SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK
REPURCHASE SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
x Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2007
Or
o Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file number 005-47757
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
THE BEARD GROUP 401(k) PLAN
5600 N. May Ave., Suite 320
Oklahoma City, Oklahoma 73112
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
THE BEARD COMPANY
5600 N. May Ave., Suite 320
Oklahoma City, Oklahoma 73112
THE BEARD GROUP 401(k) PLAN
FINANCIAL STATEMENTS
December 31, 2007 and 2006
(With Report of Independent Registered Public Accounting Firm Thereon)
THE BEARD GROUP 401(k) PLAN
FINANCIAL STATEMENTS
Table of Contents
| Page |
Report of Independent Registered Public Accounting Firm | 1 |
Financial Statements:
Statements of Net Assets Available for Benefits
| as of December 31, 2007 and 2006 | 2 |
Statements of Changes in Net Assets Available for Benefits
| for the Years Ended December 31, 2007 and 2006 | 3 |
| Notes to Financial Statements | 4 |
Supplemental Schedules:
| Schedule of Assets (Held at End of Year) |
| as of December 31, 2007 | 9 |
Note: | All other schedules required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable. |
Report of Independent Registered Public Accounting Firm
The Plan’s Administrative Committee
The Beard Group 401(k) Plan
Oklahoma City, Oklahoma
We have audited the accompanying statements of net assets available for benefits of The Beard Group 401(k) Plan (the “Plan”) as of December 31, 2007 and 2006, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s Administrative Committee. Our responsibility is to express an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Administrative Committee, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above of The Beard Group 401(k) Plan as of December 31, 2007 and 2006, and for the years then ended present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2007 and 2006, and changes in the net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2007, is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s Administrative Committee. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Oklahoma City, Oklahoma
June 25, 2008
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STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS |
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THE BEARD GROUP 401(k) PLAN |
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| December 31 | |||
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| 2007 | 2006 | ||
Investments, at fair value: |
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| Short-term investment funds |
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| $ 174,633 | $ 154,365 | ||||
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| Mutual funds |
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| 943,344 | 894,523 | |||
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| Common stock |
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| 190,958 | 347,749 | |||
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| Real estate |
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| 333,772 | 344,121 | |||
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| Participant loans |
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| 61,584 | 89,863 | |||
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| Total investments, at fair value |
| 1,704,291 | 1,830,621 | |||||
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Cash |
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| - | 2,739 | |||
Accrued other income |
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| 1,809 | 1,168 | |||||
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| NET ASSETS AVAILABLE FOR BENEFITS |
| $ 1,706,100 | $ 1,834,528 | |||||
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See notes to financial statements. |
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STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS |
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THE BEARD GROUP 401(k) PLAN |
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| Year Ended | |
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| December 31 | |
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| 2007 | 2006 |
ADDITIONS |
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Investment income: |
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| Interest and dividends |
| $ 65,827 | $ 49,530 | |||
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| Net realized and unrealized appreciation |
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| Common stock |
| (158,921) | (116,613) | |||
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| Mutual funds |
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| 4,748 | 79,314 | ||
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| Real estate |
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| (10,348) | 146,574 | |
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| Other |
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| 40,330 | 437 | |
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| (58,364) | 159,242 |
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Contributions: |
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| Employees |
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| 39,623 | 47,139 | |
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| (18,741) | 206,381 |
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DEDUCTIONS |
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| Benefits paid to participants |
| 86,329 | 324,905 | |||
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| Other |
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| 23,358 | 36,952 | |
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| 109,687 | 361,857 |
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| NET DECREASE | (128,428) | (155,476) | |||
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| NET ASSETS AVAILABLE FOR BENEFITS |
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| AT BEGINNING OF YEAR | 1,834,528 | 1,990,004 | |||
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| NET ASSETS AVAILABLE FOR BENEFITS |
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| AT END OF YEAR | $ 1,706,100 | $ 1,834,528 | |||
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See notes to financial statements. |
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THE BEARD GROUP 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
December 31, 2007 and 2006
(1) | DESCRIPTION OF THE PLAN |
The following description of The Beard Group 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution retirement plan sponsored by The Beard Company and its subsidiaries and affiliates (the “Company”), covering all employees who have completed one year of service, as defined in the Plan agreement, and are age 21 years or older. The Plan is subject to the provisions of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions and Investment Options
The 401(k) provisions of the Plan allow participants to make voluntary “savings” contributions from 1% to 50% of compensation, up to the maximum allowed by the Internal Revenue Service ($15,500 and $15,000 for the years ended December 31, 2007 and 2006, respectively), with the Company matching 100% of each participant’s contribution, up to 5% of the participant’s annual compensation. In order to improve its liquidity and conserve working capital, the Company suspended all matching contributions effective July 16, 2002. It is the Company’s intent to reinstate the match when future conditions permit; however, no definitive date exists for such reinstatement.
Plan participants age 50 and older were eligible to make a catch-up contribution of an additional $5,000 to the Plan. Participants eligible to make the catch-up contributions may do so only after making the total elective deferral contributions of the lesser of 50% of their compensation or the maximum allowed by the Internal Revenue Service.
The Plan’s assets primarily consist of participant-directed investment funds. Participants can transfer among the participant-directed investment funds. Investment options include six equity securities mutual funds, a fixed income mutual fund, a short-term investment fund, and the Company’s common stock (“Stock Fund”). Nonparticipant-directed assets are composed of interests in various real estate partnerships, which were the assets of the previous profit-sharing portion of the Plan.
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THE BEARD GROUP 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
December 31, 2007 and 2006
(1) DESCRIPTION OF THE PLAN, CONTINUED
Participant Accounts
The Company’s 401(k) matching contributions and Plan earnings or losses are credited to each participant’s account. Allocations are based on participant earnings or account balances, as defined in the Plan agreement.
Benefits owed to participants under the Plan are limited to the participant’s total 401(k) contributions, earnings, and vested interest in the Company’s 401(k) matching contributions.
Forfeitures
Forfeitures of terminated participants’ nonvested accounts are to be applied to reduce future Company matching contributions.
Benefits and Vesting
Participants may receive the vested portion of their account balance upon reaching normal retirement, upon termination, or in the event of death or permanent disability. Payments to participants may be in the form of a lump sum or substantially equal periodic payments. The minimum cash-out limit is $1,000.
Employer contributions and related investment gains or losses become vested with participants under the following schedule:
Years of Service | Vested Percentage |
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Less than 2 years | 0% |
2 or more but less than 3 years | 20% |
3 or more but less than 4 years | 40% |
4 or more but less than 5 years | 60% |
5 or more but less than 6 years | 80% |
6 years or more | 100% |
In addition, contributions become fully vested upon normal retirement at age 65, death, or permanent disability. Participant contributions and amounts received as a rollover from a predecessor plan and related earnings are fully vested at all times.
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THE BEARD GROUP 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
December 31, 2007 and 2006
(1) DESCRIPTION OF THE PLAN, CONTINUED
Plan Termination
Although the Company has not expressed the intent to terminate the Plan, it may do so at any time, subject to provisions of ERISA. Aggregate vested benefits are limited to the Plan’s net assets.
Loans to Participants
Participants may borrow up to 50% of their vested balance, but such loans may not be less than $1,000 or greater than $50,000. The loans bear interest at a fixed rate, which approximates the rate generally charged for consumer loans. The terms of the loans may not exceed 5 years, except for loans used for the purpose of acquiring a participant’s principal residence, which may be for a period of up to 15 years. Loans are generally repaid by monthly payroll deductions from a participant’s wages.
Investment Management and Custody
Custody of the Plan’s assets is maintained by InvesTrust, N.A., under the terms of a trust agreement between the Plan and InvesTrust, N.A. entered into effective January 1, 2001. Under the terms of the agreement, InvesTrust, N.A. has custody of the Plan’s assets in trust funds maintained on behalf of the Plan.
(2) | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Accounting
The Plan’s financial statements have been prepared on the accrual basis of accounting.
Investments
The short-term investment fund is valued at cost, which approximates market. Investments in mutual funds and common stocks are stated at fair value, which is determined based on quotations obtained from national securities exchanges. Investments in real estate are stated at estimated fair values determined by the Plan’s Administrative Committee, using information obtained from independent appraisals or the operators of the properties. Investments in participant loans are stated at fair value, which approximates the outstanding loan balance. Investment transactions are recognized on the trade date. Dividends are recorded on the ex-dividend date.
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THE BEARD GROUP 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
December 31, 2007 and 2006
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets during the reporting period. Actual amounts could differ from those estimates.
Administrative and Other Costs
Trust fees connected with participants’ balances are paid from Plan assets. During the years ended December 31, 2007 and 2006, all other Plan fees and expenses connected with providing administrative services by external service providers are also paid from Plan assets. Certain administrative functions are performed by the officers or employees of the Company. No such officer or employee receives compensation from the Plan.
(3) | INVESTMENTS AND TRUSTEE CERTIFICATION |
The following investments at fair value represent 5% or more of the net assets of the Plan at December 31:
| 2007 |
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AIM Short-Term Prime | $ 174,633 | (a) | $ 154,365 | (a) |
Dodge & Cox Stock Fund #145 | 234,352 |
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The Beard Company Stock | 190,958 | (b) | 347,749 | (b) |
Morgan Stanley Small Co. Growth | 154,138 |
| 162,257 |
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Montag & Caldwell Growth Fund | - | (d) | 207,622 |
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Brandywine Blue Fund | 229,398 |
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Keeley Small Cap Value Fund | 136,453 |
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AIM International Fund | 119,940 |
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Dallas/Fort Worth SH-121, Limited Partnership | 271,784 | (c) | 226,383 | (c) |
Dallas/Fort Worth North, Limited Partnership | - | (d) | 117,738 | (c) |
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(a) | The balance at December 31, 2007 and 2006, included $142,455 and $107,795, respectively, that was nonparticipant directed. |
(b) | This represents common stock of the Company, which represents a party-in-interest transaction as defined by ERISA. |
(c) | Nonparticipant directed. |
(d) | Not in excess of 5% of net assets at applicable year-end. |
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THE BEARD GROUP 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
December 31, 2007 and 2006
(4) | NONPARTICIPANT-DIRECTED INVESTMENTS |
Information about the net assets and the significant components of the changes in plan net assets relating to the nonparticipant-directed investments as of and for the years ended December 31 is as follows:
| 2007 | 2006 |
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Net assets: |
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Short-term investments | $ 142,455 | $ 107,795 |
Real estate partnerships | 333,772 | 344,121 |
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| $ 476,227 | $ 451,916 |
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Changes in net assets: |
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Net assets, beginning of year | $ 451,916 | $ 561,232 |
Net realized and unrealized | 24,311 | (109,316) |
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Net assets, end of year | $ 476,227 | $ 451,916 |
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(5) | TAXABLE STATUS OF THE PLAN |
The Plan obtained its latest determination letter on May 21, 1994, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan’s administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements
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THE BEARD GROUP 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
December 31, 2007 and 2006
(6) RISKS AND UNCERTAINTIES
The Company’s auditors included a going concern paragraph in their Independent Auditors’ Report on the Company’s financial statements for the year ended December 31, 2007. Through June 25, 2008 the Company was still in full operation. However, should the Company continue to incur recurring losses and negative cash flows from its operations, it could have a significant impact on the value of the Company’s stock included as part of the Plan’s investment assets.
THE BEARD GROUP 401(k) PLAN |
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SCHEDULE OF ASSETS (HELD AT END OF YEAR) |
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December 31, 2007 |
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Schedule H (Form 5500), Part IV, Page 4, Item 4i, Schedule of Assets Held For Investment |
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Purposes At End Of Year, Employer Number --73-0970298, Plan Number -- 001 |
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| (c) |
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| (b) |
| Description of investment including |
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| Identity of Issuer, Borrowers, and |
| maturity dates, rate of interest, |
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| Current |
(a) |
| Lessors, or Similar Party |
| collateral, par or maturity value |
| Cost |
| Value |
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| AIM Short-Term Prime |
| Money Market Mutual Fund |
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| $ 174,633 |
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| AIM International Fund |
| Mutual Fund |
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| 119,940 |
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| Dodge & Cox Stock Fund #145 |
| Mutual Fund |
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| 234,352 |
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| Keeley Small Cap Value Fund |
| Mutual Fund |
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| 136,453 |
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| Banco Bilbao Vizcaya Argenteria |
| Mutual Fund |
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| 16,975 |
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| Morgan Stanley Small Co. Growth |
| Mutual Fund |
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| 154,138 |
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| Brandywine Blue Fund |
| Mutual Fund |
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| 229,398 |
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| Vanguard Total Bond Market Fund |
| Mutual Fund |
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| 52,088 |
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| 1,117,977 |
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| The Beard Company |
| Common Stock |
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| 190,958 |
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| Real Estate: |
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| Dallas/Ft. Worth North, LP |
| Limited Partnership |
| 75,596 |
| 61,988 |
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| Dallas/Ft. Worth SH-121, LP |
| Limited Partnership |
| 157,883 |
| 271,784 |
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| 333,772 |
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| Participant Loans |
| Loans ranging from 1 to 5 year |
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| maturities, with interest rates |
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| from 4.96% to 9.25% |
| N/A |
| 61,584 |
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| $ 1,704,291 |
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| A party-in-interest as defined by ERISA |
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| Cost information is not required for participant-directed 401(k) plans. |
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SIGNATURES
THE BEARD GROUP 401(k) PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE BEARD GROUP 401(K) PLAN |
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| By: INVESTRUST, N.A., Trustee |
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Date: June 30, 2008 | By /s/ C.A. Hartwig |
| C.A. Hartwig |
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