UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 - For the Quarterly Period Ended September
30, 2014
Or
☐ Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 - For the Transition Period From ______________ to
______________
Commission file number 1-701
GREAT NORTHERN IRON ORE PROPERTIES
(Exact name of registrant as specified in its
charter)
Minnesota |
41-0788355 |
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification Number) |
|
|
W-1290 First National Bank Building |
|
332 Minnesota Street |
|
Saint Paul, Minnesota |
55101-1361 |
(Address of principal executive office) |
(Zip Code) |
(651) 224-2385
(Registrant’s telephone number, including
area code)
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
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 ☒ No
☐
Indicate by check mark whether the registrant
has submitted electronically and posted to its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes ☒ No
☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule
12b-2 of the Act).
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No
☒
Number of shares of beneficial interest outstanding on September 30, 2014: |
1,500,000 |
PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements
GREAT NORTHERN IRON ORE PROPERTIES
CONDENSED BALANCE SHEETS
|
|
September 30, |
|
|
December 31, |
|
|
|
2014 |
|
|
2013 |
|
ASSETS |
|
(Unaudited) |
|
|
(Note) |
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
919,094 |
|
|
$ |
712,197 |
|
United States Treasury securities |
|
|
7,533,804 |
|
|
|
5,468,675 |
|
Royalties receivable |
|
|
5,017,263 |
|
|
|
4,448,907 |
|
Prepaid expenses |
|
|
31,952 |
|
|
|
2,110 |
|
TOTAL CURRENT ASSETS |
|
|
13,502,113 |
|
|
|
10,631,889 |
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSETS |
|
|
|
|
|
|
|
|
United States Treasury securities |
|
|
— |
|
|
|
2,883,251 |
|
Prepaid pension costs |
|
|
1,930,938 |
|
|
|
587,159 |
|
|
|
|
1,930,938 |
|
|
|
3,470,410 |
|
|
|
|
|
|
|
|
|
|
PROPERTIES |
|
|
|
|
|
|
|
|
Mineral and surface lands |
|
|
39,479,708 |
|
|
|
39,479,708 |
|
Accumulated depletion and amortization |
|
|
(39,114,577 |
) |
|
|
(38,592,577 |
) |
|
|
|
365,131 |
|
|
|
887,131 |
|
|
|
|
|
|
|
|
|
|
Building and equipment |
|
|
335,767 |
|
|
|
335,767 |
|
Accumulated depreciation |
|
|
(304,963 |
) |
|
|
(263,965 |
) |
|
|
|
30,804 |
|
|
|
71,802 |
|
TOTAL PROPERTIES |
|
|
395,935 |
|
|
|
958,933 |
|
TOTAL ASSETS |
|
$ |
15,828,986 |
|
|
$ |
15,061,232 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND BENEFICIARIES' EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
189,294 |
|
|
$ |
92,356 |
|
Deferred compensation |
|
|
244,300 |
|
|
|
— |
|
Distributions |
|
|
3,900,000 |
|
|
|
3,975,000 |
|
TOTAL CURRENT LIABILITIES |
|
|
4,333,594 |
|
|
|
4,067,356 |
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Deferred compensation |
|
|
— |
|
|
|
244,300 |
|
TOTAL LIABILITIES |
|
|
4,333,594 |
|
|
|
4,311,656 |
|
|
|
|
|
|
|
|
|
|
BENEFICIARIES' EQUITY |
|
|
|
|
|
|
|
|
Certificate holders’ equity, represented by 1,500,000 certificates (shares or units) of beneficial interest authorized and outstanding, and the reversionary interest |
|
|
12,344,203 |
|
|
|
11,611,487 |
|
Accumulated other comprehensive loss |
|
|
(848,811 |
) |
|
|
(861,911 |
) |
TOTAL BENEFICIARIES' EQUITY |
|
|
11,495,392 |
|
|
|
10,749,576 |
|
TOTAL LIABILITIES AND BENEFICIARIES' EQUITY |
|
$ |
15,828,986 |
|
|
$ |
15,061,232 |
|
Note: |
The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
See notes to condensed financial statements.
GREAT NORTHERN IRON ORE PROPERTIES
CONDENSED STATEMENTS OF INCOME
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30 |
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties |
|
$ |
5,017,263 |
|
|
$ |
4,403,655 |
|
|
$ |
14,640,427 |
|
|
$ |
14,120,880 |
|
Interest and other income |
|
|
43,406 |
|
|
|
35,443 |
|
|
|
337,738 |
|
|
|
81,309 |
|
|
|
|
5,060,669 |
|
|
|
4,439,098 |
|
|
|
14,978,165 |
|
|
|
14,202,189 |
|
Costs and expenses |
|
|
(1,117,191 |
) |
|
|
(1,035,095 |
) |
|
|
(3,220,449 |
) |
|
|
(3,089,629 |
) |
NET INCOME |
|
$ |
3,943,478 |
|
|
$ |
3,404,003 |
|
|
$ |
11,757,716 |
|
|
$ |
11,112,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC & DILUTED EARNINGS PER SHARE |
|
$ |
2.63 |
|
|
$ |
2.27 |
|
|
$ |
7.84 |
|
|
$ |
7.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per share |
|
$ |
2.60 |
(1) |
|
$ |
2.60 |
(2) |
|
$ |
7.35 |
(3) |
|
$ |
7.35 |
(4) |
(1) |
$ |
2.60 |
declared |
9/12/2014 |
|
|
|
payable |
10/31/2014 |
|
|
|
|
|
(2) |
$ |
2.60 |
declared |
9/13/2013 |
|
|
|
paid |
10/31/2013 |
|
|
|
|
|
(3) |
$ |
2.25 |
declared |
3/14/2014 |
|
|
|
paid |
4/30/2014 |
plus |
$ |
2.50 |
declared |
6/16/2014 |
|
|
|
paid |
7/31/2014 |
plus |
$ |
2.60 |
declared |
9/12/2014 |
|
|
|
payable |
10/31/2014 |
|
|
|
|
|
(4) |
$ |
2.25 |
declared |
3/8/2013 |
|
|
|
paid |
4/30/2013 |
plus |
$ |
2.50 |
declared |
6/17/2013 |
|
|
|
paid |
7/31/2013 |
plus |
$ |
2.60 |
declared |
9/13/2013 |
|
|
|
paid |
10/31/2013 |
See notes to condensed financial statements.
GREAT NORTHERN IRON ORE PROPERTIES
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30 |
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
NET INCOME |
|
$ |
3,943,478 |
|
|
$ |
3,404,003 |
|
|
$ |
11,757,716 |
|
|
$ |
11,112,560 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service cost included in net periodic pension cost |
|
|
4,366 |
|
|
|
4,367 |
|
|
|
13,100 |
|
|
|
13,102 |
|
Amortization of net loss included in net periodic pension cost |
|
|
— |
|
|
|
165,884 |
|
|
|
— |
|
|
|
497,652 |
|
Total other comprehensive income |
|
|
4,366 |
|
|
|
170,251 |
|
|
|
13,100 |
|
|
|
510,754 |
|
TOTAL COMPREHENSIVE INCOME |
|
$ |
3,947,844 |
|
|
$ |
3,574,254 |
|
|
$ |
11,770,816 |
|
|
$ |
11,623,314 |
|
See notes to condensed financial statements.
GREAT NORTHERN IRON ORE PROPERTIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months Ended |
|
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Cash received from royalties and rents |
|
$ |
14,399,694 |
|
|
$ |
14,124,615 |
|
Cash paid to suppliers and employees |
|
|
(3,921,034 |
) |
|
|
(3,210,162 |
) |
Interest received |
|
|
28,237 |
|
|
|
59,015 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
10,506,897 |
|
|
|
10,973,468 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
United States Treasury securities purchased |
|
|
(4,500,000 |
) |
|
|
(3,525,000 |
) |
United States Treasury securities matured |
|
|
5,300,000 |
|
|
|
7,675,000 |
|
Expenditures for building and equipment |
|
|
— |
|
|
|
(23,206 |
) |
NET CASH PROVIDED BY INVESTING ACTIVITIES |
|
|
800,000 |
|
|
|
4,126,794 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Distributions paid |
|
|
(11,100,000 |
) |
|
|
(15,000,000 |
) |
NET CASH USED IN FINANCING ACTIVITIES |
|
|
(11,100,000 |
) |
|
|
(15,000,000 |
) |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
206,897 |
|
|
|
100,262 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
712,197 |
|
|
|
643,431 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
|
$ |
919,094 |
|
|
$ |
743,693 |
|
See notes to condensed financial statements.
GREAT NORTHERN IRON ORE PROPERTIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Periods of Three and Nine Months ended September
30, 2014 and September 30, 2013
Note 1 – BASIS OF PRESENTATION
The accompanying unaudited condensed financial
statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the periods stated above are not necessarily indicative of the results that may be expected for each respective full
year. For further information, refer to the financial statements and footnotes included in the Great Northern Iron Ore Properties
(the “Trust”) Annual Report on Form 10-K for the year ended December 31, 2013.
Note 2 – SECURITIES
United States Treasury securities are classified
as “held-to-maturity” securities and are carried at cost, adjusted for accrued interest and amortization of premium
or discount. The aggregate fair values listed in the table below are based on quoted prices in active markets for identical assets
(Level 1). Securities classified as current assets will mature within one year of the respective period ending date stated below.
Securities classified as noncurrent assets will mature one to two years from the respective period ending date stated below. Following
is an analysis of the securities as of the periods stated:
|
|
Current |
|
|
Noncurrent |
|
|
|
Sept. 30, 2014 |
|
|
Dec. 31, 2013 |
|
|
Sept. 30, 2014 |
|
|
Dec. 31, 2013 |
|
Aggregate fair value |
|
$ |
7,533,282 |
|
|
$ |
5,457,842 |
|
|
$ |
— |
|
|
$ |
2,880,219 |
|
Gross unrealized holding gains |
|
|
(2,742 |
) |
|
|
(1,279 |
) |
|
|
— |
|
|
|
(442 |
) |
Gross unrealized holding losses |
|
|
32 |
|
|
|
26 |
|
|
|
— |
|
|
|
294 |
|
Amortized cost basis |
|
|
7,530,572 |
|
|
|
5,456,589 |
|
|
|
— |
|
|
|
2,880,071 |
|
Accrued interest |
|
|
3,232 |
|
|
|
12,086 |
|
|
|
— |
|
|
|
3,180 |
|
Amounts shown on balance sheets |
|
$ |
7,533,804 |
|
|
$ |
5,468,675 |
|
|
$ |
— |
|
|
$ |
2,883,251 |
|
Note 3 – PENSION PLAN
A summary of the components of net periodic
pension cost is as follows:
|
|
Three Months Ended September 30 |
|
|
Nine Months Ended September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Service cost |
|
$ |
77,583 |
|
|
$ |
81,424 |
|
|
$ |
232,751 |
|
|
$ |
244,270 |
|
Interest cost |
|
|
90,641 |
|
|
|
76,967 |
|
|
|
271,921 |
|
|
|
230,903 |
|
Expected return on assets |
|
|
(56,453 |
) |
|
|
(134,480 |
) |
|
|
(169,360 |
) |
|
|
(403,442 |
) |
Amortization of net loss |
|
|
— |
|
|
|
165,884 |
|
|
|
— |
|
|
|
497,652 |
|
Amortization of prior service cost |
|
|
4,366 |
|
|
|
4,367 |
|
|
|
13,100 |
|
|
|
13,102 |
|
Net periodic pension cost |
|
$ |
116,137 |
|
|
$ |
194,162 |
|
|
$ |
348,412 |
|
|
$ |
582,485 |
|
The plan’s annual actuarial valuation
was performed as of the plan’s fiscal year end, March 31. The actuarial recommended contribution to the pension plan for
the year 2014 is $1,679,091, which contribution was made in August 2014.
Note 4 – BENEFICIARIES’ EQUITY
Pursuant to the Court Order of November 29,
1982, the Trustees were directed to create and maintain an account designated as “Principal Charges.” This account
constitutes a first and prior lien of certificate holders on any property transferable to the reversioner and reflects an allocation
of beneficiaries’ equity between the certificate holders and the reversioner. This account is neither an asset nor a liability
of the Trust. Rather, this account maintains and represents a balance which will be payable to the certificate holders of record
from the reversioner at the end of the Trust. The balance in this account consists of attorneys’ fees and expenses of counsel
for adverse parties pursuant to the Court Order in connection with litigation commenced in 1972 relating to the Trustees’
powers and duties under the Trust Agreement and the costs of homes and surface lands acquired in accordance with provisions of
a lease with U.S. Steel Corporation, net of an allowance to amortize the cost of the land based on actual shipments of taconite
and net of a credit for disposition of tangible assets.
Following is an analysis of this account for
the period ended as of:
|
|
Sept. 30, 2014 |
|
Attorneys' fees and expenses |
|
$ |
1,024,834 |
|
Costs of surface lands |
|
|
6,606,815 |
|
Cumulative shipment credits |
|
|
(2,538,669 |
) |
Cumulative asset disposition credits |
|
|
(372,124 |
) |
Principal Charges account balance |
|
$ |
4,720,856 |
|
Upon termination of the Trust, the Trustees
shall either sell tangible assets or obtain a loan with tangible assets as security to provide monies for distribution to the certificate
holders in the amount of the Principal Charges account balance.
Note 5 – ACCUMULATED OTHER COMPREHENSIVE
LOSS
A summary of the component items (all affecting
the “Costs and expenses” line item within the Condensed Statements of Income) showing the reclassifications out of
“Accumulated other comprehensive loss” (“AOCL”) is as follows:
|
|
Amounts reclassified from AOCL |
|
|
|
Three Months Ended Sept. 30 |
|
Component item |
|
2014 |
|
|
2013 |
|
Amortization of defined benefit pension items: |
|
|
|
|
|
|
|
|
Prior service cost |
|
$ |
4,366 |
|
|
$ |
4,367 |
|
Net loss |
|
|
— |
|
|
|
165,884 |
|
Total |
|
$ |
4,366 |
|
|
$ |
170,251 |
|
|
|
Amounts reclassified from AOCL |
|
|
|
Nine Months Ended Sept. 30 |
|
Component item |
|
2014 |
|
|
2013 |
|
Amortization of defined benefit pension items: |
|
|
|
|
|
|
|
|
Prior service cost |
|
$ |
13,100 |
|
|
$ |
13,102 |
|
Net loss |
|
|
— |
|
|
|
497,652 |
|
Total |
|
$ |
13,100 |
|
|
$ |
510,754 |
|
Note 5 – ACCUMULATED OTHER COMPREHENSIVE
LOSS (Continued)
A summary of the changes in AOCL by component
item is as follows:
|
|
Three Months Ended September 30, 2014 |
|
Defined benefit pension items: |
|
Prior Service Cost |
|
|
Net Loss |
|
|
Total |
|
Balance at beginning of period |
|
$ |
(8,733 |
) |
|
$ |
(844,444 |
) |
|
$ |
(853,177 |
) |
Amounts reclassified from AOCL |
|
|
4,366 |
|
|
|
— |
|
|
|
4,366 |
|
Balance at end of period |
|
$ |
(4,367 |
) |
|
$ |
(844,444 |
) |
|
$ |
(848,811 |
) |
|
|
Three Months Ended September 30, 2013 |
|
Defined benefit pension items: |
|
Prior Service Cost |
|
|
Net Loss |
|
|
Total |
|
Balance at beginning of period |
|
$ |
(26,201 |
) |
|
$ |
(2,055,405 |
) |
|
$ |
(2,081,606 |
) |
Amounts reclassified from AOCL |
|
|
4,367 |
|
|
|
165,884 |
|
|
|
170,251 |
|
Balance at end of period |
|
$ |
(21,834 |
) |
|
$ |
(1,889,521 |
) |
|
$ |
(1,911,355 |
) |
|
|
Nine Months Ended September 30, 2014 |
|
Defined benefit pension items: |
|
Prior Service Cost |
|
|
Net Loss |
|
|
Total |
|
Balance at beginning of period |
|
$ |
(17,467 |
) |
|
$ |
(844,444 |
) |
|
$ |
(861,911 |
) |
Amounts reclassified from AOCL |
|
|
13,100 |
|
|
|
— |
|
|
|
13,100 |
|
Balance at end of period |
|
$ |
(4,367 |
) |
|
$ |
(844,444 |
) |
|
$ |
(848,811 |
) |
|
|
Nine Months Ended September 30, 2013 |
|
Defined benefit pension items: |
|
Prior Service Cost |
|
|
Net Loss |
|
|
Total |
|
Balance at beginning of period |
|
$ |
(34,936 |
) |
|
$ |
(2,387,173 |
) |
|
$ |
(2,422,109 |
) |
Amounts reclassified from AOCL |
|
|
13,102 |
|
|
|
497,652 |
|
|
|
510,754 |
|
Balance at end of period |
|
$ |
(21,834 |
) |
|
$ |
(1,889,521 |
) |
|
$ |
(1,911,355 |
) |
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
Periods of Three and Nine Months ended September
30, 2014 and September 30, 2013
The Trust owns interest in 12,033 acres on
the Mesabi Iron Range Formation in northeastern Minnesota, most of which are under lease to major iron ore producing companies.
With the properties and offices all located in Minnesota, the Trust and matters affecting the Trust are under the jurisdiction
of the Ramsey County District Court (the “Court”) in Saint Paul, Minnesota. Due to the Trustees’ election pursuant
to Section 646 of the Tax Reform Act of 1986, as amended, commencing with year 1989 the Trust is not subject to federal and Minnesota
corporate income taxes. The Trust is now a grantor trust. Shares of beneficial interest in the Trust are traded on the New York
Stock Exchange under the ticker symbol “GNI” (CUSIP No. 391064102).
The terms of the Great Northern Iron Ore Properties
Trust Agreement, created December 7, 1906, state that the Trust shall continue for twenty years after the death of the last survivor
of eighteen persons named in the Trust Agreement. The last survivor of these eighteen persons died on April 6, 1995. Accordingly,
the Trust terminates twenty years from April 6, 1995, that being April 6, 2015.
Upon the termination date of the Trust on April
6, 2015, the certificates of beneficial interest (shares) in the Trust will cease to trade on the New York Stock Exchange and thereafter
will represent only the right to receive certain distributions payable to the certificate holders of record at the time of the
termination of the Trust. Upon Trust termination and after the wind-down process is completed, the Trust is obligated to distribute
ratably to these certificate holders the net monies remaining in the hands of the Trustees (after paying and providing for all
expenses and obligations incurred through the Trust’s termination and wind-down process), plus the balance in the Principal
Charges account (this account is explained in the Trust’s Annual Report sent to all certificate holders every year), all
of which are subject to the final accounting and approval of the Ramsey County District Court. All other Trust property (most notably
the Trust’s mineral properties and the active leases) must be conveyed and transferred to the reversioner (currently Glacier
Park Company, a wholly owned subsidiary of ConocoPhillips Company), without further payment or remuneration to the certificate
holders, under the terms of the Trust Agreement. The wind-down process of the Trust is anticipated to extend into the calendar
year following its termination date in order to complete the various year-end audits, court and regulatory filings, tax returns,
conveyances of non-cash properties to the reversioner, etc., relative thereto. Subject to the guidance and approval of the Ramsey
County District Court and assuming the wind-down process with the reversioner proceeds efficiently and that no other complications
arise during this time period, we anticipate the wind-down process, final distribution and dissolution of the Trust will be completed
by the end of 2016.
The exact final distribution, though not determinable
at this time, will generally consist of the sum of the Trust’s net monies (essentially, total assets less liabilities and
less properties) and the balance in the Principal Charges account, less any and all expenses and obligations incurred through the
Trust’s termination and wind-down process. To offer a hypothetical example, without factoring in any expenses and obligations
incurred through the Trust’s termination and wind-down process, and using the financial statement values as of December 31,
2013, the net monies were approximately $9,790,000 and the Principal Charges account balance was approximately $4,789,000, resulting
in a final distribution payable of approximately $14,579,000, or about $9.72 per share. Upon the termination of the Trust, the
certificates of beneficial interest (shares) would be cancelled and have no further value with the exception of the final distribution.
It is important to note, however, that the actual net monies on hand and the Principal Charges account balance will most likely
fluctuate and will not be “final” until after the termination and wind-down process of the Trust is completed. The
Trust offers this example to further inform investors about the conceptual nature of the final distribution and does not imply
or guarantee a specific known final distribution amount.
The Trustees petitioned the Court for a hearing,
which hearing occurred on October 7, 2014, to address the matter of the Trust’s termination, including the scope of the Trustees’
duties, powers and authority during the wind-down period, their plan for termination and for guidance relative to the allocation
of expenses. Please refer to Part II, Item 1 below for additional information relative to the Court hearing.
Results of Operations:
Royalties increased $613,608 and $519,547 during
the three and nine month periods ended September 30, 2014, respectively, as compared to the same periods in 2013, due mainly to
increased taconite shipments from Trust lands and increased tailings revenues, offset in part by a lower overall average earned
royalty rate caused by our lessees mining more taconite from our partial fee interest lands resulting in royalties representative
of our ownership interest.
Interest and other income increased $7,963
and $256,429 during the three and nine month periods ended September 30, 2014, respectively, as compared to the same periods in
2013, due mainly to greater aggregate revenues.
Costs and expenses increased $82,096 and $130,820
during the three and nine month periods ended September 30, 2014, respectively, as compared to the same periods in 2013, due mainly
to increased legal expenditures related to Trust termination matters, offset in part by less net periodic pension cost associated
with the Trust’s defined benefit pension plan. The reduction in pension expense was primarily due to the Trust not being
required to amortize unrecognized net loss, pursuant to pension accounting rules, since the remaining unrecognized net loss was
less than ten percent of the greater of the projected benefit obligation or the fair market value of plan assets as of the beginning
of the year (known as the corridor for delayed recognition).
At their meeting held on September 12, 2014,
the Trustees declared a distribution of $2.60 per share, amounting to $3,900,000 payable October 31, 2014, to certificate holders
of record at the close of business on September 30, 2014. Following payment of this quarterly distribution, there will be two (2)
more regular quarterly distributions declared (one in 2014 and one in 2015) before the termination date of the Trust on April 6,
2015. While there will be some income allocated to the second quarter of 2015 (representing six days of business through April
6, 2015), it is expected that this amount will be nominal and will likely be included with the final distribution to certificate
holders that will be made subsequent to the termination date and upon completion of the wind-down process and final accounting.
The final distribution will generally consist of the sum of the Trust’s net monies (essentially, total assets less liabilities
and less properties) remaining in the hands of the Trustees (after paying and providing for all expenses and obligations incurred
through the Trust’s termination and wind-down process), and the balance in the Principal Charges account, all of which are
subject to the final accounting and approval of the Ramsey County District Court. Upon Trust termination, the shares will be cancelled
and have no further value other than the final distribution. All other Trust properties will be conveyed to the reversioner upon
the completion of the wind-down process without further payment or remuneration to the certificate holders.
The Trustees have now declared three quarterly
distributions in 2014. The first, in the amount of $2.25 per share, was paid on April 30, 2014, to certificate holders of record
on March 31, 2014; the second, in the amount of $2.50 per share, was paid on July 31, 2014, to certificate holders of record on
June 30, 2014; and the third being the current distribution. The first, second and third quarter 2013 distributions were $2.25,
$2.50 and $2.60 per share, respectively. The Trustees intend to continue quarterly distributions and set the record date as of
the last business day of each quarter. The next distribution will be paid January 30, 2015 to certificate holders of record on
December 31, 2014.
A mining agreement dated January 1, 1959, with
U.S. Steel Corporation provides that one-half of annual earned royalty income, after satisfaction of minimum royalty payments,
shall be applied, in lieu of royalty payments, to reimburse the lessee for a portion of its cost of acquisition of surface lands
overlying the leased mineral deposits, which surface lands are then conveyed to the Trustees. There are surface lands yet to be
purchased, the costs of which are yet unknown and will not be known until the actual purchases are made.
Liquidity:
In the interest of preservation of principal
of Court-approved reserves and guided by the restrictive provisions of Section 646 of the Tax Reform Act of 1986, as amended, monies
are invested primarily in United States Treasury securities with maturity dates not to exceed three years and, along with cash
flows from operations, are deemed adequate to meet currently foreseeable liquidity needs.
Item 3. Quantitative
and Qualitative Disclosures About Market Risk
- None
Item 4. Controls
and Procedures
As of the end of the period covered by this
report, the Trust conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and
Chief Financial Officer, of the Trust’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities and Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Trust’s disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Trust in reports that it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange Commission rules and forms. There was no change in
the Trust’s internal control over financial reporting during the Trust’s most recently completed fiscal quarter that
has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
By a letter dated September 12, 2014, certificate
holders of record as of September 8, 2014, and the reversioner were notified of a hearing on October 7, 2014, in Ramsey County
District Court, Saint Paul, Minnesota, for the purpose of requesting from the Court instruction and guidance regarding the Trustees’
duties, powers and authority relative to operations of the Trust and the wind-down process subsequent to April 6, 2015, for approval
of the Trustees’ wind-down plan, and for instruction and guidance pertaining to the allocation of expenses of the Trust between
the certificate holders and reversioner. The hearing was not completed on October 7, 2014 and, therefore, the Court ordered a continuation
of the hearing to be held on November 24, 2014 at 9:30 a.m. in Ramsey County District Court. Copies of the Trust’s mailings
regarding the hearing may be viewed on the Trust’s Web site at www.gniop.com, or may be requested by contacting the
St. Paul office of the Trustees.
Item 1A. Risk Factors
There are no material changes from the risk
factors previously disclosed in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2013.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds
- None
Item 3. Defaults Upon Senior Securities
- None
Item 4. Mine Safety Disclosures
- Not applicable
Item 5. Other Information
- None
Item 6. Exhibits
Exhibit No. |
|
Document |
- 31.1 |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
- 31.2 |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
- 32 |
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished but not filed) |
|
|
|
- 101.INS |
|
XBRL Instance Document (Interactive Data File) |
|
|
|
- 101.SCH |
|
XBRL Taxonomy Extension Schema Document (Interactive Data File) |
|
|
|
- 101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document (Interactive Data File) |
|
|
|
- 101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document (Interactive Data File) |
|
|
|
- 101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document (Interactive Data File) |
|
|
|
- 101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document (Interactive Data File) |
|
|
|
- - - - - - -
- - - - - - - - -
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
GREAT NORTHERN IRON ORE PROPERTIES |
|
|
|
|
(Registrant) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: |
October 23, 2014 |
|
By: |
/s/ Joseph S. Micallef |
|
|
|
|
|
Joseph S. Micallef, Chief Executive Officer, |
|
|
|
|
|
Trustee and President of the Trustees |
|
|
|
|
|
(principal executive officer) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: |
October 23, 2014 |
|
By: |
/s/ Thomas A. Janochoski |
|
|
|
|
|
Thomas A. Janochoski, Chief Financial Officer, |
|
|
|
|
|
Vice President & Secretary |
|
|
|
|
|
(principal financial and accounting officer) |
|
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX
QUARTER ENDED: SEPTEMBER
30, 2014
GREAT NORTHERN IRON ORE PROPERTIES
W-1290 First National Bank Building
332 Minnesota Street
Saint Paul, Minnesota 55101-1361
Exhibit No. |
|
Document |
31.1 |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32 |
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished but not filed) |
|
|
|
101.INS |
|
XBRL Instance Document (Interactive Data File) |
|
|
|
101.SCH |
|
XBRL Taxonomy Extension Schema Document (Interactive Data File) |
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document (Interactive Data File) |
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document (Interactive Data File) |
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document (Interactive Data File) |
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document (Interactive Data File) |
Exhibit 31.1
Certification of Chief Executive Officer
pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002
I, Joseph S. Micallef, certify that:
1. I have reviewed this
quarterly report on Form 10-Q of Great Northern Iron Ore Properties;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s
other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s
other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors [or persons performing
the equivalent functions]:
a) all significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or
not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
By: |
/s/ Joseph S. Micallef |
|
Date: |
October 23, 2014 |
|
Joseph S. Micallef
Chief Executive Officer, Trustee and President of the Trustees (principal
executive officer)
Exhibit 31.2
Certification of Chief Financial Officer
pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002
I, Thomas A. Janochoski, certify that:
1. I have reviewed this
quarterly report on Form 10-Q of Great Northern Iron Ore Properties;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s
other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s
other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors [or persons performing
the equivalent functions]:
a) all significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or
not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
By: |
/s/ Thomas A. Janochoski |
|
Date: |
October 23, 2014 |
|
Thomas A. Janochoski
Chief Financial Officer, Vice President & Secretary (principal
financial and accounting officer)
Exhibit 32
Certifications of Chief Executive Officer
and Chief Financial Officer pursuant to
18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(furnished but not filed)
In connection with this
quarterly report of Great Northern Iron Ore Properties on Form 10-Q filed with the Securities and Exchange Commission, I, Joseph
S. Micallef, President of the Trustees and Chief Executive Officer of Great Northern Iron Ore Properties, certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350, that:
1. This Quarterly Report
on Form 10-Q of Great Northern Iron Ore Properties for the quarter ended September 30, 2014 (the “Report”) fully
complies with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
2. The information contained
in the Report fairly presents, in all material respects, the financial condition and results of operations of Great Northern Iron
Ore Properties.
By: |
/s/ Joseph S. Micallef |
|
Date: |
October 23, 2014 |
|
Joseph S. Micallef
Chief Executive Officer, Trustee and President of the Trustees (principal
executive officer)
A signed original of this written statement
required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement required by Section 906, has been provided to Great Northern Iron
Ore Properties and will be retained by Great Northern Iron Ore Properties and furnished to the Securities and Exchange Commission
or its staff upon request.
- - - - - -
In connection with this
quarterly report of Great Northern Iron Ore Properties on Form 10-Q filed with the Securities and Exchange Commission, I, Thomas
A. Janochoski, Vice President & Secretary and Chief Financial Officer of Great Northern Iron Ore Properties, certify, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350, that:
1. This Quarterly Report
on Form 10-Q of Great Northern Iron Ore Properties for the quarter ended September 30, 2014 (the “Report”) fully
complies with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
2. The information contained
in the Report fairly presents, in all material respects, the financial condition and results of operations of Great Northern Iron
Ore Properties.
By: |
/s/ Thomas A. Janochoski |
|
Date: |
October 23, 2014 |
|
Thomas A. Janochoski
Chief Financial Officer, Vice President & Secretary (principal
financial and accounting officer)
A signed original of this written statement
required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement required by Section 906, has been provided to Great Northern Iron
Ore Properties and will be retained by Great Northern Iron Ore Properties and furnished to the Securities and Exchange Commission
or its staff upon request.