Item 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS. Kiewit Royalty Trust (hereinafter referred to as the "Trust") is a trust organized under the laws of the State of Nebraska. The Trust was created under a Trust Indenture dated May 17, 1982, which subsequently was amended as of June 9, 1982, June 23, 1982, and by a court order dated September 23, 1994. A copy of the Trust Indenture is attached to the Form 10 filed by the Trust on December 23, 1982, and is incorporated herein by reference. A copy of the Order of the County Court of Douglas County, Nebraska, dated September 23, 1994, amending the Trust Indenture is attached to the Form 10-Q filed by the Trust on November 14, 1994, and is incorporated herein by reference.
The Trust was created by Peter Kiewit Sons', Inc., a Delaware corporation (hereinafter referred to as "Kiewit"). It was organized to provide an efficient, orderly and practical means for the administration of income received from certain royalty and overriding royalty interests */ in certain coal leases. The royalty and overriding royalty interests that the Trust owns were conveyed to the Trust by Kiewit effective June 28, 1982, pursuant to conveyance documents that gave the Trust legal title to the property interests conveyed. Ownership interests in the Trust are represented by 12,633,432 units of beneficial interest (hereinafter referred to as "Units"). On June 23, 1982, the Units were distributed pro rata to holders of Kiewit's Class B and Class C common stock, as of June 10, 1982, who were citizens of the United States.
The Trust has no active plan of business operation and is a purely ministerial trust. The Trust Indenture currently provides that all available income, after paying or making provisions for liabilities and obligations, is
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*/ When the owner of mineral rights executes a lease entitling the lessee to develop, mine, and sell the minerals, the lessee takes an "operating interest" and the owner may retain a "royalty interest." A royalty interest is a right to receive a specified amount per ton or a specified portion of the value of the total production of the property, free of the expense of development and operation. An "overriding royalty interest," which is similar to a royalty interest, is sometimes retained by the lessee of the mineral rights upon the lessee's assignment of the lease. Payment of an overriding royalty is generally subject to payment of the royalty.
to be distributed to holders of Units (hereinafter referred to as "Unit Holders") during the months of January, April, July, and October of each year. The trustee of the Trust is First Bank, National Association ("Trustee"), Omaha, Nebraska, which is a wholly owned subsidiary of First Bank System, Inc., a registered bank holding company.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. The Trust receives its income from only one industry segment. Financial information for that industry segment appears in Item 8, below.
(c) NARRATIVE DESCRIPTION OF BUSINESS. The Trust owns three (3) royalty interests and sixteen (16) overriding royalty interests relating to leases in four coal mining areas in Montana and Wyoming. The royalty and overriding royalty interests transferred to the Trust previously had been owned by various wholly owned Kiewit subsidiaries, and by Montana Royalty Company, Ltd., a partnership among three wholly owned Kiewit subsidiaries and Resource Development Co., Inc., a Washington state corporation.
The Trust is administered by officers and employees of the Trustee, but there are no specific persons employed by the Trustee having the full-time duty of administering the Trust. Under the Trust Indenture, the basic function of the Trustee is to collect income from the Trust's properties, to pay out of the Trust's income and assets all expenses, charges, and obligations, and to pay remaining cash to Unit Holders on a quarterly basis. The Trustee also is obligated to make annual financial reports to Unit Holders, to file all fiduciary income tax returns, and to prepare, execute, and deliver certificates of beneficial interest to the Unit Holders. The Trustee is obligated, subject to the terms of the Trust Indenture, to use its best judgment in good faith in all matters relating to the Trust and Trust properties.
The Trustee is authorized and required to use the money it receives to pay all liabilities of the Trust, including but not limited to all services as Trustee, and the compensation of geologists, engineers, accountants, attorneys, or the professional expert persons 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.
All available net income of the Trust will be distributed pro rata on a quarterly basis to Unit Holders. During any period between distributions to Unit Holders, the Trustee may invest any cash being held as a reserve for liabilities or for distribution in (i) time deposits of the Trustee Bank; (ii) any open-ended management type investment company or investment trust registered pursuant to the Investment Company Act of 1940 (provided that such investment matures on or before the next succeeding distribution date and is held until maturity); or (iii) trust-quality fixed net asset money market funds that have total assets of $100,000,000 or more and consist solely of direct obligations of the U.S. Government and/or next-business day repurchase agreements fully collateralized by direct obligations of the U.S. Government.
The Trust Indenture grants to the Trustee only such rights and powers as are necessary to achieve the purposes of the Trust. The Trust Indenture prohibits the Trustee from entering into or engaging in any business or commercial activity of any kind or from using any portion of the assets of the Trust to acquire any coal lease, royalty, or mineral interest. The Trustee may sell Trust properties only as authorized by a vote of a majority-in-interest of Unit Holders, except that the Trustee may sell Trust properties upon the termination of the Trust without a vote of Unit Holders. Any sale of Trust properties must be for cash, and the Trustee is obligated to distribute the available net proceeds of any such sale pro rata to Unit Holders.
The Trust is irrevocable, but it may be terminated by (i) three successive fiscal years in which net revenue is less than $1,000,000 per year; (ii) a vote in favor of termination by a majority-in-interest of Unit Holders; or (iii) operation of the provisions of the Trust Indenture intended to permit the Trust to comply with the rule against perpetuities. Upon the termination
of the Trust, the Trustee will continue to act in such capacity until all assets of the Trust are distributed. The Trustee will sell all Trust properties for cash in one or more sales and, after satisfying all expenses, claims and liabilities and establishing adequate reserves, if necessary, for the payment of contingent liabilities, will distribute the remaining proceeds of such sales according to the respective interests and rights of Unit Holders.
(d) FINANCIAL INFORMATION ABOUT OPERATIONS. During 1996, the Trust received net royalty income of $5,764,334 for distribution to Unit Holders. See Item 8, below.
Item 2.
Item 2. PROPERTIES.
The Trust's properties consist of royalty and overriding royalty interests in nineteen (19) coal leases in four mining areas located in the States of Wyoming and Montana. All of these royalty and overriding royalty interests were transferred to the Trust, as described in Item 1, above, by Kiewit and are subject to the provisions of the coal lease agreements under which they were created.
The royalty and overriding royalty interests transferred to the Trust 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 terms of these royalty and overriding royalty interests vary considerably, as does the acreage covered by the underlying coal leases, the total recoverable reserves on such leases, and the recoverable reserves to be mined under current contracts.
The remaining periods of the underlying coal leases as of December 31, 1996, including optional renewal periods, are such that, given the productive capacity of the mines that are the subjects of the leases, the full estimated total recoverable reserves could be extracted. However, it does not appear likely that the estimated total recoverable reserves will in fact be extracted. See "Properties -- Producing Leases -- Revised Production Estimates" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," below. Failure to extract the total recoverable reserves or failure to sell any portion of the coal extracted could adversely affect the royalties payable to the Trust.
The following chart sets forth the actual total amount of coal production (including production under leases in which the Trust has no royalty or overriding royalty interests) of the four mines to which the coal leases pertain:
Set forth below is a summary by mine area of pertinent information as of December 31, 1996, about each of the producing leases in which the Trust has either royalty or overriding royalty interests.
(a) PRODUCING LEASES.
(i) 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 Kiewit Coal Properties Inc. (a wholly owned subsidiary of Kiewit and formerly named Kiewit Mining Group Inc.) and Western Minerals, Inc. (a wholly owned subsidiary of NERCO, Inc.). Each joint venturer owns a fifty percent (50%) interest in the joint venture. The Decker Mine in its entirety includes approximately 17,838 acres and has an annual productive capacity of 16,000,000 tons.
The Trust owns overriding royalty interests in six (6) productive leases at the Decker Mine. The terms of the Trust's overriding royalty interests and the estimated total recoverable reserves of each lease are set
forth in the table below, of which the accompanying notes are an integral part:
(ii) BLACK BUTTE MINE. Black Butte Coal Company ("Black Butte") operates this mine in Sweetwater County, approximately 35 miles east of Rock Springs, Wyoming. Black Butte is a joint venture between Kiewit Coal Properties Inc. and Bitter Creek Coal Company (a wholly owned subsidiary of Union Pacific Corporation). The Black Butte Mine in its entirety includes approximately 50,220 acres and has an annual productive capacity of 6,000,000 tons.
The Trust owns overriding royalty interests in two (2) productive leases at the Black Butte Mine. The terms of the Trust's overriding royalty interests and the estimated total recoverable reserves of each lease are set forth in the table below, of which the accompanying note is an integral part:
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*/ 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 overriding royalties pertaining to the lease, may not exceed fifty percent (50%) of the royalty payable to the lessor under the lease.
**/ This Lease was renewed effective November 13, 1993 and was assigned a new lease number of C-1085-93.
***/ 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 the underlying royalty pertaining to the lease, will be equal to the highest cumulative royalties being paid in the States of Montana or Wyoming.
****/ This Lease was renewed effective April 14, 1995 and was assigned a new lease number of C-1087-95.
*****/ This Lease was renewed effective June 2, 1996 and was assigned a new lease number of C-1090-96.
The Trust's overriding royalty from lease number W-6266 is further limited to the difference between a specified amount per ton and the royalty per ton payable to the lessor.*/
(iii) BIG HORN MINE. Big Horn Coal Company ("Big Horn") has operated this mine, which is located approximately 5 miles north of Sheridan, Wyoming, in Sheridan County. Big Horn is a wholly owned subsidiary of Kiewit Coal Properties Inc. The Big Horn Mine in its entirety includes approximately 4,890 acres and has an annual productive capacity of 3,000,000 tons. The Trust owns royalty interests in three (3) productive leases at the Big Horn Mine.
The terms of the Trust's royalty interests and the estimated total recoverable reserves of each lease are set forth in the table below, of which the accompanying notes are an integral part:
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*/ Total remaining reserves on lease W-6266 are 25,154,000 tons. However, due to a renegotiation provision regarding the royalty payable under the lease and the cap on the amount of the overriding royalty, the Trust no longer receives an overriding royalty on coal produced after March 31, 1996. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
The Trustee understands that Kiewit anticipates minimal production from the Big Horn Mine in 1997 (and in future years) as a result of the expiration of the primary coal sales contract at the end of 1988. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," below.
(iv) 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 10,000,000 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 estimated total recoverable reserves of the lease are set out below:
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*/ Peter Kiewit Sons' Co. is a wholly owned subsidiary of PKS Information Services, Inc., which in turn is a wholly owned subsidiary of Kiewit Diversified Group Inc., which in turn is a wholly owned subsidiary of Kiewit.
**/ By the terms of the assignment by which it was created, the royalty payable for this lease is 10% of the average gross sales price per ton or, if greater, the highest royalty payable to the U.S. government for similar quality coal mined in the State of Wyoming.
(v) REVISED PRODUCTION ESTIMATES. The numbers set forth in the charts above in the column entitled "Estimated Total Recoverable Reserves" reflect estimates made at the time of the formation of the Trust in 1982, reduced to reflect the amount of coal actually extracted from the relevant leases. As a result, certain of these numbers do not reflect current conditions in the coal market. In light of recent reductions in the amounts of coal purchased under existing coal contracts (based both upon elections by customers to take the minimum quantities of coal permitted under the terms of such agreements and upon amendments of such agreements) and current conditions in the coal market, the amount of coal expected to be produced from such leases has been significantly reduced. As of December 31, 1996, the Trustee understands that the amounts of coal expected to be recovered from the relevant leases were as follows:
(b) NON-PRODUCING LEASES. In addition to its interests in these productive leases, the Trust has overriding royalty interests in three (3) leases, containing 27,800,000 tons of total estimated recoverable coal reserves from which no production is currently contemplated and in four (4)
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*/ 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.
leases, containing approximately 19,300,000 tons of coal, which are considered to be not minable because of access, alluvial valley, or other problems.
Item 3.
Item 3. LEGAL PROCEEDINGS.
None.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(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 ("1933 Act"), nor have they been registered under the securities laws of any state. Accordingly, resales of the Units are subject to certain restrictions on transferability.
Under the 1933 Act, the Units should be treated as "restricted securities." As such, resales of the Units are subject to certain restrictions on transferability under the federal securities laws. Unit Holders should consult with their own counsel regarding their ability to sell their Units. However, under the Securities and Exchange Commission's Rule 144, a Unit Holder who is not an "affiliate" */ of the Trust and has held his or her Units since the creation of the Trust should be able to sell such Units without restriction. Any Unit Holder who has acquired his or her Units since the creation of the Trust should likewise be able to sell such Units without restriction so long as at least three years have elapsed since such Units were owned by any affiliate of the Trust. In this regard, it should also be noted that sales of the Units might be made without compliance with Rule 144 pursuant to the less definite standards of the so-called Section 4(1-1/2) exemption from the registration requirements of the 1933 Act.
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*/ Under Rule 144(a)(i), an "affiliate" of the Trust would be any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Trust.
None of the Units is 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. The table below sets forth the approximate number of Unit Holders of record on December 31, 1996:
(c) DIVIDENDS. The Trust pays no dividends since it is not a corporation. Within ten (10) business days after the end of each calendar quarter, however, the Trustee will distribute the Quarterly Distribution Amount (as defined below) for the three preceding months, together with any undistributed interest earned on each such amount to the payment date. This distribution is made pro rata to Unit Holders of record on the last business day for each such quarter (the "Quarterly Record Date").
The Quarterly Distribution Amount distributed to each Unit Holder is the excess, if any, of (i) the cash received during such quarter that is attributable to the royalties and overriding royalties held by the Trust, plus any decrease in any cash reserve theretofore established by the Trustee for the payment of liabilities of the Trust, plus any other cash receipts of the Trust during such quarter other than interest earned on the Quarterly Distribution Amount for any other quarter that is earned before the actual distribution for the fiscal quarter that includes that other quarter, over (ii) the liabilities of the Trust paid during such quarter plus the amount of any cash reserve established or increased by the Trustee for the payment of any future or contingent liabilities of the Trust.
The table below shows the aggregate Quarterly Distribution Amounts (including interest) for each quarter during 1996 and 1995 and shows the date on which such amounts were distributed:
Item 6.
Item 6. SELECTED FINANCIAL DATA.
The table below sets forth selected financial data, drawn from the Trust's audited financial statements, for each of the last five years.
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*/ This figure represents $80,538 paid by Black Butte to the Trust during thefourth quarter of 1993 but reserved by the Trustee, plus accrued interest thereon in the amount of $117 as of December 31, 1993.
Item 7.
Item 7. MANAGEMENT'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 1996 was $5,780,326 compared to $7,534,101 for 1995.
The following schedule reflects the royalty and overriding royalty payments received by the Trust in respect of leases at the following mines:
(a) DECKER MINE. The amount of royalties and overriding royalties received by the Trust with respect to the Decker Mine decreased to $4,707,364 in 1996 from $5,783,247 in 1995. This decrease was due to a change in the relative amounts of coal mined under leases bearing high and low overriding royalty rates per ton, which was a normal result of the execution of a mining plan encompassing several coal leases bearing different royalty rates.
(b) BLACK BUTTE MINE. Royalties received by the Trust from the Black Butte Mine decreased to $153,352 in 1996 from $655,834 in 1995. This decrease is the result of decreased sales from the Black Butte Mine as well as the fact that Federal Lease 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 will be 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 will effectively eliminate further payments to the Trust with respect to that lease.
(c) SPRING CREEK MINE. Royalties received from the Spring Creek Mine decreased to $879,192 during 1996 from $913,096 in 1995. This decrease reflects decreased production under the applicable leases.
(d) BIG HORN MINE. Royalties received from the Big Horn Mine decreased to $24,426 during 1996 from $130,206 in 1995. The decrease reflects decreased production under the applicable leases.
(e) TRUST EXPENSES. Trust expenses increased to $49,637 in 1996 from $47,023 in 1995.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
(a) FINANCIAL STATEMENTS. The following documents are filed as part of the Trust's financial statements for the period from January 1, 1996 to December 31, 1996:
(1) Report of Independent Accountants
(2) Statements of Assets, Liabilities and Trust Corpus
(3) Statements of Distributable Income and Statements of Changes in Trust Corpus
(4) Notes to Financial Statements
KIEWIT ROYALTY TRUST
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FINANCIAL STATEMENTS as of December 31, 1996 and 1995 and for the three years ended December 31, 1996
COOPERS & LYBRAND L.L.P. a professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
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, 1996 and 1995, and the related statements of distributable income and changes in trust corpus for each of the three years in the period ended December 31, 1996. 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 generally accepted auditing standards. 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. An audit also includes 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, the financial statements have been prepared on the basis of accounting which differs in some respects from generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present financial position and results of operations of Kiewit Royalty Trust in conformity with 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, 1996 and 1995, and the distributable income and changes in trust corpus for each of the three years in the period ended December 31, 1996, in conformity with the basis of accounting described in Note 1 to the financial statements.
/s/ Coopers & Lybrand L.L.P.
Omaha, Nebraska March 26, 1997
KIEWIT ROYALTY TRUST STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS December 31, 1996 and 1995
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The accompanying notes are an integral part of the financial statements.
KIEWIT ROYALTY TRUST STATEMENTS OF DISTRIBUTABLE INCOME for the three years ended December 31, 1996 -------
STATEMENTS OF CHANGES IN TRUST CORPUS for the three years ended December 31, 1996 -------
The accompanying notes are an integral part of the financial statements.
KIEWIT ROYALTY TRUST NOTES TO FINANCIAL STATEMENTS
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1. Summary of Significant Accounting Policies and Basis of Accounting:
(a) Basis of Accounting:
The financial statements of the Kiewit Royalty Trust (the Trust) are prepared on the following basis:
(1) The royalty income recorded for a month is the amount received from the lease holder for such month.
(2) 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 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 royalty payments are received. In addition, amortization of the net royalty and overriding royalty interests, which is calculated on a units-of-production basis on a lease, is charged directly to trust corpus since such amount does not affect distributable income.
(b) Cash Equivalents:
Cash equivalents consist of money market funds, which are recorded at cost plus interest.
2. Trust Organization and Provisions:
The Kiewit Royalty Trust was established on May 17, 1982. On June 28, 1982, Peter Kiewit Sons', Inc. (Kiewit) conveyed to the Trust royalty and overriding royalty interests owned by Kiewit's subsidiaries in certain coal properties in Montana and Wyoming.
Units of beneficial interest (Units) in the Trust were distributed on June 23, 1982 to Kiewit's Class B and Class C shareholders of record as of June 10, 1982 who were citizens of the United States. These shareholders received one Unit in the Trust for each share of Kiewit stock held.
KIEWIT ROYALTY TRUST NOTES TO FINANCIAL STATEMENTS, CONTINUED
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2. Trust Organization and Provisions, Continued:
FirsTier Bank, N.A., Omaha was Trustee for the Trust through February 15, 1996. On February 16, 1996, FirsTier Bank merged with First Bank, National Association, who is now 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 Units 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 interest 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 interests of $167,817 represents Kiewit'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 (Quarterly 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 Quarterly Distribution Amount is payable to unit holders of record as of the last business day of each quarter. The cash distributions are made quarterly within the first 10 business days of January, April, July and October.
KIEWIT ROYALTY TRUST NOTES TO FINANCIAL STATEMENTS, CONTINUED
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5. Income Taxes:
Provision for federal and state income taxes has not been made in the financial statements since, in the opinion of legal counsel, the Trust should be treated as a "grantor trust" which is not a taxable entity.
6. Summary of Quarterly Financial Data (Unaudited):
The following is a summary of the unaudited quarterly financial information:
7. Other Matters:
Black Butte Coal Company had been involved in a dispute with the Minerals Management Service ("MMS") of the U.S. Department of the Interior concerning the calculation of royalties on a Federal lease. Because of an overall limitation on the overriding royalty payable to the Trust from this lease, any additional amounts owed to MMS would have decreased the overriding royalties to which the Trust was entitled. An escrow account was established pending the resolution of the dispute with MMS and the disputed amounts were deposited into escrow. Upon resolution of the dispute, the escrow agent distributed the funds held in escrow, with interest, during the fourth quarter of 1994 and the escrow account was terminated.
(b) SUPPLEMENTARY DATA. Not applicable.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable.
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Trust was created as a trust under the laws of the State of Nebraska and its Indenture does not provide for the election of directors or officers. First Bank, National Association serves as Trustee. See Item 1, above.
Item 11.
Item 11. EXECUTIVE COMPENSATION.
As stated in Item 10, above, the Trust has no directors and no officers. During 1996, the Trust incurred $49,637 of administration expenses.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table sets forth the persons who, as of December 31, 1996, were known by the Trust to be beneficial owners of more than five percent of the
Units:
(b) SECURITY OWNERSHIP OF MANAGEMENT. There are no executive officers or directors of the Trust. See Item 10, above. As of December 31, 1996, First Bank, National Association, Trustee, did not beneficially own any Units in the Trust.
(c) CHANGES IN CONTROL. As of December 31, 1996, 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.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) TRANSACTIONS WITH MANAGEMENT AND OTHERS. As stated in Item 10, above, the Trust has no directors and no officers. During 1996, there were no transactions to which the Trust was a party and in which any persons known to the Trust to be the beneficial owners of more than five percent of the Units had a direct or indirect material interest.
(b) CERTAIN BUSINESS RELATIONSHIPS. There are no directors or nominees for director of the Trust. See Item 10, above.
(c) INDEBTEDNESS OF MANAGEMENT. As stated in Item 10, above, the Trust has no directors and no officers.
(d) TRANSACTIONS WITH PROMOTERS. Not applicable.
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) FINANCIAL STATEMENTS. See Item 8, above.
(2) FINANCIAL STATEMENT SCHEDULES. See Item 8, above, and Item 14(d), below.
(3) EXHIBITS. See Item 14(c), below.
(b) REPORTS ON FORM 8-K. The Trust did not file any reports on Form 8-K during the quarter ended December 31, 1996.
(c) 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 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.
99.1 Location Map of Coal Properties (filed as 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).
(d) SEPARATE FINANCIAL STATEMENTS AND SCHEDULES. Not applicable.
S I G N A T U R E S
Pursuant to the requirements of Section 13 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 in its capacity as Trustee and not in its individual capacity or otherwise
By: /s/ Susan K. Rosburg --------------------------- Susan K. Rosburg Trust Officer
Date: March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name Capacity Date ---- -------- ---- First Bank, National Association Trustee March 26, 1997
By: /s/ Susan K. Rosburg -------------------------- Susan K. Rosburg Trust Officer
EXHIBIT INDEX
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*/ Appears at sequentially numbered page 35 in the Trust's Form 10, as amended.
**/ Appears at sequentially numbered page 37 in the Trust's Form 10-Q filed on November 14, 1994.
***/ Appears at sequentially numbered page 36 in the Trust's Form 10-K filed on March 31, 1985.