1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1996 Commission File No. 0-10810 KIEWIT ROYALTY TRUST (Exact name of Registrant as specified in its charter) Nebraska 47-6131402 - ------------------------------------ --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) First Bank, National Association 1700 Farnam Street Omaha, Nebraska 68102 ---------------------------------------- (Address of Principal Executive Offices) (402) 348-6275 ------------------------------------------------ (Registrant's telephone no. 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 ----- ----- APPLICABLE ONLY TO CORPORATE REGISTRANTS Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of September 30, 1996, there were 12,633,432 Units of Beneficial Interest of the registrant outstanding. 2 PART I - FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. KIEWIT ROYALTY TRUST STATEMENT OF ASSETS, LIABILITY AND TRUST CORPUS as of September 30, 1996 and December 31, 1995 ASSETS 1996 1995 - ------ -------------- -------------- Cash and short-term investments $ 2,993,802 $ 162,011 Net royalty and overriding royalty interests in coal leases: Estimated fair market value at date of transfer to Trust $ 73,878,000 $ 73,878,000 Allowance to reduce carrying value to Peter Kiewit Sons' Inc.'s historical book value (73,710,183) (73,710,183) -------------- ------------ $ 167,817 $ 167,817 Less accumulated amortization (75,439) (70,897) Net royalty and overriding royalty interests in coal leases $ 92,378 $ 96,920 ------------- ------------ Total Assets $ 3,086,180 $ 258,931 ============= ============ LIABILITY AND TRUST CORPUS - -------------------------- Distributions payable to Unit Holders $ 2,993,802 $ 162,011 Trust corpus: 12,633,432 units of beneficial interest authorized and outstanding $ 92,378 $ 96,920 ------------- ------------ Total Liability and Trust Corpus $ 3,086,180 $ 258,931 ============= ============ The accompanying notes are an integral part of the financial statements 3 KIEWIT ROYALTY TRUST STATEMENT OF DISTRIBUTABLE INCOME For the Three Months and Nine Months Ended September 30, 1996 and 1995 Three Months Ended Nine Months Ended September 30 September 30 ----------------------------------- ----------------------------------- 1996 1995 1996 1995 ----- ----- ----- ---- Royalty Income $2,978,007 $3,405,049 $5,518,364 $7,313,800 Interest income $ 25,436 $ 32,990 $ 56,805 $ 87,629 Trust expenses (9,641) (11,952) (39,113) (29,339) ---------- ---------- ---------- ---------- Distributable Income $2,993,802 $3,426,087 $5,536,056 $7,372,090 ========== ========== ========== ========== Distributable Income per unit (12,633,432 units) $ .236975 $ .271192 $ .438207 $ .583538 See Accompanying Notes to Financial Statements - 2 - 4 KIEWIT ROYALTY TRUST STATEMENT OF CHANGES IN TRUST CORPUS For the Nine Months Ended September 30, 1996 and 1995 1996 1995 ----------------- ----------------- Trust Corpus as of January 1 $ 96,920 $ 108,822 Amortization of royalty interest (4,542) (10,000) Distributable Income 5,536,056 7,372,090 Distribution to Unit Holders (5,536,056) (7,372,090) ----------- ----------- Trust Corpus as of September 30 $ 92,378 $ 98,822 =========== =========== See Accompanying Notes to Financial Statements - 3 - 5 KIEWIT ROYALTY TRUST Notes to Financial Statements as of September 30, 1996 and December 31, 1995 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 generally accepted accounting principles 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, 1995. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited financial statements have been prepared on the following basis: (a) The royalty income recorded for a month is the amount computed and paid by the lease holder to the Trustee for such month. (b) Trust administration expenses are recorded in the month they accrue. This basis for reporting royalty income is thought to be the most meaningful because distributions to the Unit Holders for a month are based on net cash receipts for such month. However, these statements differ from financial statements prepared in accordance with generally accepted accounting principles because, under such principles, royalty income for a month would be based on production for such month without regard to when calculated or received. In addition, amortization of the net royalty and overriding royalty interests, which is calculated on a units-of-production basis by lease, is charged directly to trust corpus, since such amount does not affect distributable income. - 4 - 6 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 nine months ended September 30, 1996, the Trust received a total of $5,518,364 of royalty and overriding royalty payments; during the three months ended September 30, it received a total of $2,978,007 of such payments. The following schedule reflects the royalty and overriding royalty amounts received by the Trust from each mine. Mine Three Months Ended Nine Months Ended ---- September 30 September 30 --------------------------- ----------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Decker $2,139,744 $2,338,528 $4,475,066 $5,644,098 Spring Creek 829,191 913,096 879,191 913,096 Black Butte 69 144,277 152,095 638,937 Big Horn 9,003 9,148 12,012 117,699 ---------- ---------- ---------- ---------- $2,978,007 $3,405,049 $5,518,364 $7,313,800 ========== ========== ========== ========== i. DECKER MINE The amount of royalties and overriding royalties received by the Trust with respect to the Decker Mine decreased to $4,475,066 in the nine months ended September 30, 1996 compared to $5,644,098 during the same period in 1995. For the third quarter of 1996, the amounts received decreased to $2,139,744 compared to $2,338,528 during the third quarter of 1995. These variations in receipts during the nine months and three months ended September 30, 1996 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. - 5 - 7 ii. SPRING CREEK MINE Royalties received from the Spring Creek Mine decreased from $913,096 during the nine months ended September 30, 1995 to $879,191 during the corresponding period in 1996. The Trust received $829,191 in the third quarter of 1996, compared to $913,096 during the third quarter of 1995. This decrease reflects decreased production from the applicable lease. Royalties from the Spring Creek Mine are typically paid by the mine operators on an annual basis during the second half of the calendar year. iii. BLACK BUTTE MINE The Trust received $152,095 in royalty and overriding royalty amounts from the Black Butte Mine during the nine months ended September 30, 1996, a decrease from the $638,937 received during the nine months ended September 30, 1995. The Trust received $69 during the third quarter of 1996, as compared to receipts of $144,277 during the third quarter of 1995. The decrease in royalties received during the nine months ended September 30, 1996 and the third quarter of 1996 as compared to the corresponding periods of 1995 reflects decreased sales from the Black Butte Mine as well as the fact that Federal Lease number W-6266 was renewed effective April 1, 1996 and the Trust no longer receives an overriding royalty on coal produced after March 31, 1996 as explained below. Lease number W-6266 provides that the terms and conditions of the lease are subject to "reasonable readjustment" effective on April 1, 1996. At that time, the royalty rate payable to the United States was increased to 12-1/2%, which is the currently prevailing federal royalty rate. Because of the cap on the amount of the overriding royalty payable to the Trust with respect to this lease, the increased royalty rate has effectively eliminated further payments to the Trust with respect to this lease. iv. BIG HORN MINE Overall royalties received from the Big Horn Mine decreased to $12,012 during the nine months ended September 30, 1996 from $117,669 in 1995, and decreased to $9,003 in the third quarter of 1996 from $9,148 in the third quarter of 1995. The decrease in the first nine months of 1996 reflects decreased production from the applicable leases. The Trustee anticipates that there will be minimal production at the Big Horn Mine in the future. - 6 - 8 PART II - OTHER INFORMATION. ITEM 1. LEGAL PROCEEDINGS. There are no material pending legal proceedings to which the Trust is a party or of which any of its property is the subject. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. 27.1 Financial Data Schedule. (b) No reports on Form 8-K were filed during the quarter for which this report is filed. - 7 - 9 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: First Bank, National Association its capacity as Trustee and not in its individual capacity or otherwise By: /s/ Susan K. Rosburg --------------------------- Susan K. Rosburg Trust Officer Dated: November 8, 1996