UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______ to ________
Commission file number 33-53542
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Unit Corporation Employees' Thrift Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Unit Corporation
7130 South Lewis, Suite 1000
Tulsa, Oklahoma 74136
Unit Corporation Employees' Thrift Plan
Index to
Financial Statements and Supplemental Schedules
Report of Independent Registered Public Accounting Firm....................1
Financial Statements.......................................................2
Statements of Net Assets Available For Benefits at
December 31, 2003 and 2002............................................2
Statements of Changes in Net Assets Available For Benefits
for the year ended December 31, 2003 and 2002.........................3
Notes to Financial Statements...........................................4
Supplemental Schedules*....................................................9
Schedule H, line 4i, Schedule of Assets (Held at End of Year)...........9
Schedule H, line 4j, Schedule of Reportable Transactions
for the year ended December 31, 2003.................................10
* Other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for the Reporting and Disclosure under the Employee
Retirement Income Security Act ("ERISA") of 1974 have been omitted because they
are not applicable.
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator
Unit Corporation Employees' Thrift Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of Unit Corporation Employees' Thrift Plan (the "Plan") at December 31,
2003 and 2002, and the changes in net assets available for benefits for the
years ended December 31, 2003 and 2002 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with the
Standards of the Public Company Accounting Oversight Board (United States),
whose 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules, as
listed in the accompanying index, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
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. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
October 7, 2004
1
UNIT CORPORATION EMPLOYEES' THRIFT PLAN
Financial Statements
Statements of Net Assets Available For Benefits at December 31, 2003 and 2002
December 31,
------------------------------------
2003 2002
---------------- ----------------
Assets
Investments (Notes 2 and 4)
Registered Mutual Funds $ 15,635,877 $ 11,689,278
Common stock of Unit Corporation 9,553,370 6,634,924
---------------- ----------------
Total investments 25,189,247 18,324,202
---------------- ----------------
Receivables
Employer's contribution 1,409,836 1,079,329
Employees' contribution 62,451 48,605
Accrued interest and dividends 6,722 7,289
Due from brokers 30,862 539
---------------- ----------------
Total receivables 1,509,871 1,135,762
---------------- ----------------
Total Assets 26,699,118 19,459,964
---------------- ----------------
Liabilities
Payable to broker (89,303) (25,275)
Payable to trustee (31,374) ---
---------------- ----------------
Total liabilities (120,677) (25,275)
---------------- ----------------
Net assets available for
plan benefits $ 26,578,441 $ 19,434,689
================ ================
The accompanying notes are an integral part of these financial statements
2
UNIT CORPORATION EMPLOYEES' THRIFT PLAN
Statements of Changes in Net Assets Available For Benefits for the Years
ended December 31, 2003 and 2002
Years Ended December 31,
------------------------------------
2003 2002
---------------- ----------------
Additions
Investment income
Interest and dividend income $ 156,802 $ 162,866
Net appreciation in fair
value of investments 4,138,721 1,820,769
---------------- ----------------
4,295,523 1,983,635
Contributions
Employer 1,407,464 1,080,119
Employee 1,996,588 1,548,605
Rollovers 220,939 20,354
Transfers in (Note 1) 360 334,197
--------------- ----------------
Total additions 7,920,874 4,966,910
--------------- ----------------
Deductions
Distributions (777,122) (1,557,821)
--------------- ----------------
Net increase 7,143,752 3,409,089
Net assets available for plan benefits
Beginning of the year 19,434,689 16,025,600
--------------- ----------------
End of the year $ 26,578,441 $ 19,434,689
=============== ================
The accompanying notes are an integral part of these financial statements
3
UNIT CORPORATION EMPLOYEES' THRIFT PLAN
Notes to Financial Statements
1. Description of Plan
The following description of the Unit Corporation Employees' Thrift Plan
(the "Plan"), formerly Unit Drilling and Exploration Company Employees'
Thrift Plan, provides only general information. Participants should refer
to the Plan for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all eligible employees of
Unit Corporation (the "Company"), the Plan sponsor. Bank of Oklahoma, N.A.
serves as trustee for the Plan under a trust agreement dated August 1,
1985. The Plan is subject to the provisions of the Employment Retirement
Income Security Act of 1974, as amended ("ERISA").
The Plan allows participation on the first day of any service month
immediately following completion of the attainment of age 21 and three
months of service.
Contributions
Effective January 1, 2002, the Plan allows participants to contribute up to
100% of their total monthly compensation (including overtime pay, bonuses
and other extraordinary compensation), as increased from 19% prior to
January 1, 2002.
The Company may contribute to the Plan a specified percentage of
participant contributions determined by the Company's Board of Directors,
limited to 6% of participant compensation. The Company may also contribute
an additional amount from its net profits and accumulated net profits as
determined by the Board of Directors from time to time. The Company
contribution for the Plan year 2003 was $1,407,464, which was 100% of
participating employees first 6% of contributions. The Company contribution
for the Plan year 2002 was $1,080,119, which was 100% of participating
employees' first 6% of contributions.
Transfers In
Effective December 13, 2002, the Cactus Drilling Company 401(k) Plan for
Hourly Employees and the Cactus Drilling Company 401(k) Plan for Salary
Employees was merged into the Unit Corporation Employees' Thrift Plan,
which resulted in $334,197 in assets transferred into the Plan during 2002.
Participants' Accounts
Each participant's account is credited with the participant's contribution,
the Company's contribution, if any, and Plan earnings. Plan earnings are
allocated based on account balances as of the preceding valuation date,
plus the proportionate allocation of contributions received since the
previous valuation date.
Vesting, Payment of Benefits and Forfeitures
Participants are immediately vested in their own contributions plus actual
earnings thereon. Participants are also fully vested in amounts previously
transferred from the Unit Drilling and Exploration Company Employee Stock
Ownership Plan. Vesting of the Company's contribution and related earnings
is based on years of employee service or the attainment of normal
retirement age for Company contributions made before 1999 and are as
follows:
Vesting Service Nonforfeitable
Percentage
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
4
In 1999, the Company began matching under the IRS Safe Harbor rules which
require these contributions to be immediately 100 percent vested.
Normal retirement age is 65. Participants may generally elect the form of
payment from several options, including a lump sum payment, installment
payments over a specified number of years not to exceed the participant's
remaining life expectancy, or by transferring to another plan which is
qualified under Section 401(c) of the Internal Revenue Code.
The participant's account balance is retained in the Plan until the
participant requests a payment due to death, disability or retirement. At
the Plan administrative committee's discretion and with the terminated
participant's consent, payment of such vested benefits may be made at an
earlier date. Participants forfeit the nonvested portion of their account
upon distribution of vested benefits. Forfeited non-vested amounts, which
were not significant in 2003 or 2002, reduce the amount of employer
matching contributions for the Plan year in which participants receive a
distribution of their entire vested account.
Withdrawals
Participants may withdraw their salary reduction contributions only upon
termination, attainment of age 59-1/2 or normal retirement age, or a
limited hardship ruling which has been authorized by the Plan
administrative committee. The vested portion of Company contributions may
be withdrawn only upon termination of employment or attainment of age
59-1/2 if 100 percent vested.
Investment Options
The Plan provides for the participant contributions to be invested at the
election of the participant into any combination of the following options:
American Performance Cash Management Fund
The American Performance Cash Management Fund seeks current income with
liquidity and stability of principal by investing in U.S. dollar
denominated, high-quality short-term debt and other short-term obligations
of high quality.
American Performance Equity Fund
American Performance Equity Fund seeks growth of capital and, secondarily,
income. The fund normally invests at least 70% of assets in a diversified
portfolio of common stocks and convertible securities.
American Performance Balanced Fund
American Performance Balanced Fund seeks current income; long-term capital
growth is secondary. The fund invests in both equities and debt securities,
but it maintains at least 25% of assets in fixed-income securities.
PIMCO Total Return Fund
The PIMCO Total Return Fund is a high quality, well-diversified,
intermediate maturity portfolio that seeks to maintain the value of
original investments and to prudently maximize investments earnings.
Dodge & Cox Balanced Fund
The Dodge & Cox Balanced Fund seeks conservation of principal and long-term
growth of principal of income by investing in a diversified portfolio of
common stocks, preferred stocks, and fixed income securities.
PIMCO Capital Appreciation Fund
The PIMCO Capital Appreciation Fund seeks capital growth by primarily
investing in common stocks of companies with capitalizations of at least
$100 million.
Neuberger & Berman Partners Trust Fund
The Neuberger & Berman Partners Trust Fund seeks capital growth by
investing in preferred stocks, convertible securities, and debt securities.
Neuberger & Berman Genesis Trust Fund
The Neuberger & Berman Genesis Trust Fund seeks capital appreciation by
primarily investing in common stocks of companies with market
capitalizations less than $1.5 billion.
5
Fidelity Advisors Mid Cap Fund
Fidelity Advisor Mid Cap Fund seeks long-term growth capital. The fund
normally invests at least 65% of assets in companies with medium market
capitalizations.
Janus Fund
Janus Fund seeks long-term capital growth consistent with preservation of
capital. The fund invests primarily in common stocks of larger,
more-established companies, though it may invest in a large number of
issuers of any size.
T. Rowe Price New Horizons Fund
T. Rowe Price New Horizons Fund seeks capital appreciation; current income
is not a factor. The fund invests primarily in common stocks of small,
rapidly growing companies.
Vanguard 500 Index Fund
Vanguard 500 Index Fund seeks investment results that correspond with the
price and yield performance of the S&P 500 Index.
Vanguard Fixed Income Security Fund
Vanguard Long-Term Corporate Bond Fund seeks current income consistent with
maintenance of principal and liquidity.
Common Stock of Unit Corporation
The Unit Corporation common stock fund includes contributions from the
Company and participants. Participant contributions are directed solely by
the participants. Contributions from the Company are directed by the
Company. Once the common stock has been contributed to the Plan the
participants may sell the common stock and allocate the proceeds to other
funds in the Plan. All other funds are participant directed.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Plan are presented on the accrual basis of
accounting.
Investment Valuation
Investments in Unit Corporation Common Stock are stated at current market
value as established by quoted market prices in an active market. All other
investments, which are registered open-ended mutual funds, are also stated
at current market value.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
Income Recognition
Purchases and sales of securities are recorded on a settlement date basis
which is not materially different from using a trade date basis. Interest
and dividend income and contributions are recorded on an accrual basis.
Administrative Expenses
The costs of administering the Plan are borne by the Company and are not
reflected in the statements included herein. Such costs totaled
approximately $27,000 and $22,000 for the years ended December 31, 2003 and
2002, respectively.
Payments of Benefits
Distributions are recorded when paid to participants.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
plan administrator to make significant estimates and assumptions that
affect the reported amounts of net assets available for benefits and, when
applicable, disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of changes in net assets
6
available for benefits during the reporting period. Actual results could
differ from those estimates.
3. Plan Termination
Although it has expressed no intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of the Employee Retirement
Income Security Act of 1974. In the event of Plan termination, participants
will become fully vested in their accounts.
4. Investments
All investments were held on behalf of the Plan by the trustee under a
trust agreement dated August 1, 1985. Investments held by the Plan
representing 5% or more of the Plan's net assets are as follows:
Fair
Shares Value
December 31, 2003
Registered mutual funds
American Performance Cash
Management Fund 3,943,679 $ 3,943,679
PIMCO Total Return Fund 147,349 1,578,111
Dodge & Cox Balanced Fund 42,178 3,080,646
PIMCO Cap Appreciation Fund 158,940 2,525,557
Neuberger & Berman Genesis Trust Fund 69,585 2,576,739
Common stock of Unit Corporation 405,663 9,553,370
December 31, 2002
Registered mutual funds
American Performance Cash
Management Fund 3,705,979 $ 3,705,981
PIMCO Total Return Fund 133,535 1,424,823
Dodge & Cox Balanced Fund 43,068 2,616,396
PIMCO Cap Appreciation Fund 143,091 1,794,356
Neuberger & Berman Genesis Trust Fund 55,809 1,570,458
Common stock of Unit Corporation 357,678 6,634,924
5. Nonparticipant-Directed Investments
The following tables set forth information related to the Unit Corporation
common stock fund's assets available for benefits as of December 31, 2003
and 2002 and the changes in such assets for the years then ended.
2003 2002
--------------- ---------------
Net assets
Unit Corporation common stock $ 9,553,370 $ 6,634,924
Employer's contribution receivable 1,409,836 1,079,329
Employees' contribution receivable 13,350 16,753
--------------- ---------------
$ 10,976,556 $ 7,731,006
=============== ===============
7
2003 2002
--------------- ---------------
Changes in net assets
Contributions $ 1,841,384 $ 1,473,961
Net appreciation 2,229,910 2,726,798
Distributions (378,033) (453,663)
Transfers (447,711) (2,522,688)
--------------- ---------------
$ 3,245,550 $ 1,224,408
=============== ===============
6. Income Tax Status
A favorable determination of the qualification of the Plan under Section
401 of the Internal Revenue Code and the tax exempt status of the Trust
under Section 501 was received from the Internal Revenue Service in August
2001 covering amendments to the Plan subsequent to its previous
determination letter obtained in June 1998. There have been amendments
since the August 2001 determination letter. However, the plan 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.
7. Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in
the near term and that such changes could materially affect participants'
account balances and the amounts reported in the statement of net assets
available for plan benefits and the statement of changes in net assets
available for plan benefits.
8. Benefits Due to Participants
At December 31, 2003 and 2002, there were no benefits payable to
participants who had elected to withdraw from the Plan but had not yet been
paid.
9. Party-In-Interest
Certain Plan investments are shares of Unit Corporation common stock. These
transactions represent investments in the Company and, therefore, qualify
as party-in-interest. The fair value of this investment totaled $9,553,370
and $6,634,924 at December 31, 2003 and 2002, respectively.
10. Subsequent Event
Effective June 25, 2004, the Serdrilco, Inc. 401(k) Savings Plan was merged
into the Unit Corporation Employees' Thrift Plan, which resulted in
approximately $1.9 million in assets being transferred into the Plan.
8
UNIT CORPORATION EMPLOYEES' THRIFT PLAN
Supplemental Schedules
Schedule H, line 4i, Schedule of Assets (Held at End of Year)
December 31, 2003
Identity of Issuer and Current
Description of Investment Shares Cost Value
Registered mutual funds
American Performance Cash
Management Fund 3,943,679 $ 3,943,679 $ 3,943,679
American Performance Equity Fund 14,533 111,961 114,378
American Performance Balanced Fund 2,319 25,824 28,683
PIMCO Total Return Fund 147,349 1,566,622 1,578,111
Dodge & Cox Balanced Fund 42,178 2,762,194 3,080,646
PIMCO Cap Appreciation Fund 158,940 2,985,866 2,525,557
Neuberger & Berman Partners Trust Fund 26,711 403,798 435,926
Neuberger & Berman Genesis Trust Fund 69,585 2,026,398 2,576,739
Fidelity Advisors Mid Cap Fund 12,896 232,612 289,008
Janus Fund 8,463 174,808 198,625
T. Rowe Price New Horizons Fund 9,748 206,484 241,752
Vanguard 500 Index Fund 2,143 185,316 220,053
Vanguard Fixed Income Security Fund 42,183 391,595 391,039
Common stock of Unit Corporation * 405,663 5,160,179 9,553,370
Participant loans (maturing 8/30/04 -
10/12/07, interest rates of 5.28% -
9%) --- 11,681
------------ ------------
$20,177,336 $25,189,247
============ ============
* - Represents investments which qualify as party-in-interest.
9
UNIT CORPORATION EMPLOYEES' THRIFT PLAN
Schedule H, line 4j, Schedule of Reportable Transactions
for the year ended December 31, 2003
Identity
Number of Party
of Involved/ CV of Asset
Trans- Description Purchase Selling Cost of on Date of Gain
actions of Assets Price Price Asset Transaction (Loss)
Series
273 BOSC Inc./ $ --- $1,884,016 $1,069,501 $1,884,016 $814,515
Unit
Corporation
Common Stock
177 BOSC Inc./ $1,525,665 $ --- $1,525,665 $1,525,665 $ ---
Unit
Corporation
Common Stock
SIGNATURE
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.
UNIT CORPORATION EMPLOYEES' THRIFT PLAN
Unit Corporation as Administrator of the Plan
By: /s/ Mark E. Schell Date: October 14, 2004
- ---------------------------------
Mark E. Schell
Senior Vice President, General Counsel and
Secretary
10
EXHIBIT INDEX
Exhibit Number Exhibit
23.1 Consent of Independent Registered Public Accounting Firm
11