Kiewit Royalty Trust (KIRY) 10-Q 2002 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

Commission File No. 0-10810

KIEWIT ROYALTY TRUST
(Exact name of Registrant as specified in its charter)

Nebraska (State or other jurisdiction of incorporation or organization)	47-6131402 (I.R.S. Employer Identification No.)
Trust Division U.S. Bank National Association 1700 Farnam Street Omaha, Nebraska (Address of Principal Executive Offices)	68102Zip Code

(402) 348-6000
(Registrant’s Telephone Number, Including Area Code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   X      No     

     There were 12,633,432 Units of Beneficial Interest outstanding as of May 14, 2002.

KIEWIT ROYALTY TRUST

FORM 10-Q

For the Quarter Ended March 31, 2002

INDEX

		Page
Part I	Financial Information
	Item 1. Financial Statements	3
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	7
Part II	Other Information
	Item 1. Legal Proceedings	8
	Item 2. Changes in Securities and Use of Proceeds	8
	Item 3. Defaults Upon Senior Securities	8
	Item 4. Submission of Matters to a Vote of Security Holders	8
	Item 5. Other Information	8
	Item 6. Exhibits and Reports on Form 8-K	8
Signatures		9

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

KIEWIT ROYALTY TRUST
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
unaudited as of March 31, 2002 and audited as of December 31, 2001

ASSETS	March 31, 2002 (unaudited)			December 31, 2001
Cash equivalents	$	1,293,911		$	188,882
Trust reserves		783,317			783,317
Royalty and overriding royalty interests in coal leases		167,817			167,817
Less accumulated amortization		(134,788	)		(130,431	)
Net royalty and overriding royalty interests in coal leases		33,029			37,386
Total Assets	$	2,110,257		$	1,009,585
LIABILITIES AND TRUST CORPUS
Distributions payable to unit holders	$	1,293,911		$	188,882
Trust reserves payable		783,317			783,317
Trust corpus: 12,633,432 units of beneficial interest authorized and outstanding		33,029			37,386
Total Liabilities and Trust Corpus	$	2,110,257		$	1,009,585

The accompanying notes are an integral part of the financial statements.

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KIEWIT ROYALTY TRUST
STATEMENTS OF DISTRIBUTABLE INCOME
(unaudited)

	Three Months Ended March 31
	2002			2001
Royalty income	$	2,098,047		$	1,688,481
Interest income		9,507			14,636
Trust expenses		(30,327	)		(19,982	)
Distributable income	$	2,077,227		$	1,683,135
Distributable income per unit	$	0.164423		$	0.133229

STATEMENTS OF CHANGES IN TRUST CORPUS
(unaudited)

	Three Months Ended March 31
	2002			2001
Trust corpus as of January 1	$	37,386		$	43,453
Amortization of royalty interests		(4,357	)		(2,762	)
Distributable income		2,077,227			1,683,135
Distributions to unit holders		(2,077,227	)		(1,683,135	)
Trust corpus as of March 31	$	33,029		$	40,691

The accompanying notes are an integral part of the financial statements.

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KIEWIT ROYALTY TRUST
NOTES TO FINANCIAL STATEMENTS
as of March 31, 2002 and December 31, 2001

Basis of Presentation

     The accompanying unaudited financial statements have been prepared in accordance with the instructions for Form 10-Q and do not necessarily include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the Trustee’s opinion, all adjustments necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes included in the Trust’s annual report on Form 10-K for the year ended December 31, 2001.

Summary of Significant Accounting Policies

  (a) Basis of Accounting:

     The accompanying unaudited financial statements have been prepared on the following basis:

(1)	Royalty income is recorded on a cash receipt basis.
(2)	Trust administration expenses are recorded in the month in which they are paid.
(3)	Amortization of the net royalty and overriding royalty interests, which is calculated on a units-of-production basis, is charged directly to trust corpus since such amount does not affect distributable income.

     The preparation of financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

     While these statements differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America, the cash basis of reporting revenues is considered to be the most meaningful because Quarterly Distributions to Unit Holders are based on net cash receipts.

  (b) Cash Equivalents:

     Cash equivalents consist of money market funds, which are recorded at cost plus interest.

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

a.     Material Changes in Financial Condition.

     Kiewit Royalty Trust is a royalty trust with royalty and overriding royalty interests in certain coal leases. The Trust was formed for the purposes of (1) administering the income received from such coal leases and (2) distributing such income (together with interest earned thereon less payment of or provision for obligations) to the holders of the Units of Beneficial Interest.

b.     Material Changes in Results of Operations.

     During the three months ended March 31, 2002, the Trust received a total of $2,098,047 of royalty and overriding royalty payments. The following schedule reflects the royalty and overriding royalty payments received by the Trust in respect of leases at the following mines:

	Three Months Ended March 31
Mine	2002		2001
Decker	$	2,098,047	$	1,687,081
Big Horn		—		1,400
Spring Creek		—		—
	$	2,098,047	$	1,688,481

     i.     Decker Mine.

     Royalty and overriding royalty amounts received by the Trust from the Decker Mine increased to $2,098,047 during the first three months of 2002 compared to $1,687,081 during the same period in 2001. These changes in royalty and overriding royalty amounts received were due to changes in the relative amounts of coal mined under leases bearing high and low overriding royalty rates per ton, which are a normal result of the execution of a mining plan encompassing several coal leases bearing different royalty rates.

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     ii.     Big Horn Mine.

     No royalties were received from the Big Horn Mine during the first three months of 2002 or 2001. The Big Horn Mine has reached the end of its production cycle and it is foreseen that the Trust will receive no further payments deriving from coal production from the Big Horn Mine. Also, the Big Horn Mine will no longer receive rental payments due to the leases being terminated by the lessee. In the past, the amount of such rental payments was included in the figure representing receipt of royalty and overriding royalty payments. During the first three months of 2002, the Big Horn Mine received no rental payments. During the first three months of 2001, the Big Horn Mine received $1,400 in rental payments.

     iii.     Spring Creek Mine.

     No royalties were received from the Spring Creek Mine during the first three months of 2002 and 2001 because royalties with respect to this mine are typically paid by the mine operators on an annual basis during the second half of the calendar year.

     iv.     Trust Expenses.

     Trust expenses increased to $30,327 in the first three months of 2002, as compared to $19,982 for the same period in 2001. This increase was due principally to an increase in legal fees related to trust operations, trust ownership transfers and the Trust Reserve discussed below.

     v.     Trust Reserve.

     On June 29, 2001, the Trustee received notification from the operator of the Spring Creek Mine of alleged overpayments aggregating approximately $476,000 related to the Trust’s overriding royalty interest that were remitted during the period from 1996 to 2000. The $783,317 royalty payment received from the Spring Creek Mine on July 31, 2001 is being held in reserve in connection with this matter.

     In April, 2002, the Trust filed a complaint in federal district court seeking a declaratory judgment and accounting against Spring Creek Coal Company, the operator of the Spring Creek Mine, in connection with this matter. The ultimate outcome of this issue is uncertain at this time. For a more detailed discussion of the legal action instituted by the Trust, see “Legal Proceedings.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     Not Applicable.

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PART II — OTHER INFORMATION.

Item 1. Legal Proceedings.

     On April 25, 2002, the Trust filed a complaint in the Federal District Court for the District of Montana, Billings Division, seeking a declaratory judgment and accounting against Spring Creek Coal Company, the operator of the Spring Creek Mine. The suit seeks adjudication of a reimbursement request to the Trust from Spring Creek Coal Company and an accounting of all coal overriding royalties that Spring Creek Coal Company should have paid to the Trust under certain agreements between the parties. The outcome of the suit is uncertain at this time.

     There are no other material pending legal proceedings to which the Trust is a party or which any of its property is the subject.

Item 2. Changes in Securities and Use of Proceeds.

     Not Applicable.

Item 3. Defaults Upon Senior Securities.

     Not Applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

     Not Applicable.

Item 5. Other Information.

     Not Applicable.

Item 6. Exhibits and Reports on Form 8-K.

     a.     Exhibits

4.1	Kiewit Royalty Trust Indenture dated May 17, 1982, as amended June 9, 1982 and June 23, 1982 (filed as Exhibit 4.1 to the Trust’s Form 10-K filed with the Securities and Exchange Commission on March 28, 2002, and incorporated herein by reference).
4.2	Order dated September 23, 1994, of the County Court of Douglas County, Nebraska (filed as Exhibit 4.2 to the Trust’s Form 10-K filed with the Securities and Exchange Commission on March 28, 2002, and incorporated herein by reference).

     b.     Reports on Form 8-K.

     No reports on Form 8-K were filed during the quarter for which this report is filed.

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SIGNATURE

     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.

KIEWIT ROYALTY TRUST (Registrant)
By:	U. S. Bank National Association in its capacity as Trustee and not in its individual capacity or otherwise
	/s/ Susan K. Rosburg Susan K. Rosburg Trust Officer

Dated: May 14, 2002

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