1
FORM 10-Q
UNITED STATES
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 June 30, 1998
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)
Trust Division
U.S. Bank National Association
1700 Farnam Street
Omaha, Nebraska 68102
--------------------------------------
(Address of Principal Executive Offices)
(402) 348-6000
------------------------------------------
(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 June 30, 1998, 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 June 30, 1998 and December 31, 1997
ASSETS 1998 1997
- ------ ---- ----
Cash and short-term investments $ 197,923 $ 180,832
Royalty and overriding
royalty interests in coal leases $ 167,817 $ 167,817
Less accumulated amortization $ (92,583) $ (85,611)
---------- ----------
Net royalty and overriding
royalty interests in coal leases $ 75,234 $ 82,206
---------- ----------
Total Assets $ 273,157 $ 263,038
========== ==========
LIABILITIES AND TRUST CORPUS
Distributions payable to Unit Holders $ 197,923 $ 180,832
Trust Corpus: 12,633,432
Units of Beneficial Interest
authorized and outstanding $ 75,234 $ 82,206
---------- ----------
Total Liabilities and Trust Corpus $ 273,157 $ 263,038
========== ==========
The accompanying notes are an integral part
of the financial statements
-2-
3
KIEWIT ROYALTY TRUST
STATEMENT OF DISTRIBUTABLE INCOME
For the Three Months and Six Months Ended June 30, 1998 and 1997
Three Months Ended Six Months Ended
June 30 June 30
-------------------------- ---------------------------
1998 1997 1998 1997
--------- --------- ---------- ----------
Royalty Income $ 203,430 $ 238,339 $2,738,400 $2,088,444
Interest Income 6,867 5,496 25,822 21,838
Trust Expenses (12,374) (12,641) ( 30,756) (27,529)
--------- --------- ---------- ----------
Distributable
Income $ 197,923 $ 231,194 $2,733,466 $2,082,753
Distributable
income per unit
(12,633,432 units) $.0156666 $.0183002 $ .2163677 $ .1648604
STATEMENT OF CHANGES IN TRUST CORPUS
For the Six Months Ended June 30, 1998 and 1997
1998 1997
--------- -----------
Trust Corpus as of January 1 $ 82,206 $ 90,896
Amortization of royalty interests (6,972) (1,239)
Distributable Income 2,733,466 2,082,753
Distribution to Unit Holders (2,733,466) (2,082,753)
--------- -----------
Trust Corpus as of June 30 $ 75,234 $ 89,657
========= ===========
The accompanying notes are an integral part of the financial statements
-3-
4
KIEWIT ROYALTY TRUST
Notes to Financial Statements
as of June 30, 1998 and December 31, 1997
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, 1997.
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-
5
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 six months ended June 30, 1998, the Trust
received a total of $2,738,400 of royalty and overriding royalty payments;
during the three months ended June 30, it received a total of $203,430 of such
payments. The following schedule reflects the royalty and overriding royalty
amounts received by the Trust from each mine.
Three Months Ended Six Months Ended
Mine June 30 June 30
------ ------------------------ --------------------------
1998 1997 1998 1997
-------- ----------- ---------- -----------
Black Butte $ --- $ (274) $ --- $ (274)
Decker 158,230 237,064 2,628,900 2,074,112
Big Horn 45,200 1,549 109,500 14,606
Spring Creek --- --- --- - --
-------- ----------- ---------- -----------
$203,430 $ 238,339 $2,738,400 $ 2,088,444
======== =========== ========== ===========
i. BLACK BUTTE MINE.
The Trust received no royalties during the first six months of 1998, as
compared to the payment of $274 made by the Trust to Black Butte Mine during the
first six months of 1997. The Trust received no royalties during the three
months ended June 30, 1998, as compared to the payment of $274 made by the Trust
to the Black Butte Mine during the same period in 1997. The reason no royalties
are being received is that the trust no longer receives any overriding
royalties on coal produced after March 31, 1996 (as explained below) as a
result of the renewal of Federal Lease Number W-6266 effective April 1, 1996.
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
-5-
6
with respect to this lease, the increased federal royalty rate has effectively
eliminated further payments to the Trust with respect to this lease.
ii. DECKER MINE.
The amount of royalties and overriding royalties received by the Trust
with respect to the Decker Mine increased to $2,628,900 in the first six months
of 1998 compared to $2,074,112 during the same period in 1997. For the second
quarter, the amounts received decreased to $158,230 compared to the $237,064
received during the second quarter of 1997. 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.
iii. BIG HORN MINE.
Royalties received from the Big Horn Mine increased to $45,200 during
the second quarter of 1998 from $1,549 in 1997, and overall receipts for the
first six months of 1998 increased to $109,500 compared to $14,606 during the
corresponding period in 1997. These increases for 1998 reflect increased
production in the relative amounts of coal mined under leases bearing high and
low overriding royalty rates per ton.
iv. SPRING CREEK MINE.
No royalties were received from the Spring Creek Mine during the first
six months of 1998 or 1997 because royalties are typically paid by the mine
operators on an annual basis during the second half of a calendar year.
-6-
7
PART II - OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the Trust is a
party of which any of its property is the subject.
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 1 to the
Trust's Form 10-Q filed with the Securities and Exchange
Commission on December 23, 1982, and incorporated herein by
reference).
4.2 Order dated September 23, 1994, of the County Court of Douglas
County, Nebraska (filed as Exhibit 2 to the Trust's Form 10-Q
filed with the Securities and Exchange Commission on November
14, 1994, and incorporated herein by reference).
27.1 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for which this report
is filed.
-7-
8
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
By: /s/ Susan K. Rosburg
-----------------------------------
Susan K. Rosburg
Trust Officer
Dated: August 3, 1998
-8-