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