10-Q

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 June 30, 2011

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 incorporation or organization)	(I.R.S. Employer 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 June 30, 2011:      1,500,000

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

GREAT NORTHERN IRON ORE PROPERTIES

CONDENSED BALANCE SHEETS

	June 30 2011		December 31 2010
ASSETS	(Unaudited)		(Note)
CURRENT ASSETS
Cash and cash equivalents	$	805,039	$	668,310
United States Treasury securities		4,039,117		5,013,272
Royalties receivable		6,282,003		6,041,224
Prepaid expenses		50,986		4,519
TOTAL CURRENT ASSETS		11,177,145		11,727,325
NONCURRENT ASSETS
United States Treasury securities		5,130,100		3,025,924
PROPERTIES
Mineral and surface lands		39,304,058		39,127,058
Less: Allowances for accumulated depletion and amortization		-36,908,377		-36,614,977
		2,395,681		2,512,081
Building and equipment		313,831		313,831
Less: Allowances for accumulated depreciation		-211,890		-196,069
		101,941		117,762
TOTAL PROPERTIES		2,497,622		2,629,843
TOTAL ASSETS	$	18,804,867	$	17,383,092
LIABILITIES AND BENEFICIARIES' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	140,904	$	111,556
Distributions		4,500,000		5,625,000
TOTAL CURRENT LIABILITIES		4,640,904		5,736,556
NONCURRENT LIABILITIES
Deferred compensation		181,500		181,500
Liability for pension benefits		1,432,272		1,349,314
TOTAL NONCURRENT LIABILITIES		1,613,772		1,530,814
TOTAL LIABILITIES		6,254,676		7,267,370
BENEFICIARIES' EQUITY, including certificate holders' equity, represented by 1,500,000 certificates (shares or units) of beneficial interest authorized and outstanding, and the reversionary interest		14,477,089		12,204,529
Accumulated other comprehensive loss		-1,926,898		-2,088,807
TOTAL BENEFICIARIES' EQUITY		12,550,191		10,115,722
TOTAL LIABILITIES AND BENEFICIARIES' EQUITY	$	18,804,867	$	17,383,092

Note:  The balance sheet at December 31, 2010, 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.

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GREAT NORTHERN IRON ORE PROPERTIES

CONDENSED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30						Six Months Ended June 30
	2011			2010			2011			2010
REVENUES
Royalties	$	6,543,197		$	5,256,998		$	11,957,873		$	8,344,856
Interest and other income		28,640			31,732			62,858			114,054
		6,571,837			5,288,730			12,020,731			8,458,910
Costs and expenses		-918,969			-844,954			-1,873,171			-1,694,112
NET INCOME	$	5,652,868		$	4,443,776		$	10,147,560		$	6,764,798
Weighted-average shares outstanding		1,500,000			1,500,000			1,500,000			1,500,000
BASIC & DILUTED EARNINGS PER SHARE	$	3.77		$	2.96		$	6.77		$	4.51
Distributions declared per share	$	3.00	(1)	$	2.75	(2)	$	5.25	(3)	$	4.75	(4)

(1)	$3.00	declared	6/10/2011
		payable	7/29/2011
(2)	$2.75	declared	6/7/2010
		paid	7/30/2010
(3)	$2.25	declared	3/10/2011	plus	$3.00	declared	6/10/2011
		paid	4/29/2011			payable	7/29/2011
(4)	$2.00	declared	3/22/2010	plus	$2.75	declared	6/7/2010
		paid	4/30/2010			paid	7/30/2010

See notes to condensed financial statements.

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GREAT NORTHERN IRON ORE PROPERTIES

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30
	2011		2010
Cash flows from operating activities:
Cash received from royalties and rents	$	11,575,918	$	6,752,609
Cash paid to suppliers and employees		-1,336,202		-1,224,493
Interest and related premium/discount (paid) received		-2,987		58,696
NET CASH PROVIDED BY OPERATING ACTIVITIES		10,236,729		5,586,812
Cash flows from investing activities:
U.S. Treasury securities purchased		-4,425,000		-500,000
U.S. Treasury securities matured		3,325,000		1,500,000
Expenditures for building and equipment		0		-11,303
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		-1,100,000		988,697
Cash flows from financing activities:
Distributions paid		-9,000,000		-6,900,000
NET CASH USED IN FINANCING ACTIVITIES		-9,000,000		-6,900,000
Net increase (decrease) in cash and cash equivalents		136,729		-324,491
Cash and cash equivalents at beginning of year		668,310		924,234
CASH AND CASH EQUIVALENTS AT JUNE 30	$	805,039	$	599,743

See notes to condensed financial statements.

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GREAT NORTHERN IRON ORE PROPERTIES

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Periods of Three and Six Months ended June 30, 2011 and June 30, 2010

Note 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with 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 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 (“Trust”) Annual Report on Form 10-K for the year ended December 31, 2010. 

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 recognized as current assets will mature within one year of the respective period ending date stated below.  Securities recognized as noncurrent assets will mature one to three years from the respective period ending date stated below.  Following is an analysis of the securities as of the periods stated:

	Current				Noncurrent
	June 30, 2011		Dec. 31, 2010		June 30, 2011		Dec. 31, 2010
Aggregate fair value	$	4,037,216	$	5,017,250	$	5,121,373	$	3,014,093
Gross unrealized holding gains		-5,473		-13,938		-11,256		-3,358
Gross unrealized holding losses		—		—		630		4,732
Amortized cost basis		4,031,743		5,003,312		5,110,747		3,015,467
Accrued interest		7,374		9,960		19,353		10,457
Amounts shown on balance sheets	$	4,039,117	$	5,013,272	$	5,130,100	$	3,025,924

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Note 3 – PENSION PLAN

A summary of the components of net periodic pension cost is as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
Service cost	$	69,912	$	61,606	$	139,824	$	123,212
Interest cost		79,965		79,667		159,930		159,334
Expected return on assets		–108,398		–96,746		–216,796		–193,492
Amortization of net loss		76,587		54,428		153,174		108,857
Amortization of prior service cost		4,368		4,368		8,735		8,735
Net periodic pension cost	$	122,434	$	103,323	$	244,867	$	206,646

The plan’s annual actuarial valuation was performed as of the plan’s fiscal year-end March 31.  The actuarially recommended contribution to the pension plan for 2011 is $551,124, which contribution is scheduled to be made in August 2011.

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 United States 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 as of June 30, 2011:

Attorneys’ fees and expenses	$	1,024,834
Costs of surface lands .		6,431,165
Cumulative shipment credits		–2,168,461
Cumulative asset disposition credits		–372,124
Principal Charges account balance	$	4,915,414

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.

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Note 5 – COMPREHENSIVE INCOME

A summary of the components of comprehensive income is as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
Net income	$	5,652,868	$	4,443,776	$	10,147,560	$	6,764,798
Other comprehensive income:
Defined benefit pension plan -
Amortization of net loss		76,587		54,428		153,174		108,857
Amortization of prior service cost		4,368		4,368		8,735		8,735
Total other comprehensive income		80,955		58,796		161,909		117,592
Total comprehensive income	$	5,733,823	$	4,502,572	$	10,309,469	$	6,882,390

Note 6 – NEW ACCOUNTING PRONOUNCEMENTS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs."  This ASU addresses fair value measurement and disclosure requirements within Accounting Standards Codification ("ASC") Topic 820 for the purpose of providing consistency and common meaning between U.S. GAAP and IFRSs.  Generally, this ASU is not intended to change the application of the requirements in Topic 820.  Rather, this ASU primarily changes the wording to describe many of the requirements in U.S. GAAP for measuring fair value or for disclosing information about fair value measurements.  This ASU is effective for periods beginning after December 15, 2011.  It is not expected to have any impact on the Trust’s financial statements or disclosures.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.”  This ASU increases the prominence of other comprehensive income (“OCI”) in the financial statements and provides companies two options for presenting OCI, which until now has typically been placed within the statement of equity.  One option allows an OCI statement to be included with the net income statement, and together the two will make a statement of total comprehensive income.  Alternately, companies may present an OCI statement separate from the net income statement; however, the two statements will have to appear consecutively within a financial report.  This ASU does not affect the types of items that are reported in OCI, nor does it affect the calculation or presentation of earnings per share.  For public companies, this ASU is effective for periods beginning after December 15, 2011.  The Trust will adopt the OCI presentation requirements required by ASU No. 2011-05 beginning with its first quarter in 2012.

-6-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Periods of Three and Six Months ended June 30, 2011 and June 30, 2010

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.  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.

At the end 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 termination, 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 of the Trust), 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 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) under the terms of the Trust Agreement. 

We have previously provided information in our various Securities and Exchange Commission filings, including our Annual Report, about the final distribution payable to the certificate holders upon the Trust’s termination.  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 properties) and the balance in the Principal Charges account, less any and all expenses and obligations of the Trust upon termination.  To offer a hypothetical example, without factoring in any expenses and obligations of the Trust upon its termination, and using the financial statement values as of December 31, 2010, the net monies were approximately $7,486,000 and the Principal Charges account balance was approximately $4,840,000, resulting in a final distribution payable of approximately $12,326,000, or about $8.22 per share.  After payment of this final distribution, the certificates of beneficial interest (shares) would be cancelled and have no further value.  It is important to note, however, that the actual net monies on hand and the Principal Charges account balance will most likely fluctuate during the ensuing years and will not be “final” until after the termination and wind-down of the Trust.  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.

Results of Operations:

Royalties increased $3,613,017 and $1,286,199 during the six months and three months ended June 30, 2011, respectively, as compared to the same periods in 2010, due mainly to a higher overall average earned royalty rate caused by escalation of producer price indices.

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Interest and other income decreased $51,196 and $3,092 during the six months and three months ended June 30, 2011, respectively, as compared to the same periods in 2010, due mainly to less gravel revenues received and reduced yields on the Trust’s investments.

Costs and expenses increased $179,059 and $74,015 during the six months and three months ended June 30, 2011, respectively, as compared to the same periods in 2010, due mainly to increased legal expenditures associated with the execution of a new lease and additional pension expense pertaining to the defined benefit pension plan.

At their meeting held on June 10, 2011, the Trustees declared a distribution of $3.00 per share, amounting to $4,500,000 payable July 29, 2011, to certificate holders of record at the close of business on June 30, 2011.  The Trustees have now declared two quarterly distributions in 2011.  The first, in the amount of $2.25 per share, was paid on April 29, 2011, to certificate holders of record on March 31, 2011; and the second, that being the current distribution.  The first and second quarter 2010 distributions were $2.00 and $2.75 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 in late October 2011 to certificate holders of record on September 30, 2011.

A mining agreement dated January 1, 1959, with United States Steel Corporation provides that one-half of annual earned royalty income, after satisfaction of minimum royalty payments, shall be applied 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 U.S. 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.

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PART II. OTHER INFORMATION

Item 1.     Legal Proceedings

At a hearing held on April 20, 2011, in Ramsey County District Court, Saint Paul, Minnesota, the accounts of the Trustees for the year 2010 were approved.

Item 1A.  Risk Factors

There are no material changes from the risk factors previously disclosed in the Trust’s December 31, 2010 Annual Report on Form 10-K.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

- None

Item 3.     Defaults Upon Senior Securities

- None

Item 4.     (Removed and Reserved)

- 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 (Interactive Data File)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase (Interactive Data File)
101.LAB	XBRL Taxonomy Extension Label Linkbase (Interactive Data File)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase (Interactive Data File)

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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	July 21, 2011	By	/s/  Joseph S. Micallef
			Joseph S. Micallef, President of the Trustees and Chief Executive Officer
Date	July 21, 2011	By	/s/  Thomas A. Janochoski
			Thomas A. Janochoski, Vice President & Secretary and Chief Financial Officer

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QUARTERLY REPORT ON FORM 10-Q

EXHIBIT INDEX

QUARTER ENDED:      JUNE 30, 2011

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 (Interactive Data File)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase (Interactive Data File)
101.LAB	XBRL Taxonomy Extension Label Linkbase (Interactive Data File)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase (Interactive Data File)

EX-31.1

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:	July 21, 2011
	Joseph S. Micallef President of the Trustees and Chief Executive Officer

EX-31.2

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:	July 21, 2011
	Thomas A. Janochoski Vice President & Secretary and Chief Financial Officer

EX-32

 

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 June 30, 2011 (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.

Date	July 21, 2011	By	/s/  Joseph S. Micallef
			Joseph S. Micallef, President of the Trustees and Chief 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 June 30, 2011 (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.

Date	July 21, 2011	By	/s/  Thomas A. Janochoski
			Thomas A. Janochoski, Vice President & Secretary and Chief Financial 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.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Trading Symbol	gni
Entity Registrant Name	GREAT NORTHERN IRON ORE PROPERTIES
Entity Central Index Key	0000043410
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding	1,500,000

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Comprehensive Income

6 Months Ended

Jun. 30, 2011

Comprehensive Income

Comprehensive Income

Note 5 – COMPREHENSIVE INCOME

A summary of the components of comprehensive income is as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
Net income	$	5,652,868	$	4,443,776	$	10,147,560	$	6,764,798
Other comprehensive income:
Defined benefit pension plan -
Amortization of net loss		76,587		54,428		153,174		108,857
Amortization of prior service cost		4,368		4,368		8,735		8,735
Total other comprehensive income		80,955		58,796		161,909		117,592
Total comprehensive income	$	5,733,823	$	4,502,572	$	10,309,469	$	6,882,390

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New Accounting Pronouncements

6 Months Ended

Jun. 30, 2011

New Accounting Pronouncements

New Accounting Pronouncements

Note 6 – NEW ACCOUNTING PRONOUNCEMENTS

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, "Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs."  This ASU addresses fair value measurement and disclosure requirements within Accounting Standards Codification ("ASC") Topic 820 for the purpose of providing consistency and common meaning between U.S. GAAP and IFRSs.  Generally, this ASU is not intended to change the application of the requirements in Topic 820.  Rather, this ASU primarily changes the wording to describe many of the requirements in U.S. GAAP for measuring fair value or for disclosing information about fair value measurements.  This ASU is effective for periods beginning after December 15, 2011.  It is not expected to have any impact on the Trust's financial statements or disclosures.

In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income."  This ASU increases the prominence of other comprehensive income ("OCI") in the financial statements and provides companies two options for presenting OCI, which until now has typically been placed within the statement of equity.  One option allows an OCI statement to be included with the net income statement, and together the two will make a statement of total comprehensive income.  Alternately, companies may present an OCI statement separate from the net income statement; however, the two statements will have to appear consecutively within a financial report.  This ASU does not affect the types of items that are reported in OCI, nor does it affect the calculation or presentation of earnings per share.  For public companies, this ASU is effective for periods beginning after December 15, 2011.  The Trust will adopt the OCI presentation requirements required by ASU No. 2011-05 beginning with its first quarter in 2012.

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Condensed Balance Sheets (USD $)	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 805,039	$ 668,310	[1]
United States Treasury securities	4,039,117	5,013,272	[1]
Royalties receivable	6,282,003	6,041,224	[1]
Prepaid expenses	50,986	4,519	[1]
TOTAL CURRENT ASSETS	11,177,145	11,727,325	[1]
NONCURRENT ASSETS
United States Treasury securities	5,130,100	3,025,924	[1]
PROPERTIES
Mineral and surface lands	39,304,058	39,127,058	[1]
Less: Allowances for accumulated depletion and amortization	(36,908,377)	(36,614,977)	[1]
MINERAL PROPERTIES, NET	2,395,681	2,512,081	[1]
Building and equipment	313,831	313,831	[1]
Less: Allowances for accumulated depreciation	(211,890)	(196,069)	[1]
PROPERTY, PLANT AND EQUIPMENT, NET, TOTAL	101,941	117,762	[1]
TOTAL PROPERTIES	2,497,622	2,629,843	[1]
TOTAL ASSETS	18,804,867	17,383,092	[1]
LIABILITIES AND BENEFICIARIES' EQUITY
Accounts payable and accrued expenses	140,904	111,556	[1]
Distributions	4,500,000	5,625,000	[1]
TOTAL CURRENT LIABILITIES	4,640,904	5,736,556	[1]
NONCURRENT LIABILITIES
Deferred compensation	181,500	181,500	[1]
Liability for pension benefits	1,432,272	1,349,314	[1]
TOTAL NONCURRENT LIABILITIES	1,613,772	1,530,814	[1]
TOTAL LIABILITIES	6,254,676	7,267,370	[1]
BENEFICIARIES' EQUITY, including certificate holders' equity, represented by 1,500,000 certificates (shares or units) of beneficial interest authorized and outstanding, and the reversionary interest	14,477,089	12,204,529	[1]
Accumulated other comprehensive loss	(1,926,898)	(2,088,807)	[1]
TOTAL BENEFICIARIES' EQUITY	12,550,191	10,115,722	[1]
TOTAL LIABILITIES AND BENEFICIARIES' EQUITY	$ 18,804,867	$ 17,383,092	[1]

[1] Note: The balance sheet at December 31, 2010, 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.

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Condensed Balance Sheets (Parenthetical)	Jun. 30, 2011	Dec. 31, 2010
Condensed Balance Sheets
BENEFICIARIES' EQUITY, interest authorized	1,500,000	1,500,000
BENEFICIARIES' EQUITY, interest outstanding	1,500,000	1,500,000

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Condensed Statements Of Income (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011		Jun. 30, 2010
REVENUES
Royalties	$ 6,543,197		$ 5,256,998		$ 11,957,873		$ 8,344,856
Interest and other income	28,640		31,732		62,858		114,054
REVENUES, TOTAL	6,571,837		5,288,730		12,020,731		8,458,910
Costs and expenses	(918,969)		(844,954)		(1,873,171)		(1,694,112)
NET INCOME	$ 5,652,868		$ 4,443,776		$ 10,147,560		$ 6,764,798
Weighted-average shares outstanding	1,500,000		1,500,000		1,500,000		1,500,000
BASIC & DILUTED EARNINGS PER SHARE	$ 3.77		$ 2.96		$ 6.77		$ 4.51
Distributions declared per share	$ 3.00	[1]	$ 2.75	[2]	$ 5.25	[3]	$ 4.75	[4]

[1] $3.00 declared 6/10/2011 payable 7/29/2011

[2] $2.75 declared 6/7/2010 paid 7/30/2010

[3] $2.25 declared 3/10/2011 plus $3.00 declared 6/10/2011 paid 4/29/2011 payable 7/29/2011

[4] $2.00 declared 3/22/2010 plus $2.75 declared 6/7/2010 paid 4/30/2010 paid 7/30/2010

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Condensed Statements Of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010
Cash flows from operating activities:
Cash received from royalties and rents	$ 11,575,918		$ 6,752,609
Cash paid to suppliers and employees	(1,336,202)		(1,224,493)
Interest and related premium/discount (paid) received	(2,987)		58,696
NET CASH PROVIDED BY OPERATING ACTIVITIES	10,236,729		5,586,812
Cash flows from investing activities:
U.S. Treasury securities purchased	(4,425,000)		(500,000)
U.S. Treasury securities matured	3,325,000		1,500,000
Expenditures for building and equipment	0		(11,303)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES	(1,100,000)		988,697
Cash flows from financing activities:
Distributions paid	(9,000,000)		(6,900,000)
NET CASH USED IN FINANCING ACTIVITIES	(9,000,000)		(6,900,000)
Net increase (decrease) in cash and cash equivalents	136,729		(324,491)
Cash and cash equivalents at beginning of year	668,310	[1]	924,234
CASH AND CASH EQUIVALENTS AT JUNE 30	$ 805,039		$ 599,743

[1] Note: The balance sheet at December 31, 2010, 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.

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Basis Of Presentation

6 Months Ended

Jun. 30, 2011

Basis Of Presentation

Basis Of Presentation

Note 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with 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 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 ("Trust") Annual Report on Form 10-K for the year ended December 31, 2010. 

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Securities

6 Months Ended

Jun. 30, 2011

Securities

Securities

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 recognized as current assets will mature within one year of the respective period ending date stated below.  Securities recognized as noncurrent assets will mature one to three years from the respective period ending date stated below.  Following is an analysis of the securities as of the periods stated:

	Current				Noncurrent
	June 30, 2011		Dec. 31, 2010		June 30, 2011		Dec. 31, 2010
Aggregate fair value	$	4,037,216	$	5,017,250	$	5,121,373	$	3,014,093
Gross unrealized holding gains		-5,473		-13,938		-11,256		-3,358
Gross unrealized holding losses		—		—		630		4,732
Amortized cost basis		4,031,743		5,003,312		5,110,747		3,015,467
Accrued interest		7,374		9,960		19,353		10,457
Amounts shown on balance sheets	$	4,039,117	$	5,013,272	$	5,130,100	$	3,025,924

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Pension Plan

6 Months Ended

Jun. 30, 2011

Pension Plan

Pension Plan

Note 3 – PENSION PLAN

A summary of the components of net periodic pension cost is as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
Service cost	$	69,912	$	61,606	$	139,824	$	123,212
Interest cost		79,965		79,667		159,930		159,334
Expected return on assets		–108,398		–96,746		–216,796		–193,492
Amortization of net loss		76,587		54,428		153,174		108,857
Amortization of prior service cost		4,368		4,368		8,735		8,735
Net periodic pension cost	$	122,434	$	103,323	$	244,867	$	206,646

The plan's annual actuarial valuation was performed as of the plan's fiscal year-end March 31.  The actuarially recommended contribution to the pension plan for 2011 is $551,124, which contribution is scheduled to be made in August 2011.

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Beneficiaries' Equity

6 Months Ended

Jun. 30, 2011

Beneficiaries' Equity

Beneficiaries' Equity

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 United States 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 as of June 30, 2011:

Attorneys' fees and expenses	$	1,024,834
Costs of surface lands .		6,431,165
Cumulative shipment credits		–2,168,461
Cumulative asset disposition credits		–372,124
Principal Charges account balance	$	4,915,414

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.