<PAGE> 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, 1999
Commission File No. 0-10810
KIEWIT ROYALTY TRUST
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Nebraska 47-6131402
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
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, 1999, there were 12,633,432 Units of Beneficial Interest
of the registrant outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
KIEWIT ROYALTY TRUST
STATEMENT OF ASSETS, LIABILITIES AND TRUST CORPUS
as of June 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
- ------ ---- ----
<S> <C> <C>
Cash equivalents $ 246,669 $ 163,236
Royalty and overriding
royalty interests in coal leases $ 167,817 $ 167,817
Less accumulated amortization $(105,518) $ (98,702)
--------- -------------
Net royalty and overriding
royalty interests in coal leases $ 62,299 $ 69,115
--------- -------------
Total Assets $ 308,968 $ 232,351
========= ============
LIABILITIES AND TRUST CORPUS
- ----------------------------
Distributions payable to Unit Holders $ 246,669 $ 163,236
Trust Corpus: 12,633,432
Units of Beneficial Interest
authorized and outstanding $ 62,299 $ 69,115
--------- ------------
Total Liabilities and Trust Corpus $ 308,968 $ 232,351
========= ============
</TABLE>
The accompanying notes are an integral part
of the financial statements
- 2 -
<PAGE> 3
KIEWIT ROYALTY TRUST
STATEMENT OF DISTRIBUTABLE INCOME
for the three months and six months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Royalty Income $ 253,698 $ 203,430 $ 2,028,179 $ 2,738,400
Interest Income 4,899 6,867 17,535 25,822
Trust Expenses (11,928) (12,374) (30,389) (30,756)
------------ ------------ ------------- -----------
Distributable
Income $ 246,669 $ 197,923 $ 2,015,325 $ 2,733,466
Distributable
income per unit
(12,633,432 units) $ .0195251 $ .0156666 $ .1595232 $ .2163677
</TABLE>
STATEMENT OF CHANGES IN TRUST CORPUS
for the six months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Trust Corpus as of January 1 $ 69,115 $ 82,206
Amortization of royalty interests (6,816) (6,972)
Distributable Income 2,015,325 2,733,466
Distribution to Unit Holders ( 2,015,325) ( 2,733,466)
------------ ------------
Trust Corpus as of June 30 $ 62,299 $ 75,234
=========== ============
</TABLE>
The accompanying notes are an integral part
of the financial statements
- 3 -
<PAGE> 4
KIEWIT ROYALTY TRUST
Notes to Financial Statements
as of June 30, 1999 and December 31, 1998
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, 1998.
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 -
<PAGE> 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 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, 1999, the Trust received a
total of $2,028,179 of royalty and overriding royalty payments; during the three
months ended June 30, it received a total of $253,698 of such payments. The
following schedule reflects the royalty and overriding royalty amounts received
by the Trust from each mine.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Mine June 30 June 30
- ---- -------------------------------- --------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Decker 204,967 158,230 1,917,149 2,628,900
Big Horn 48,731 45,200 111,030 109,500
Spring Creek --- --- --- ---
-------- -------- ---------- ----------
$253,698 $203,430 $2,028,179 $2,738,400
======== ======== ========== ==========
</TABLE>
i. DECKER MINE.
The royalty and overriding royalty payments received by the Trust during
the first six months of 1999 with respect to the Decker Mine decreased to
$1,917,149 compared to $2,628,900 received during the same period in 1998. The
decrease in payments received in the first six months of 1999 was due to a
lower average selling price for the coal mined during the relevant period. For
the second quarter, the payments received by the Trust increased to $204,967
compared to $158,230 received during the same period in 1998. The increase in
payments received in the second quarter of 1999 was due to increased production
and a higher average selling price for the coal mined during the relevant
period.
- 5 -
<PAGE> 6
ii. BIG HORN MINE.
Royalties received from the Big Horn Mine increased to $48,731 during the
second quarter of 1998 from $45,200 in 1998, and overall receipts for the first
six months of 1999 increased to $111,030 compared to $109,500 during the
corresponding period in 1998. These increases for 1999 reflect increased
production in the relative amounts of coal mined under leases bearing high and
low overriding royalty rates per ton.
iii. SPRING CREEK MINE.
No royalties were received from the Spring Creek Mine during the first
six months of 1999 or 1998 because royalties are typically paid by the mine
operators on an annual basis during the second half of a calendar year.
c. YEAR 2000 ISSUE.
The "Year 2000" computer problem has arisen because many computer
applications worldwide will not properly recognize the date change from December
31, 1999, to January 1, 2000, potentially causing production of erroneous data,
miscalculations, system failures and other operational problems.
Since the Trust does not have any computer system of its own, initiatives
to address the Year 2000 issue has been undertaken by the Trustee, U.S. Bank
National Association, to evaluate the Year 2000 impact on its critical computer
hardware and software. The Trust does not incur any cost in the Trustee's
addressing of its Year 2000 problem. The Trustee has indicated to the Trust that
it has developed a strategic plan focusing on achieving Year 2000 compliance.
Certain systems are being replaced, modified or reprogrammed to be Year 2000
compliant. If necessary, new hardware and software is being purchased to be Year
2000 compliant. Systems are being tested in an isolated environment dedicated to
Year 2000 testing. The Year 2000 project includes contingency plans to mitigate
potential delays or other problems, such as back-up solutions for all
mission-critical applications and business continuation plans for significant
vendors and other business partners. The Year 2000 efforts of the Trustee and
any related third parties are not within the Trust's control, however, and their
failure to remediate Year 2000 issues successfully could result in business
disruption, increased operating costs and increased credit risk for the Trust.
At the present time, it is not possible to determine whether any such events are
likely to occur, or to quantify any potential negative impact they may have on
the Trust's future results of operations and financial condition.
Ultimately, the potential impact of the Year 2000 issue will depend not
only on the success of the corrective measures undertaken by the Trustee, but
also on the way in which the Year 2000 issue is addressed by vendors, service
providers, counterparties, utilities, governmental agencies and other entities
with which the Trustee and the Trust do
- 6 -
<PAGE> 7
business. These parties are receiving communication from the Trustee to heighten
their awareness of the Year 2000 issue, to learn how the Trustee is addressing
it and to evaluate any likely impact on the Trustee and the Trust.
The foregoing discussion regarding Year 2000 contains forward-looking
statements, which are based on management's best estimates derived using various
assumptions. These forward-looking statements involve inherent risks and
uncertainties, and actual results could differ materially from those
contemplated by such statements. Such material differences could result in,
among other things, business disruption, operational problems, financial loss,
legal liability and similar risks.
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 -
<PAGE> 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 10, 1998
- 8 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 246,669
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 308,968
<CURRENT-LIABILITIES> 246,669
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 62,299
<TOTAL-LIABILITY-AND-EQUITY> 308,968
<SALES> 0
<TOTAL-REVENUES> 2,045,714
<CGS> 0
<TOTAL-COSTS> 2,015,325
<OTHER-EXPENSES> 30,389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> .16
<EPS-DILUTED> .16
</TABLE>
