April 18, 2006
Mr. John Cash VIA FACSIMILE
Accounting Branch Chief
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549-0510
Dear Mr. Cash:
The following is offered in response to your letter of December 19, 2005
regarding the Form 10-K of The Beard Company:
SEC December 19, 2005, comment 1
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We have amended our Form 10-K for the year ended December 31, 2004 and Forms
10-Q for the three quarters in 2005 to reflect our share of the earnings of
Cibola under the equity method on a "gross" basis rather than a "net" basis.
Form 10-K/A for the year ended December 31, 2004 and Forms 10-Q/A for the three
quarters in 2005 were filed and accepted by the Commission yesterday between
3:57 PM CDST and 4:09 PM CDST.
Our restated income statement in each case conforms to the presentation we
provided on Schedule 7---Version 1---Full "other than temporary" impairment and
provides "other than temporary" impairment of our investment to the extent our
share of Cibola earnings exceed the actual cash distributions we earned and
received during the respective periods.
SEC December 19, 2005, comment 2
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Our balance sheets in the above filings have been amended to reflect our
investment in and the related note payable to Cibola on a gross basis versus our
previous net method of disclosure. Further, we added a comment on the balance
sheets regarding the cumulative impairment of the investment in Cibola to arrive
at the amounts disclosed on the face of the balance sheets.
SEC December 19, 2005, comment 3
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Our footnote disclosures in the above filings have been amended to include
certain items provided in our FASB No. 94 and EITF 96-16 analysis. See
particularly the disclosures in footnote 1 under the caption Restatements of
Previously Issued Financial Statements in the 10-K/A where, for Cibola, we
addressed the issues of corporate governance, the comparable economic interests
and the relative investments at risk for Beard compared to the minority common
and preferred shareholders in arriving at the conclusion that the equity method
of accounting for the investment in Cibola was appropriate for Beard rather than
consolidation.
SEC December 19, 2005, comment 4
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The financial statements of Cibola have been included as Exhibits to the
respective filings as required under Rule 3-09. Only the 2004 financial
statements of Cibola have been audited.
In the 2004 10-K/A, we made revisions to the interest expense, total assets and
long-term debt amounts on Item 6 - Selected Financial Data. We also made minor
narrative revisions in Item 7 - Management's Discussion and Analysis of
Financial Condition and Results. Please see the discussions on liquidity and
capital resources, material trends and uncertainties, and the interest expense,
equity in earnings of unconsolidated affiliates, and impairments of investments
and other assets under the general heading titled Results of Operations.
Additionally, we incorporated the changes previously discussed in the table of
contractual obligations due as of December 31, 2004. Certain of the amounts in
Item 7A - Quantitative and Qualitative Disclosures about Market Risk have been
revised to reflect the increased debt. The Report of Independent Registered
Public Accounting Firm includes an additional paragraph addressing the issues
raised by the previous correspondence of the SEC. As mentioned earlier, the
balance sheets have been adjusted to include the $1,439,000 as additional
investment and the total notes payable - related entities has been increased by
the same amount for both years ended December 31, 2004 and 2003.. The statements
of operations have been revised to increase interest expense and earnings of
unconsolidated affiliates as has the caption for impairment of investment in
unconsolidated affiliate for the appropriate amounts for each of the years ended
December 31, 2004, 2003 and 2002. Similar revisions were made to the statements
of cash flows for the same periods. The Notes to the Financial Statements were
revised to reflect these changes. See Notes 1 (as mentioned), 5, 9 and 15. We
added Note 18 which was inadvertently omitted from the original filing though
the issues addressed there were addressed in the original 10-K in Item 7. As
mentioned, we also changed Part IV, Item 15 - Exhibits, Financial Statement
Schedules to include Item 10.9 - Cibola Corporation financial statements for the
three years ended December 31, 2004.
Each of the 10-Q/As for the periods ending March 31, June 30 and September 30,
2005 were revised, as well. The balance sheets, statements of operations and
statements of cash flows were revised in a manner similar to the 10-K/A for
2004. The Notes to the financial statements included a revision to Note 1 - see
the heading Restatement of Previously Issued Financial Statements. Item 2 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations was revised for each of the periods presented - whether that be an
analysis of a three, six or nine-month period ended in the years 2004 or 2005.
Lastly, we incorporated by reference the audited financial statements of Cibola
that were originally presented as an exhibit in the form 10-K/A discussed above.
Please contact Jack Martine if he may be of assistance in your review of these
newly filed documents.
Sincerely yours,
THE BEARD COMPANY
/s/ Herb Mee, Jr. /s/ Jack A. Martine
Herb Mee, Jr. Jack A. Martine, Controller and
President Chief Accounting Officer
cc: Michael Gibson
Cole & Reed, P.C.
Jerry A. Warren
McAfee & Taft