Kiewit Royalty Trust (KIRY) 10-K 2007 FY Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

• For the fiscal year ended December 31, 2007

o 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: 000-10810

KIEWIT ROYALTY TRUST

(Exact name of registrant as specified in its charter)

Nebraska
(State of Organization) 47-6131402
(I.R.S. Employer Identification Number)

Trust Division
U.S. Bank National Association
1700 Farnam Street
Omaha, Nebraska 68102
(Address of principal executive offices)

Registrant’s telephone number, including area code: (402) 348-6000

Securities registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class
Units of Beneficial Interest

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso Noþ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso Noþ

     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. Yesþ Noo

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þ

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

     There is no active trading market for the Units of Beneficial Interest. As a result, the aggregate market value of the Units of Beneficial Interest is not available.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		2
Item 1B.	Unresolved Staff Comments		2
Item 2.	Properties		2
Item 3.	Legal Proceedings		2
Item 4.	Submission of Matters to a Vote of Security Holders		3
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		3
Item 7.	Trustee’s Discussion and Analysis of Financial Condition and Results of Operations		4
Item 8.	Financial Statements and Supplementary Data		5
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		10
Item 9A(T).	Controls and Procedures		10
Item 9B.	Other Information		11
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		11
Item 11.	Executive Compensation		11
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters		11
Item 13.	Certain Relationships and Related Transactions, and Director Independence		11
Item 14.	Principal Accountant Fees and Services		12
PART IV
Item 15.	Exhibits and Financial Statement Schedules		12
	Signatures		14
	Certifications		15
Rule 13a14(a)	Certification of Trust Officer
Section 906	Certification of Trust Officer
Certification of Trust Officer
Section 906 Certification of Trust Officer

Forward-Looking Statements

     This Form 10-K includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbor created thereby. All statements other than statements of historical fact included in this Form 10-K are forward-looking statements. Such statements include, without limitation, factors affecting the price of coal contained in Item 1, “Business,” the “Tons Under Lease” and “Current Economic Tons” information and other statements contained in Item 2, “Properties,” and certain statements regarding the Trust’s financial position, industry conditions and other matters contained in Item 7. Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove to be correct. There are many factors, none of which are within the Trustee’s control, that may cause such expectations not to be realized, including, among other things, factors identified in this Form 10-K affecting coal prices (including, without limitation, the domestic and foreign supply of coal and the price of foreign imports, market demand, the price and availability of alternative fuels and the effect of governmental regulations) and the recoverability of “Tons Under Lease” and “Current Economic Tons,” general economic conditions, and other changes in the domestic and international coal markets.

ii

PART I

Item 1. BUSINESS.

     Purpose of the Trust.Kiewit Royalty Trust (the “Trust”) was organized by Peter Kiewit Sons’, Inc. (now, known as Level 3 Communications, Inc.) (the “Trustor”) under the laws of the State of Nebraska on May 17, 1982 to provide an efficient, orderly and practical means of administrating the income received from three royalty interests and 16 overriding royalty interests in leases of four coal mines located in Montana and Wyoming (the “Coal Royalties”). The Coal Royalties are the interests retained in these four mine properties under the leases of the mineral rights to the mining companies who have developed, mined, and sold the coal from these mines. In general, the Coal Royalties entitle the Trust to a specified portion of the value of the total coal production from these mines, free of the expense of development and operation.

     The Coal Royalties were conveyed by the Trustor to the Trust for the benefit of the holders of record of the Trustor’s Class B and Class C common stock as of June 10, 1982. Ownership of beneficial interests in the Trust is represented by 12,633,432 units of beneficial interest (hereinafter referred to as “Units”). The Trust is a purely ministerial trust which distributes the available revenues generated by the Coal Royalties, net of the Trust’s expenses, to the holders of Units. Trust expenses include but are not limited to, fees of the Trustee, and compensation paid to geologists, engineers, accountants, attorneys, or other professionals that the Trustee may, in its discretion, employ in the administration of the Trust. With respect to any liability that is contingent or uncertain in amount or that otherwise is not currently due, the Trustee has the discretion to establish cash reserves for the payment thereof.

     The Coal Royalties.The Coal Royalties provide for the payment of either a specified amount per ton of coal produced, or a fixed percentage of the value or price with respect to the coal produced under the leases relating to these interests. The remaining terms of the individual Coal Royalties vary considerably, as does the acreage covered by the underlying coal leases, the estimated total tons of coal within a legal description of property as evidenced by a lease (the “Tons Under Lease”) and the estimated total tons of coal under lease that can be economically extracted under existing market conditions (“Current Economic Tons”). In general, the Current Economic Tons will be less than the total Tons Under Lease because the cost of extracting a portion of the total Tons Under Lease will outweigh the price at which the coal could be sold. In addition, Current Economic Tons may be reduced by the refusal of a state and/or federal authority to grant a permit to mine portions of the coal reserves within a specific property. The inability to extract the total Tons Under Lease or the inability to sell any portion of the coal extracted will reduce the royalties payable to the Trust. The following chart sets forth the actual total amount of coal production during the past two years from the leases in which the Trust has Coal Royalties:

Tons of Coal Produced

	2007		2006
Decker Mine		5,546,316		5,619,320
Spring Creek Mine		11,842,177		10,014,587
Total		17,388,493		15,633,907

     The following sets forth certain information about each of the mine properties in which the Trust continues to hold a Coal Royalty:

     DECKER MINE. Decker Coal Company (“Decker”) operates this mine, which is located in Big Horn County, Montana, approximately 20 miles north of Sheridan, Wyoming. Decker is a joint venture between KCP Inc. (a wholly-owned subsidiary of Level 3 Communications, Inc.) and Western Minerals, Inc. (a wholly-owned subsidiary of NERCO, Inc.). Each company owns a fifty percent (50%) interest in the joint venture. The Decker Mine in its entirety includes approximately 23,371 acres and has an annual productive capacity of 12,000,000 tons. The Trust owns overriding royalty interests in five productive leases at the Decker Mine. The terms of the Trust’s overriding royalty interests and the Tons Under Lease and Current Economic Tons of each lease are set forth in the table below, of which the accompanying notes are an integral part:

		Terms of Overriding	Tons Under		Current Economic
		Royalties	Lease		Tons
M-073093	United States	5 cents per ton1		84,594,000		58,505
M-061685	United States	10 cents per ton1		45,802,000		7,436,826
M-057934	United States	10 cents per ton1		7,927,000		—
C-1085-93	Montana	10 cents per ton1		2,446,000		917,347
C-1087-95	Montana	10 cents per ton1		7,420,000		7,420,000
				148,189,000		15,832,678

1 The Trust has an undivided one-half interest in a second overriding royalty pertaining to this lease. By the terms of the assignment by which it was created, this second overriding royalty, when added to all other royalties pertaining to this lease, may not exceed fifty percent (50%) of the royalty payable to the lessor under the lease.

1

     SPRING CREEK MINE. Spring Creek Coal Company (“Spring Creek”) operates this mine, which is located in Big Horn County, Montana, approximately 25 miles north of Sheridan, Wyoming. Spring Creek is a subsidiary of NERCO, Inc. The Spring Creek Mine in its entirety includes approximately 2,560 acres and has an annual productive capacity of 12,000,000 tons. The Trust owns an overriding royalty interest in one productive lease at the Spring Creek Mine. The terms of the overriding royalty interest and the “Tons Under Lease” and “Current Economic Tons” of the lease are set out below:

		Terms of Overriding			Current Economic
Lease	Lessor	Royalties	Tons Under Lease		Tons
M-069782	United States	10 cents per ton2		83,409,000		35,779,498

2 Under the terms of the lease, if the production royalty payable to the United States is increased, then the overriding royalty will be recomputed to equal 10.75% of such production royalty.

     In addition to its interests in the foregoing leases, the Trust has overriding royalty interests in three leases, containing approximately 27,800,000 tons of total estimated recoverable coal reserves from which no production is currently contemplated and in four leases which are considered to be not mineable because of access, alluvial valley, or other problems.

     Financial Information about Segments.The Trust’s sole activity is the collection and distribution of the revenues generated by the Coal Royalties. Accordingly, the Trust operates in a single business segment.

     Financial Information about Geographic Areas.Substantially all of the Trust’s 2007 income was generated from royalty income received from sources located in the United States.

     Available Information.The Trust does not have an Internet website. However, the Trust electronically files annual, quarterly and current reports with the SEC. The SEC maintains a web site atwww.sec.govthat contains the Trust’s SEC filings. The Trustee will provide any Unit Holder with a paper copy of the Trust’s SEC filings free of charge upon request. The trustee of the Trust is U.S. Bank National Association, Omaha, Nebraska, which is a wholly-owned subsidiary of U.S. Bancorp, a registered bank holding company.

Item 1A. RISK FACTORS.

     A Substantial or Extended Decline in Coal Prices Would Have a Material Adverse Effect on the Trust’s Revenues

     The royalty payments received by the Trust are dependent on the realized price of the coal produced under the Coal Royalties. The price of coal is affected by numerous factors beyond the control of the Trust and the operators of the mines in which it holds coal royalties. Any drop in the realized price of coal will adversely affect the Trust revenues, net income and cash flows.

Estimates of Economic Tons of Coal Are Uncertain

     Estimates of the economic tons of coal under the Coal Royalties are subject to considerable uncertainty. Such estimates are based on the estimated amount of coal actually in the ground, estimates of the selling price of such coal and estimates of the cost to extract the coal. Estimates of coal in the ground are based on interpretations of geologic data and are subject to considerable uncertainty. Estimates of capital and operating costs associated with extracting coal are based on many factors such as anticipated tonnage and grades of coal to be mined, the predicted configuration of the coal deposits, the costs of operating and processing equipment and other factors. The selling price of coal is subject to significant uncertainty. As a result the amount of coal that may be extracted from a particular mine in an economic manner may be considerably less than the amount of coal actually in place. As coal prices decline or extraction costs increase, the economic tons of coal will decline and this will affect the amount of coal that is actually produced from the mine. Any drop in the economic tons of coal subject to the Coal Royalties will adversely affect the Trust revenues, net income and cash flows.

Item 1B. UNRESOLVED STAFF COMMENTS.

     None.

Item 2. PROPERTIES.

     The Trust does not own any physical or real property.

Item 3. LEGAL PROCEEDINGS.

     There are no pending material legal proceedings to which the Trust is a party.

2

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

     a. Market Information.There is no established public trading market for the Units. The Units have not been registered under the Securities Act of 1933, nor have they been registered under the securities laws of any state. Accordingly, resales of the Units are subject to certain legal restrictions on transferability. Unit Holders should consult with their own counsel regarding their ability to sell their Units.

     None of the Units are subject to outstanding options or warrants to purchase, and no securities are convertible into Units. Under the terms of the Trust Indenture, the Trust may not issue additional Units.

     b. Holders.The Units are the only class of security issued by the Trust. As of March 27, 2008, there were 868 record holders of Units.

     c. Distributions to Unit Holders.All income of the Trust plus any amounts released from reserves, less amounts used to pay Trust expenses and amounts placed in reserves, is distributed pro rata on a quarterly basis to Unit Holders. The following table shows the aggregate distributions made to Unit Holders for each quarter during 2007 and 2006:

2007
		Distribution Amounts
Quarter Ended	Date Distributed	In Total		Per Unit
March 31, 2007	April 10, 2007	$	955,633	$	0.075643
June 30, 2007	July 10, 2007		143,780		0.011381
September 30, 2007	October 11, 2007		2,295,067		0.181666
December 31, 2007	January 10, 2008		106,185		0.008405
		$	3,500,665	$	0.277095

2006
		Distribution Amounts
Quarter Ended	Date Distributed	In Total		Per Unit
March 31, 2006	April 12, 2006	$	1,004,695	$	0.079527
June 30, 2006	July 11, 2006		202,770		0.016050
September 30, 2006	October 12, 2006		1,986,164		0.157215
December 31, 2006	January 10, 2007		136,046		0.010769
		$	3,329,675	$	0.263561

     d. Securities Authorized for Issuance under Equity Compensation Plans.

     Not applicable.

     e. Recent Sales of Unregistered Securities.

     None.

     f. Issuer Purchases of Equity Securities.

     None.

3

Item 7. TRUSTEE’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     Distributable income (the total amount of net royalty and overriding royalty payments received from the various mines, increased by the amount of interest earned and any other amounts received by the Trust and decreased by the amount of Trust Expenses) for 2007 was $3,500,665 compared to $3,329,675 for 2006. The 5.1% increase in distributable income from 2006 to 2007 was attributable to higher royalty and overriding royalty payments from the Spring Creek Mine which were partially offset by reduced royalty and overriding royalty payments from the Decker Mine as discussed below.

     The following schedule reflects the royalty and overriding royalty payments received by the Trust in respect of leases at the following mines:

	2007		2006
Decker Mine	$	2,080,254	$	2,178,696
Spring Creek Mine		1,489,021		1,203,858
Total	$	3,569,275	$	3,382,554

     a. Decker Mine.The amount of royalties and overriding royalties received by the Trust with respect to the Decker Mine decreased to $2,080,254 in 2007 from $2,178,696 in 2006. This change was the net result of changes in the relative amounts of coal mined under leases bearing higher and lower overriding royalty rates per ton, which were a normal result of the execution of a mining plan encompassing several coal leases bearing different royalty rates.

     b. Spring Creek Mine.The amount of royalties and overriding royalties received by the Trust with respect to the Spring Creek Mine increased to $1,489,021 in 2007 from $1,203,858 in 2006. The increase is due to increased coal production under the Spring Creek Mine leases.

     Trust Expenses.Trust expenses increased to $103,670 in 2007 from $84,553 in 2006 due to an increase in accounting and auditing fees.

     Off-Balance Sheet Arrangements.As required by the Trust Indenture, the Trust is intended to be passive in nature and the Trustee does not have any control over or any responsibility relating to the operation of the mines under which the Trust has any royalty interests and overriding royalty interests. The Trustee has powers to collect and distribute proceeds received by the Trust and pay Trust liabilities and expenses and its actions have been limited to those activities. As a result, the Trust has not engaged in any off-balance sheet arrangements.

     Contractual Obligations.

     None.

     Critical Accounting Policies and Estimates.The Trust’s financial statements reflect the selection and application of accounting policies that require the Trust to make significant estimates and assumptions. The following are some of the more critical judgment areas in the application of accounting policies that currently affect the Trust’s financial condition and results of operations:

• Royalty income and interest income are recognized in the month in which amounts are received by the Trust.

• Trust expenses, consisting principally of routine general and administrative costs, include payments made during the accounting period.

• Reserves for liabilities that are contingent or uncertain in amount may also be established if considered necessary.

• Net royalty and overriding royalty interests that are producing properties are amortized using the unit-of-production method. This amortization is shown as a reduction of Trust corpus.

• Distributions to Unit Holders are recognized when declared by the Trustee.

     The financial statements of the Trust differ from financial statements prepared in conformity with U.S. generally accepted accounting principles because of the following:

• Royalty income is recognized in the month received rather than in the month of production.

• Expenses are not accrued.

• Amortization of the net royalty and overriding royalty interests is shown as a reduction to Trust corpus and not as a charge to operating results.

• Reserves may be established for contingencies that would not be recorded under U.S. generally accepted accounting principles.

4

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     a. Financial Statements.The following documents are filed as part of the Trust’s financial statements as of December 31, 2007, and for the two years then ended:

(1)	Report of Independent Registered Public Accounting Firm — KPMG LLP
(2)	Statements of Assets, Liabilities and Trust Corpus
(3)	Statements of Distributable Income
(4)	Statements of Changes in Trust Corpus
(5)	Notes to Financial Statements

5

Report of Independent Registered Public Accounting Firm

The Trustee and Unit Holders
Kiewit Royalty Trust:

     We have audited the accompanying statements of assets, liabilities and trust corpus of Kiewit Royalty Trust as of December 31, 2007 and 2006, and the related statements of distributable income and changes in trust corpus for each of the years then ended. These financial statements are the responsibility of the Trustee. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Trustee, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     As described in note 1, these financial statements were prepared on the basis of cash receipts and disbursements as prescribed by the Securities and Exchange Commission, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and trust corpus of Kiewit Royalty Trust as of December 31, 2007 and 2006, and the distributable income and changes in trust corpus for each of the years then ended, on the basis of accounting described in note 1.

/s/ KPMG LLP

KPMG LLP

Omaha, Nebraska

March 27, 2008

6

KIEWIT ROYALTY TRUST
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
December 31, 2007 and 2006

	2007			2006
Assets
Cash and cash equivalents	$	106,185		$	136,046
Royalty and overriding royalty interests in coal leases		167,817			167,817
Less accumulated amortization		(144,927	)		(144,927	)
Net royalty and overriding royalty interests in coal leases		22,890			22,890
Total Assets	$	129,075		$	158,936
Liabilities
Distributions to Unit Holders	$	106,185		$	136,046
Trust corpus: 12,633,432 units of beneficial interest authorized, issued and outstanding		22,890			22,890
Total liabilities and trust corpus	$	129,075		$	158,936

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

7

KIEWIT ROYALTY TRUST
STATEMENTS OF DISTRIBUTABLE INCOME
for the two years ended December 31, 2007

	2007			2006
Royalty income	$	3,569,275		$	3,382,554
Interest income		35,060			31,674
Trust expenses		(103,670	)		(84,553	)
Distributable income	$	3,500,665		$	3,329,675
Distributable income per unit	$	0.277095		$	0.263561

KIEWIT ROYALTY TRUST
STATEMENTS OF CHANGES IN TRUST CORPUS
for the two years ended December 31, 2007

	2007			2006
Trust corpus, beginning of year	$	22,890		$	22,890
Distributable income		3,500,665			3,329,675
Distributions to Unit Holders		(3,500,665	)		(3,329,675	)
	$	22,890		$	22,890

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

8

KIEWIT ROYALTY TRUST
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Basis of Accounting:

(a)	Basis of Accounting:
1.	Royalty income and interest income are recognized in the month in which amounts are received by the Trust.
2.	Trust expenses, consisting principally of routine general and administrative costs, include payments made during the accounting period.
3.	Reserves for liabilities that are contingent or uncertain in amount may also be established if considered necessary.
4.	Net royalty and overriding royalty interests that are producing properties are amortized using the unit-of-production method. This amortization is shown as a reduction of Trust corpus.
5.	Distributions to Unit Holders are recognized when declared by the Trustee.
	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 U.S. generally accepted accounting principles, the cash basis of reporting revenues is considered to be the most meaningful because Distributions to Unit Holders are based on net cash receipts.
(b)	Cash and Cash Equivalents:
	The Trust considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash equivalents.
2.	Trust Organization and Provisions:
	The Trust was established on May 17, 1982. Units of beneficial interest (“Units”) in the Trust were distributed on June 23, 1982 to Class B and Class C shareholders of record of Peter Kiewit Sons’, Inc. (now known as Level 3 Communications, Inc.) (the “Trustor”), as of June 10, 1982. Such shareholders were citizens of the United States of America. These shareholders received one Unit in the Trust for each share of the Trustor’s stock held. On June 28, 1982, the Trustor conveyed to the Trust royalty and overriding royalty interests owned by the Trustor’s subsidiaries in certain coal properties in Montana and Wyoming.
	U.S. Bank National Association is the Trustee for the Trust. The terms of the trust indenture provide, among other things, that:
(a)	the Trust shall not engage in any business or investment activity of any kind or acquire any assets other than those initially conveyed to the Trust;
(b)	the Trustee may not sell all or any part of the royalty interests unless approved by a majority of Unit Holders outstanding, in which case the sale must be for cash and the proceeds promptly distributed;
(c)	the Trustee may establish a cash reserve for the payment of any liability which is contingent or uncertain in amount;
(d)	the Trustee will make cash distributions to the Unit Holders in January, April, July and October of each year as discussed in Note 4; and
(e)	in September 1994, the Trust Indenture was amended to authorize the Trustee to invest funds in government obligations, government-secured obligations and funds registered pursuant to the Investment Company Act of 1940.
3.	Royalty and Overriding Royalty Interests:
	The cash received by the Trustee from the royalty interests will consist of a specified amount per ton or a specified fraction of the value of the total production of the property, free of the expense of development and operation.
	The initial carrying value of the royalty and overriding royalty interests in coal leases of $167,817 represents the Trustor’s historical net book value at the date of the transfer to the Trust.
4.	Distributions to Unit Holders:
	The amounts to be distributed to Unit Holders (“Distribution Amount”) are determined on a quarterly basis. The Quarterly Distribution Amount is the excess of (i) the cash received during the quarter which is attributable to royalties, plus any decrease in cash reserves, plus any other cash receipts of the Trust during the quarter over (ii) the liabilities of the Trust paid during the quarter, plus any increase in cash reserves. The Distribution Amount is payable to Unit Holders of record as of the last business day of each calendar quarter. The cash distributions are made quarterly within the first 10 business days of January, April, July and October.

9

5.	Income Taxes:
	Provision for federal and state income taxes has not been made in the financial statements since the Trust has been recognized by the IRS as a “grantor trust” which is not a taxable entity.
6.	Selected Quarterly Financial Data (Unaudited):
	The following is a summary of the unaudited quarterly financial information:

					Distributable
	Royalty Income		Distributable income		Income Per Unit
For the year ended December 31, 2007:
March 31, 2007	$	959,842	$	955,633	$	0.075643
June 30, 2007		184,042		143,780		0.011381
September 30, 2007		2,306,235		2,295,067		0.181666
December 31, 2007		119,156		106,185		0.008405
	$	3,569,275	$	3,500,665	$	0.277095

					Distributable
	Royalty Income		Distributable income		Income Per Unit
For the year ended December 31, 2006:
March 31, 2006	$	1,008,302	$	1,004,695	$	0.079527
June 30, 2006		244,498		202,770		0.016050
September 30, 2006		1,986,032		1,986,164		0.157215
December 31, 2006		143,722		136,046		0.010769
	$	3,382,554	$	3,329,675	$	0.263561

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     None.

Item 9A(T). CONTROLS AND PROCEDURES.

     Evaluation of Disclosure Controls and Procedures.As of the end of the period covered by this Form 10-K, officers of the Trustee conducted an evaluation of the Trust’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934). Based upon this evaluation, the officers of the Trustee concluded that the Trust’s disclosure controls and procedures are effective in timely alerting them of any material information relating to the Trust that is required to be disclosed by the Trust in the reports it files or submits under the Securities Exchange Act of 1934.

     Trustee’s Report on Internal Control over Financial Reporting.The Trustee is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934 Act. The Trustee has assessed the effectiveness of the Trust’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, the Trustee concluded that, as of December 31, 2007, the Trust’s internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes on the basis of cash receipts and disbursements, which is a comprehensive basis of accounting other than generally accepted accounting principles. This annual report does not include an attestation report of the Trust’s registered public accounting firm regarding internal control over financial public reporting. The Trust’s internal control over financial reporting is not subject to attestation by the Trust’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Trust to provide only the Trustee’s report in this annual report.

     Changes in Internal Control Over Financial Reporting.There were no significant changes in the Trust’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during the Trust’s most recently completed fiscal quarter that has materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

     Limitations on Controls.The Trustee does not expect that the Trust’s disclosure controls and procedures or the Trust’s internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Trust have been detected.

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Item 9B. OTHER INFORMATION.

     On July 31, 2007, certain affiliates of Mackenzie Patterson Fuller, LP announced a tender offer to purchase up to 2,526,686 units of beneficial interest in the Trust for $0.60 per unit. The offer expired on September 14, 2007. According to reports filed by the offerors with the SEC, the offer resulted in the tender by unitholders, and the acceptance for payment by the offerors, of a total of 251,096 units. Upon completion of the offer, the offerors held an aggregate of 251,096 units, or approximately 2.0% of the total outstanding units.

     On January 11, 2008, certain affiliates of Mackenzie Patterson Fuller, LP announced a tender offer to purchase up to 2,526,686 units of beneficial interest in the Trust for $0.55 per unit, less the amount of any distributions declared or made with respect to the Units between January 11, 2008 and February 29, 2008. The offer expired on February 29, 2008. Upon completion of the offer, the offerors held an aggregate of 305,386 units, or approximately 2.4% of the total outstanding units.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

     Executive Officers and Director.The Trust is administered by officers and employees of the Trustee and has no Directors or audit committee. While there are no specific persons employed by the Trustee having the full-time duty of administering the Trust, the following officer of the Trustee acts as the chief executive officer and chief financial officer of the Trust:

     Luke H. Paladino, age 30, Trust Officer with US Bank NA since September 2007. Mr. Paladino has been the Trust Officer responsible for the Trust since January 2008. Mr. Paladino has been a Trust Officer with US Bank NA since September 2007 in the Private Client Group. From 2005 through 2007, he served as Principal of Paladino Legal Group P.C., a law firm located in Omaha, Nebraska.

     Section 16(a) Beneficial Ownership Reporting Compliance.The Trust believes that there was full compliance for the year ended December 31, 2007 with all filing requirements under Section 16(a) of the Exchange Act applicable to any person who would be considered as an officer or director of the Trust and to all persons who were beneficial owners of more than ten percent of the outstanding Units.

     Code of Ethics. The Trust does not maintain its own Code of Ethical Conduct for its senior executive and financial officers as required by Section 406 of the Sarbanes-Oxley Act of 2002 because it does not have officers or employees of its own. The Trustee maintains a Code of Conduct for all of its employees, including those who perform duties for the Trust. A copy of the Trustee’s Code of Conduct will be made available to Unit Holders without charge upon request.

Item 11. EXECUTIVE COMPENSATION.

     The Trust does not have its own officers. Certain services are provided to the Trust by officers of the Trustee. However, none of employees of the Trustee that perform the functions of the Trust’s officers receive any compensation from the Trust and the Trustee does not receive reimbursement from the Trust for any portion of the compensation paid to such employees.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

     The Trustee believes the only holder of more than 5% of the outstanding Units as of March 27, 2008, is Walter Scott, Jr., who beneficially owned 800,000 Units representing 6.33% of the class outstanding. Mr. Scott’s address is One Thousand Kiewit Plaza, Omaha, Nebraska 68131. These Units are held in trust by the Trustee for the benefit of Mr. Scott. No employee of the Trustee who performed the functions as an officer of the Trust owned any Units as of March 27, 2008. The Trust had no knowledge of any arrangements, the operation of which could, at a subsequent date, result in a change of control of the Trust. The Trust does not maintain any equity contribution plans as defined in Item 201(d) of Regulation S-K.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

     During 2007, there were no transactions of any nature between the Trust and any employee of the Trustee who performed the functions of an officer of the Trust or any persons known to the Trustee to be the beneficial owners of more than five percent of the Units.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     Fees Paid to KPMG LLP for 2007 and 2006

     The following are aggregate fees billed to the Trust by KPMG LLP during 2007 and 2006.

	Fiscal Year ended
	December 31,
	2007		2006
Audit fees	$	41,688	$	25,500
Audit-related fees		—		—
Tax fees		—		—
All other fees		—		—
	$	41,688	$	25,500

     Audit fees.Audit fees consist of fees billed for professional services rendered for the audit of the Trust’s financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings.

     Audit-related fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Trust’s financial statements and are not reported under “Audit fees.” These services include attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

     Tax fees. Tax fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance and tax audit defense.

     All other fees. All other fees consist of fees for products and services other than the services reported above.

     As referenced in Item 10 above, the Trust has no audit committee and, as a result, has no audit committee pre-approval policy with respect to fees paid to KPMG LLP.

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

a. Documents Filed as Part of this Report.

1.	The following statements are filed herewith:
	Report of Independent Registered Public Accounting Firm — KPMG LLP
	Statements of Assets, Liabilities and Trust Corpus
	Statements of Distributable Income
	Statements of Changes in Trust Corpus
	Notes to Financial Statements
2.	Financial statement schedules
	No financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements
3.	Exhibits
	The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC.
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).

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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).
31*	Certification of Trust Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
32*	Certification of Trust Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Location Map of Coal Properties (incorporated herein by reference to Exhibit 2 to the Trust’s Form 10-K filed with the Securities and Exchange Commission on March 31, 1985, and incorporated herein by reference).

* Filed herewith.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KIEWIT ROYALTY TRUST
	By	U.S. Bank National Association in its capacity as Trustee and not in its individual capacity or otherwise
March 27, 2008	By:	/s/ Luke H. Paladino
		By:	Luke H. Paladino
		Trust Officer

(The Registrant has no directors or executive officers.)

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