 1996 AND JANUARY 31, 1995
Mesabi Trust's gross income for the fiscal year ended January 31, 1996 was
$4,061,228, an increase of $575,877 (or approximately 16.5%) from the gross
income of $3,485,351 for the fiscal year ended January 31, 1995. The increase in
gross income primarily was due to an increase in shipments
4
<PAGE>
plus a higher average sales price per ton. Mesabi Trust's expenses of $387,180
for the fiscal year ended January 31, 1996 decreased $39,475 (or approximately
9.3%) from expenses of $426,655 for the fiscal year ended January 31, 1995. The
decrease in expenses was primarily because of decreased costs for printing and
postage, transfer agent fees and legal fees. Total expenses, by category, for
each of the last three fiscal years is set forth under "Income and Expense" on
pages 9 and 10 of this report. Increased income and decreased expenses resulted
in net income of $3,674,048 for the fiscal year ended January 31, 1996, an
increase of $615,352 from the net income of $3,058,696 for the fiscal year ended
January 31, 1995.
Mesabi Trust's Unallocated Reserve aggregated $541,403 at January 31, 1996,
as compared with an Unallocated Reserve of $475,358 at January 31, 1995. During
the fiscal year ended January 31, 1996, the Trustees distributed $.255 per Unit
of Beneficial Interest in Mesabi Trust. These distributions to Unitholders
totalled $3,345,603.
COMPARISON OF FISCAL YEARS ENDED JANUARY 31, 1995 AND JANUARY 31, 1994
Mesabi Trust's gross income for the fiscal year ended January 31, 1995 was
$3,485,351, a decrease of $159,003 (or approximately 4.4%) from the gross income
of $3,644,354 for the fiscal year ended January 31, 1994. The decrease in gross
income primarily was due to $144,973 of non-recurring income recognized in
fiscal 1994 from the resolution of a proof of claim. Mesabi Trust's expenses of
$426,655 for the fiscal year ended January 31, 1995 increased $26,614 (or
approximately 6.7%) from expenses of $400,041 for the fiscal year ended January
31, 1994. The increase in expenses was primarily because of increased costs for
inspection trips, printing and postage, transfer agent fees and legal fees.
Total expenses, by category, for each of the last three fiscal years is set
forth under "Income and Expense" on pages 9 and 10 of this report. Decreased
income and increased expenses resulted in net income of $3,058,696 for the
fiscal year ended January 31, 1995, a decrease of $185,617 from the net income
of $3,244,313 for the fiscal year ended January 31, 1994.
Mesabi Trust's Unallocated Reserve aggregated $475,358 at January 31, 1995,
as compared with an Unallocated Reserve of $565,465 at January 31, 1994. During
the fiscal year ended January 31, 1995, the Trustees distributed $.24 per Unit
of Beneficial Interest. These distributions to Unitholders totalled $3,148,803.
5
<PAGE>
TO THE HOLDERS OF
CERTIFICATES OF BENEFICIAL INTEREST IN
MESABI TRUST
MESABI TRUST
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 therefrom 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.
THE TRUST ESTATE
The principal assets of Mesabi Trust consist of two different interests in
certain properties in the Mesabi Iron Range: (1) Mesabi Trust's interest as
assignor in the Amended Peters Lease Assignment and the Amended Cloquet Lease
Assignment, which cover properties that aggregate approximately 9,750 contiguous
acres in St. Louis County, Minnesota (the "Peters Lease Lands" and the "Cloquet
Lease Lands," respectively), and (2) Mesabi Trust's ownership of the entire
beneficial interest in Mesabi Land Trust which has a 20% interest as fee owner
in the Peters Lease Lands and a 100% fee ownership in certain
non-mineral-bearing lands adjacent to the Peters and Cloquet Lease Lands (the
"Mesabi Lease Lands").
The Peters and Cloquet Lease Lands are located at the eastern end of the
Mesabi Iron Range and contain low-grade iron ore known as taconite,
approximately three tons of which must be beneficiated to produce one ton of
high-grade pellets. The Trustees have not had any surveys or test drillings
performed to ascertain the iron ore reserves on the Peters Lease and the Cloquet
Lease Lands. However, initial surveys and test drillings made by Mesabi Iron
Company many years ago indicated that these lands contained accessible taconite
reserves capable of yielding approximately 500 million tons of high grade iron
ore pellets. It is estimated (based on the amount of ore extracted) that more
than one-half of the indicated ore reserves still remain in the Peters Lease and
Cloquet Lease Lands. The Mesabi Lease Lands provide an area for location of
service roads, supporting plants and equipment and dump sites for overburden.
Under the Amended Assignment Agreements, Northshore produces iron ore from
the Peters Lease Lands and the Cloquet Lease Lands for the manufacture of
pellets to be sold to various users, and Mesabi Trust receives royalties on the
crude ore extracted from such Lands and the pellets produced from such crude
ore.
LEASEHOLD ROYALTIES
Northshore is obligated to pay to Mesabi Trust base overriding royalties and
royalty bonuses on all pellets (and other iron ore products) produced from the
Peters and Cloquet Lease Lands ("Mesabi Ore") and shipped from Silver Bay,
Minnesota in each calendar year, based on prices and volumes.
Base overriding royalties are calculated on the basis of an escalating scale
of percentages of gross sales proceeds of iron ore shipped, with the applicable
percentage determined by reference to the tonnage of pellets previously shipped
in the then current calendar year, as follows:
<TABLE>
<CAPTION>
APPLICABLE ROYALTY
(EXPRESSED AS A
PERCENTAGE
OF GROSS SALES PROCEEDS
TONS OF PELLETS SHIPPED IN CALENDAR YEAR WITHIN EACH TRANCHE)
- ------------------------------------------------------------ -------------------------
<S> <C>
one million or less......................................... 2 1/2%
more than one but not more than two......................... 3 1/2%
more than two but not more than three....................... 5%
more than three but not more than four...................... 5 1/2%
more than four million...................................... 6%
</TABLE>
6
<PAGE>
For example, assuming that no shipments of pellets were made during the
first calendar quarter of 1996 and further assuming that pellets were shipped
from Silver Bay, Minnesota in the second and third calendar quarters of 1996 in
the following quantities, and the gross proceeds of such shipments are in the
following amounts:
<TABLE>
<CAPTION>
GROSS
TONNAGE PROCEEDS
---------- -------------
<S> <C> <C>
2nd Quarter: 500,000 $ 14,000,000
3rd Quarter: 500,000 $ 14,000,000
1,000,000 $ 27,000,000
1,000,000 $ 26,000,000
1,000,000 $ 25,000,000
1,500,000 $ 37,500,000
</TABLE>
then the base overriding royalties payable in respect of the second and third
calendar quarters of 1996 would be as follows:
<TABLE>
<S> <C> <C> <C>
2nd Quarter: $ 14,000,000 X 2 1/2% $ (350,000)
3rd Quarter: $ 14,000,000 X 2 1/2% $ (350,000)
$ 27,000,000 X 3 1/2% $ (945,000)
$ 26,000,000 X 5% $ (1,300,000)
$ 25,000,000 X 5 1/2% $ (1,375,000)
$ 37,500,000 X 6% $ (2,250,000)
</TABLE>
and the percentage applicable for all pellets shipped in the fourth quarter of
1996 would be 6%. The above figures are provided only to illustrate the method
for calculating base overriding royalties and do NOT indicate the amount of base
overriding royalties the Trustees expect Mesabi Trust to earn in 1996 or any
other year. Accordingly, the foregoing example illustrating the calculation of
base overriding royalties should not be considered a prediction of the amount of
base overriding royalties Mesabi Trust will receive.
Royalty bonuses are payable on all pellets sold at prices above a threshold
price (the "Adjusted Threshold Price"), which was $35.77 per ton for calendar
year 1995 and will be $36.62 per ton for calendar year 1996. 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 a broad based index of inflation and deflation published quarterly by the
U.S. Department of Commerce.
The amount of royalty bonuses payable for any period is calculated on the
basis of an escalating scale of percentages of the gross sales proceeds to
Northshore of pellets sold at prices above the Adjusted Threshold Price. The
applicable percentage is determined by reference to the amount by which the
sales prices for a particular quantity of pellets exceeds the Adjusted Threshold
Price, as follows:
<TABLE>
<CAPTION>
AMOUNT BY WHICH SALES PRICE PER TON APPLICABLE
EXCEEDS ADJUSTED THRESHOLD PRICE PERCENTAGE
- ------------------------------------------------------------ --------------
<S> <C>
$2 or less.................................................. 1/2 of 1%
more than $2 but not more than $4........................... 1%
more than $4 but not more than $6........................... 1 1/2%
more than $6 but not more than $8........................... 2%
more than $8 but not more than $10.......................... 2 1/2%
more than $10............................................... 3%
</TABLE>
7
<PAGE>
For example, if an Adjusted Threshold Price of $36.62 is assumed for
calendar year 1996 and assuming two million tons of pellets were shipped in the
second quarter of 1996 at the following prices:
1,000,000 tons @ $29.00/ton
300,000 tons @ $31.00/ton
300,000 tons @ $34.00/ton
100,000 tons @ $36.00/ton
100,000 tons @ $38.00/ton
100,000 tons @ $40.00/ton
50,000 tons @ $42.00/ton
50,000 tons @ $45.00/ton
then the following royalty bonuses would be payable on shipments of pellets on
the second quarter of 1996 as follows:
1,000,000 tons @ $29.00/ton No bonus
300,000 tons @ $31.00/ton No bonus
300,000 tons @ $34.00/ton No bonus
100,000 tons @ $36.00/ton No bonus
100,000 tons @ $38.00/ton 1/2%
100,000 tons @ $40.00/ton 1%
50,000 tons @ $42.00/ton 1 1/2%
50,000 tons @ $45.00/ton 2 1/2%
The above figures are provided only to illustrate the method for calculating
royalty bonuses and do NOT indicate the amount of royalty bonuses, if any, the
Trustees expect Mesabi Trust to earn in 1996 or any other year. Accordingly, the
foregoing example illustrating the calculation of royalty bonuses should not be
considered a prediction of the amount, if any, of royalty bonuses Mesabi Trust
will receive. Under the Amended Assignment Agreements, no royalty bonus has been
paid to the Trust for several years.
Northshore also must pay base overriding royalties and royalty bonuses on
pellets produced from other lands ("Other Ore") to the extent necessary to
assure payment of base overriding royalties and royalty bonuses on at least 90%
of the first four million tons of pellets shipped from Silver Bay, Minnesota in
each calendar year, at least 85% of the next two million tons of pellets shipped
therefrom in each calendar year, and at least 25% of all tonnage of pellets
shipped therefrom in each calendar year in excess of six million tons. Base
overriding royalties and royalty bonuses payable on Other Ore can be recouped by
Northshore out of base overriding royalties and royalty bonuses paid on Mesabi
Ore. The amount of Other Ore royalties and Other Ore royalty bonuses which can
be recouped on any payment date cannot, however, exceed 20% of the amount of
Mesabi Ore royalties and royalty bonuses which are otherwise payable on that
payment date.
Northshore is also obligated to pay to Mesabi Trust advance royalties in
equal quarterly installments. The advance royalty was $596,246 per annum for the
calendar year ended December 31, 1995 and is $610,335 for calendar year 1996.
The amount of advance royalties payable is subject to adjustment (but not below
$500,000 per annum) for inflation and deflation and is determined each year in
the same manner as the Adjusted Threshold Price. All payments of advance
royalties are credited against payments of base overriding royalties and royalty
bonuses payable on Mesabi Ore until fully recouped. The amount of advance
royalties payable in respect of each calendar quarter shall constitute the
minimum overriding royalty amount payable by Northshore in respect of that
calendar quarter.
Base overriding royalties and royalty bonuses are payable quarterly and
accrue upon shipment, whether or not the actual sales proceeds for any shipment
are received by Northshore. The amount of base overriding royalties and royalty
bonuses payable with respect to the first three quarters in any
8
<PAGE>
calendar year are determined on the basis of tonnage shipped during each such
calendar quarter and the actual sales proceeds of such shipments, with an
adjustment made to the royalties payable with respect to the last quarter in any
calendar year to account for errors, adjustments and returns.
In addition, in the event that Northshore commences mining and production of
quarry stone for shipment from Silver Bay, Minnesota, Northshore must pay base
overriding royalties on all quarry stone so shipped on the basis of the same
scale of percentages used in calculating base overriding royalties payable on
pellets and other iron ore product. Northshore has not informed Mesabi Trust of
any present intention to commence mining and production of quarry stone.
LAND TRUST AND FEE ROYALTIES
Mesabi Land Trust holds a 20% interest as fee owner in the Peters Lease
Lands and a 100% interest as fee owner in the Mesabi Lease Lands as lessor of
the Mesabi Lease. Mesabi Trust holds the entire beneficial interest in Mesabi
Land Trust and is entitled to receive the net income of Mesabi Land Trust after
payment of expenses. Northshore is not obligated to pay royalties or rental to
Mesabi Land Trust as fee owner of the non-mineral bearing Mesabi Lease Lands, a
consideration having been paid in that respect at the inception of the Mesabi
Lease.
Northshore is required to pay a base royalty to the fee owners in an amount
which, at its option, is either (a) 11 2/3 CENTS per gross ton of crude ore it
mines from the Peters Lease Lands or (b) $.0056 for each 1% of metallic iron ore
natural contained in each gross ton of pellets it produces from the Peters Lease
Lands and ships. The base fee royalty rate will be adjusted up or down each
quarter (but not below the base royalty specified above) by addition or
subtraction of an amount to be determined by reference to changes in Lower Lake
Mesabi Range pellet prices and the All Commodities Producer Price Index. The
adjustment factor is computed by multiplying the base fee royalty rate specified
above by a percentage that is the sum of (a) one-half of the percentage change,
if any, by which the then prevailing price per iron unit of Mesabi Range
taconite pellets delivered by rail or vessel at Lower Lake Erie ports exceeds
80.5 CENTS (the price per iron unit in effect in January 1982) plus (b) one-half
of the percentage change, if any, by which the All Commodities Producer Price
Index exceeds 295.8 (the level of the Index for December 1981).
Fee royalties aggregating $276,908 with respect to crude ore mined by Cyprus
NMC were earned by Mesabi Land Trust during the fiscal year ended January 31,
1996.
INCOME AND EXPENSE
Total income for Mesabi Trust for the fiscal year ended January 31, 1996 was
$4,061,228, consisting of $41,399 in interest earned on the investment of the
Unallocated Reserve, $276,908 in fee income, $596,246 in minimum advance royalty
income, and $3,146,675 in overriding royalty income compared with $3,485,351 in
total income for the previous fiscal year. Total expenses for the fiscal year
were $387,180, compared with $426,655 in total expenses for the previous fiscal
year. There were distributions paid per Unit of Beneficial Interest totalling
25.5 CENTS for the fiscal year ended January 31, 1996, compared with
distributions paid for the fiscal year ended January 31, 1995 of 24 CENTS per
Unit.
9
<PAGE>
Total expenses by categories were as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JANUARY 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Compensation of Trustees......................................... $ 131,906 $ 123,057 $ 120,424
Fees and Disbursements:
Administrative................................................. 62,500 62,500 62,500
Accounting..................................................... 29,326 30,997 47,668
Inspection trips, travel and other expenses of Trustees........ 36,352 38,564 26,368
Legal.......................................................... 17,630 28,795 19,808
Mining consultant and field representatives.................... 12,558 11,768 11,270
Printing of annual and quarterly reports, and letters to
certificate holders........................................... 46,676 63,902 51,631
Registrar...................................................... 559 1,937 1,023
Securities and Exchange Commission............................. 250 250 250
Transfer Agent................................................. 32,619 51,102 43,003
Transfer Agent miscellaneous disbursements..................... 13,500 13,500 13,500
Other miscellaneous expenses................................... 3,304 283 2,596
----------- ----------- -----------
$ 387,180 $ 426,655 $ 400,041
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
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.
RESERVES AND DISTRIBUTIONS
Mesabi Trust's Unallocated Reserve aggregated $541,403 at January 31, 1996,
compared with an Unallocated Reserve of $475,358 at January 31, 1995. The
Trustees have determined that the Unallocated Reserve should be maintained at a
prudent level. 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 intended that future distributions will be highly
dependent upon royalty income as it is received and the level of Trust expenses.
The amount of future royalty income available for distribution will be subject
to the volume of iron ore product shipments and the dollar level of sales by
Northshore. Shipping activity is greatly reduced during the winter months and
economic conditions, particularly those affecting the steel industry, may
adversely affect the amount and timing of such future shipments and sales.
The Trustees will continue to monitor the economic circumstances of the
Trust to strike a responsible balance between distributions to Unitholders and
the need to maintain adequate reserves at a prudent level, given the
unpredictable nature of the iron ore industry, the Trust's dependence on the
actions of the lessee/operator, and the fact the Trust essentially has no other
liquid assets.
Payments to Unitholders during the fiscal year ended January 31, 1995
totalled $3,148,803, and payments to Unitholders during the fiscal year ended
January 31, 1996 totalled $3,345,603.
10
<PAGE>
CERTIFICATES OF BENEFICIAL INTEREST
The Certificates of Beneficial Interest are traded on the New York Stock
Exchange. During the past two fiscal years, the market ranges of the
certificates for each quarterly period and the distributions declared for such
quarterly periods were as follows:
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED HIGH LOW AMOUNT DECLARED PER UNIT
- ---------------------------------------- ------- ------- --------------- ---------
<S> <C> <C> <C> <C>
April 30, 1994.......................... 3 1/4 2 5/8 $ -- $ --
July 31, 1994........................... 3 7/8 2 3/4 787,201 0.060
October 31, 1994........................ 3 3/8 2 7/8 1,049,601 0.080
January 31, 1995........................ 3 5/8 2 3/4 1,312,001 0.100
--------------- ---------
$ 3,148,803 $ 0.240
--------------- ---------
--------------- ---------
<CAPTION>
FISCAL QUARTER ENDED HIGH LOW AMOUNT DECLARED PER UNIT
- ---------------------------------------- ------- ------- --------------- ---------
<S> <C> <C> <C> <C>
April 30, 1995.......................... 3 5/8 3 1/2 $ -- $ --
July 31, 1995........................... 3 7/8 3 1/4 852,801 0.065
October 31, 1995........................ 4 1/8 3 3/8 1,180,801 0.090
January 31, 1996........................ 4 3 1/2 1,574,401 0.120
--------------- ---------
$ 3,608,003 $ 0.275
--------------- ---------
--------------- ---------
</TABLE>
As of the close of business on April 26, 1996, the beneficial interest in
Mesabi Trust was represented by 13,120,010 Units registered in the names of
approximately 3,073 individuals holding of record approximately 1,861,984 Units,
and in the names of approximately 590 brokers, nominees, or fiduciaries holding
of record approximately 11,258,026 Units.
11
<PAGE>
THE TRUSTEES
The name and address of each Trustee and the principal occupation of each
individual Trustee are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF TRUSTEE PRINCIPAL OCCUPATION
- ---------------------------------------- --------------------------------------
<S> <C>
Bankers Trust Company --
Corporate Trustee
Four Albany Street
New York New York 10015
David J. Hoffman Mining geologist
Individual Trustee
150 Forest View Drive
Sedona, Arizona 86336
Richard G. Lareau Partner in the law firm of
Individual Trustee Oppenheimer Wolff & Donnelly
Oppenheimer Wolff & Donnelly
3400 Plaza VII
45 South Seventh Street
Minneapolis, Minnesota 55402
Ira A. Marshall, Jr. Private investor; Self-employed
Individual Trustee petroleum engineer
12 Fincher Way
Rancho Mirage, California 92270
Norman F. Sprague III Private investor; Orthopedic surgeon
Individual Trustee
11600 Wilshire Boulevard
Los Angeles, California 90025
</TABLE>
Respectfully submitted,
BANKERS TRUST COMPANY
DAVID J. HOFFMAN
RICHARD G. LAREAU
IRA A. MARSHALL, JR.
NORMAN F. SPRAGUE III
Trustees
New York, NY
April 27, 1996
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 0
<SECURITIES> 2,145
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,286
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,286
<CURRENT-LIABILITIES> 1,630
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,286
<SALES> 3,743
<TOTAL-REVENUES> 4,061
<CGS> 0
<TOTAL-COSTS> 387
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,674
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,674
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,674
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
