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)
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
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
4 RANGE RESOURCES CORPORATION AND SUBSIDIARIES PRO FORMA COMBINED BALANCE SHEET JUNE 30, 1998 (DOLLARS IN THOUSANDS) (UNAUDITED) Merger Post-Merger Historical Pro Forma Pro Forma --------------------------- Lomak Domain Adjustments Range ------------- ------------- --------------- ----------------- 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 ========== ========== =========== See notes to pro forma combined financial statements 4
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) HISTORICAL MERGER POST-MERGER ----------------------------- PRO FORMA PRO FORMA LOMAK DOMAIN ADJUSTMENTS ADJUSTMENTS ----------- ----------- ------------ ------------ 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 =========== =========== =========== See notes to pro forma combined financial statements 5
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) HISTORICAL MERGER POST-MERGER ----------------------------- PRO FORMA PRO FORMA LOMAK DOMAIN ADJUSTMENTS ADJUSTMENTS ------------- ------------ ----------- ------------- 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 =========== ========= =========== See notes to pro forma combined financial statements 6
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): 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 ============= The preliminary allocation of the purchase price included in the pro forma balance sheet is summarized as follows (in thousands): 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 ============= 7
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
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