##### Table of Contents



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, 2006
 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:
 Securities registered pursuant to Section 12(g) of the Act:
 Title of each class
 o þ
 o þ
 þ o
 þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-accelerated Filer þ
 o þ




---



##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    2Item 1B.
    
    Unresolved Staff Comments
    
    
    2Item 2.
    
    Properties
    
    
    2Item 3.
    
    Legal Proceedings
    
    
    2Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    3PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    3Item 6.
    
    Selected Financial Data
    
    
    3Item 7.
    
    Trustees Discussion and Analysis of Financial Condition and Results of Operations
    
    
    4Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risks
    
    
    5Item 8.
    
    Financial Statements and Supplementary Data
    
    
    5Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    10Item 9A.
    
    Controls and Procedures
    
    
    11Item 9B.
    
    Other Information
    
    
    11PART III
    
    
    
    
    11Item 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    11Item 11.
    
    Executive Compensation
    
    
    11Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
    
    
    11Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    11Item 14.
    
    Principal Accountant Fees and Services
    
    
    12PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    12Signatures
    
    
    14Certifications
    
    
    15Certification of Trust Officer
    
    
    16Section 906 Certification of Trust OfficerCertification of Trust OfficerCertification of Trust OfficerCertificationCertification
  Forward-Looking Statements
  ii




---



##### Table of Contents



PART I
 
 Item 1. BUSINESS.
 Purpose of the Trust.
  The Coal Royalties.
 Tons of Coal Produced
 2006
    
    2005
       
    2004
    
    2003
    
    2002Decker Mine
    
    
    5,619,320
    
    
    
    5,660,597
    
    
    
    6,640,460
    
    
    
    5,664,008
    
    
    
    7,184,287Spring Creek Mine
    
    
    10,014,587
    
    
    
    9,258,738
    
    
    
    9,937,376
    
    
    
    6,613,867
    
    
    
    8,509,650Total
    
    
    15,633,907
    
    
    
    14,919,335
    
    
    
    16,577,836
    
    
    
    12,277,875
    
    
    
    15,693,937
   Terms of Overriding
    
    
    Tons Under
    
    
    Current EconomicLease
    
    Lessor
    
    Royalties
    
    Lease
    
    TonsM-073093
    
    United States
    
    5 cents per ton1
    
    
    84,594,000
    
    
    
    58,505M-061685
    
    United States
    
    10 cents per ton1
    
    
    45,802,000
    
    
    
    9,498,531M-057934
    
    United States
    
    10 cents per ton1
    
    
    7,927,000
    
    
    
    1,397,700C-1085-93
    
    Montana
    
    10 cents per ton1
    
    
    2,446,000
    
    
    
    917,347C-1087-95
    
    Montana
    
    10 cents per ton1
    
    
    7,420,000
    
    
    
    7,420,000148,189,000
    
    
    
    19,292,083
 1




---



##### Table of Contents



Terms of Overriding
    
    
    Tons Under
    
    
    Current EconomicLease
    
    Lessor
    
    Royalties
    
    Lease
    
    TonsM-069782
    
    United States
    
    10 cents per ton2
    
    
    83,409,000
    
    
    
    47,621,675
  
 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.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. Financial Information about Segments.
 Financial Information about Geographic Areas.
 Available Information. www.sec.gov
 
 Item 1A. RISK FACTORS.
 A Substantial or Extended Decline in Coal Prices Would Have a Material Adverse Effect on the
Trusts Revenues
  Estimates of Economic Tons of Coal Are Uncertain
  
 Item 1B. UNRESOLVED STAFF COMMENTS.
  
 Item 2. PROPERTIES.
  
 Item 3. LEGAL PROCEEDINGS.
  2




---



##### Table of Contents



Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
 a. Market Information.
  b. Holders.
 c. Distributions to Unit Holders.
 2006Distribution AmountsQuarter Ended
    
    Date Distributed
    
    In Total
    
    Per UnitMarch 31, 2006
    
    April 12, 2006
    
    $
    1,004,695
    
    
    $
    0.079527June 30, 2006
    
    July 11, 2006
    
    
    202,770
    
    
    
    0.016050September 30, 2006
    
    October 12, 2006
    
    
    1,986,164
    
    
    
    0.157215December 31, 2006
    
    January 10, 2007
    
    
    136,046
    
    
    
    0.010769$
    3,329,675
    
    
    $
    0.263561
 2005Distribution AmountsQuarter Ended
    
    Date Distributed
    
    In Total
    
    Per UnitMarch 31, 2005
    
    April 8, 2005
    
    $
    2,469,050
    
    
    $
    0.195438June 30, 2005
    
    July 8, 2005
    
    
    170,253
    
    
    
    0.013476September 30, 2005
    
    October 12, 2005
    
    
    1,828,614
    
    
    
    0.144744December 31, 2005
    
    January 11, 2006
    
    
    168,311
    
    
    
    0.013323$
    4,636,228
    
    
    $
    0.366981
 d. Securities Authorized for Issuance under Equity Compensation Plans.
  e. Recent Sales of Unregistered Securities.
  f. Issuer Purchases of Equity Securities.
  
 Item 6. SELECTED FINANCIAL DATA.
  2006
    
    2005
    
    2004
    
    2003
    
    2002Royalty and interest income
    
    $
    3,414,228
    
    
    $
    4,736,654
    
    
    $
    3,973,069
    
    
    $
    3,359,949
    
    
    $
    4,713,912Trust expenses
    
    $
    (84,553
    )
    
    $
    (100,426
    )
    
    $
    (89,323
    )
    
    $
    (116,904
    )
    
    $
    (119,781
    )Distributable income
    
    $
    3,329,675
    
    
    $
    4,636,228
    
    
    $
    3,883,746
    
    
    $
    3,243,045
    
    
    $
    4,594,131Distributable income per unit
(12,633,432 units)
    
    $
    0.263561
    
    
    $
    0.366981
    
    
    $
    0.307418
    
    
    $
    0.256700
    
    
    $
    0.363649Total assets
    
    $
    158,936
    
    
    $
    191,200
    
    
    $
    1,211,946
    
    
    $
    958,204
    
    
    $
    1,003,245
 3




---



##### Table of Contents



Item 7. TRUSTEES DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
   2006
    
    2005
    
    2004
    
    2003
    
    2002Decker Mine
    
    $
    2,178,696
    
    
    $
    2,926,496
    
    
    $
    3,056,604
    
    
    $
    2,684,331
    
    
    $
    3,835,811Spring Creek Mine
    
    
    1,203,858
    
    
    
    999,028
    
    
    
    897,698
    
    
    
    661,387
    
    
    
    850,965Total
    
    $
    3,382,554
    
    
    $
    3,925,524
    
    
    $
    3,954,302
    
    
    $
    3,345,718
    
    
    $
    4,686,776
 a. Decker Mine.
 b. Spring Creek Mine.
 Trust Expenses.
 Trust Reserves.
 4




---



##### Table of Contents



Off-Balance Sheet Arrangements.
 Contractual Obligations.
  Critical Accounting Policies and Estimates.
 
    
    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.
  
    
    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.
 
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
  
 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 a. Financial Statements.
 (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




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 The Trustee and Unit Holders
Kiewit Royalty Trust:
        6




---



##### Table of Contents



KIEWIT ROYALTY TRUST
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
December 31, 2006 and 2005
 2006
    
    2005ASSETSCash and cash equivalents
    
    $
    136,046
    
    
    $
    168,310Royalty and overriding royalty interests in coal lease
    
    
    167,817
    
    
    
    167,817Less accumulated amortization
    
    
    (144,927
    )
    
    
    (144,927
    )Net royalty and overriding royalty interests in coal leases
    
    
    22,890
    
    
    
    22,890Total Assets
    
    $
    158,936
    
    
    $
    191,200LIABILITIESDistributions payable to Unit Holders
    
    $
    136,046
    
    
    $
    168,310Trust corpus: 12,633,432 units of beneficial interest authorized, issued and outstanding
    
    
    22,890
    
    
    
    22,890Total liabilities and trust corpus
    
    $
    158,936
    
    
    $
    191,200
 The accompanying notes are an integral part
of the financial statements.
 7




---



##### Table of Contents



KIEWIT ROYALTY TRUST
STATEMENTS OF DISTRIBUTABLE INCOME
for the three years ended December 31, 2006
 2006
    
    2005
    
    2004Royalty income
    
    $
    3,382,554
    
    
    $
    3,925,524
    
    
    $
    3,954,302Royalty income recognized on settlement of litigation
    
    
    
    
    
    
    783,317
    
    
    
    Interest income
    
    
    31,674
    
    
    
    27,813
    
    
    
    18,767Trust expenses
    
    
    (84,553
    )
    
    
    (100,426
    )
    
    
    (89,323
    )Distributable income
    
    $
    3,329,675
    
    
    $
    4,636,228
    
    
    $
    3,883,746Distributable income per unit
    
    $
    0.263561
    
    
    $
    0.366981
    
    
    $
    0.307,418
 STATEMENTS OF CHANGES IN TRUST CORPUS
for the three years ended December 31, 2006
 2006
    
    2005
    
    2004Trust corpus, beginning of year
    
    $
    22,890
    
    
    $
    25,091
    
    
    $
    26,225Amortization of royalty interests
    
    
    
    
    
    
    (2,201
    )
    
    
    (1,134
    )Distributable income
    
    
    3,329,675
    
    
    
    4,636,228
    
    
    
    3,883,746Distributions to Unit Holders
    
    
    (3,329,675
    )
    
    
    (4,636,228
    )
    
    
    (3,883,746
    )Trust corpus, end of year
    
    $
    22,890
    
    
    $
    22,890
    
    
    $
    25,091
 The accompanying notes are an integral part
of the financial statements.
 8




---



##### Table of Contents



KIEWIT ROYALTY TRUST
NOTES TO FINANCIAL STATEMENTS
 1.
    
    Summary of Significant Accounting Policies and Basis of Accounting:(a)
    
    Basis of Accounting:The financial statements of Kiewit Royalty Trust (the Trust) are prepared on the following basis:(1)
    
    Royalty income is recorded on a cash receipt basis.(2)
    
    Trust administration expenses are recorded in the month in which they are paid.(3)
    
    Amortization of the net royalty and overriding royalty interests, which is calculated on a units-of-production basis, is
charged directly to trust corpus since such amount does not affect distributable income.(4)
    
    Distributions to Unit Holders are recognized when declared by the Trust.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.
 9




---



##### Table of Contents



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.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.
    
    Royalty Income Recognized on Settlement of Litigation:On June 29, 2001, the Trustee received notification from the operator of
the Spring Creek Mine initially alleging overpayments aggregating
approximately $476,000 related to the Trusts overriding royalty interest
that were remitted during the period from 1996 to 2000. Accordingly, the
$783,317 royalty payment received from the Spring Creek Mine on July 31,
2001, was being held in reserve in connection with this matter. In April
2002, the Trust filed a complaint in federal district court seeking a
declaratory judgment and accounting against Spring Creek Coal Company, the
operator of the Spring Creek Mine, in connection with this matter. On
October 28, 2002, the Spring Creek Coal Company filed an answer and a
counterclaim to the Trusts complaint alleging that the Trust does not own
an overriding royalty interest in certain portions of lands encompassed by
Lease M-069782 at Spring Creek Mine. The Spring Creek Coal Company was
seeking the return of $790,776 in allegedly mistaken payments made by it to
the Trust under this lease. In December 2004, the parties reached a
settlement and the case was dismissed with prejudice. As a result of the
settlement, during the first quarter of 2005, the Trustee distributed to
the Unit Holders the $783,317 which was held in trust reserves. This amount
is included in the statements of distributable income.7.
    
    Selected Quarterly Financial Data (Unaudited):The following is a summary of the unaudited quarterly financial information:
 DistributableRoyalty
    
    
    Distributable
    
    
    Income PerIncome
    
    Income
    
    UnitFor the year ended December 31, 2006:March 31, 2006
    
    $
    1,008,302
    
    
    $
    1,004,695
    
    
    $
    0.079527June 30, 2006
    
    
    244,498
    
    
    
    202,770
    
    
    
    0.016050September 30, 2006
    
    
    1,986,032
    
    
    
    1,986,164
    
    
    
    0.157215December 31, 2006
    
    
    143,722
    
    
    
    136,046
    
    
    
    0.010769$
    3,382,554
    
    
    $
    3,329,675
    
    
    $
    0.263561
 DistributableRoyalty
    
    
    Distributable
    
    
    Income PerIncome
    
    Income
    
    UnitFor the year ended December 31, 2005:March 31, 2005
    
    $
    1,711,110
    
    
    $
    2,469,050
    
    
    $
    0.195438June 30, 2005
    
    
    207,409
    
    
    
    170,253
    
    
    
    0.013476September 30, 2005
    
    
    1,829,761
    
    
    
    1,828,614
    
    
    
    0.144744December 31, 2005
    
    
    177,244
    
    
    
    168,311
    
    
    
    0.013323$
    3,925,524
    
    
    $
    4,636,228
    
    
    $
    0.366981
 
 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  10




---



##### Table of Contents



Item 9A. CONTROLS AND PROCEDURES.
 a.
    
    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.b.
    
    There was no significant change 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.
 
 Item 9B. OTHER INFORMATION.
  
 PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 Executive Officers and Director
  Compliance with Section 16(a) of the Exchange Act.
 Code of Ethics
 
 Item 11. EXECUTIVE COMPENSATION.
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
  11




---



##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 Fees Paid to KPMG LLP for 2006 and 2005
  Fiscal Year endedDecember 31,2006
    
    2005Audit fees
    
    $
    25,500
    
    
    $
    24,725Audit-related fees
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    $
    25,500
    
    
    $
    24,725
 Audit fees.
 Audit-related fees
 Tax fees
 All other fees
  
 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 LLPStatements of Assets, Liabilities and Trust CorpusStatements of Distributable IncomeStatements of Changes in Trust CorpusNotes to Financial Statements2.
    
    Financial statement schedulesNo financial statement schedules are filed herewith because (1) such schedules are not
required or (2) the information has been presented in the aforementioned financial statements3.
    
    ExhibitsThe 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).
 12




---



##### Table of Contents



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. 13




---



##### Table of Contents



SIGNATURES
  KIEWIT ROYALTY TRUSTBy
U.S. Bank National Association
in its capacity as Trustee and
not in its individual capacity or
otherwiseApril 1, 2007
    By:
    /s/ Ted L. HallBy:
    Ted L. HallTrust Officer (The Registrant has no directors or executive officers.)
 14