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, 2005 |
|
|
OR |
|
|
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
BERRY
PETROLEUM COMPANY
THRIFT
PLAN
AUDITED
FINANCIAL STATEMENTS
AND
SUPPLEMENTAL SCHEDULE
December
31, 2005 and 2004
BERRY
PETROLEUM COMPANY THRIFT PLAN
December
31, 2005 and 2004
INDEX
Report
of Independent Registered Public Accounting Firm 2
Financial
Statements
Statements
of Net Assets Available for Benefits
3
Statement
of Changes in Net Assets Available for Benefits 4
Notes
to Financial Statements
5
Supplemental
Schedule
Schedule
H, Line 4i - Schedule of Assets (Held at End of Year) 10
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, 2005 and
2004,
and the related statement of changes in net assets available for benefits
for
the year ended December 31, 2005. 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 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 controls over financial
reporting. Our audits 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 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 Plan as of
December 31, 2005 and 2004 and the changes in its net assets available for
benefits for the year ended December 31, 2005, 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, 2005, is presented for the purpose of additional
analysis and is not a required part of the basic 2005 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 2005 financial statements
and, in our opinion, is fairly stated in all material respects in relation
to
the basic 2005 financial statements taken as a whole.
/s/
Corbin & Company, LLP
CORBIN
&
COMPANY,
LLP
Irvine,
California
July
10,
2006
2
BERRY
PETROLEUM COMPANY THRIFT PLAN
Statements
of Net Assets Available for Benefits
December
31, 2005 and 2004
|
2005
|
2004
|
||||||
|
ASSETS:
|
|||||||
|
Cash
and cash equivalents
|
$
|
277,041
|
$
|
125,673
|
|||
|
Accrued
income
|
562
|
-
|
|||||
|
Employer
contributions receivable
|
-
|
192
|
|||||
|
Investments,
at fair value
|
17,730,826
|
13,967,623
|
|||||
|
Investments,
at values quoted by trust
|
5,652,528
|
4,922,806
|
|||||
|
Participants
loans
|
692,721
|
600,857
|
|||||
|
Net
assets available for benefits
|
$
|
24,353,678
|
$
|
19,617,151
|
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, 2005
|
ADDITIONS:
|
||||
|
Additions
to net assets attributable to:
|
||||
|
Contributions:
|
||||
|
Participants
|
$
|
1,269,352
|
||
|
Employer
|
1,091,727
|
|||
|
Rollovers
|
691,468
|
|||
|
3,052,547
|
||||
|
Interest
and
dividends
|
764,978
|
|||
|
Participant
loan interest payments
|
44,091
|
|||
|
Net
appreciation in fair value of investments
|
1,356,758
|
|||
|
2,165,827
|
||||
|
Total
additions
|
5,218,374
|
|||
|
DEDUCTIONS:
|
||||
|
Deductions
from
net assets attributable to:
|
||||
|
Administrative
fees
|
4,363
|
|||
|
Benefits
paid
to participants
|
477,484
|
|||
|
Total
deductions
|
481,847
|
|||
|
Net
increase in net assets
|
4,736,527
|
|||
|
Net
assets available for benefits:
|
||||
|
Beginning
of
year
|
19,617,151
|
|||
|
End
of
year
|
$
|
24,353,678
|
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
eligible compensation, as defined in the Plan Agreement. The Company matched
100% of the first 6% of
the
participants eligible compensation contributed to the Plan.
The Plan
provided for a Company match in excess of 6%, if certain financial results
were
achieved; however, the participants were required to contribute at least
6% to
receive the full Company match. Company matching contributions ranged from
6% to
9% of eligible compensation for active participants in the Plan. Matching
contributions averaged approximately 8.92% and 8.92% for 2005 and 2004,
respectively.
To
encourage and provide an incentive for employees to increase their contributions
to the Plan, effective January 1, 2006, the Plan was amended to change the
Company match rate from the variable rate ranging from 6% to 9% to a
dollar-for-dollar match of each participant's contributions up to the first
8%
of the participant's eligible compensation contributed to the Plan.
Participant
and employer contributions are subject to statutory limitations, which for
2005
were $14,000 pre-tax and $42,000 total for all employee and employer
contributions, respectively. 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 $4,000 for 2005. 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:
|
Berry
Petroleum Company Common Stock Fund
|
Spartan
U.S. Equity Index Fund
|
|
Fidelity
Managed Income Portfolio
|
AIM
Mid Cap Core Equity A Fund (2)
|
|
Fidelity
Contrafund
|
ABF
Small Cap Value PA Fund
|
|
Fidelity
Diversified International Fund
|
ABF
Large Cap Value PA Fund (1)
|
|
Fidelity
Inflation Protected Bond Fund
|
Morgan
Stanley Institutional -
|
|
Fidelity
Low-Priced Stock Fund
|
Equity Growth Portfolio B Fund
|
|
Fidelity
Puritan Fund
|
PIMCO
High Yield Admin Fund
|
|
Fidelity
U.S. Bond Index Fund
|
RS
Smaller Company Growth Fund
|
|
Fidelity
Freedom Income Fund
|
|
|
Fidelity
Freedom Funds (3)
|
(1) Option
added as of October 1, 2005.
(2) Option
discontinued as of March 27, 2006, replaced by the CRM Mid Cap Value
Fund.
(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, 2005 and 2004 representing
more
than 5% of net assets available for benefits:
|
2005
|
2004
|
||||||
|
Fidelity
Managed Income Portfolio
|
$
|
5,652,528
|
$
|
4,922,806
|
|||
|
Berry
Petroleum Company Common
|
|||||||
|
Stock
Fund
|
3,234,557*
|
2,295,833*
|
|||||
|
Fidelity
Contrafund
|
3,083,824
|
2,301,450
|
|||||
|
Fidelity
Low-Priced Stock Fund
|
2,600,759
|
2,496,574
|
|||||
|
Fidelity
Diversified International Fund
|
2,553,393
|
1,725,413
|
|||||
|
Spartan
U.S. Equity Index Fund
|
2,106,217
|
2,050,619
|
|||||
|
Fidelity
Equity Income I Fund
|
**
|
1,035,588
|
*
Includes cash and cash equivalents of $277,041 and $125,673 at December 31,
2005
and 2004, respectively.
**
Fund
removed as an investment option for the Plan as of October 1, 2005.
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, 2005 and 2004 were $29,934 and $14,919, 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%. In December 2005, the interest rate on 401(k) loans
was changed by the Administrators to 1% over the prime rate. 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, 2005, 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.
Effective July 15, 2005, the Plan was amended to allow withdrawals from the
participant accounts in the form of installment payments in addition to lump
sum
distributions.
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,
2005, 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. Although the Plan has been amended since receiving
the
determination letter, 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, 2005 and 2004, 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, 2005, the Plan Sponsor paid $23,165 of Plan
administration costs. In addition, as of December 31, 2005 and 2004, the
Plan
had outstanding participant loan balances of $692,721 and $600,857,
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 risks. 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
Plan
# 002 EIN # 77-0079387
Schedule
I - Schedule H, Line 4i Schedule of Assets (Held at End of
Year)
As
of December 31, 2005
|
(a)
|
(b)
|
(c)
|
(e)
|
|||
|
Description
of investment, including maturity date, rate of interest, collateral,
par
or maturity value
|
Current
Value
|
|||||
|
|
|
|
|
|||
|
*
|
Fidelity
Managed Income Portfolio
|
Common
Collective Trust
|
$
5,652,528
|
|||
|
*
|
Berry
Petroleum Company Common Stock Fund **
|
Class
A Common Stock Mutual Fund ($0.01 par value)
|
3,234,557
|
|||
|
*
|
Fidelity
Contrafund
|
Mutual
Fund
|
3,083,824
|
|||
|
*
|
Fidelity
Low-Priced Stock Fund
|
Mutual
Fund
|
2,600,759
|
|||
|
*
|
Fidelity
Diversified International Fund
|
Mutual
Fund
|
2,553,393
|
|||
|
*
|
Spartan
U.S. Equity Index Fund
|
Mutual
Fund
|
2,106,217
|
|||
|
*
|
ABF
Large Cap Value PA Fund
|
Mutual
Fund
|
1,036,912
|
|||
|
*
|
Fidelity
Freedom 2020 Fund
|
Mutual
Fund
|
511,489
|
|||
|
AIM
Midcap Core Equity A Fund
|
Mutual
Fund
|
462,760
|
||||
|
Morgan
Stanley Institutional Equity Growth B Fund
|
Mutual
Fund
|
324,681
|
||||
|
ABF
Small Cap Value PA Fund
|
Mutual
Fund
|
305,004
|
||||
|
*
|
Fidelity
US Bond Index Fund
|
Mutual
Fund
|
280,008
|
|||
|
*
|
Fidelity
Freedom 2010 Fund
|
Mutual
Fund
|
258,316
|
|||
|
RS
Smaller Co. Growth Fund
|
Mutual
Fund
|
250,251
|
||||
|
*
|
Fidelity
Freedom 2030 Fund
|
Mutual
Fund
|
220,359
|
|||
|
*
|
Fidelity
Puritan Fund
|
Mutual
Fund
|
209,300
|
|||
|
*
|
Fidelity
Inflation Protected Bond Fund
|
Mutual
Fund
|
196,874
|
|||
|
Pimco
High Yield Admin Fund
|
Mutual
Fund
|
195,234
|
||||
|
*
|
Fidelity
Freedom 2040 Fund
|
Mutual
Fund
|
125,660
|
|||
|
*
|
Fidelity
Freedom 2000 Fund
|
Mutual
Fund
|
29,738
|
|||
|
*
|
Fidelity
Freedom Income Fund
|
Mutual
Fund
|
13,293
|
|||
|
*
|
Fidelity
Freedom 2025 Fund
|
Mutual
Fund
|
9,681
|
|||
|
*
|
Fidelity
Freedom 2035 Fund
|
Mutual
Fund
|
119
|
|||
|
Total
Investments
|
23,660,957
|
|||||
|
|
||||||
|
*
|
Participant
loans
|
Interest
bearing loans at prime rate plus 1% to 2%; interest rates on outstanding
loans range from 6% to 11.5% for a period of 1 to 5 years.
|
692,721
|
|||
|
|
||||||
|
Net
assets available for benefits
|
$
24,353,678
|
|||||
|
*
Party-in-interest
|
||||||
|
**
Includes 103,409 split adjusted shares of Class A Common Stock,
$0.01 par
value,
|
||||||
|
and
cash and cash equivalents of $277,041.
|
||||||
10
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Administration
Committee has duly caused this annual report to be signed on behalf of the
Plan
by the undersigned hereunto duly authorized.
BERRY
PETROLEUM COMPANY
Thrift
Plan
/s/ Kenneth A. Olson
Kenneth A. Olson
/s/ Kenneth A. Olson
Kenneth A. Olson
Member
of
the Administration Committee
Date:
July 12, 2006
11
EXHIBIT
INDEX
Exhibit
Number Description
23.1 Consent
of Independent Registered
Public Accounting Firm (filed herewith).
12
EXHIBIT
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in the Registration Statement on
Form
S-8
No.
333-62871 pertaining to the Berry Petroleum Company Thrift Plan of our report
dated July 10, 2006, with respect to the statements of net assets available
for
benefits of the Berry Petroleum Company Thrift Plan as of December 31, 2005
and
2004, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2005 and the related supplemental schedule,
which report appears in the December 31, 2005 Annual Report on Form 11-K of
the
Berry Petroleum Company Thrift Plan.
/s/
Corbin & Company, LLP
CORBIN
&
COMPANY,
LLP
Irvine,
California
July
12,
2006