UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the Fiscal Year Ended December 31, 2004 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) |
For the Transition Period From
Commission File Number 1-9735
A. Full title of the Plan and the address of the Plan, if different from that of the issuer named below:
BERRY PETROLEUM COMPANY THRIFT PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office:
Berry Petroleum Company
5201 Truxtun Avenue, Suite 300
Bakersfield, CA 93309
TABLE OF CONTENTS
Page
Report of Independent Registered Public Accounting Firm 2
Statements of Net Assets Available for Benefits as of
December 31, 2004 and 2003 3
Statement of Changes in Net Assets Available for Benefits for the
year ended December 31, 2004 4
Notes to Financial Statements 5
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 10
Signature 11
Exhibit Index
Exhibit 23.1 - Consent of Independent Registered Public Accounting Firm
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Administrators of the
Berry Petroleum Company Thrift Plan
We have audited the accompanying statements of net assets available for benefits
of the Berry Petroleum Company Thrift Plan (the Plan) as of December 31, 2004
and 2003, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2004. 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 in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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. An audit also includes 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 present fairly, in
all material respects, the net assets available for benefits of the Berry
Petroleum Company Thrift Plan as of December 31, 2004 and 2003 and the changes
in its net assets available for benefits for the year ended December 31, 2004,
in conformity with accounting principles generally accepted in the United States
of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The 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 2004 financial
statements, but is supplementary information required by the United States
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 management. The supplemental schedule has
been subjected to the auditing procedures applied in our audit of the basic 2004
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic 2004 financial statements taken as a whole.
Corbin & Company, LLP
/s/Corbin & Company, LLP
Irvine, California
June 14, 2005
2
BERRY PETROLEUM COMPANY THRIFT PLAN
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
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2004 |
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2003 |
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ASSETS: |
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Cash and cash equivalents |
$ 125,673 |
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$ 51,495 |
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Employer contributions receivable |
192 |
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7,662 |
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Investments, at fair value |
13,967,623 |
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10,409,536 |
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Investments, at values quoted by trust |
4,922,806 |
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5,155,224 |
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Participant loans |
600,857 |
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686,557 |
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19,617,151 |
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16,310,474 |
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LIABILITIES: |
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Operating payables |
- |
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6,777 |
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Net assets available for benefits |
$ 19,617,151 |
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$ 16,303,697 |
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The accompanying notes are an integral part of these financial statements.
3
BERRY PETROLEUM COMPANY THRIFT PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2004
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Additions to net assets attributable to: |
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Contributions: |
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Participants |
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$ 884,861 |
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Employer |
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763,392 |
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Rollovers |
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92,955 |
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1,741,208 |
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Interest and dividends |
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213,157 |
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Participant loan interest payments |
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45,933 |
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Net appreciation in |
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fair value of investments |
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2,573,960 |
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2,833,050 |
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Total additions |
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4,574,258 |
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DEDUCTIONS: |
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Deductions from net assets attributable to: |
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Administrative fees |
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3,538 |
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Benefits paid to participants |
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1,257,266 |
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Total deductions |
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1,260,804 |
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Net increase in net assets |
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3,313,454 |
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Net assets available for benefits: |
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Beginning of year |
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16,303,697 |
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End of year |
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$ 19,617,151 |
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The accompanying notes are an integral part of these financial statements.
4
BERRY PETROLEUM COMPANY THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1. Plan Description
The following description of the Berry Petroleum Company Thrift Plan (the Plan)
is provided for general information purposes only. Participants should refer to
the Plan Agreement for more complete information.
General
The Plan is a defined contribution plan under Section 401(k) of the Internal
Revenue Code (the Code). The Plan was amended as of November 1, 2004 to allow
for immediate enrollment eligibility for all employees of Berry Petroleum
Company (the Company). Prior to November 1, 2004, employees were required to
have completed six months of service, as defined in the Plan Agreement, to be
eligible to participate in the Plan.
Contributions
Employees who elect to participate in the Plan may contribute from 1% to 60% of
their annual earnings, as defined in the Plan Agreement. The Company matches
100% of the first 6% of the participants annual earnings contributed to the
Plan. The Plan provides for a Company match in excess of 6%, if certain
financial results are achieved; however, the participants must contribute at
least 6% to receive the full Company match. Company matching contributions can
range from 6% to 9% of eligible participating employee earnings for active
participants in the Plan. Matching contributions averaged approximately 8.92%
and 7.48% for 2004 and 2003, respectively.
Participant and employer contributions are subject to statutory limitations,
which for 2004 were $13,000 pre-tax and $41,000 total for all employee and
employer contributions. Employees who have attained the age of 50 by the end of
the Plan year were eligible to make an additional catch-up contribution of
$3,000 for 2004. Participants vest immediately in their contributions, and
vesting in employer contributions is at a rate of 20% per year of service during
the first five years of employment. In addition, participants may elect to
contribute a percentage of eligible compensation into the Plan on an after-tax
basis. After-tax contributions are subject to special Internal Revenue Code
rules which must be satisfied and reduce the maximum amount a participant may
contribute. Any contributions that adversely affect the Plan's
non-discrimination tests may be refused or refunded.
Contributions made by or on behalf of Plan participants are invested
semi-monthly, as directed by the participants and held under a trust agreement
in one or more of the investment options selected by the Plan Sponsor in
accordance with the provisions of the Plan Agreement. Employees may choose to
have their contributions invested in the Managed Income Portfolio, the Berry
Petroleum Company Common Stock Fund and a selection of mutual funds. The Managed
Income Portfolio is designed to preserve capital and achieve a competitive level
of income over time while attempting to maintain a participant's unit value at
one dollar per share, similar to a money market fund.
5
BERRY PETROLEUM COMPANY THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1. Plan Description, continued
Investment Funds
The investment selections available to participants are as follows:
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Berry Petroleum Company Common Stock Fund |
Spartan U.S. Equity Index Fund |
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Managed Income Portfolio |
Fidelity Freedom Funds (3) |
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Fidelity Contrafund |
AIM Mid Cap Core Equity Fund (1) |
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Fidelity Diversified International Fund |
American Beacon Small Cap Value Fund (2) |
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Fidelity Equity Income I Fund |
Morgan Stanley Institutional - |
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Fidelity Inflation-Protected Bond Fund (1) |
Equity Growth Portfolio B Fund (1) |
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Fidelity Low-Priced Stock Fund |
PIMCO High Yield Fund (1) |
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Fidelity Puritan Fund |
RS Smaller Company Growth Fund (1) |
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Fidelity U.S. Bond Index Fund |
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Fidelity Freedom Income Fund |
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(1) Option added as of April 1, 2004.
(2) Option added as of December 27, 2004.
(3) The entire range of Freedom Funds are available and comprise the Freedom
2000, 2005, 2010, 2015
2020, 2025, 2030, 2035 and 2040. Not all of these funds are currently being used
by participants.
The following investments had values at December 31, 2004 and 2003 representing
more than 5% of net assets available for benefits:
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2004 |
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2003 |
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Fidelity Managed Income Portfolio |
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$ 4,922,806 |
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$ 5,155,224 |
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Fidelity Low-Priced Stock Fund |
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2,496,574 |
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1,851,273 |
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Fidelity Contrafund |
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2,301,450 |
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1,873,337 |
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Berry Petroleum Company Common Stock Fund |
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2,295,833 * |
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828,528 * |
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Spartan U.S. Equity Index Fund |
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2,050,619 |
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1,004,929 |
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Fidelity Diversified International Fund |
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1,725,413 |
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1,213,012 |
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Fidelity Equity Income I Fund |
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1,035,588 |
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838,613 |
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Fidelity Growth & Income Fund |
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- ** |
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917,410 |
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* Includes cash and cash equivalents of $125,673 and $51,495 at December 31,
2004 and 2003, respectively.
** Fund removed as an investment option for the Plan in April 2004.
6
BERRY PETROLEUM COMPANY THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1. Plan Description, continued
Participant Accounts
Participant statements are prepared and distributed quarterly. However,
participants can access their accounts at any time with Fidelity's Net Benefits
online service. Each participant account is credited with the participant's and
the Company's contributions, in addition to the allocation of any Plan earnings
or losses. Earnings or losses are allocated on a fund-by-fund basis. Allocations
are based on the ratio of the participant's account balance in each investment
option to the total assets of the investment option. Forfeitures of terminated
participants' non-vested accounts may be allocated to participants' accounts as
an additional Company match. If there is an allocation of forfeitures to
participants' accounts, it is based on service units from 0 to 12 depending on
months of service during the year. Only employees who are active participants at
December 31 each year are eligible for the allocation of forfeitures to their
accounts. Forfeitures allocated to participant accounts for the years ended
December 31, 2004 and 2003 were $14,919 and $4,965, respectively.
Participant Loans
Participants are entitled to borrow from their vested account balances in
amounts from $1,000 to $50,000, but not in excess of 50% of their vested account
balances. Interest is computed based on the prime rate in the Wall Street
Journal on the date of the application, plus 2%. A maximum of two loans can be
outstanding at any one time and each loan must be repaid over a period of 1 to 5
years. Home loans are available for a period of 5 years up to a maximum of 10
years. Each loan is supported by a promissory note with the participant's
account balance as collateral. In the event of default, death, disability or
termination of employment, the entire outstanding principal balance and accrued
interest may become immediately due and payable.
Hardship Withdrawals
The Plan allows for hardship withdrawals to pay certain housing, health or
education expenses if the participant does not have other funds available for
these expenses. Internal Revenue Service (IRS) regulations require that a
participant cannot make contributions to the Plan for 6 months after taking a
hardship withdrawal. In addition, participants will not receive matching
contributions or forfeitures for the 6 months they are ineligible to participate
in the Plan. For the year ended December 31, 2004, the Plan had no hardship
withdrawals.
Payment of Benefits
Upon termination of service due to retirement, death, disability or other
reasons, the participant or beneficiary, in the case of death, can request
withdrawal of his or her account equal to the value of the vested balance in the
participant account, reduced by any unpaid loan balance. If desired, a
participant can leave the account balance in the Plan until the participant
attains the age 70 1/2 unless the participant's vested account balance is less
than $5,000, in which case the vested account balance would be distributed to
the participant.
7
BERRY PETROLEUM COMPANY THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1. Plan Description, continued
Plan Termination
Although it is anticipated that the Plan will remain in effect indefinitely, the
Company has the right to discontinue its contributions and terminate the Plan
subject to the provisions of the Employee Retirement Income Security Act of
1974. In the event of complete or partial termination of the Plan, participants
become 100% vested in the employer contributions and earnings thereon. Upon
termination of the Plan, all participants have equal priority in the
distribution of any Plan assets in excess of Plan liabilities.
Trustees and Administration
The Company has entered into a trust agreement with Fidelity Management Trust
Company (Fidelity) to handle duties as the named Trustee for the Plan. Three
officers of the Company, Robert F. Heinemann, Ralph J. Goehring and Kenneth A.
Olson, are the Administrators of the Plan, and Berry Petroleum Company is the
Plan Sponsor. The Administrators have the authority to delegate plan
administration duties as necessary. Certain administrative expenses are paid by
the Company. Fidelity, as the Trustee, receives contributions from the Plan
Sponsor, invests and reinvests the Plan's assets, determines the market value of
Plan assets, prepares statements and processes loans and withdrawals to
beneficiaries.
Note 2. Summary of Significant Accounting Policies
Basis of Accounting
The Plan's financial statements are prepared using the accrual method of
accounting in accordance with accounting principles generally accepted in the
United States of America.
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 net assets
available for benefits and changes therein. Actual results could differ from
those estimates.
Investments
Quoted market prices as of the valuation date are used to compute the fair value
of equity securities for the Berry Petroleum Company Common Stock Fund and the
mutual funds. The value of the Managed Income Portfolio is based on the unit
price quoted by the trust, representing the fair value of the underlying
investments.
In accordance with the policy of stating Plan assets at their fair value, the
Plan presents the net appreciation (depreciation) in the fair value of its
investments in the statement of changes in net assets, which consists of the
realized gains or losses and the unrealized appreciation (depreciation) on those
investments.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded as of the
ex-dividend date.
8
BERRY PETROLEUM COMPANY THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 2. Summary of Significant Accounting Policies, continued
Payment of Benefits
Benefit payments to participants are recorded upon distribution. As of December
31, 2004, benefits payable to terminated participants who have requested
distributions were zero.
Expenses of the Plan
The Plan's administrative expenses are paid by either the Plan or the Plan's
Sponsor as provided by the Plan Agreement.
Note 3. Tax Status
Fidelity Management Trust Company, the Plan's Trustee, received a favorable IRS
Determination Letter from the IRS for their Prototype Plan (the Prototype Plan)
in November 2002. On June 1, 2003, the Company adopted Fidelity's Prototype
401(k) Plan conforming the operations of the Plan to the Prototype Plan, thereby
allowing the Company to rely on Fidelity's current and future favorable IRS
Determination Letters. The Plan Sponsor believes the Plan is designed, and is
currently being operated, in compliance with the applicable requirements of the
Internal Revenue Code.
Note 4. Transactions with Parties-in-Interest and Related Party Transactions
During the years ended December 31, 2004 and 2003, there were transactions
involving investment of Plan assets in investment funds maintained by the Plan's
trustee and participant loans. The Trustee and participants are considered to be
parties-in-interest as defined in Section 3(14) of ERISA. One of the Plan's
investment options is Berry Petroleum Company Common Stock which is purchased by
the Plan's Trustee in the open market.
During the year-ended December 31, 2004, the Plan Sponsor paid $21,888 of Plan
administration costs. In addition, as of December 31, 2004 and 2003, the Plan
had outstanding participant loan balances of $600,857 and $686,557,
respectively. All of these transactions are considered exempt party-in-interest
transactions under ERISA.
Note 5. Risks and Uncertainties
The Plan provides for investments in any combination of mutual funds, Berry
Petroleum Company Common Stock and a Managed Income Portfolio, with different
investment strategies. These investments are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated with
certain investments and the level of uncertainty related to the changes in the
value of these investments, it is at least reasonably possible that changes in
risks in the near term would materially affect participants' account balances
and the amounts reported in the statements of net assets available for benefits
and the statement of changes in net assets available for benefits.
9
BERRY PETROLEUM COMPANY THRIFT PLAN
Schedule H, Line 4i Schedule of Assets (Held at End of Year)
December 31, 2004
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(a) |
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(b) |
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(c) |
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(e) |
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Description of investment, including maturity date, rate of interest, collateral, par or maturity value |
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Current Value |
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* |
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Fidelity Managed Income Portfolio |
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Common Collective Trust |
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$ 4,922,806 |
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* |
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Fidelity Low-Priced Stock Fund |
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Mutual Fund |
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2,496,574 |
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* |
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Fidelity Contrafund |
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Mutual Fund |
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2,301,450 |
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* |
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Berry Petroleum Company Common Stock Fund ** |
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Class A Common Stock Mutual Fund ($.01 par value) |
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2,295,833 |
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* |
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Spartan U.S. Equity Index |
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Mutual Fund |
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2,050,619 |
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* |
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Fidelity Diversified International Fund |
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Mutual Fund |
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1,725,413 |
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* |
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Fidelity Equity Income I Fund |
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Mutual Fund |
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1,035,588 |
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* |
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Fidelity Freedom 2020 Fund |
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Mutual Fund |
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506,591 |
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* |
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Fidelity Freedom 2010 Fund |
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Mutual Fund |
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308,421 |
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* |
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Fidelity Freedom 2030 Fund |
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Mutual Fund |
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266,150 |
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* |
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Fidelity US Bond Index Fund |
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Mutual Fund |
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257,757 |
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AIM Midcap Core Equity A |
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Mutual Fund |
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216,076 |
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* |
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Fidelity Puritan Fund |
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Mutual Fund |
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211,612 |
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RS Smaller Co. Growth Fund |
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Mutual Fund |
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137,793 |
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* |
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Fidelity Freedom 2040 Fund |
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Mutual Fund |
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83,728 |
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Morgan Stanley Institutional Equity Growth B Fund |
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Mutual Fund |
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68,504 |
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* |
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Fidelity Inflation Protected Bond Fund |
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Mutual Fund |
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42,756 |
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Pimco High Yield Admin Fund |
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Mutual Fund |
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31,272 |
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* |
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Fidelity Freedom 2000 Fund |
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Mutual Fund |
|
24,903 |
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American Beacon Small Cap Value Fund |
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Mutual Fund |
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19,534 |
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* |
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Fidelity Freedom Income Fund |
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Mutual Fund |
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12,914 |
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Total Investments |
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19,016,294 |
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* |
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Participant loans |
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Interest bearing loans at prime rate plus 2%; interest rates on outstanding loans range from 6% to 11.5% for a period of 1 to 5 years. |
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600,857 |
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Net assets available for benefits |
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$ 19,617,151 |
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* Party-in-interest |
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10
SIGNATURE
Thrift Plan
/s/ Kenneth A. Olson
Kenneth A. Olson
Member of the Administration Committee
Date: July 8, 2005
11
EXHIBIT INDEX
Exhibit Number Description
23.1 Consent of Independent Registered Public Accounting Firm (filed herewith).