<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 8-K/A
(AMENDMENT NO. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) August 25,1998
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-9592 34-1312571
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation Identification
or organization) Number)
500 THROCKMORTON STREET 76102
FORT WORTH, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (817) 870-2601
LOMAK PETROLEUM, INC.
(Former name or former address, if changed since last report)
<PAGE> 2
The purpose of this report is to make the following amendments pursuant to Item
5 Other Events and Item 7(b) Financial Statements and Exhibits:
ITEM 5. OTHER EVENTS.
On November 9, 1998, Range Resources Corporation announced today it
expects to record a non-cash impairment charge in the third quarter of
approximately $98 million. The charge reflects a reduction in the book value of
Range's oil and gas properties by $98 million, partially offset by a related $34
million reduction of deferred income taxes. The pretax charge is roughly $8
million lower than that previously disclosed. The Company expects to report its
third quarter results on November 12.
A majority of the impairment is attributable to properties added in the
Domain merger. Under the purchase accounting used in the merger, Range recorded
Domain's oil and gas properties at a value $75 million above their historical
book value. Accounting rules require that the new book values be reviewed for
impairment using current oil and gas prices and costs. The impairment reduces
the book value of the properties to their estimated fair value under these
parameters. This charge may not be reversed in future periods, even if higher
oil and gas prices increase future net revenues. Given the volatile nature of
oil and gas prices, there can be no assurance as to their future levels. The
remainder of the charge reduces the carrying value of the Range's unproved
properties. This charge reflects the reduced estimate of the value of unproved
properties in the current low commodity price environment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
Pro Forma combined balance sheet at June 30, 1998
Pro Forma combined statement of operations for the six months ended
June 30, 1998 Pro Forma combined statement of operations for the twelve
months ended December 31, 1997 Notes to pro forma combined financial
statements
2
<PAGE> 3
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
On August 25, 1998, the stockholders of Lomak Petroleum, Inc., a
Delaware corporation ("Lomak"), approved the issuance of common stock, par value
$.01 per share, of Lomak ("Lomak Common Stock") pursuant to the Agreement and
Plan of Merger dated as of May 12, 1998, as amended (the "Merger Agreement"),
among Lomak DEC Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Lomak ("Merger Sub"), and Domain Energy Corporation, a Delaware
corporation ("Domain"). Pursuant to the Merger Agreement, Merger Sub was merged
with and into Domain (the "Merger"), with Domain surviving and changing its name
to "Range Energy Corporation." As a result of the Merger, Domain became a
wholly-owned subsidiary of Lomak. The Lomak stockholders also approved a
proposal to change the company name (the "Name Change") to Range Resources
Corporation ("Range"). The transaction was accounted for under the purchase
method of accounting.
The accompanying unaudited pro forma condensed financial statements
give effect to the Merger and the Name Change. The unaudited pro forma combined
statements of operations for the year ended December 31, 1997 and the six months
ended June 30, 1998 were prepared as if the Merger had occurred on January 1,
1997. The accompanying unaudited pro forma combined balance sheet of Range as of
June 30, 1998 has been prepared as if the Merger had occurred as of that date.
This information is not necessarily indicative of future consolidated
results of operations and it should be read in conjunction with the separate
historical statements and related notes of the respective entities appearing
elsewhere in this filing or incorporated by reference herein.
3
<PAGE> 4
RANGE RESOURCES CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Merger Post-Merger
Historical Pro Forma Pro Forma
---------------------------
Lomak Domain Adjustments Range
------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and equivalents................................... $13,526 $ 4,702 $ 18,228
Accounts receivable.................................... 25,923 9,107 (1,747) (a) 33,283
IPF Program notes receivable, current portion.......... - 5,815 5,815
Marketable securities.................................. 4,051 - 4,051
Inventory and other.................................... 1,919 3,161 (445) (a) 4,635
---------- ---------- -----------
Total current assets............................. 45,419 22,785 66,012
---------- ---------- -----------
IPF Program notes receivable, net......................... - 60,582 (1,586) (a) 58,996
Oil and gas properties.................................... 874,752 188,244 30,121 (a) 1,093,117
Accumulated depletion and amortization................. (180,315) (26,857) (29,005) (a,b) (236,177)
---------- ---------- -----------
694,437 161,387 856,940
---------- ---------- -----------
Gas transportation and field services assets.............. 86,626 - 86,626
Accumulated depreciation............................... (12,392) - (12,392)
---------- ---------- -----------
74,234 - 74,234
Other assets.............................................. 8,894 3,938 (2,740) (a) 10,092
---------- ---------- -----------
$ 822,984 $ 248,692 $1,066,274
========== ========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable........................................ $ 24,253 $ 14,390 15 (a) $ 38,658
Accrued liabilities..................................... 24,068 770 4,305 (a) 29,143
Current portion of debt................................. 26 - 26
---------- ---------- -----------
Total current liabilities........................ 48,347 15,160 67,827
---------- ---------- -----------
Senior debt............................................... 252,200 94,361 45,143 (a) 391,704
Senior subordinated notes................................. 125,000 - 125,000
Convertible subordinated debentures....................... 55,000 - 55,000
---------- ---------- -----------
432,200 94,361 571,704
---------- ---------- -----------
Deferred income taxes..................................... 26,690 2,312 6,998 (a,b) 36,000
Company-obligated preferred securities of
subsidiary trust ....................................... 120,000 - 120,000
Stockholders' equity
$2.03 convertible preferred stock, $1 par value......... 1,150 - 1,150
Common stock, $.01 par value............................ 212 151 (15) (a) 348
Capital in excess of par value.......................... 219,033 129,178 (18,252) (a) 329,959
Treasury stock.......................................... - (10) 10 (a) -
Retained earnings (deficit)............................. (23,069) 7,540 (43,606) (a,b) (59,135)
Unrealized gain (loss) on marketable securities......... (1,579) - (1,579)
---------- ---------- -----------
Total stockholders' equity....................... 195,747 136,859 270,743
---------- ---------- -----------
$ 822,984 $ 248,692 $1,066,274
========== ========== ===========
</TABLE>
See notes to pro forma combined financial statements
4
<PAGE> 5
RANGE RESOURCES CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL MERGER POST-MERGER
----------------------------- PRO FORMA PRO FORMA
LOMAK DOMAIN ADJUSTMENTS ADJUSTMENTS
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Oil and gas sales................. $ 63,280 $ 27,707 $90,987
Transportation, marketing and
processing.................... 5,452 - 5,452
IPF income, net................... - 4,375 4,375
Interest and other................ 1,639 688 (2,898) (d) (571)
--------- ---------- ------ --------
70,371 32,770 100,243
Expenses
Direct operating.................. 16,043 8,729 24,772
Transportation, marketing and
processing.................... 2,088 - 2,088
Exploration....................... 2,431 - 5,346 (d) 7,777
General and administrative........ 3,936 3,184 7,120
Stock compensation................ - 369 (369) (d) -
Interest.......................... 18,108 1,639 2,501 (c,d) 22,248
Depletion, depreciation and
amortization.................... 24,764 11,824 609 (d,e) 37,197
Minority interest................. - - (35) (d) (35)
--------- ---------- ------ --------
67,370 25,745 101,167
--------- ---------- --------
Income (loss) before income taxes.. 3,001 7,025 (924)
Income taxes
Current........................... 135 70 205
Deferred.......................... 1,051 2,578 (3,952)(d,f) (323)
--------- ---------- ------ --------
Income (loss) from continuing
operations....................... $ 1,815 $ 4,377 $ (806)
========= ========== =========
Income (loss) from continuing
operations applicable to common
shares........................... $ 648 $ 4,377 $ (1,973)
=========== =========== ==========
Net income (loss) per common share:
Basic............................. $ 0.03 $ 0.29 $ (0.06)
=========== =========== ===========
Diluted........................... $ 0.03 $ 0.28 $ (0.06)
=========== =========== ===========
Weighted average shares outstanding 21,136 15,108 (1,478) 34,766
=========== =========== ===========
Weighted average shares outstanding
diluted........................... 21,579 15,817 (1,203) 36,193
=========== =========== ===========
</TABLE>
See notes to pro forma combined financial statements
5
<PAGE> 6
RANGE RESOURCES CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL MERGER POST-MERGER
----------------------------- PRO FORMA PRO FORMA
LOMAK DOMAIN ADJUSTMENTS ADJUSTMENTS
------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Revenues
Oil and gas sales................. $ 130,017 $ 47,251 $177,268
Transportation, marketing and
processing.................... 11,727 - 11,727
IPF income, net................... - 4,779 4,779
Interest and other................ 7,594 238 882 (i) 8,714
----------- --------- -----------
149,338 52,268 202,488
----------- --------- -----------
Expenses
Direct operating.................. 31,481 16,341 47,822
Transportation, marketing and
processing.................... 3,921 - 3,921
Exploration....................... 2,527 - 12,100 (i) 14,627
General and administrative........ 5,290 4,237 9,527
Stock compensation................ - 4,587 (4,587) (i) -
Interest.......................... 27,175 3,774 3,156 (h,i) 34,105
Depletion, depreciation and
amortization.................... 55,407 16,072 3,739 (i,j) 75,218
Provision for impairment.......... 58,700 - 58,700
Minority interest................. - - (42) (i) (42)
----------- --------- -----------
184,501 45,011 243,878
----------- --------- -----------
Income (loss) before income taxes.. (35,163) 7,257 (41,390)
Income taxes
Current........................... 684 735 (792) (l) 627
Deferred.......................... (12,515) 3,359 (5,331)(i,k) (14,487)
----------- --------- -----------
Income (loss) from continuing
operations $ (23,332) $ 3,163 $ (27,530)
=========== ========= ===========
Income (loss) from continuing
operations applicable to common
shares........................... $ (25,666) $ 3,163 $ (29,864)
=========== ========= ===========
Net income (loss) per common share:
Basic............................. $ (1.31) $ 0.27 $ (.90)
=========== ========= ===========
Diluted........................... $ (1.31) $ 0.26 $ (.90)
=========== ========= ===========
Weighted average shares outstanding 19,641 11,578 2,052 33,271
=========== ========= ===========
Weighted average shares outstanding
diluted........................... 19,641 12,126 2,487 34,254
=========== ========= ===========
</TABLE>
See notes to pro forma combined financial statements
6
<PAGE> 7
RANGE RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE (1) BASIS OF PRESENTATION
On August 25, 1998, the stockholders of Lomak voted to approve the
merger agreement with Domain (the "Merger Agreement"). Pursuant to the
Merger Agreement each share of common stock, par value $.01 per share, of
Domain outstanding at the effective time of the Merger was converted into
1.2083 shares of Lomak common stock (the "Exchange Ratio"). The Lomak
stockholders also approved a proposal to change the company name to Range
Resources Corporation ("Range"). The accompanying pro forma condensed
financial statements give effect to the Merger which was accounted for
using the purchase method of accounting
NOTE (2) MERGER PRO FORMA ADJUSTMENTS - AS OF JUNE 30, 1998
The accompanying unaudited pro forma combined balance sheet as of June
30, 1998 has been prepared as if the Merger had occurred on June 30, 1998 and
reflects the following adjustments:
(a) To adjust assets and liabilities under the purchase method of accounting
based on the purchase price. Such purchase price has been allocated to
the consolidated assets and liabilities of Domain based on preliminary
estimates of fair values, with the remainder allocated between proved
and unproved properties based on their relative fair values. The
purchase price allocated to proved properties was further allocated
based on the relative fair values of individual producing fields. This
allocation was then reviewed for indications of impairment by comparing
the allocated cost to the estimated undiscounted future net cash flows
on a field-by-field basis. Those oil and gas properties having a
carrying value in excess of the estimated undiscounted future net cash
flows were deemed impaired pursuant to SFAS 121. The purchase price
allocated to unproved oil and gas properties was adjusted to the lower
of cost (allocated purchase price) or market. The combined impairment
resulted in a pretax charge of $55.9 million ($36.3 million after tax).
No goodwill will be recorded in connection with the Merger. The
information presented herein may differ from the actual purchase price
allocation. The purchase price is determined as follows (in thousands):
<TABLE>
<S> <C> <C>
Cash consideration for FRLP shares of Domain Common Stock (3,250,000 shares)..................... $ 43,875
Estimated fair value (at $7.7208 per share) of 13,630,251 shares of Range Common Stock
issued at the exchange rate of 1.2083 shares of Range Common Stock for each share of Domain
Common Stock................................................................................ 105,236
Estimated fair value of options to purchase 983,296 shares of Range Common Stock................. 7,592
Estimated proceeds from options to purchase 983,296 shares of Range Common Stock................. (1,766)
Cash consideration for market purchases of Domain Common Stock (577,200 shares).................. 6,625
-------------
$ 161,562
=============
</TABLE>
<TABLE>
The preliminary allocation of the purchase price included in the pro forma
balance sheet is summarized as follows (in thousands):
<S> <C>
Working capital assumed.......................................................................... $ 8,782
IPF Program notes receivable, noncurrent......................................................... 66,966
Oil and gas properties:
Proved...................................................................................... 213,740
Unproved.................................................................................... 7,500
Other....................................................................................... 2,046
Other assets..................................................................................... 600
Accrued liabilities.............................................................................. (4,305)
Bank debt........................................................................................ (104,661)
Deferred income taxes............................................................................ (29,106)
-------------
$ 161,562
=============
</TABLE>
7
<PAGE> 8
(b) To record the estimated impairment charge resulting from the allocation
of the purchase price to proved and unproved oil and gas properties as
described in Note (2) (a) above.
NOTE (3) MERGER PRO FORMA ADJUSTMENTS - FOR THE SIX MONTHS ENDED JUNE 30, 1998
The accompanying unaudited pro forma combined statement of operations
for the six months ended June 30, 1998 has been prepared as if the Merger had
occurred on January 1, 1997 and reflects the following adjustments:
(c) To adjust interest expense for the Merger and the borrowings of Domain
under the existing Lomak credit facility. A 1/8% per annum increase in
the interest rate would decrease Range's income before taxes by
$27,000.
(d) To record the adjustment for the change in accounting methods for the
Domain operations from full cost method of accounting to successful
efforts method of accounting.
(e) To record the estimated adjustment to depletion, depreciation and
amortization expense attributable to the allocation of the purchase
price using the successful efforts method of accounting. Such
adjustment assumes the recognition at closing of an estimated
impairment charge totaling $55.9 million ($36.3 million after tax) (see
Note 2(a) above). The one time non-recurring charge is not reflected in
the unaudited pro forma statement of operations as presented herein.
(f) To adjust the provision for income taxes for the change in taxable
income resulting from the Merger.
(g) Although not reflected on the Pro Forma Combined Statement of
Operations, the Company believes that the Merger will result in
synergies in the general and administrative area which will cause cost
reductions amounting to approximately $480,000.
NOTE (4) MERGER PRO FORMA ADJUSTMENTS - FOR THE YEAR ENDED DECEMBER 31, 1997
The accompanying unaudited pro forma combined statement of operations
for the year ended December 31, 1997 has been prepared as if the Merger had
occurred on January 1, 1997 and reflects the following adjustments:
(h) To adjust interest expense for the Merger and the borrowings of Domain
under the existing Lomak credit facility. A 1/8% per annum increase in
the interest rate would decrease Range's income before taxes by
$140,000.
(i) To record the adjustment for the change in accounting methods for the
Domain operations from full cost method of accounting to successful
efforts method of accounting.
(j) To record the estimated adjustment to depletion, depreciation and
amortization expense attributable to the allocation of the purchase
price using the successful efforts method of accounting. Such
adjustment assumes the recognition at closing of an estimated
impairment charge totaling $55.9 million ($36.3 million after tax) (see
Note 2(a) above). The one time non-recurring charge is not reflected in
the unaudited pro forma statement of operations as presented herein.
(k) To adjust the provision for income taxes for the change in taxable
income resulting from the Merger and the effect on deferred taxes
recorded at January 1, 1997 had the transaction taken place at that
time.
(l) Although not reflected on the Pro Forma Combined Statement of
Operations, the Company believes that the Merger will result in
synergies in the general and administrative area which will cause cost
reductions amounting to approximately $960,000.
8
<PAGE> 9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RANGE RESOURCES CORPORATION
By /s/ Thomas W. Stoelk
---------------------
Thomas W. Stoelk
Senior Vice President
Finance & Administration
September 16, 1999
9
