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, 2005
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
THE BEARD GROUP 401(k) PLAN
FINANCIAL STATEMENTS
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Table of Contents Page
Report of Independent Registered Public Accounting Firm................... 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2005 and 2004.................................. 2
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 2005 and 2004.................... 3
Notes to Financial Statements....................................... 4
Supplemental Schedules:
Schedule of Assets (Held at End of Year)
as of December 31, 2005........................................... 9
Schedule of Reportable Transactions
for the year ended December 31, 2005..............................10
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 plan net assets available for
benefits of The Beard Group 401(k) Plan (the "Plan") as of December 31, 2005 and
2004, and the related statements of changes in plan 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, 2005 and 2004, and for the years then ended
present fairly, in all material respects, the net assets available for plan
benefits of the Plan as of December 31, 2005 and 2004, and changes in the net
assets available for plan 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 schedules
of assets (held at end of year) as of December 31, 2005 and schedule of
reportable transactions for the year ended December 31, 2005, 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. The supplemental schedules
are the responsibility of the Plan's Administrative Committee. The supplementary
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.
COLE & REED P.C.
Oklahoma City, Oklahoma
June 13, 2006
THE BEARD GROUP 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31
-----------
2005 2004
---- ----
ASSETS
Investments, at fair value
Short-term investment funds $ 283,353 $ 46,877
Mutual funds 882,740 945,564
Common stock 458,844 228,340
Real estate 281,924 480,837
Loans to participants 81,715 49,964
----------- -----------
Total investments, at fair value 1,988,576 1,751,582
----------- -----------
Cash - 1,073
Accrued other income 1,428 13
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 1,990,004 $ 1,752,668
=========== ===========
See accompanying notes to financial statements.
THE BEARD GROUP 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended
December 31
-----------
2005 2004
---- ----
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Interest and dividends $ 46,759 $ 28,732
Net realized and unrealized appreciation
on investments:
Common stock 228,568 178,270
Mutual funds 57,213 86,262
Real estate 51,398 36,047
Other 492 424
------------ -----------
TOTAL INVESTMENT INCOME 384,430 329,735
Contributions:
Participants 48,509 45,667
------------ ------------
TOTAL ADDITIONS 432,939 375,402
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 173,591 265,270
Other 22,012 18,596
------------ ------------
TOTAL DEDUCTIONS 195,603 283,866
------------ ------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS 237,336 91,536
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 1,752,668 1,661,132
------------ ------------
END OF YEAR $ 1,990,004 $ 1,752,668
============ ============
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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(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 ($14,000 and $13,000 for the years
ended December 31, 2005 and 2004, 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 $4,000 to the Plan during the year ended
December 31, 2005. 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"). 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.
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 were no
unused forfeitures as of December 31, 2005.
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. Effective September 1, 2005, payments to participants
may be in the form of a lump sum or substantially equal periodic payments.
The Plan was amended in 2005 to reduce the minimum cash-out limit from
$5,000 to $1,000.
Employer contributions and related investment gains or losses become vested
with participants under the following schedule effective January 1, 2005:
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 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 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 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.
(3) 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 years ended December 31, 2005 and 2004.
The following investments at fair value represent 5% or more of the net
assets of the Plan at December 31:
2005 2004
---- ----
AIM Short Term Prime (a) $ 283,353 $ -
Dodge & Cox Stock Fund #145 204,038 213,076
Beard Company Stock (b) 458,844 228,340
Neuberger Berman Genesis Fund 214,833 205,675
Morgan Stanley Small Co. Growth 163,786 178,349
Montag & Caldwell Growth Fund 167,593 195,710
Dallas/Fort Worth SH-121, Limited Partnership (c) 138,576 135,453
Dallas/Fort Worth North, Limited Partnership (c) - 87,950
F.M. 1314-Needham Road, Limited Partnership #2 (c) - 136,475
-----------------
(a) The balance at December 31, 2005, included $279,308 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.
(4) NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
as of and for the years ended December 31 is as follows:
2005 2004
---- ----
Net assets:
Short-term investments $ 279,308 $ 39,758
Real estate partnerships 281,924 480,837
---------- ----------
$ 561,232 $ 520,595
========== ==========
Changes in net assets:
Net assets, beginning of year $ 520,595 $ 492,141
Net realized and unrealized appreciation
on investments 40,637 28,454
---------- ----------
Net assets, end of year $ 561,232 $ 520,595
========== ==========
(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
(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, 2005. Through May 24, 2006, 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.
Employer Number -- 73-0970298
Plan Number -- 001
THE BEARD GROUP 401(k) PLAN
FORM 5500 - Schedule H, Line 4i -
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
- -----------------------------------------------------------------------------------------------------------------------
December 31, 2005
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> $ 283,353
Aim International Fund Equity securities mutual fund <F2> 50,080
Dodge & Cox Stock Fund #145 Equity securities mutual fund <F2> 204,038
Neuberger Berman Genesis Fund Equity securities mutual fund <F2> 214,833
Morgan Stanley Small Co. Growth Equity securities mutual fund <F2> 163,786
Montag & Caldwell Growth Fund Equity securities mutual fund <F2> 167,593
Vanguard Total Bond Market Fund Fixed income securities
mutual fund <F2> 82,410
-----------
882,740
-----------
<F1> The Beard Company Common Stock <F2> 458,844
-----------
Real Estate:
Dallas/Fort Worth North, Limited
Partnership Limited Partnership 111,778 92,457
Dallas/Fort Worth SH-121, Limited
Partnership Limited Partnership 157,883 138,576
Classen Enterprises, Limited Partnership Limited Partnership 41,200 46,555
F.M. 1314-Needham Road, Limited
Partnership #2 Limited Partnership - 3,353
Other Mineral Interest 1,418 983
-----------
281,924
-----------
<F1> Participant loans - various Loans ranging from 1-5
year maturities, secured by
employee's vested balance,
with interest rates of 4%
to 7.75% - 81,715
----------- ----------
$ 312,279 $1,988,576
=========== ==========
<FN>
<F1>
Signifies a party-in-interest as defined by ERISA.
<F2>
Cost information is not required on participant-directed investments.
</FN>
Schedule II
Employer Number -- 73-0970298
Plan Number -- 001
THE BEARD GROUP 401(k) PLAN
FORM 5500 - Schedule H, Line 4j -
REPORTABLE TRANSACTIONS
- ---------------------------------------------------------------------------------------------------------------
Year Ended December 31, 2005
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Current
Expense value of
Identity incurred assets on Net gain
of party Description Purchase Selling Lease with Cost of transaction or
involved of asset price price rental transaction asset date (loss)
- ---------------------------------------------------------------------------------------------------------------
FM 1314 - Needham $ - $100,584 $ - $ - $ 85,770 $ 100,584 $ 14,814
Rd Limited
Partnership
FM 1314 - Needham - 149,728 - - 136,475 149,728 13,233
Rd #2
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 28, 2006 By: /s/ C.A. HARTWIG
C.A. Hartwig
Vice President