SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT 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, 2004
Or
[ ] 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
TABLE OF CONTENTS
Audited Financial Statements
Report of Independent Registered Public Accounting Firm....................1
Statements of Net Assets Available for Benefits............................2
Statements of Changes in Net Assets Available for Benefits.................3
Notes to Financial Statements..............................................4
Other Financial Information
Schedule of Assets (Held at End of Year)...................................9
Report of Independent Registered Public Accounting Firm
The Plan's Administrative Committee
The Beard Group 401(k) Plan
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, 2004 and 2003,
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. The Plan is not required
to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included 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 management, 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, 2004 and 2003, 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, 2004 and 2003, 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 of America.
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, 2004, 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. This supplemental schedule is the
responsibility of the Plan's Administrative Committee. The supplementary
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.
COLE & REED P.C.
Oklahoma City, Oklahoma
May 25, 2005
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
THE BEARD GROUP 401(k) PLAN
December 31
-----------
2004 2003
---- ----
ASSETS
Investments, at fair value
Short-term investment funds $ 46,877 $ 109,692
Mutual funds 945,564 1,020,534
Common stock 228,340 50,070
Real estate 480,837 444,790
Loans to participants 49,964 36,008
----------- -----------
1,751,582 1,661,094
Cash 1,073 -
Accrued other income 13 38
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 1,752,668 $ 1,661,132
=========== ===========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
THE BEARD GROUP 401(k) PLAN
Year Ended
December 31
-----------
2004 2003
---- ----
ADDITIONS
Investment income:
Interest and dividends $ 28,732 $ 17,084
Net realized and unrealized appreciation
on investments:
Common stock 178,270 1,070
Mutual funds 86,262 170,601
Real estate 36,047 24,335
Other 424 392
------------ ------------
329,735 213,482
Contributions:
Participants 45,667 61,127
------------ ------------
TOTAL ADDITIONS 375,402 274,609
DEDUCTIONS
Benefits paid to participants 265,270 29,072
Other 18,596 13,418
------------ ------------
TOTAL DEDUCTIONS 283,866 42,490
------------ ------------
NET INCREASE 91,536 232,119
NET ASSETS AVAILABLE FOR BENEFITS AT
BEGINNING OF YEAR 1,661,132 1,429,013
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 1,752,668 $ 1,661,132
============ ============
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS--Continued
THE BEARD GROUP 401(k) PLAN
December 31, 2004
NOTE A--DESCRIPTION OF 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 ($13,000
and $12,000 for the years ended December 31, 2004 and 2003, 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 $3,000 to the Plan during the year ended December 31, 2004.
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 amount
of the allowable catch-up contributions will increase by $1,000 per year through
the year ended December 31, 2006.
The Plan's assets primarily consist of participant directed investment funds.
Participants can transfer among the participant directed investment funds.
Investment options include five equity securities mutual funds, a fixed income
mutual fund, a short-term investment fund, and the Company's common stock
("Stock Fund"). Non-participant directed assets are composed of interests in
various real estate partnerships, which were the assets of the previous profit
sharing portion of the Plan.
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 the participant's 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. There was $1,073 of
unused forfeitures as of December 31, 2004.
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 in excess of
$5,000 may be made in a single payment, in installments, or in the form of an
annuity contract, as elected by the participants. In cases where the amount due
is less than $5,000, the method of payment is at the option of the Plan's
Administrative Committee.
Employer contributions and related investment gains or losses become vested with
participants under the following schedule effective January 1, 2004:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 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.
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 five years,
except for loans used for the purpose of acquiring a participant's principal
residence which may be for a period of up to fifteen 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.
NOTE B--SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation: 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 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.
Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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. All other Plan fees and expenses connected with
providing administrative services by external service providers are paid by the
Company. Certain administrative functions are performed by the officers or
employees of the Company. No such officer or employee receives compensation from
the Plan.
NOTE C--INVESTMENTS AND TRUSTEE CERTIFICATION
InvesTrust, N.A., the Plan's trustee, has certified, to the best of its
knowledge, the completeness and accuracy of all investment balances and
activity, including investment fair value and cost, accrued interest receivable,
interest and dividend income, net appreciation (depreciation) in fair value of
investments, and purchases and sales of investments as of and for the year ended
December 31, 2004 and 2003.
The following investments at fair value represent 5% or more of the net assets
of the Plan at December 31:
2004 2003
---- ----
AIM Short Term Prime (a) $ - $ 109,692
Dodge & Cox Stock Fund #145 213,076 170,861
Beard Company Stock (b) 228,340 -
Neuberger Berman Genesis Fund 205,675 183,878
Morgan Stanley Small Co. Growth 178,349 122,053
Vanguard Total Bond Market Fund - 178,269
Montag & Caldwell Growth Fund 195,710 291,991
Dallas/Fort Worth SH-121, Limited Partnership (c) 135,453 128,493
Dallas/Fort Worth North, Limited Partnership (c) 87,950 92,318
F.M. 1314-Needham Road, Limited Partnership #2 (c) 136,475 129,538
(a) The balance at December 31, 2003 included $47,351 that was non-participant
directed.
(b) This represents common stock of the Company, which represents a
party-in-interest transaction as defined by ERISA.
(c) Non-participant directed.
NOTE D--NON-PARTICIPANT DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the non-participant directed investments as of and for
the years ended December 31, 2004 and 2003 is as follows:
2004 2003
---- ----
Net assets:
Short-term investments $ 39,758 $ 47,351
Real estate partnerships 480,837 444,790
---------- ----------
$ 520,595 $ 492,141
========== ==========
Changes in net assets:
Net assets, beginning of year $ 492,141 $ 467,806
Net realized and unrealized appreciation
on investments 28,454 24,335
---------- ----------
Net assets, end of year $ 520,595 $ 492,141
========== ==========
NOTE E--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.
NOTE F--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, 2004. Through May, 25, 2005, the Company was still in full
operations. 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.
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
THE BEARD GROUP 401(k) PLAN
December 31, 2004
Schedule H (Form 5500), Part IV, Page 4, Item 4i,
Schedule of Assets Held For
Investment Purposes At End Of Year,
Employer Number -- 73-0970298; Plan Number -- 001
Description of investment
including maturity date,
Identity of Issuer, Borrowers, rate of interest, collateral, Fair
Lessors, or Similar Party par or maturity value Cost Value
------------------------- --------------------- ---- -----
Aim Short Term Prime Short-term investment fund $ <F2> $ 46,877
Aim International Fund Equity securities mutual fund <F2> 50,544
Dodge & Cox Stock Fund #145 Equity securities mutual fund <F2> 213,076
Eresearch Technology Equity securities mutual fund <F2> 21,398
Neuberger Berman Genesis Fund Equity securities mutual fund <F2> 205,675
Morgan Stanley Small Co. Growth Equity securities mutual fund <F2> 178,349
Montag & Caldwell Growth Fund Equity securities mutual fund <F2> 195,710
Vanguard Total Bond Market Fund Fixed income securities
mutual fund <F2> 80,812
<F1> The Beard Company Common Stock <F2> 228,340
Real Estate:
Dallas/Fort Worth North, Limited
Partnership Limited Partnership 105,983 87,950
Dallas/Fort Worth SH-121, Limited
Partnership Limited Partnership 156,640 135,453
Classen Enterprises, Limited Partnership Limited Partnership 41,200 31,908
F.M. 1314-Needham Road, Limited
Partnership Limited Partnership 85,845 85,770
F.M. 1314-Needham Road, Limited
Partnership #2 Limited Partnership 48,132 136,475
Other Mineral Interest 1,418 3,281
<F1> Participant loans - various Loans ranging from 1-5
years maturity, secured by
employee's vested balance,
with interest rates of 4%
to 6.75% - 49,964
----------- ----------
$ 439,218 $1,751,582
=========== ==========
<FN>
<F1>
A party-in-interest as defined by ERISA
<F2>
Cost information is not required on participant-directed investments
</FN>
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
By: INVESTRUST, N.A., Trustee
Date: June 27, 2005 By: C.A. HARTWIG
C.A. Hartwig
Vice President