**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 
| **(Mark One)** |
|----------------|
|           |   |
| **x**          | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|           |   |
| ** **     | **For the quarterly period ended  July 31, 2008** |
|           |   |
| ** **     | **or** |
|           |   |
| **o**          | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|           |   |
| ** **     | **For the transition period from                                      to                                    ** |

 

**CommissionFile Number:  1-4488**

 

**MESABI TRUST**

(Exact name of registrant as specified in itscharter)

 

| **New York**                                         | ** ** | **13-6022277**                       |
|------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of                      |       | (I.R.S. Employer Identification No.) |
| incorporation or organization)                       |       |                                 |
|                                                 |       |                                 |
| **c/o Deutsche Bank Trust Company  Americas**        | ** ** | ** **                           |
| **Trust & Securities  Services – GDS** |       |                                 |
| **60 Wall Street**                                   | ** ** | ** **                           |
| **27th Floor**                                       | ** ** | ** **                           |
| **New York, New York**                               |       | **10005**                            |
| (Address of principal executive offices)             |       | (Zip code)                           |

 

**(615)835-2749**

(Registrant’s telephone number, including area code)

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.              Yes  x  No  o

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See definitions of “large accelerated filer,” “acceleratedfiler” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 
| Large accelerated filer | o |   | Accelerated filer         | x |
|-------------------------|---|--------|---------------------------|---|
| Non-accelerated filer   | o |   | Smaller reporting company | o |

 

Indicate bycheck mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).    Yes  o  No  x

 

As of September 3,2008, there were 13,120,010 Units of Beneficial Interest in Mesabi Trustoutstanding.

 

 

 

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**PART I - FINANCIAL INFORMATION**

 

**Item1.****                    ****FinancialStatements.  (Note 1)**

 

**Mesabi Trust**

**Condensed Statements of Income**

**Three and Six Months Ended July 31,2008 and 2007**

 
| ** ** | ** ** | ** **                               | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------|------------|------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** ** | ** ** | ** **                               | ** ** | **July 31,**                | ** ** | **July 31,**              | ** ** |
| ** ** | ** ** | ** **                               | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** ** | ** ** | ** **                               | ** ** | **(unaudited)**                  | ** ** | **(unaudited)**                | ** ** | **(unaudited)** | ** ** | **(unaudited)** | ** ** |
| **A.**     | ** ** | **Condensed Statements of Income**       | ** ** | ** **                       | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** |
|       |       |                                     |       |                             |       |                           |       |   |   |   |   |
|       |       | Revenues                                 |       |                             |       |                           |       |   |   |   |   |
|       |       | Royalty  income                          |       | $                                | 16,766,563 |                           | $          | 4,427,036 |   | $ | 20,614,273 |   | $ | 6,206,177 |   |
|       |       | Interest  income                         |       | 5,240                            |       | 8,448                          |       | 19,337 |   | 14,362 |   |
|       |       |                                     |       | 16,771,803                       |       | 4,435,484                      |       | 20,633,610 |   | 6,220,539 |   |
|       |       |                                     |       |                             |       |                           |       |   |   |   |   |
|       |       | Expenses                                 |       | 201,486                          |       | 261,345                        |       | 423,640 |   | 346,783 |   |
|       |       |                                     |       |                             |       |                           |       |   |   |   |   |
|       |       | Net income                               |       | $                                | 16,570,317 |                           | $          | 4,174,139 |   | $ | 20,209,970 |   | $ | 5,873,756 |   |
|       |       |                                     |       |                             |       |                           |       |   |   |   |   |
|       |       | Number of units outstanding              |       | 13,120,010                       |       | 13,120,010                     |       | 13,120,010 |   | 13,120,010 |   |
|       |       |                                     |       |                             |       |                           |       |   |   |   |   |
|       |       | Net income per unit (Note 2)             |       | $                                | 1.2630     |                           | $          | 0.3182 |   | $ | 1.5404 |   | $ | 0.4477 |   |
|       |       |                                     |       |                             |       |                           |       |   |   |   |   |
|       |       | Distributions declared per unit (Note 3) |       | $                                | 1.0000     |                           | $          | 0.3100 |   | $ | 1.1200 |   | $ | 0.3550 |   |

 

SeeNotes to Condensed Financial Statements.

 

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**MesabiTrust**

**CondensedBalance Sheets**

**July 31,2008 and January 31, 2008**

 
| ** ** | ** ** | ** **                                                                 | ** ** | **July 31, 2008** | ** ** | **January 31, 2008** | ** ** |
|------------|------------|----------------------------------------------------------------------------|------------|-----------------------------|------------|--------------------------------|------------|
| ** ** | ** ** | ** **                                                                 | ** ** | **(unaudited)**             | ** ** | ** **                     | ** ** |
| **B.**     | ** ** | **Condensed Balance Sheets**                                               | ** ** | ** **                  | ** ** | ** **                     | ** ** |
|       |       |                                                                       |       |                        |       |                           |       |
| ** ** | ** ** | **Assets**                                                                 | ** ** | ** **                  | ** ** | ** **                     | ** ** |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | Cash                                                                       |       | $                           | 13,472,832 |                           | $          | 6,959,701 |   |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | U.S.  Government securities, at amortized cost (which approximates market) |       | 438,198                     |       | 544,193                        |       |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | Accrued  income receivable                                                 |       | 6,453,966                   |       | 959,925                        |       |
|       |       | Prepaid  expenses                                                          |       | 15,929                      |       | 24,687                         |       |
|       |       |                                                                       |       | 20,380,925                  |       | 8,488,506                      |       |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | Fixed  property, including intangibles, at nominal values                  |       |                        |       |                           |       |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | 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                              |       |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       |                                                                       |       | $                           | 20,380,928 |                           | $          | 8,488,509 |   |
|       |       |                                                                       |       |                        |       |                           |       |
| ** ** | ** ** | **Liabilities, Unallocated Reserve and Trust  Corpus**                     | ** ** | ** **                  | ** ** | ** **                     | ** ** |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | Liabilities                                                                |       |                        |       |                           |       |
|       |       | Distribution  payable                                                      |       | $                           | 13,120,010 |                           | $          | 6,756,805 |   |
|       |       | Accrued  expenses                                                          |       | 85,336                      |       | 71,680                         |       |
|       |       |                                                                       |       | 13,205,346                  |       | 6,828,485                      |       |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       | Unallocated  Reserve (Note 4)                                              |       | 7,175,579                   |       | 1,660,021                      |       |
|       |       | Trust  Corpus                                                              |       | 3                           |       | 3                              |       |
|       |       |                                                                       |       |                        |       |                           |       |
|       |       |                                                                       |       | $                           | 20,380,928 |                           | $          | 8,488,509 |   |

 

See Notes to CondensedFinancial Statements.

 

3

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**MesabiTrust**

**CondensedStatements of Cash Flows**

**Six MonthsEnded July 31, 2008 and 2007**

 
| ** ** | ** ** | ** **                                                                     | ** ** | **Six Months Ended** | ** ** |
|------------|------------|--------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** ** | ** ** | ** **                                                                     | ** ** | **July 31,**              | ** ** |
| ** ** | ** ** | ** **                                                                     | ** ** | **2008**                       | ** ** | **2007** | ** ** |
| ** ** | ** ** | ** **                                                                     | ** ** | **(unaudited)**                | ** ** | **(unaudited)** | ** ** |
| **C.**     | ** ** | **Condensed Statements of Cash Flows**                                         | ** ** | ** **                     | ** ** | ** ** | ** ** |
|       |       |                                                                           |       |                           |       |   |   |
| ** ** |       | Cash flows from operating activities                                           | ** ** | ** **                     | ** ** | ** ** | ** ** |
|       |       | Royalties  received                                                            |       | $                              | 15,113,023 |   | $ | 4,853,799 |   |
|       |       | Interest  received                                                             |       | 23,996                         |       | 20,398 |   |
|       |       | Expenses  paid                                                                 |       | (398,676                       | )          | (417,636 | ) |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Net  cash provided by operating activities                                     |       | 14,738,343                     |       | 4,456,561 |   |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Cash flows from investing activities                                           |       |                           |       |   |   |
|       |       | Maturities  of U.S. Government Securities                                      |       | 209,643                        |       | 5,231,254 |   |
|       |       | Purchases  of U.S. Government Securities                                       |       | (103,649                       | )          | (4,938,331 | ) |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Net  cash provided by (used for) investing activities                          |       | 105,994                        |       | 292,923 |   |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Cash flow from financing activities Distributions  to Unitholders              |       | (8,331,206                     | )          | (4,723,204 | ) |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Net change in cash                                                             |       | 6,513,131                      |       | 26,280 |   |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Cash, beginning of year                                                        |       | 6,959,701                      |       | 4,258,201 |   |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Cash, end of period                                                            |       | $                              | 13,472,832 |   | $ | 4,284,481 |   |
|       |       |                                                                           |       |                           |       |   |   |
| ** ** |       | **Reconciliation of net income to net cash  provided by operating activities** |       |                           |       |   |   |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Net income                                                                     |       | $                              | 20,209,970 |   | $ | 5,873,756 |   |
|       |       | Increase in accrued income receivable                                          |       | (5,494,041                     | )          | (1,346,343 | ) |
|       |       | Decrease (increase) in prepaid expenses                                        |       | 8,758                          |       | (35,653 | ) |
|       |       | (Decrease) increase in accrued expenses                                        |       | 13,656                         |       | (35,199 | ) |
|       |       |                                                                           |       |                           |       |   |   |
|       |       | Net  cash provided by operating activities                                     |       | $                              | 14,738,343 |   | $ | 4,456,561 |   |

 

See Notes to Condensed Financial Statements.

 

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**MesabiTrust**

 

**Notes to Condensed FinancialStatements**

**July 31, 2008 (unaudited)**

 

Note 1.         The financial statements included herein havebeen prepared without audit (except for the balance sheet at January 31,2008) in accordance with the instructions to Form 10-Q pursuant to the rules andregulations of the Securities and Exchange Commission.  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles have been condensed or omitted pursuant to such rules andregulations.  In the opinion of the Trustees,all adjustments, consisting only of normal recurring adjustments, necessary fora fair statement of (a) the results of operations for the three months andsix months ended July 31, 2008 and 2007, (b) the financial positionat July 31, 2008 and (c) the cash flows for the six months ended July 31,2008 and 2007, have been made.

 

Note 2.         Net income per unit includes accrued incomereceivable.  For the three months ended July 31,2008 the Trust recorded $6,453,966 of accrued income receivable as reflected onthe Consolidated Balance Sheet as of July 31, 2008 (unaudited).  Accrued income receivable is accounted forand reported for the Trust’s second fiscal quarter based on shipments duringthe month of July even though such accrued income receivable is notavailable for distribution to unitholders until it is actually received by theTrust at the end of October.  Net incomeper unit is based on 13,120,010 units outstanding during the period.

 

Note 3.         The Trust declares distributions each year inApril, July, October and January. Distributions are declared after receiving notification from NorthshoreMining Company as to the amount of royalty income that is expected to be paidto the Trust based on shipments through the end of each calendar quarter.  The Trust’s financial statements are preparedon an accrual basis and present the Trust’s results of operations based on eachfiscal quarter which ends one month after the close of each calendarquarter.  Because distributions aredeclared based on royalty income that is payable as of the end of each calendarquarter and the Trust’s Net Income is calculated as of the end of each fiscalquarter, the distributions declared by the Trust are not equivalent to theTrust’s Net Income during the periods reported in this quarterly report on Form 10-Q.

 

Note 4.         The Trustees have determined that theunallocated cash and U.S. Government securities portion of the UnallocatedReserve should be maintained at a prudent level, usually within the range of$500,000 to $1,000,000, to meet present or future potential liabilities of theTrust.  Accordingly, although the actualamount of the Unallocated Reserve will fluctuate from time to time, and mayincrease or decrease from its current level, it is currently intended thatfuture distributions will be highly dependent upon royalty income as it isreceived quarterly and the level of Trust expenses that the Trustees anticipatein subsequent quarters.  At July 31,2008, the Unallocated Reserve was represented by $721,613 in unallocated cashand U.S. Government securities, and $6,453,966 of accrued revenue primarilyrepresenting royalties not yet received by the Trust but anticipated to bereceived from Northshore Mining Company in October 2008 based uponreported lessee shipping activity during the month of July 2008.

 

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**Item 2.    Trustees’ Discussion and Analysis of Financial Condition andResults of Operations.**

 

**Forward-Looking Statements**

 

Certain information included in this Quarterly Reporton Form 10-Q contains “forward-looking statements” within the meaning of Section 21Eof the Securities Exchange Act of 1934 and Section 27A of the SecuritiesAct of 1933.  All such forward-lookingstatements, including those statements estimating iron ore pellet production orshipments, are based on information from the lessee/operator (and its parentcorporation) of the mine located on the lands owned and held in trust for thebenefit of the holders of units of beneficial interest of Mesabi Trust.  These statements may be identified by the useof forward-looking words, such as “may,” “will,” “could,” “project,” “predict,”“intend,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,”“plan,” “should,” “assume,” “forecast” and other similar words.  Such forward-looking statements areinherently subject to known and unknown risks and uncertainties.  Actual results and future developments coulddiffer materially from the results or developments expressed in or implied bythese forward-looking statements.  Theserisks and uncertainties include volatility of iron ore and steel prices,product supply and demand, competition, regulation or government action,litigation and uncertainties about estimates of reserves.  Further, substantial portions of royaltiesearned by Mesabi Trust are based on estimated prices that are subject tointerim and final adjustments which can be positive or negative and aredependent in part on multiple price and inflation index factors that are notknown until after the end of a contract year. For adiscussion of the factors, including but not limited to, those that couldmaterially and adversely affect Mesabi Trust’s actual results and performance,see “Risk Factors” in Part I – Item 1A of Mesabi Trust’s Annual Report on Form10-K for the year-ended January 31, 2008. Mesabi Trust undertakes no obligation, other than that imposed by law,to make any revisions to the forward-looking statements contained in thisfiling or to update them to reflect circumstances occurring after the date ofthis filing.

 

**Background**

 

Mesabi Trust (“MesabiTrust” or the “Trust”), formed pursuant to an Agreement of Trust dated July 18,1961 (the “Agreement of Trust”), is a trust organized under the laws of theState of New York.  Mesabi Trust holdsall of the interests formerly owned by Mesabi Iron Company (“MIC”), includingall right, title and interest in the Amendment of Assignment, Assumption andFurther Assignment of Peters Lease (the “Amended Assignment of Peters Lease”),the Amendment of Assignment, Assumption and Further Assignment of Cloquet Lease(the “Amended Assignment of Cloquet Lease” and together with the AmendedAssignment of Peters Lease, the “Amended Assignment Agreements”), thebeneficial interest in the Mesabi Land Trust (as such term is defined below)and all other assets and property identified in the Agreement of Trust. TheAmended Assignment of Peters Lease relates to an Indenture made as of April 30,1915 among East Mesaba Iron Company (“East Mesaba”), Dunka River Iron Company (“DunkaRiver”) and Claude W. Peters (the “Peters Lease”) and the Amended Assignment ofCloquet Lease relates to an Indenture made May 1, 1916 between CloquetLumber Company and Claude W. Peters (the “Cloquet Lease”).

 

The Agreement ofTrust specifically prohibits the Trustees from entering into or engaging in anybusiness.  This prohibition applies evento business activities the Trustees may deem necessary or proper for thepreservation and protection of the Trust Estate.  Accordingly, the Trustees’ activities inconnection with the administration of Trust assets are limited to collectingincome, paying expenses and liabilities, distributing net income to the holdersof Certificates of Beneficial Interest in Mesabi Trust (“Unitholders”) afterthe payment of, or provision for, such expenses and liabilities, and protectingand conserving the assets held.

 

The Trustees donot intend to expand their responsibilities beyond those permitted or requiredby the Agreement of Trust, the Amendment to the Agreement of Trust dated October 25,1982 (the 

 

6

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“Amendment”),and those required under applicable law. Mesabi Trust has no employees, but it engages independent consultants toassist the Trustees in, among other things, monitoring the volume and salesprices of iron ore products shipped from Silver Bay, Minnesota, based oninformation supplied to the Trustees by Northshore Mining Company (“Northshore”),the lessee/operator of the Mesabi Trust lands, and its parent companyCleveland-Cliffs Inc (“CCI”).  Referencesto Northshore in this quarterly report, unless the context requires otherwise,are applicable to CCI as well.

 

Leaseholdroyalty income constitutes the principal source of the Trust’s revenue.  Royalty rates are determined in accordancewith the terms of Mesabi Trust’s leases and assignments of leases.

 

Three types ofroyalties, as well as royalty bonuses, comprise the Trust’s leasehold royaltyincome:

 

·                  Base overriding royalties. Base overriding royalties have historically constituted the majority ofMesabi Trust’s royalty income.  Baseoverriding royalties are determined by both the volume and selling price ofiron ore products shipped.  Northshore isobligated to pay Mesabi Trust base overriding royalties in varying amounts,based on the volume of iron ore products shipped.  Base overriding royalties are calculated as apercentage of the gross proceeds of iron ore products produced at Mesabi Trustlands (and to a limited extent other lands) and shipped from Silver Bay,Minnesota.  The percentage ranges from2-1/2% of the gross proceeds for the first one million tons of iron oreproducts so shipped annually to 6% of the gross proceeds for all iron ore productsin excess of 4 million tons so shipped annually.  Base overriding royalties are subject toprice adjustments under the CCI Pellet Agreements and, as described elsewherein this report, such adjustments may be positive or negative.  See the section entitled “Royalty Comparisons”below for more information.

 

·                  Royalty bonuses.  TheTrust earns royalty bonuses when iron ore products shipped from Silver Bay aresold at prices above a threshold price per ton. The royalty bonus is based on a percentage of the gross proceeds ofproduct shipped from Silver Bay and sold at prices above a thresholdprice.  The threshold price is adjusted(but not below $30.00 per ton) on an annual basis for inflation and deflation(the “Adjusted Threshold Price”).  TheAdjusted Threshold Price was $45.98 per ton for calendar year 2007 and is$47.43 per ton for calendar year 2008. The royalty bonus percentage ranges from 1/2 of 1% of the gross proceeds(on all tonnage shipped for sale at prices between the Adjusted Threshold Priceand $2.00 above the Adjusted Threshold Price) to 3% of the gross proceeds (onall tonnage shipped for sale at prices $10.00 or more above the AdjustedThreshold Price).  Royalty bonuses aresubject to price adjustments under the CCI Pellet Agreements and, as describedelsewhere in this report, such adjustments may be positive or negative.  See the section entitled “Royalty Comparisons”below for more information.

 

·                  Fee royalties.  Feeroyalties have historically constituted a smaller component of the Trust’stotal royalty income.  Fee royalties arepayable to the Mesabi Land Trust, a Minnesota land trust, which holds a 20%interest as fee owner in the Amended Assignment of the Peters Lease.  Mesabi Trust holds the entire beneficialinterest in the Mesabi Land Trust for which U.S. Bank N.A. acts as thecorporate trustee.  Mesabi Trust receives the netincome of the Mesabi Land Trust, which is generated from royalties on theamount of crude ore mined after the payment of expenses to U.S. Bank N.A. forits services as corporate trustee.  Crudeore is the source of iron oxides used to make iron ore pellets and otherproducts.  The fee royalty on crude oreis based on an agreed price per ton, subject to certain indexing.

 

·                  Minimum advance royalties. Generally, Northshore’s obligation to pay base overriding royalties androyalty bonuses with respect to the sale of iron ore products accrues upon theshipment of those products from Silver Bay. However, regardless of whether any shipment has occurred, Northshore isobligated to pay to Mesabi Trust a minimum advance royalty.  Each year, the amount of the minimum advanceroyalty is adjusted (but not below $500,000 per annum) for inflation anddeflation.  The 

 

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minimum advanceroyalty was $766,510 for calendar year 2007 and is $790,721 for calendar year2008.  Until overriding royalties (androyalty bonuses, if any) for a particular year equal or exceed the minimumadvance royalty for the year, Northshore must make quarterly payments of up to25% of the minimum advance royalty for the year.  Because minimum advance royalties areessentially prepayments of base overriding royalties and royalty bonuses earnedeach year, any minimum advance royalties paid in a fiscal quarter are recoupedby credits against base overriding royalties and royalty bonuses earned inlater fiscal quarters during the year.

 

Under therelevant agreements, Northshore may mine and ship iron ore products from landsother than Mesabi Trust lands. Northshore alone determines whether to mine off Trust and/or such otherlands, based on its current mining and engineering plan.  The Trustees do not exert any influence overmining operational decisions.  Toencourage the use of iron ore products from Mesabi Trust lands, Mesabi Trustreceives 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 thegreater of (i) the aggregate quantity of iron ore products shipped thatwere from Mesabi Trust lands, and (ii) a portion of the aggregate quantityof all iron ore products shipped from Silver Bay that were mined from anylands, such portion being 90% of the first four million tons shipped duringsuch year, 85% of the next two million tons shipped from Silver Bay during suchyear, and 25% of all tonnage shipped during such year in excess of six milliontons.

 

Northshore isobligated to make quarterly royalty payments in January, April, July and October ofeach year based on shipments of iron ore products from Silver Bay, Minnesotaduring each calendar quarter.  The Trustaccounts and reports accrued income receivable based on shipments during thelast month of the Trust’s fiscal quarter (April, July, October andJanuary) even though such accrued income receivable is not available fordistribution to unitholders until it is received by the Trust.  The Trust declares distributions each year inApril, July, October and January. Distributions are declared after receiving notification from NorthshoreMining Company as to the amount of royalty income that is expected to be paidto the Trust based on shipments through the end of each calendar quarter.  Accordingly, distributions declared by theTrust are not equivalent to the Trust’s Net Income during the periods reportedin this quarterly report on Form 10-Q.

 

Deutsche BankTrust Company Americas, the Corporate Trustee, performs certain administrativefunctions for Mesabi Trust.  The Trustmaintains a website at www.mesabi-trust.com. The Trust makes available (free ofcharge) its annual, quarterly and current reports (and any amendments thereto)filed with the Securities and Exchange Commission (the “SEC”) through itswebsite as soon as reasonably practicable after electronically filing orfurnishing such material with or to the SEC.

 

**Results of Operations**

 

**Comparison of Iron Ore Pellet Production and Shipmentsfor the Three and Six Months Ended July 31, 2008 and July 31, 2007**

 

As shown in thetable below, production of iron ore pellets from Mesabi Trust lands during thefiscal quarter ended July 31, 2008 totaled approximately 1.47 milliontons, and actual shipments over the same period totaled approximately 2.55million tons.  By comparison, productionof iron ore pellets from Mesabi Trust lands during the same period in 2007totaled approximately 1.25 million tons, and actual shipments approximated 1.12million tons.

 

8

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| **Three Months Ended** | ** ** | **Pellets Produced from  Trust Lands (tons)** | ** ** | **Shipments from Trust  Lands (tons)** | ** ** |
|----------------------------------|------------|-------------------------------------------------------------------|------------|-------------------------------------------------------|------------|
| July 31, 2008               |       | 1,473,683                                                         |       | 2,548,888                                             |       |
| July 31, 2007               |       | 1,255,510                                                         |       | 1,119,828                                             |       |

 

As shown in the table below, during the six monthsended July 31, 2008, production of iron ore pellets from Mesabi Trustlands totaled approximately 2.69 million tons, and actual shipments over thesame period totaled approximately 3.59 million tons.  By comparison, production of iron ore pelletsfrom Mesabi Trust lands during the same period in 2007 totaled approximately2.21 million tons, and actual shipments approximated 1.59 million tons.

 
| **Six Months Ended** | ** ** | **Pellets Produced from  Trust Lands (tons)** | ** ** | **Shipments from Trust  Lands (tons)** | ** ** |
|--------------------------------|------------|-------------------------------------------------------------------|------------|-------------------------------------------------------|------------|
| July 31, 2008             |       | 2,689,784                                                         |       | 3,589,002                                             |       |
| July 31, 2007             |       | 2,209,067                                                         |       | 1,589,298                                             |       |

 

**Comparison of Royalty Income for the Three and SixMonths Ended July 31, 2008 and July 31, 2007**

 

Base overridingroyalties for the three months ended July 31, 2008 increased by 310% to$10,156,568 as compared to the three months ended July 31, 2007.  At the same time, bonus royalties increasedby 220% to $6,451,312 as compared to the three months ended July 31,2007.  The increase in the baseoverriding and bonus royalties is the result of a significant increase in the volumeof shipments and an increase in the sales prices of iron ore products whichexceeded the 2008 Adjusted Threshold Price of $47.43 per ton by a wider marginas compared to the comparable prior period. Consequently, total royalty income for the three months ended July 31,2008 increased 279% to $16,766,563 as compared to the three months ended July 31,2007.  The following table provides asummary of Mesabi Trust’s royalty income for the three months ended July 31,2008 and July 31, 2007:

 
| ** **                              | ** ** | **Three Months Ended July 31,** | ** ** |
|-----------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                            | ** ** | **2007** | ** ** |
| Base overriding royalties               |       | $                                                   | 10,156,568 |   | $ | 2,479,304 |   |
| Bonus royalties                         |       | 6,451,312                                           |       | 2,016,291 |   |
| Minimum advance royalty paid (recouped) |       | —                                              |       | (191,628 | ) |
| Fee royalties                           |       | 158,683                                             |       | 123,069 |   |
| **Total royalty income**                |       | $                                                   | 16,766,563 |   | $ | 4,427,036 |   |

 

Base overriding royaltiesfor the six months ended July 31, 2008 increased by 297% to $11,912,740 ascompared to the six months ended July 31, 2007.  At the same time, bonus royalties increasedby 182% to $8,410,036 as compared to the six months ended July 31,2007.  As was the case for the threemonths ended July 31, 2008, the increase in the base overriding and bonusroyalties for the six months ended July 31, 2008 is the result of asignificant increase in the volume of shipments and an increase in the salesprices of iron ore products which exceeded the 2008 Adjusted Threshold Price of$47.43 per ton by a wider margin as compared to the comparable priorperiod.  Consequently, total 

 

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royalty income for the six months ended July 31, 2008 increasedapproximately 232% to $20,614,273, as compared to the six months ended July 31,2007.  The following table provides asummary of Mesabi Trust’s royalty income for the six months ended July 31,2008 and July 31, 2007:

 
| ** **                              | ** ** | **Six Months Ended July 31,** | ** ** |
|-----------------------------------------|------------|---------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                          | ** ** | **2007** | ** ** |
| Base overriding royalties               |       | $                                                 | 11,912,740 |   | $ | 3,004,080 |   |
| Bonus royalties                         |       | 8,410,036                                         |       | 2,983,348 |   |
| Minimum advance royalty paid (recouped) |       | —                                            |       | — |   |
| Fee royalties                           |       | 291,497                                           |       | 218,749 |   |
| **Total royalty income**                |       | $                                                 | 20,614,273 |   | $ | 6,206,177 |   |

 

**Comparison of Trust Incomefor the Three and Six Months Ended July 31, 2008 and July 31, 2007**

 

Net income for the three months ended July 31,2008 was $16,570,317 an increase of approximately 297% as compared to netincome of $4,174,139 for the three months ended July 31, 2007.  This increase was due to increases in thebase overriding royalties paid to the Trust, resulting from a significantincrease in the volume of shipments, and higher bonus royalties during thequarter due to higher pellet prices. In addition, Trust expenses decreased by23% as compared to the three months ended July 31, 2007 primarily becauseof a decrease in the Trust’s professional service fees that were accrued forduring the three months ended April 30, 2008. The following table providesa summary of Mesabi Trust’s results for the three months ended July 31,2008 and July 31, 2007:

 
| ** **           | ** ** | **Three Months Ended July 31,** | ** ** |
|----------------------|------------|-----------------------------------------------------|------------|
| ** **           | ** ** | **2008**                                            | ** ** | **2007** | ** ** |
| Total royalty income |       | $                                                   | 16,766,563 |   | $ | 4,427,036 |   |
| Interest income      |       | 5,240                                               |       | 8,448 |   |
| Gross income         |       | 16,771,803                                          |       | 4,435,484 |   |
|                 |       |                                                |       |   |   |
| Expenses             |       | 201,486                                             |       | 261,345 |   |
| Net income           |       | $                                                   | 16,570,317 |   | $ | 4,174,139 |   |

 

Net income forthe six months ended July 31, 2008 was $20,209,970, an increase ofapproximately 244% as compared to net income of $5,873,756 for the six monthsended July 31, 2007. As was the case for the three months ended July 31,2008, this increase was due to the increase in the base overriding royaltiespaid to the Trust, resulting from a significant increase in the volume ofshipments, and higher bonus royalties during the quarter due to higher pelletprices.  Trust expenses increased by 22%as compared to the six months ended July 31, 2007 primarily because of anincrease the Trust’s operating expenses, including professional servicefees.   The following table provides asummary of Mesabi Trust’s results for the six months ended July 31, 2008and July 31, 2007:

 

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| ** **           | ** ** | **Six Months Ended July 31,** | ** ** |
|----------------------|------------|---------------------------------------------------|------------|
| ** **           | ** ** | **2008**                                          | ** ** | **2007** | ** ** |
| Total royalty income |       | $                                                 | 20,614,273 |   | $ | 6,206,177 |   |
| Interest income      |       | 19,337                                            |       | 14,362 |   |
| Gross income         |       | 20,633,610                                        |       | 6,220,539 |   |
|                 |       |                                              |       |   |   |
| Expenses             |       | 423,640                                           |       | 346,783 |   |
| Net income           |       | $                                                 | 20,209,970 |   | $ | 5,873,756 |   |

 

**UnallocatedReserve**

 

The Unallocated Reserve as of July 31, 2008 was$7,175,579, an increase of 205% as compared to the $2,355,828 in UnallocatedReserve as of July 31, 2007.  Theincrease in the Unallocated Reserve is the result of a significant increase inthe royalty revenue accrued on the Trust’s balance sheet at the end of thefiscal quarter ended July 31, 2008, but not yet paid to the Trust, and anincrease in the unallocated cash and U.S. Government securities held by theTrust.  At July 31, 2008,$6,453,966, or approximately 90% of the Unallocated Reserve was accrued incomereceivable, representing royalties not yet received by the Trust butanticipated to be received from Northshore in October 2008 for shipmentsduring the third calendar quarter.  Bycomparison, at July 31, 2007, $1,756,107, or approximately 75% of theUnallocated Reserve was accrued income receivable. The significant increase inaccrued income receivable, which is based upon reported lessee shippingactivity for the month of July 2008, is reflected on the Trust’s balancesheet at July 31, 2008 and at July 31, 2007.  The Trustees anticipate that substantiallyall of the $6,453,966 in accrued income receivable will be distributed toUnitholders in October 2008, after the Trustees provide for expenses andunexpected loss contingencies.

 

The Trusteeshave determined that a portion of the Unallocated Reserve, usually within therange of $500,000 to $1,000,000 or such other amount as the Trustees may deemprudent, should be maintained for unexpected loss contingencies.  As of July 31, 2008, $721,613, or 10% ofthe Unallocated Reserve, was represented by unallocated cash and U.S.Government securities, whereas, at July 31, 2007, $599,721, or 25% of theUnallocated Reserve was unallocated cash and U.S. Government securities.

 

The Trust’sUnallocated Reserve for the six months ended July 31, 2008 increased 332%or $5,515,558 as compared to the Unallocated Reserve at January 31,2008.  This increase in the UnallocatedReserve is primarily due to the accrual of royalty income for shipments fromNorthshore during the month of July 2008. At January 31, 2008, approximately 58% of the Unallocated Reserveor $959,925 was represented by accrued income receivable while 42% or $700,096was represented by unallocated cash and U.S. Government securities.

 

The Trusteeswill continue to monitor the economic circumstances of the Trust to strike aresponsible balance between distributions to Unitholders and the need tomaintain reserve for unexpected loss contingencies at a prudent level, giventhe unpredictable nature of the iron ore industry, the Trust’s dependence onthe actions of the lessee/operator, and the fact that the Trust essentially hasno other liquid assets.

 

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Although the actual amount of the UnallocatedReserve will fluctuate from time to time, and may increase or decrease from itscurrent level, it is currently intended that future distributions will behighly dependent upon royalty income as it is received and the level of Trustexpenses.  The amount of future royaltyincome available for distribution will be subject to the volume of iron oreproduct shipments and the dollar level of sales by Northshore.

 

**Recent Developments**

 

***Production and Shipments***. During calendar years 2007, 2006, 2005, 2004 and 2003, the percentage ofshipments of iron ore products from Mesabi Trust lands was approximately 88.2%,90.9%, 90.1%, 92.0% and 95.5%, respectively, of total shipments.  In its Form 10-Q filed May 6, 2008,CCI reported that it is estimating total production of 5.7 million tons of ironore pellets at Northshore during calendar year 2008.   Northshore has not advised the Trustees asto the percentage of iron ore products from Mesabi Trust lands it anticipatesshipping in calendar year 2008.  See thedescription of the uncertainty of market conditions in the iron ore and steelindustry under “Important Factors Affecting Mesabi Trust” below and theinformation under the heading “Risk Factors” in Part I – Item 1A of theTrust’s Annual Report on Form 10-K for the year-ended January 31,2008.

 

***NorthshoreAdministrative Permit Amendment***.   As reported inthe Trust’s Form 10-K filed April 11, 2008, according to CCI’s Form 10-Kfiled February 29, 2008, on December 16, 2006, CCI submitted an administrativepermit amendment application to the Minnesota Pollution Control Agency (“MPCA”)with respect to Northshore’s Title V operating permit.  CCI reported that Northshore requested anamendment to its permit to delete a 30 year old “control city” monitoringrequirement but the MPCA denied Northshore’s application on February 23,2007.   In its Form 10-K, CCIfurther reported that it had appealed the denial of its application to theMinnesota Court of Appeals and that subsequent to the filing of the appeal, theMPCA advised Northshore that the MPCA considered Northshore to be in violationof the control city standard. CCI also reported that it was in discussions withthe MPCA with respect to the terms of a compliance schedule in which it wouldagree to take certain actions in settlement of the alleged violation.  According to CCI’s Form 10-K, theMinnesota Center for Environmental Advocacy had since filed a motion with theCourt of Appeals to intervene in Northshore’s appeal of the denial of anadministrative amendment to Northshore’s Title V operating permit.

 

On May 20, 2008, theMinnesota Court of Appeals issued a ruling on Northshore’s appeal and held thatthe MPCA did not err in concluding that Northshore proceeded under the wrongpermit modification procedures when it applied to amend its permit to eliminatethe “control city” standard from its Title V operating permit.  The Minnesota Court of Appeals ruled thatNorthshore’s administrative amendment application should have been dealt withthrough the major permit amendment process rather than through theadministrative permit amendment process, which is used to address insignificantamendments.  The Trustees are unable topredict what impact the administrative proceedings discussed above will have onNorthshore’s compliance with its Title V operating permit or on futureroyalties payable to the Trust.

 

***NorthshoreNotice of Violation. ***In its Form 10-Q filed July 31,2008, CCI reported that on July 28, 2008, the MPCA issued a Notice ofViolation (“NOV”) to Northshore alleging violations related to the Control CityStandard for the period of March 2006 through October 2007,specifically with respect to MPCA’s interpretation of the Control City Standard’semission limits and related monitoring and reporting requirements. CCI reportedthat the NOV states that Northshore has been in compliance with MPCA’sinterpretation of the Standard since October 2007, but requires correctiveactions relating to operating and maintaining facilities of treatment and controlto remain in compliance. Although the NOV does not seek civil penalties, itcontains various requests for information and reserves the right for MPCA totake further action. CCI also reported that Northshore disputes the allegationscontained in the NOV and that it is currently assessing itslegal/administrative options.  TheTrustees are unable to predict what impact, if any, the NOV may have onNorthshore’s operations or on future royalties payable to the Trust.

 

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**Important FactorsAffecting Mesabi Trust**

 

The Agreement of Trust specifically prohibits theTrustees from entering into or engaging in any business.  This prohibition seemingly applies even tobusiness activities the Trustees deem necessary or proper for the preservationand protection of the Trust Estate (as such term is defined below).  Accordingly, the Trustees’ activities inconnection with the administration of Trust assets are limited to collectingincome, paying expenses and liabilities, distributing net income to MesabiTrust’s Unitholders after the payment of, or provision for, such expenses andliabilities, and protecting and conserving the assets held.  Consequently, the income of Mesabi Trust ishighly dependent upon the activities and operations of Northshore, and theterms and conditions of the leases and assignments of leases between MesabiTrust and Northshore.  Moreover, shippingactivity is greatly reduced during the winter months and economic conditions,particularly those affecting the steel industry, may adversely affect theamount and timing of such future shipments and sales.  For a discussion of additional factors,including but not limited to those that could adversely affect Mesabi Trust’sactual results and performance, see “Risk Factors” in Part I – Item 1A ofMesabi Trust’s Annual Report on Form 10-K for the year-ended January 31,2008.

 

Neither MesabiTrust nor the Trustees have any control over the operations and activities ofNorthshore, except within the framework of the Amended AssignmentAgreements.  CCI alone controls (i) historicaloperating data, including iron ore production volumes, marketing of iron oreproducts, operating and capital expenditures as they relate to Northshore,environmental and other liabilities and the effects of regulatory changes; (ii) plansfor Northshore’s future operating and capital expenditures; (iii) geologicaldata relating to reserves (iv) projected production of iron ore products;and (v) the decision to mine off Mesabi Trust and/or state lands, based onCCI’s current mining and engineering plan. The Trustees do not exert any influence over mining operationaldecisions at Northshore, nor do the Trustees provide any input regarding theore reserve estimate at Northshore as reported by CCI.  While the Trustees request materialinformation for use in periodic reports as part of their evaluation of MesabiTrust’s disclosure controls and procedures, the Trustees do not control thisinformation and they rely on the information in CCI’s periodic and currentfilings with the SEC to provide accurate and timely information in Mesabi Trust’sreports filed with the SEC.

 

In accordancewith the Agreement of Trust and the Amendment, the Trustees are entitled to,and in fact do, rely upon certain experts in good faith, including (i) theindependent consultants with respect to monthly production and shipmentreports, which include figures on crude ore production and iron ore pelletshipments, and discussions concerning the condition and accuracy of the scalesand plans regarding the development of Mesabi Trust’s mining property; and (ii) theaccounting firm they have contracted with for non-audit services, includingreviews of financial data related to shipping and sales reports provided byNorthshore and a review of the schedule of leasehold royalties payable toMesabi Trust.

 

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**Iron Ore Pricing and Contract Adjustments**

 

During the course of itsfiscal year some portion of the royalties paid to Mesabi Trust are based onestimated prices for iron ore products sold under term contracts between CCIand its subsidiaries and certain of their customers (the “CCI Pellet Agreements”).Mesabi Trust is not a party to any of the CCI Pellet Agreements. These pricesare subject to interim and final pricing adjustments, which can be positive ornegative, and which adjustments are dependent in part on a variety of price andinflation index factors, including but not limited to the internationalbenchmark pellet price, hot band steel prices and various Producer PriceIndexes. Although Northshore makes interim adjustments to the royalty paymentson a quarterly basis, these price adjustments cannot be finalized until afterthe end of a contract year. This may result in significant and frequentvariations in royalties received by Mesabi Trust (and in turn the resultingamount of funds available for distribution to Unitholders by the Trust) fromquarter to quarter and on a comparative historical basis, and these variations,which can be positive or negative, cannot be predicted by Mesabi Trust.

 

**Effects of Securities Regulation**

 

The Trust is a publicly-traded trust listed on theNew York Stock Exchange (“NYSE”) and is therefore subject to extensiveregulation under, among others, the Securities Act of 1933, the SecuritiesExchange Act of 1934, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and therules and regulations of the NYSE. Issuers failing to comply with such authorities risk seriousconsequences, including criminal as well as civil and administrativepenalties.  In most instances, theselaws, rules and regulations do not specifically address theirapplicability to publicly-traded trusts such as Mesabi Trust.  In particular, Sarbanes-Oxley mandated theadoption by the Securities and Exchange Commission (the “SEC”) and NYSE ofcertain rules and regulations that are impossible for the Trust toliterally satisfy because of its nature as a pass-through trust.  Pursuant to NYSE rules currently ineffect, the Trust is exempt from many of the corporate governance requirementsthat apply to publicly traded corporations. The Trust does not have, nor does the Agreement of Trust provide for, aboard of directors, an audit committee, a corporate governance committee or acompensation committee.  The Trusteesintend to closely monitor the SEC’s and the NYSE’s rulemaking activity and willattempt to comply with such rules and regulations where applicable.

 

In May 2008, the Trust established a websitein response to the NYSE’s interpretation of Rule 203.01 of the NYSE ListedCompany Manual.  The Trust’s website is located atwww.mesabi-trust.com.

 

**Critical Accounting Policies**

 

This “Trustees’Discussion and Analysis of Financial Condition and Results of Operations” isbased upon the Trust’s financial statements, which have been prepared inaccordance with accounting principles generally accepted in the UnitedStates.  The preparation of thesefinancial statements requires the Trustees to make estimates and judgments thataffect the reported amounts of assets, liabilities, revenues and expenses, andrelated disclosure of contingent assets and liabilities.  These estimates form the basis for makingjudgments about the carrying value of assets and liabilities that are notreadily apparent from other sources.  TheTrustees base their estimates and judgments on historical experience and onvarious other assumptions that the Trustees believe are reasonable under thecircumstances.  However, future eventsare subject to change and the best estimates and judgments may requireadjustment.

 

Criticalaccounting policies are those that have meaningful impact on the reporting ofthe Trust’s financial condition and results, and that require significantmanagement judgment and estimates.  TheTrustees have determined that there are no critical accounting policies.

 

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**Item3.  Quantitative and QualitativeDisclosures About Market Risk.**

 

Not applicable.

 

**Item 4.  Controls and Procedures.**

 

***Evaluation of Disclosure Controlsand Procedures******. ***The Trustees maintain disclosurecontrols and procedures designed to ensure that information required to bedisclosed by the Trust in the reports that it files or submits under theSecurities Exchange Act of 1934, as amended, is recorded, processed, summarizedand reported within the time periods specified in the rules andregulations of the Securities and Exchange Commission.  Disclosure controls and procedures includecontrols and procedures designed to ensure that information required to bedisclosed by the Trust is accumulated and communicated by Northshore, andconsultants to the Trustees as appropriate, to allow timely decisions regardingrequired disclosure.

 

As part of theirevaluation of the Trust’s disclosure controls and procedures, the Trustees relyon quarterly shipment and royalty calculations provided by Northshore.  Because Northshore has declined to supportthis information with a written certification attesting to whether Northshorehas established disclosure controls and procedures and internal controlssufficient to enable it to verify that the information furnished to theTrustees is accurate and complete, the Trustees also rely on (a) an annualcertification from Northshore and Northshore’s parent, CCI, certifying as tothe accuracy of the royalty calculations, and (b) the related duediligence review performed by the Trust’s external accountants.  In addition, the Trust’s consultants reviewthe schedule of leasehold royalties payable and shipping and sales reportsprovided by Northshore against production and shipment reports prepared by theEveleth Fee Office, Inc., an independent consultant to the Trust (“EvelethFee Office”). The Eveleth Fee Office gathers production and shippinginformation from Northshore and prepares monthly production and shipmentreports for the Trustees. Furthermore, as part of its engagement by the Trust,the Eveleth Fee Office also attends Northshore’s calibration and testing of itscrude ore scales and boat loader scales which are conducted on a periodicbasis.

 

As of the end ofthe period covered by this report, the Trustees carried out an evaluation ofthe Trust’s disclosure controls and procedures. The Trustees have concluded that such disclosure controls and proceduresare effective.

 

***Changes in Internal Control OverFinancial Reporting******.***  To the knowledge of theTrustees, there has been no change in the Trust’s internal control overfinancial reporting that occurred during the Trust’s last fiscal quarter thathas materially affected, or is likely to materially affect, the Trust’sinternal control over financial reporting. The Trustees note for purposes of clarification that they have noauthority over, and make no statement concerning, the internal controls ofNorthshore or CCI.

 

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**PART II - OTHER INFORMATION**

 
| **Item 1A.** | ** ** | **Risk Factors**                                                                                                                                                                                                                    |
|--------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                                                                                                                |
|         |       | There have been no material changes in the Trust’s  risk factors as described in Part I Item 1A, “Risk Factors” in the  Trust’s Annual Report on Form 10-K for the year ended January 31,  2008. |
|         |       |                                                                                                                                                                                                                                |
| **Item 6.**  | ** ** | **Exhibits.**                                                                                                                                                                                                                       |
|         |       |                                                                                                                                                                                                                                |
|         |       | 31                                                                                                                                                                                                                                  | Certification of Corporate Trustee of Mesabi Trust  pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as  adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|         |       |                                                                                                                                                                                                                                |   |
|         |       | 32                                                                                                                                                                                                                                  | Certification of Corporate Trustee of Mesabi Trust  pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002. |
|         |       |                                                                                                                                                                                                                                |   |
|         |       | 99.1                                                                                                                                                                                                                                | Report of Gordon, Hughes & Banks, LLP,  dated September 5, 2008 regarding its review of the unaudited interim  financial statements of Mesabi Trust as of and for the quarter ended  July 31, 2008. |

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|                               | MESABI TRUST                                                      |
|------------------------------------|-------------------------------------------------------------------|
|                               | (Registrant)                                                      |
|                               |                                                              |
|   September 5, 2008 | By:                                                               | DEUTSCHE BANK TRUST COMPANY  AMERICAS |
|                               |                                                              | Corporate Trustee |
|                               | Principal Administrative Officer and duly authorized  signatory:* |
|                               |                                                              |   |
|                               | By:                                                               | DEUTSCHE BANK NATIONAL TRUST  COMPANY |
|                                    |                                                                   |  |  |

 

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* There are noprincipal executive officers or principal financial officers of the registrant.

 

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